The opinion of the court was delivered by: WEINFELD
Plaintiff Quantum Capital Group, Inc. ("Quantum"), a New Jersey corporation, commenced this diversity action against Isramco, Inc., a Delaware corporation, for breach of a consulting agreement between the parties. Defendant counterclaimed, alleging that plaintiff breached the agreement by failing to perform consulting services required under the contract and by rendering itself incapable of fulfilling its contractual obligations. Upon consideration of the parties' pre-trial and post-trial submissions, the Court's contemporaneous notes of the trial, as well as an evaluation of the demeanor and credibility of the witnesses, the Court makes the following findings of fact and conclusions of law.
Quantum, a registered broker-dealer, is wholly-owned by Sherwood Capital Group, a holding company formed in 1981 as the parent of both Quantum and Sherwood Securities. quantum was a retail stock trading operation with offices in Boca Raton and Orlando, Florida, and Denver, Colorado. Defendant Isramco is a publicly held corporation principally engaged in oil exploration in the Middle East.
In August 1983, Quantum was the led underwriter for a public offering of Isramco stock.
On August 23rd, Quantum and Isramco entered in to a consulting agreement for a period of 5 years which provides:
FIRST: . . . Consultant (Quantum) agrees to perform such financial consulting services as shall from time to time be assigned to it by the President or the Board of Directors of the Company (Isramco) and agrees to provide timely and prompt advice and responses to matters within the scope of this Consulting Agreement when requested by the Company or when deemed by Consultant to be appropriate to be given to the Company . . .
SECOND: Consultant shall render financial consulting services to the Company including the evaluation of mergers, consolidations and acquisitions, private placements of the Company's securities and other forms of advisory activities with respect to investment banking.
THIRD: The Company shall pay to Consultant and consultant shall accept for the Company for consulting services during the Consulting Period, compensation at the rate of Eighteen Hundred ($1,800) Dollars per month, payable in advance on the first day of each month, commencing on the date hereof.
It is undisputed that Isramco paid $21,600 to Quantum under the consulting agreement but has made no payments since August 1984.
Quantum contends that there is no justification for Isramco's failure to pay the balance of the monthly payments and seeks to recover all payments due for the remainder of the contract period, a total of $86,400. In uncontradicted testimony, Charles J. Sheils, president of Quantum until May 1984, testified that when Isramco failed to make the September 1984 payment, he had a series of discussions with counsel for Isramco, who told him that Isramco lacked adequate funds to continue making the payments.
For its part, Isramco contends that it stopped making the monthly payments because plaintiff failed to perform services under the contract and because plaintiff terminated its business operations, rendering itself unable to perform under the contract. Defendant, under a counterclaim, seeks recovery of the payments it made and an additional $4,500, representing monies expended by Isramco when Quantum allegedly failed to perform services in connection with Isramco's 1984 proxy statement.
With respect to its claim that Quantum failed to perform its contractual duties, defendant Isramco makes two independent arguments: that Quantum ignored Isramco's repeated requests for services and that the second paragraph of the consulting agreement imposed an affirmative obligation on Quantum to render services regardless of whether Isramco requested those services. The evidence fails to support either contention.
Sheils testified that he received few requests for services from Isramco and those that he did receive were fulfilled. In particular, Sheils testified that he provide Isramco with one of Quantum's consultants, Alfred Vitalli, in response to Isramco's request for assistance in raising additional capital for the corporation; that when Isramco's chairman and chief executive officer, Joseph Elmaleh, suggested raising capital for Isramco by swapping Israeli bonds for debentures in the company, he placed Elmaleh in contact with Paul Alessandrini, a consultant to Jesup & Lamont; and that Quantum organized and paid for a reception in Denver, Colorado to familiarize Quantum's customers with Isramco. Sheils testified that he received no other requests from Isramco for consulting services. According to Sheils, Isramco never asked Quantum to evaluate a merger, a consolidation, a proposed acquisition or private placement. Sheils successor as president of Quantum, Murray Seitman, testified that Isramco has not requested any services since he became president.
Elmaleh disputed each of these statements. Elmaleh claimed that he repeatedly asked Sheils and others at Quantum to perform consulting services for Isramco, but to no avail. While Elmaleh acknowledged that Quantum had performed some services, he minimized the the value of those services.
It is upon this direct conflict in the testimony of the officers of the plaintiff and the defendant that the Court must resolve the question of whether Quantum performed the services it was asked to perform. The Court finds that although the services performed by Quantum were not extensive, they were responsive to Isramco's requests. Defendant offered no documentary evidence to support its claim of repeated requests and Elmaleh and experienced businessman, admitted he had not put any of his alleged requests in writing. Moreover, Isramco continued to make monthly payments to Quantum until August 1984, without written protest, despite what it contends was a complete lack of performance by Quantum from the time the contract was signed in ...