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WOLFF v. FORD MOTOR CO.

May 12, 1980

WILLIAM WOLFF and WOLFF MOTOR COMPANY, INC., Plaintiffs, against FORD MOTOR COMPANY, FORD MARKETING CORPORATION and FORD LEASING DEVELOPMENT COMPANY, Defendants.


The opinion of the court was delivered by: CONNER

OPINION AND ORDER

This case is before the Court for decision following a three-day trial held on November 5-7, 1979. In light of this Court's previous grants of summary judgment with respect to plaintiffs' antitrust claims, common law fraud claims, and certain contract claims, see this Court's opinions of April 18, 1977, November 21, 1977 and May 10, 1979, and of the parties' stipulated dismissal of those counts in the complaint relating to alleged warranties by defendants, see stipulations of February 14, 1979 and March 2, 1979, the issues before the Court have been narrowed to plaintiffs' claims in Counts IV and V of the Second Amended Complaint that defendants either breached or are estopped from denying breach of a Buy/Sell Agreement dated December 17, 1974 between plaintiff Wolff Motor Company, Inc. ("Wolff Motor Company," "Wolff Motors" or "WMC") and defendant Ford Marketing Corporation ("Ford Marketing"), *fn1" and a Lease Agreement dated December 9, 1979 between Ford Leasing Development Company ("LeaseCo") and plaintiff William Wolff ("William Wolff" or "Wolff").

 The issues in the case have been limited still further by plaintiff Wolff Motors' execution, subsequent to trial, as part of a resale of its assets to Ford Motor Company ("Ford"), of a release which by its terms covers these claims against these defendants. Presently pending, then, are plaintiff William Wolff's individual claims against these defendants.

 This Opinion and Order incorporates the Court's findings of fact and conclusions of law pursuant to Rule 52(a), F.R.Civ.P.

 I. Background

 The claims here arise out of an aborted arrangement in 1974 under which ownership of the Wolff Motors Ford dealership on Coney Island Avenue in Brooklyn was to be transferred, first back to Ford through its subsidiary Ford Marketing by means of the Buy/Sell Agreement described above, and then to new owners. Under this arrangement, William Wolff individually was to continue to own the property on which the dealership was located, and was to receive rental payments for the use of that property pursuant to a Lease Agreement with LeaseCo, another Ford subsidiary, which would in turn receive rental payments from the new dealership (with LeaseCo thus acting, in effect, as a deep-pocket guarantor for William Wolff). No replacement dealer was found in that year, however, and the transactions contemplated by the two agreements were never consummated.

 With respect to plaintiffs' claims for breach of the two agreements, defendants contend that a condition precedent to the Buy/Sell Agreement was that Ford secure a suitable replacement dealer who would repurchase the dealership from Ford Marketing Corporation; that this condition was never satisfied; and that, as a result, the Buy/Sell Agreement never took effect and defendants cannot be held to be in breach of that agreement. Defendants further assert that LeaseCo's performance under the Lease Agreement with William Wolff was expressly conditioned on the closing of the transactions contemplated in the Buy/Sell Agreement, so that Wolff cannot assert a breach of contract claim under the Lease Agreement if the condition precedent to that agreement, closing on the Buy/Sell Agreement, never occurred.

 Plaintiffs assert, however, that Ford frustrated the performance of the condition precedent in the Buy/Sell Agreement by refusing to accept either the replacement dealership of Patrick Kieran ("Kieran") and Robert Moleti ("Moleti") acting jointly as Action Ford, Inc. ("Action Ford"), or any of the other dealer prospects available during 1974 and 1975; and that this frustration of satisfaction of the condition precedent to the Buy/Sell Agreement, which, in turn, frustrated the satisfaction of the condition precedent to the Lease Agreement, precludes defendants from relying on these unsatisfied conditions as a defense under cases such as Kooleraire Service and Installation Corporation v. Board of Education, 28 N.Y.2d 101, 320 N.Y.S.2d 46, 268 N.E.2d 782 (1971). Plaintiffs further contend that defendants are equitably estopped from denying their obligations under the two agreements, based on defendants' encouragement of or acquiescence in certain steps taken to replace Wolff Motors' licensing, signs and other indicia of ownership with corresponding Action Ford licensing, signs, etc.

 II. Discussion

 The Court notes initially that it is unclear whether William Wolff may press a breach of contract claim in the absence of such a claim by Wolff Motors, since Wolff was not a party to the December 17, 1974 Buy/Sell Agreement, and since the Lease Agreement, to which Wolff is a party, is expressly made effective only upon the closing of the arrangements outlined in the Buy/Sell Agreement, Exhibit 41 at 1, *fn2" which closing Wolff concedes never occurred.

 Even if Wolff is considered to have standing to raise the frustration of the condition precedent to the Buy/Sell Agreement, to which he was not a party, as a proximate cause of the breach of the Lease Agreement, to which he was a party, however, the Court concludes that defendants are not liable under either agreement.

 A. Contract Claims

 Plaintiffs' breach of contract claims turn on the interpretation of the following term in the Buy/Sell Agreement:

 
"12. Conditions Precedent to Payment of Purchase Price Payment of the various sums stated in this Agreement shall be conditioned . . . upon accomplishment of the following conditions precedent . . . :
 
(a)
 
(vii) Successor Dealer Buyer (Ford) shall have secured a replacement dealer to take over the dealership immediately following the Closing." Exh. 42 at 12(a) (vii).

 Defendants contend that this term should be construed to mean a replacement dealer satisfactory to Ford. Plaintiffs argue that the term should be read to mean any replacement dealer, or at least, any of those dealer prospects available to Ford as of January 9, 1975, the inventory date prior to the scheduled closing date of January 15, 1975.

 1. Testimony at trial

 a) Negotiations with ...


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