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MODERN AMUSEMENTS, INC. v. MARRIOTT CORP.

January 2, 1985

MODERN AMUSEMENTS, INC., Plaintiff, against MARRIOTT CORPORATION and THE COUNTY OF WESTCHESTER, Defendants.


The opinion of the court was delivered by: WEINFELD

Edward Weinfeld, D.J.

This is in effect a three-way litigation. Plaintiff, Modern Amusements, Inc. ("Modern"), commenced this action against the defendants, The County of Westchester ("County"), and Marriott Corporation ("Marriott"), to recover a balance of $30,000 claimed to be due under a written lease agreement entered into for the use of an amusement ride called "Himalaya" at Rye Playland Amusement Park ("Playland"), Rye, New York, owned by the County. The lease was for each of the three year operating seasons, 1982, 1983 and 1984, at a rental of $55,000 per season ("the Lease"). *fn1" It was executed by Marriott "as Managing Agent for the County of Westchester" and contained an express representation by Marriott that it "is authorized to enter into this Lease on behalf of the County of Westchester as the County's managing agent for the operation of Rye Playland."

 Modern asserts separate claims against the County and Marriott. It seeks to hold the County liable as principal under the Lease. Alternatively, in the event it is determined that Marriott did not have the legal authority to enter into the Lease on behalf of the County, plaintiff seeks to hold Marriott liable for the unpaid rental for breach of its representation that it did have such authority.

 The County resists plaintiff's claim against it upon the ground that the Lease was void ab initio for non-compliance with applicable statutory requirements for municipal contracts, and in the event it is held liable to Modern, the County cross-claims against Marriott for the amount it is cast in liability to Modern. Marriott denies liability to Modern upon the ground that it was acting for a disclosed principal -- the County, and in the event this defense is rejected and it is found liable to plaintiff, it asserts a cross-claim for indemnification against the County.

 Marriott and the County each move to dismiss Modern's respective claim against it pursuant to Rule 12(b)(6), Fed. R. Civ. P. for failure to state a claim, or alternatively, for summary judgment pursuant to Rule 56. Each makes the same motions against each other's cross-claim. Modern in turn moves for summary judgment against each defendant and to dismiss their defenses. Each litigant has filed a statement as required by Local Rule 3(g). In view of the submission of affidavits in support of and in opposition to the respective motions, the parties, upon argument of these motions, acknowledged they are ripe for disposition under the summary judgment rule.

 I

 THE FACTUAL BACKGROUND

 On or about January 1, 1981, the County and Marriott entered into an "Interim Management and Consulting Agreement (the "Management Agreement") whereby Marriott was to manage and operate Playland for a term of two years ending December 31, 1982. The parties contemplated a long-term arrangement but this was never consummated.

 On April 23, 1982 the Lease between Modern as lessor and the County as lessee was executed by Marriott, as already noted, as the "Managing Agent" for the County. Prior thereto, on or about March 17, 1982, Michael B. Lichtenstein, hosue counsel for Marriott, conferred with Richard Pitassy ("Pitassy"), the Chief Deputy Attorney of the Count *fn2" and discussed the proposed Lease and the fact that the term thereof was for three operating seasons, i.e., 1982, 1983, and 1984, which would extend beyond December 31, 1982, the termination date of the Management Agreement. Pitassy gave his approval and authorized Marriott to execute the Lease. Thereafter a fully executed copy of the Lease was sent to and retained by Pitassy on behalf of the County.

 Although the Management Agreement by its terms was effective as of January 1, 1981, it was not formally executed until April 28, 1981. Previously, the County had advised Marriott that contracts had to be entered into promptly so that the concessionaires would have the necessary lead time to prepare their concessions for the scheduled opening of Playland on May 9, 1981. Thus, by telex on April 9, 1981, prior to the formal execution of the Management Agreement on April 28, 1981, the County authorized Marriott "to enter into concession agreements with concessionaires for the 1981 Playland season" and pursuant to such authorization Marriott executed a substantial number of such agreements as "Managing Agent for the County of Westchester."

 In June 1982, a group of concessionaires commenced an action in the Supreme Court of the State of New York, Westchester County, against Marriott and the County ("the Fragola" action) to enjoin them from removing the concessionaires and their equipment from Playland. The action centered about a dispute as to the terms of the concessions for the 1982 season. When the concessionaires applied for a preliminary injunction, Brian J. Powers, an Assistant Westchester County Attorney, submitted an affirmation in opposition to the motion and annexed thereto two exhibits, one, a copy of one of the 1981 concessionaire agreements with the County which had been executed by Marriott as "Managing Agent for the County of Westchester" and the other, a proposed agreement for the 1982 season to be executed by Marriott in the same manner. Also submitted in opposition to the motion for a preliminary injunction in the Fragola action was an affidavit of a Marriott Vice President and General Manager of Playland who swore that pursuant to the Management Agreement, Marriott was "empowered to enter into contractual agreements on behalf of the County of Westchester . . ." Since Marriott and the county as defendants joined forces in opposition to the Fragola motion for injunctive relief, there can be no issue that the County's attorneys were fully aware of that statement.

 At the end of 1982, as previously noted, the Management Agreement between Marriott and the County terminated. Thereafter the County took over the operation of Playland as of January 1, 1983. On March 17, 1983 the County and Modern entered into a modification agreement of the Lease under which the Himalaya ride was delivered by Modern on May 4, 1983 rather than on April 1, 1983 and $5,000 was deducted from the first monthly rent installment due on June 1, 1983. The modification agreement provides: "[a]ll other terms and conditions of the Lease agreement shall remain the same." *fn3" The County paid and Modern accepted the Lease payments for the use of the Himalaya for the 1983 season. Modern also received payments due for the year 1982 and all payments were made with the knowledge and consent of the County. On December 9, 1983, the County informed Modern that it would not lease the Himalaya during the 1984 season citing "the questionable validity of the April 23, 1982 Lease with the Marriott Corporation," as well as other reasons.

 II

 DISCUSSIO ...


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