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LITTON INDUS. CREDIT CORP. v. PLAZA SUPER OF MALTA

October 24, 1980

LITTON INDUSTRIES CREDIT CORPORATION, Plaintiff,
v.
PLAZA SUPER OF MALTA, INC., Savas Ermides, Natalie A. Ermides, C. J. Drislane Co., Inc., Star Plaza, Inc. and Capitol Refrigeration Co., Inc., Defendants



The opinion of the court was delivered by: MCCURN

MEMORANDUM-DECISION AND ORDER

This diversity action arises out of an agreement for the lease of refrigeration equipment entered into between the plaintiff Litton Industries Credit Corporation (hereinafter "Litton"), as lessor and defendant Plaza Super of Malta, Inc. (hereinafter "Plaza"), as lessee. Payment under the lease was allegedly guaranteed by defendants C. J. Drislane Co., Inc. (hereinafter "Drislane"), Star Plaza, Inc. (hereinafter "Star"), Capitol Refrigeration Co., Inc. (hereinafter "Capitol"), and Savas and Natalie A. Ermides. The case is presently before the Court on defendant Drislane's motion for summary judgment dismissing plaintiff's claim for recovery against it under an alleged guaranty agreement on the ground that no such contract ever existed, and that if an agreement did exist, that it was materially altered by an agent of the plaintiff and is therefore unenforceable. Jurisdiction is predicated upon 28 U.S.C. ยง 1332.

 BACKGROUND

 The facts surrounding the various transactions involved in this matter are largely, although not entirely undisputed. Defendant Plaza needed refrigeration equipment for a retail food market owned by it. An elaborate financing scheme was worked out by the parties to this lawsuit whereby Litton would purchase refrigeration equipment which was owned by Capitol and was already installed on the market premises, and would then lease the equipment to Plaza.

 Plaintiff's willingness to enter into the transaction was conditioned upon Plaza's financial obligations under the lease being fully guaranteed by defendants Savas and Natalie Ermides and Star, and partially guaranteed by defendants Drislane and Capitol. Drislane's participation in the financing scheme arose out of its relationship with Plaza as a supplier of retail frozen foods.

 On January 27, 1975, Litton and Plaza entered into a formal lease agreement for a term of eighty-four (84) months at a total rental cost of $ 583,632.00. The Ermides, Star and Capitol executed their respective guaranty agreements on the same date. Drislane executed its guaranty agreement on January 30, 1975. However, the terms in the agreement which plaintiff had submitted had been altered by Drislane in an unacceptable manner, and the agreement was rejected.

 Drislane agreed to a revision, and on Friday, January 31, 1975, several copies of the revised agreement were executed by Drislane representative Richard LeClair. Under the terms set forth in the agreement, Drislane agreed to guarantee payment of thirty-seven and one-half percent (371/2%) of Litton's net loss under the lease agreement "without deduction by reason of setoff, defense or counterclaim."

 Mr. LeClair retained one copy and gave the others to Mr. Donald Bronstein, President of defendant Capitol, who had been delegated responsibility for obtaining necessary signatures and delivering the documents involved in the transaction to plaintiff's office in Stamford, Connecticut. On Monday, February 3, 1975, having had the executed copies of the Drislane agreement in his possession over the weekend, Mr. Bronstein delivered the documents to Litton.

 Bronstein waited while plaintiff's representative William Lucas reviewed and approved the Drislane agreement. Upon approval a check was issued to defendant Capitol in payment for the refrigeration equipment, and the lease agreement between Litton and Plaza became operative.

 Plaza allegedly defaulted on the lease and Litton declared the entire amount due and owing. The property was sold at a private sale, and plaintiff commenced this action for recovery under the lease and the various guaranty agreements. It was upon the commencement of this action that the factual allegations of primary concern on the summary judgment motion now before the Court came into light. A purported copy of the Drislane guaranty agreement was appended as an exhibit to Litton's complaint. According to Drislane, however, the copy attached to the complaint contained alterations which were not present when Richard LeClair executed the agreement for Drislane and are not contained in the executed copy which was retained by Mr. LeClair at the time he signed the agreement.

 The first alteration, which bears the allegedly forged initials of Richard LeClair, deletes the following sentence from the original proposal:

 
Our obligations shall be based on initial equipment costs to you of $ 360,000, subject to the reductions herein provided for.

 The second alteration, also bearing the allegedly forged initials of Richard LeClair, added to the original proposal in the following manner (addition underlined):

 
This instrument shall continue in full force and effect for forty-two (42) months from the date of the execution of the lease agreement. When the Customer has made the required 42 lease payments for such 42 month period in accordance with the terms and conditions of the lease agreement, we shall be ...

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