The opinion of the court was delivered by: PLATT
Defendant's present motion to dismiss plaintiff's complaint calls upon us once again to determine the delicate question of whether we should interfere, however slightly, in a lawsuit first commenced by the defendant against the plaintiffs for breach of contract in the Monroe County Supreme Court wherein the plaintiffs here (defendants there) interposed as counterclaims and defenses the identical claims which they assert here. Since any action taken by us on this motion might carry with it the implication that the learned Supreme Court Justice to whom the State Court proceeding has been assigned is not as qualified to decide whether the identical counterclaims and defenses should stand or be dismissed, comity dictates that no such action should be taken by us absent an express request therefor from another such Judge in a prior action to whom any such questions may also be submitted.
Procedurally, this case is now before the Court on defendant Theatre Confections, Inc.'s (hereinafter TCI) motion to dismiss the complaint of plaintiffs Andrea Theatres, Inc. and E.B. Cinema Corp. (hereinafter collectively referred to as ATI) pursuant to Rule 12(b)(6), F.R.Civ.P., or, alternatively, to dismiss or stay this action pending the resolution of an ongoing State action involving precisely the same parties. For the reasons stated below, the Court grants defendant's motion to stay this action.
Defendant TCI is a New York corporation with its principal offices in Rochester. Plaintiffs' Complaint, P6 (hereinafter Pl. Complt.). TCI's primary businesses involve (1) the provision of "concession packages" which include products to be sold and equipment for the operation of sales in space it leases from entities such as movie theaters, and (2) loans for purposes such as construction to the owners of entities from which it leases space to operate its concession stands. Id. at PP7, 10. TCI's business ventures are conducted primarily in the northeast and north central United States. Id.
Plaintiffs are both New York corporations, owned by the same principals, with their principal place of business in Merrick, New York. Pl. Complt. PP4, 5, 21. Each plaintiff is the lessee and operator of a movie theater complex in the greater New York City area; Andrea Theatres leases and operates one in Staten Island, New York; E.B. Cinema, one in Nanuet, New York. Id. The principals of plaintiffs also lease and operate several other movie theaters in the same geographic area. Id. at P21.
In February of 1979, plaintiff E.B. Cinema obtained its present ten-year lease in Nanuet for the purpose of constructing a "five-plex" movie theater by the Christmas season of 1979. Pl. Complt. P14. At the time, plaintiffs estimated the construction would cost approximately $500,000 to $600,000, and they "were unable to obtain all the financing necessary for the planned construction . . . from outside banks." Id. at P15.
In September of 1979, TCI agreed to loan $300,000 to plaintiffs for the construction. Pl. Complt. P19. On September 26, 1979, ATI's principals and TCI signed both a loan agreement for $300,000 and a concession lease agreement covering three other movie theaters in addition to the two plaintiff theaters, also operated by ATI's principals.
In return for the loan, TCI required various forms of security and collateral; the concession lease agreement being one form. Pl. Complt. P23. For example, the Concession Lease was to run until September of 1987, but could be automatically extended by TCI "until all monies owed" by ATI's principals to TCI "if any, have been repaid in full." Defendant's Affidavit in Support of its Motion, Exhibit B, Concession Lease Agreement PP1, 14 (hereinafter Concession Agreement). Moreover, for an initial period, the Concession Agreement was to be used as a vehicle for paying the loan itself; that is, until a certain fraction of the loan was paid a portion of the proceeds that would otherwise have been paid to ATI's principals as rent for the leased space were to be treated as loan payments. Defendant's Affidavit in Support of its Motion, Exhibit A, Loan Agreement, P2(b) (hereinafter Loan Agreement).
Ultimately, only $250,000 of the $300,000 that TCI had initially made available under the loan was actually used. Pl. Complt. P57. However, the Loan Agreement also acknowledged debts owing to TCI under previous loans made by TCI to plaintiffs' principals and theaters operated by them, among them being plaintiff Andrea Theatres, in 1975 and 1976 which had been guaranteed by inter alia a concession lease agreement. Loan Agreement, P8. The aggregate amount owed on these previous loans was acknowledged by plaintiffs' principals to be $148,835.54 as of September 20, 1979.
ATI's principals agreed that this aggregate amount "shall be added to the outstanding balance hereunder" (i.e., the 1979 loan) and would be repaid together with interest in the manner set forth under paragraph 2 of the 1979 Loan Agreement "as if said account stated [i.e., the aggregate amount outstanding from the old loans] had been an additional loan borrowed as of the date hereof." Loan Agreement, P8. By this Court's estimation, then, the total value of the 1979 loan came to nearly $400,000 exclusive of interest.
Under the Concession Lease Agreement, ATI's principals agreed to buy concession products exclusively from TCI for five theaters, two of which are the plaintiffs herein, and TCI was given the exclusive right to sell its products from the space it leased. Concession Lease, PP2, 4. In exchange for the lease, TCI was to pay approximately 50% of the proceeds from its sales to plaintiffs' principals as a rental fee. Id. at P3. Plaintiffs' principals were to use its own theater staff at the concession but TCI reserved the right to staff the concession with its own employees under certain circumstances. Id. at P14. During the time that plaintiffs' principals used their own staff, they were to give TCI a weekly accounting for all monies received from the sales of the concessions and make deposits of these monies as well as give TCI a monthly inventory. Id. at P8.
The Concession Lease Agreement also incorporated a previous concession lease agreement entered into on November 18, 1975 between TCI and other theaters operated by plaintiffs' principals, among them Andrea Theatres, and modified that previous agreement where it was inconsistent with the present 1979 agreement. Concession Agreement, P21.
In the Spring of 1984, plaintiffs allege that they had paid TCI approximately $450,000 and informed TCI that they considered the 1979 loan paid. Pl. Complt. P60. Plaintiffs further allege that TCI agreed with them but refused to consider the loan repaid unless ...