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CITY OF YONKERS v. OTIS ELEVATOR CO.

December 11, 1986

CITY OF YONKERS and YONKERS COMMUNITY DEVELOPMENT AGENCY, Plaintiffs,
v.
OTIS ELEVATOR COMPANY and UNITED TECHNOLOGIES CORPORATION, Defendants



The opinion of the court was delivered by: SPRIZZO

OPINION AND ORDER

SPRIZZO, D.J.:

 BACKGROUND

 Plaintiff City of Yonkers (the "City" or "Yonkers") is a New York municipal corporation, which is a political subdivision of and located in the State of New York. See Complaint ("Compl.") at 1. Plaintiff Yonkers Community Development Agency (the "Agency" or "YCDA") is a New York public benefit corporation, organized for the benefit of, and located in the City. See id. For purposes of this action, both plaintiffs stand in essentially the same posture. See Yulish Dep. at 8-9, 18; Martinelli Dep. at 4-5; Del Bello Dep. at 9. *fn1"

 Defendant Otis Elevator Company ("Otis") is a New Jersey corporation, with its principal executive offices in Farmington, Connecticut. See Compl. at P 3. Otis is a wholly-owned subsidiary of defendant United Technologies Corporation ("United"), a Delaware corporation with its principal place of business in Connecticut. See id. at PP 3-4. In 1975, United acquired a majority of the outstanding stock of Otis, which was merged into United in 1976. See id. at P 9.

 The facts underlying the instant action are not in substantial dispute. During the 1960's and early 1970's, Otis undertook an evaluation of the efficiency and productivity of its North American plants engaged in the production of high-speed gearless elevators. By 1968 or shortly thereafter, Otis had concluded that its Yonkers plant would not be able to meet future production requirements. See Defendants' Response to Plaintiffs' 3(g) Stmt. ("Def. 3(g) Resp.") at P 1. Among Otis' considered alternatives were: closing the Yonkers plant and relocating the Yonkers operation to Parsippany, New Jersey, or to some alternate site in Westchester County; expanding and increasing the use of Otis' Canadian and United Kingdom plants to replace the Yonkers operation; and expanding and modernizing the Yonkers plant. See Defendants' 3(g) Statement ("Def. 3(g) Stmt.") at P 1; see also Plaintiffs' 3(g) Statement ("Pl. 3(g) Stmt.") at P 6; Plaintiffs' Exhibits (PXs") 1-2, 64-66, 95; Walker Dep. at 33-36, 38-39, 43-52, 56-59, 264-265; Hull Dep. at 4-5, 13-14; Granville Dep. at 10-13, 16-17, 78-79; Sitaras Dep. at 98-100, 153-55, 238-41; Drummond Dep. at 46-47, 49-59, 66, 70-72, 208-10, 226. Yonkers officials were aware of the possibility that Otis might relocate from Yonkers. See Del Bello Aff. at P 8; Scher Aff. at P 2.

 In exploring the possibility of Otis' remaining in Yonkers, plaintiffs and Otis engaged in discussions regarding Otis' need for space to accommodate an expansion and modernization effort in Yonkers. New York State Urban Development Corporation ("NYSUDC") officials were part of these discussions. Compare Def. 3(g) Resp. at P 2 with Pl. 3(g) Stmt. at P 2.

 In 1969, commissioned by NYSUDC, see Def. 3(g) Resp. at P 3; the Charles T. Main Company prepared a report detailing the possible use of urban renewal as a device to effect Otis' expansion and modernization in Yonkers. See PX 1 ("the Main Proposal"). While the Main Proposal was rejected by Otis, see, e.g., Pl. 3(g) Stmt. at P 4, the concept of utilizing urban renewal continued to be a focus of the parties. See id. at P 5; Def. 3(g) Resp. at P 5.

 Otis and Yonkers officials continued to discuss the possibility of Otis' expansion within Yonkers. Meanwhile, Otis continued its search for other sites, and acquired an option to purchase land in Parsippany. See Pl. 3(g) Stmt. at P 6; Def. 3(g) Resp. at P 6. During 1970-71, George Sitaras, Otis' Manager of Facilities, Production Division, prepared the Modified Urban Renewal Proposal ("MUR"), which recommended the use of an urban renewal program to effectuate an eastward expansion of Otis' existing plant -- in contrast to the Main Proposal's recommendation for the construction of a new facility on land to the west of the existing plant. See Pl. 3(g) Stmt. at P 7; Def. 3(g) Resp. at P 7. No such urban renewal plan existed at the time MUR was written. See Pl. 3(g) Stmt. at P 8. At some time in 1971, Otis told plaintiffs that if an appropriate parcel of land could be made available, Otis would be willing to expand and modernize its Yonkers facilities. See Def. 3(g) Resp. at P 10; Pl. 3(g) Stmt. at P 10.

 On June 29, 1971, Dr. Seymour Scher, then Yonkers' City Manager, sent a letter to Otis' president, Ralph Weller. See PX 5. That letter informed Weller that urban renewal funding was available for the purpose of expanding Otis' Yonkers plant, and stated the general terms and conditions that plaintiff expected would apply in their relationship with Otis. It is noteworthy that nowhere in this letter is there any indication that plaintiffs, or HUD, or any other entity would exact in return for urban renewal funding a commitment from Otis to operate its Yonkers plant for any period of time. See id.; see also Scher dep. at 10-13.

 On March 7, 1972, Scher wrote a letter to William Granville, Otis' vice-president. See DXs 19-20 (the "Yonkers Proposal Letter"). In that letter, Scher advanced on behalf of plaintiffs certain "preliminary language which together with [Otis'] concerns would ultimately be contained in a formal Letter of Intent." See id. at 1. It is again noteworthy that the author of that letter stated in his deposition that the letter did not "ask any commitment by Otis to operate its Yonkers plant for any period of time." See Scher Dep. at 20. *fn2" Morton Yulish, who was at that time Administrator of Yonkers' Department of Development and Executive Director of the Yonkers Urban Renewal Agency, see Yulish Dep. at 8-9, also stated at his deposition that there was no such commitment sought in the letter. See Yulish Dep. at 21-22.

 Upon Otis' receipt of this proposal letter, Otis' representatives, primarily Granville and George J. Sitaras, were in contact with Yonkers officials, primarily Scher and Yulish, concerning the signing of a formal "Letter of Intent." See, e.g., Scher Dep. at 20-21; Yulish Dep. at 24-25, Hull Dep. at 9. On June 6, 1972, Otis and plaintiffs signed a Letter of Intent, dated June 5, 1972. See DX 6. *fn3" This letter clearly states:

 The purpose of this letter and of the commitments set forth herein is the realization of the following goals : .

 (a) the retention by Otis of its existing usable manufacturing facilities in Yonkers;

 (b) the improvement and expansion of these facilities with the cooperation and assistance of federal, state and local agencies;

 (c) the improvement in the aesthetic appearance of the older section of Yonkers in which these facilities are located; and

 (d) the continuation of existing opportunities for employment and training of the unemployed and the underemployed, such as are now provided by Otis.

 See DX 6 at 1. (emphasis added).

 The "commitments" set forth in the Letter of Intent included various land transactions and site improvement agreements. See id. at PP 2-9. All of these "commitments" were expressly subject to various conditions, also set forth in the Letter of Intent. See id. at PP 2-8, 10-11. Again, nowhere in this Letter of Intent does there appear any "commitment" or "agreement" by Otis to "remain" in Yonkers. See id.; Del Bello Dep. at 89; Scher dep. at 23; *fn4" see also Def. 3(g) Stmt. at P 10. This Letter of Intent was never approved by the Yonkers City Council. See Ex. N to Mazur Aff. at P 7; Ex. O to Mazur Aff. at 26-27.

 At this time, Otis had no intention to leave Yonkers, see Def. 3(g) Stmt. at P 11; see also Weller Dep. at 104-05, 145-48, 161-62, 238, 240-41; Drummond Dep. at 25; Sitaras Dep. at 188; Del Bello Dep. at 93, but there was no binding agreement to stay, and plaintiffs' own employees and officials proceeded as if there were no such agreement. See note 4 supra ; see also Mazur Reply Aff. at PP 2-8. *fn5" Indeed, contrary to the impression created by their counsel's arguments on this motion, not even the post-deposition affidavits of various plaintiffs' officials assert that there was ever an objective manifestation of any affirmative agreement by Otis to remain in Yonkers. See Del Bello Aff. at P 10; Dunn Aff. at P 9; Scher Aff. at P 5; Yulish Aff. at P 9. *fn6"

 On June 27, 1972, the Yonkers City Council designated the Warburton-Woodworth Parcel as an urban renewal area. See DX 30; Def. 3(g) Stmt. at P 13. On September 26, 1972, the Yonkers City Council approved an Urban Renewal Plan ("URP" or the "Plan") for NDP area No. 4, see DX 22, which included the Warburton-Woodworth Parcel. This Plan, which was prepared by plaintiffs, see Martinelli Dep. at 72; Del Bello Dep. at 25; Yulish Dep. at 29-32; Yost Dep. at 9-10, sets forth various "development goals," none of which includes requiring Otis to operate its Yonkers plant for any period of time. Compare Def. 3(g) Stmt. at P 14 with Pl. 3(g) Stmt. at P 29. Nowhere in the section entitled "Redevelopers Obligations" or in any other section does the URP purport to require Otis to operate its Yonkers plant for any period of time. Compare Def. 3(g) Stmt. at P 14 with Pl. 3(g) Stmt. at P 29; see also, Yulish Dep. at 33-34; Del Bello Dep. at 32. While the Plan did state that the site would "provide a much needed expansion area for the Otis Elevator Company, a long time industry in the city," see DX 22 at 3, the URP did not state as a goal or condition that Otis be required to operate its Yonkers plant for any period of time. See Del Bello Tr. at 30. HUD also approved the URP. See Yulish Dep. at 55; see also Scher Dep. at 33.

 In June of 1973, Otis received from Yulish drafts of a proposed land disposition agreement and deed of conveyance (indenture); which were sent to Mr. Ross, Otis' counsel; the drafts were prepared by Halprin & Goler, the Agency's land disposition attorneys. See DX 23; Yulish Dep. at 84; Del Bello Dep. at 49-50; Martinelli Dep. at 103-04; compare Def. 3(g) Stmt. at P 23 with Pl. 3(g) Stmt. at P 29. *fn7" On July 25, 1973, Weller received approval from Otis' board of directors to purchase the Warburton-Woodworth Parcel. See DX 79. Plaintiffs had already obtained approximately $8 million in federal urban renewal funds from HUD and $2 million from New York State for purposes of assembling and clearing the Warburton-Woodworth Parcel; the City contributed approximately $2 million plus portions of certain streets, and the Agency proceeded to assemble and clear the Parcel. See, e.g., DXs 74, 95; Dunn Dep. at 37; see also Def. Rule 3(g) Stmt. at P 23.

 On or about July 31, 1974, HUD informed the Agency that HUD had approved a revised disposition price of $1,391,000 for the sale of the Parcel to Otis. See Def. Rule 3(g) Stmt. at P 24. HUD also agreed that any site improvement costs, approved by HUD to be borne by Otis, could be used by Otis as an offset against the purchase price. See DX 10; Yost Dep. at 45, 69; Del Bello Dep. at 16-17. Further drafts of the proposed agreement and indenture were sent by Halprin & Goler to Otis on August 8, 1974. On August 9, 1974, Otis sent a letter to Yost to confirm the $1,391,000 disposition price and that the drafts were satisfactory as to form. See DX 9; Def. 3(g) Stmt. at P 26.

 On September 11, 1974, the Yonkers City Council unanimously resolved that the proposed agreement, indenture and purchase price were satisfactory, and approved the sale of the Warburton-Woodworth Parcel to Otis. See DX 29 at 2-3. The Court notes that the Council's resolution did not state or refer to any understanding or agreement that the approved transaction would obligate Otis to remain in Yonkers and/or to operate its Yonkers plant for any period of time.

 On September 13, 1974, the Agency and Otis entered into a "Contract for Sale of Land for Private Redevelopment," see DX 12 (the "Land Disposition Agreement" or "LDA"), and the Agency executed an Indenture conveying the Warburton-Woodworth Parcel to Otis. See DX 11 (the "Indenture").

 The LDA, which was intended by the parties to be an enforceable agreement, see Casey Dep. at 9, 14-15; Sitaras Dep. at 183; see also Def. 3(g) Stmt. at P 28, is divided into two parts. Part I was prepared by the Agency's attorneys with specific reference to the sale of the Warburton-Woodworth Parcel to Otis; Part II, entitled "Terms and Conditions," is a standard form provided by HUD. See Yost Dep. at 13, 15.

 At their depositions, neither Casey nor Yost could recall any discussion of "any written commitment by Otis . . . to operate its plant for a particular period of time after it was constructed." See Casey Dep. at 15; Yost Dep. at 19-20; see also DX 2 (Yost memorandum dated 11/9/76, stating, "both parties have indeed complied with the intent of the agreement in every respect"). *fn8" Sections 401 and 402 of the LDA and paragraphs 1-3 Of the Indenture speak of Otis' right to transfer its interest in the Warburton-Woodworth Parcel and Improvements. See DX 12 at §§ 401-402; DX 11 at PP 1-3. Article V of the LDA expressly provides that Otis, as the Redeveloper, "may enter into any agreement to sell, lease, or otherwise transfer . . . the Property or any part thereof or interest therein. . . ." See DX 12 at § 503(a)(2). *fn9" The Indenture transfers the Parcel to Otis subject to the terms, covenants and conditions of the LDA, and also contemplates the possible sale, lease, or rental of the Parcel by Otis. See DX 11 at 4-6.

 Pursuant to paragraph 2 of the Indenture, and following Otis' completion of the redevelopment of the Parcel as specified in § 305 of the LDA, and the dedication of the plant in September of 1976, see Martinelli Dep. at 151-54; DX 51, the Agency issued a Certificate of Completion of Improvements. See DX 48 ("CCI"). The CCI ...


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