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February 21, 1984;

AMAX INC., Defendant, vs. ALAN P. ROSEFIELDE, WILLIAM F. HANDY and SONGBIRD, LTD., Counterclaim Defendants.

The opinion of the court was delivered by: WEINFELD


Plaintiffs, Songbird Jet Ltd., Inc. ("Songbird Jet") and Jet Leasing Corporation ("Jet Leasing"), brought this diversity action against the defendant, Amax Inc. ("Amax"), alleging breach of a sales contract, breach of a brokerage contract, fraud based upon defendant's lack of intention to perform the agreements, and unjust enrichment in connection with an alleged purchase by them from defendant of a Falcon Jet, Model 50, Serial No. 108 ("the 108").

 Amax denies the alleged agreements and plaintiffs' other claims and alleges that sale of the 108 was an inseparable part of an entire transaction that included the purchase of another Amax jet, the leasing by plaintiffs to the defendant of a third jet and the cancellation of an outstanding lease on still another jet. Based upon this alleged transaction, Amax asserts counterclaims against the plaintiffs and their principals and chief executive officers, Alan P. Rosefielde ("Rosefielde") and William F. Handy ("Handy"), who are named as counterclaim defendants (collectively referred to herein as "the plaintiffs").

 The defendant now moves pursuant to Fed. R. Civ. P. 56 for summary judgment dismissing plaintiffs' claims. The defendant filed a statement pursuant to Local Civil Rule 3(g), many allegations of which are challenged by plaintiffs, who contend that controverted material fact issues require a trial. Both parties in support of and opposition to the motion have submitted affidavits, depositions, answers to interrogatories, and documents obtained during extensive pretrial discovery.



 Songbird Jet has been engaged in the business of buying, selling, leasing and brokering business jet aircraft and is controlled by Rosefielde. He is a former tax lawyer who in addition to other duties handles financial and legal matters for plaintiffs. A not uncommon feature of some of the transactions engaged in by plaintiffs, whether they involved a purchase, sale or lease of an airplane, was a tax benefit transfer, sometimes referred to as a TBT, to one of the participants.

 Jet Leasing, controlled by Handy, a former airline pilot and aircraft manufacturing employee, is primarily engaged in the business of brokering, managing, maintaining and operating business jet aircraft. Jet Leasing also provides technical services, such as testing and demonstrating corporate jets or checking on and facilitating production of an aircraft at a manufacturer's plant.It is alleged that the two plaintiff corporations under the direction of their respective principals, Rosefielde and Handy, acted as a single, unified entity.


 Amax, the defendant, is a publicly held corporation organized under New York law with its principal place of business in Greenwich, Connecticut. It is engaged in the business of exploration for the extraction, refinement, and treatment of minerals, metals, coal, oil and natural gas. It owns or leases several business jet aircraft to transport its corporate personnel. In the spring of 1982, due to severe financial losses, Amax embarked on an austerity program and decided to reduce its corporate jet fleet. At that time it owned and used two Falcon Model 50 corporate jets, serial numbers 8 and 69 (the "8" and "69," respectively) and was the lessee from plaintiffs of a Falcon Model 20F, Serial No. 388 (the "388"). Amax also was the owner of the 108, which then was under construction by the Falcon Jet Corporation, and had not been delivered to Amax. It is this 108 jet that is the subject of plaintiffs' claims.

 David Ayres, Manager, Financing ("Ayres"), Edward Miller, Senior Vice President, Administration ("Miller"), and Jack Esposito, Manager, Flight Operations ("Esposito") were assigned to put into effect the policy of reducing Amax's corporate jet fleet.


 Plaintiffs' claims originate in events and meetings commencing in June of 1982 relating to Amax's fleet reduction program. On June 15 Handy and Rosefielde met with Miller, Ayres and Esposito to discuss the disposition of one or more of Amaxcorporate jets. Plaintiffs claim that at this meeting the participants agreed that plaintiffs would "broker" the 108 jet for "about" $9 million; that in exchange for their services in locating a purchaser for the aircraft, they would receive the profit that plaintiffs could arrange by means of a purchase and resale of the aircraft.

 Plaintiffs further allege that in September of 1982 they located L. R. French, Jr. ("French"), a Texas oil man who agreed to purchase the 108, but who had no need for any tax benefit transfer that might be available. In addition to his lack of interest in any tax benefit, French wanted a Lear jet that he owned accepted as a trade-in to reduce the price. Rosefielde testified that on October 8 he informed Ayres of the French offer and advised him that, since French had no interest in the tax benefits, Amax could realize additional revenues by selling them to a third party, with a consequent reduction in price to French, provided that the 108 was in service before January 1983. However, the proposal for the trade-in of the Lear was not acceptable to Ayres. Rosefielde further testified that to consummate the transaction he proposed that Songbird Jet purchase the 108 and in turn sell it to French, and that Songbird Jet would accept the Lear in a trade-in, using the proceeds from its sale towards plaintiffs' purchase price so that in end result Amax would net approximately $9 million. According to Rosefielde, Ayres stated the proposal was acceptable to him and that "he would run it up the flag pole," which each understood to mean approval by Ayres' executive seniors. Sometime thereafter, about October 28, Ayres advised Rosefielde that senior management had approved and that the parties had a deal for the sale to plaintiffs of the 108 for $8,850,000 net (reduced from $9,000,000 by the cost of making modifications in the plane as requested by French). Rosefielde testified that Ayres, on behalf of the defendant, agreed to sell the plaintiffs the 108 if (1) Amax wwere provided with a $250,000 deposit to be applied toward the purchase price of the plane, and (2) it was presented with a copy of the agreement between plaintiffs and French with terms acceptable to Amax.

 Rosefielde, according to his testimony, on the following day met with Ayres, who confirmed the foregoing arrangement. On that occasion Ayres was given an unsigned copy of the agreement between French and Songbird for Amax's approval, which Ayres said was satisfactory, and soon thereafter plaintiffs provided Ayres with a copy of the French-Songbird agreement signed by French. Meanwhile, John Kennedy, Jet Leasing's controller, on instructions from Rosefielde, forwarded the $250,000 check and subsequently, as hereafter described, two substituted checks for the same amount. The first draft of a proposed Amax-Songbird Jet agreement prepared by Amax's attorneys was returned, Rosefielde testified, because it did not mirror the Songbird Jet-French agreement. Thereafter, between mid-November and early December 1982, other drafts prepared by Amax's attorneys were submitted to plaintiffs, although none was signed by either plaintiffs or defendant. Plaintiffs assert other conduct, in addition to the retention of the $250,000 by Amax, as evidencing an executed contract for the sale of the 108 to them. Plaintiffs claim that during November and December of 1982 Jet Leasing representatives went to the AiResearch facility in Los Angeles where the 108 was then under construction to expedite its completion and delivery by the end of the calendar year 1982, a requisite if the defendant were to realize a sale of the tax benefits to a third party.

 Plaintiffs contend that the foregoing events constitute and confirm a binding contract between the parties and that the reduction of the agreement to written form was to memorialize its terms -- it was merely to "mirror" the terms of the agreement between French and Songbird Jet, an executed copy of which, dated November 4, 1982, was transmitted to Ayres by letter dated December 13, 1982.

 Plaintiffs assert that Amax breached the agreement on December 22, 1982, when Ayres notified plaintiffs the 108 was not for sale and disputed that a contract had been entered into. Amax, on December 29, 1982, sold the tax benefits to a third party. On January 19, 1983, plaintiffs instituted this action, asserting the following claims against Amax:

 (1) fraudulent misrepresentation of its intention to sell the 108;

 (2) breach of an agreement by Amax to sell to plaintiffs the 108 for resale by them to French (the "sales contract");

 (3) breach of a separate, but related, agreement appointing plaintiffs as broker in connection with the sale of the 108 (the "brokerage contract"); and

 (4) unjust enrichment arising from defendant's retaining the various benefits derived from plaintiffs' activities, including advice ...

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