Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Trusthouse Forte Inc. v. 795 Fifth Avenue Corp.

February 26, 1985

TRUSTHOUSE FORTE, INC. AND KNOTT HOTELS CORP., PLAINTIFFS-APPELLEES,
v.
795 FIFTH AVENUE CORP., DEFENDANT-APPELLANT



Kaufman and Winter, Circuit Judges, and Wyzanski, District Judge.*fn*

Author: Winter

WINTER, Circuit judge:

The dispute underlying this appeal is over monies due under a lease. The issue on appeal is whether certain findings and conclusions of the district court are appealable by the defendant and, if so, whether they are erroneous. The parties having declined to take advantage of an adjournment to settle the matter, we decide it on the merits and vacate part of the judgment.

795 Fifth Avenue Corporation, the defendant in the district court, owns the Hotel Pierre, a cooperative apartment building in Manhattan. For a period of time, the plaintiffs-appellees managed the building and leased a portion of it to operate a transient hotel. The legal relations between the parties were governed by a document entitled Lease and Management Agreement and dated November 1, 1973. The Agreement had a 21-year term but provided that either party could terminate without cause at the end of 1977 or at three year intervals thereafter.

The Agreement provided a formula to determine the amount of compensation to be paid appellees for managing the building. Disputes over the amount owed were to be resolved by a procedure specified in Paragraph 32(c), which we set out in pertinent part in the margin.*fn1 That paragraph provides for a panel of agreed-upon or court-appointed certified public accountants to resolve disputes over the amounts owed under the agreement.

Beginning in 1976, the parties were unable to agree on the amount of the annual management fee, and appellant paid a smaller sum than that requested by the appellees for the years 1976 through 1980. Neither party invoked the procedures specified in Paragraph 32(c). At the end of 1980, appellant terminated the Agreement. Shortly thereafter, appellees brought the present diversity action seeking $4,967,900 in annual management fees and $2,659,005 in capital improvements allegedly due them under the Agreement for the period 1976 through 1980. Appellant's answer asserted several affirmative defenses, two of which are relevant on this appeal. First, it claimed that the appellees acquiesced in the lower fee payments, thus either waiving their claim or estopping them from raising it. Second, it asserted that appellees' failure to invoke the dispute resolution procedure of Paragraph 32(c) barred resort to judicial remedies.

Appellant moved for summary judgment on Count I of the complaint relating to management fees (the capital improvements count has been voluntarily dismissed) on the grounds, as stated in defendant's notice of motion, that "plaintiffs have failed to comply with the dispute resolution provisions of the Agreement, a condition precedent to maintaining this Action. . . ."

The issues underlying this appeal originated during the argument on the summary judgment motion in the district court. In joining issue, counsel for appellant argued that invocation of the dispute resolution procedure of Paragraph 32(c) was a condition precedent to suit over compensation. Counsel for appellees contended that Paragraph 32(c) was not intended to cover a "legal dispute" over what costs were compensable under the Agreement, which he claimed was the disputed issue in this case. Instead, he claimed it was limited to disputes over the amount of costs actually incurred, or "numbers disputes" suitable for resolution be accountants, matters he said were not in issue.

In tangential but extended colloquies with the court, counsel for appellant also stated that the dispute resolution procedure had to be invoked annually in a timely fashion "so that increased current expenses might be allocated among existing cooperative owners rather than borne by those who might purchase in later years." He made it clear in such colloquies that appellant believed appellees had waived their claims for all years in dispute save 1980 by acquiescing in the appellant's payments. Nevertheless, counsel explicitly stated that the waiver defense was not the basis for his motion for summary judgment and could not be resolved by the court at that time.

Near the end of the hearing, the district court declared that "[t]he motion for summary judgment was limited to the issue of whether [the dispute] resolution provision applies here, that is, whether the parties had to invoke that provision before any suit could be brought, and that is the extent of the Court's decision." The court added that "there is no time limit in which the third accountant is to be appointed under the contract. So that is still to be done." As matters stood following this statement, therefore, appellees' complaint was to be dismissed although they would be entitled to pursue remedies under Paragraph 32(c). and appellant would be free to raise the waiver defense at an appropriate time and in an appropriate forum.

Shortly thereafter, the district court rendered a written opinion that tracked her oral decision but for the following paragraphs:

Defendant asserts that plaintiffs' failure to invoke the provisions of paragraph 32 constitute a waiver of any claim by plaintiffs to funds in excess of those amounts already paid by defendant for the services rendered to the cooperative. This, too, is a legal rather than factual dispute. At the outset, the court notes that paragraph 24 of the Agreement provided that no waivers of the terms of the Agreement would be binding on the parties unless in writing and signed by the party to be charged. Such provisions are ordinarily enforced in New York, see N.Y. Gen. Oblig. Law ยง 15-301(a) (McKinney 1978). See also Beacon Terminal Corp. v. Chemprene, Inc., 75 A.D.2d 350, 429 N.Y.S.2d 715, 718-19 (2d Dep't 1980). Further, plaintiffs have submitted letters of the President of defendant cooperative to its accountants as well as the Annual Reports of defendant which indicate that defendant has considered the disputed payments to be "subject to the final settlement." Plaintiffs' Exhibits 46B, 47A, 48A, 48B & 49. Thus, defendant's assertion of reliance and estoppel are unfounded. The court finds that plaintiffs have not waived their claims to further payments and are not estopped from pursuing them.

Memorandum Decision, pp. 3-4.

Appellant thereafter moved pursuant to Fed.R.Civ.P. 52(b) to delete the above paragraph, arguing that the issues discussed were not raised in the summary judgment motion, that consideration of them was not necessary to the disposition of the motion, and that they involved disputed issues of material ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.