The opinion of the court was delivered by: Goettel, District Judge.
In Herman Melville's "Bartleby the Scrivener," which coincidentally is
subtitled "A Story of Wall Street," the protagonist is asked by his
employer to examine a document. Bartleby responds with the familiar
refrain, "I would prefer not to." This continues for a period of time and
the employer becomes increasingly more exasperated. Finally, Bartleby is
fired. When asked to leave, however, Bartleby again responds, "I would
prefer not to." Bartleby never says, "I can't do it," only that he would
rather not. In the case at bar, we are presented with yet another attempt
by a creditor of Trans World Airlines, Inc. ("TWA") to collect on a
debt.*fn1 TWA admits it owes the money and that it has the money, but
like Bartleby, it would prefer not to pay. Instead, it wants to use the
money for other purposes, like purchasing the bankrupt Pan American World
Airways ("Pan Am"). See Norris, "When the Merely Broke Try to Buy the
Bankrupt," The New York Times, July 23, 1991, at D1. Would that we could
all treat our creditors in a similar fashion.
In 1979, plaintiff Mercantile-Safe Deposit and Trust Company, a
Maryland institution, and Ozark Air Lines, Inc. ("Ozark") entered into an
Equipment Trust Agreement (the "Agreement"). The Agreement provided that
plaintiff, as trustee for four institutions who actually financed the deal
and now hold equipment trust certificates, would purchase two airplanes,
five engines, and various spare parts from Ozark. Ozark would then lease
the property from plaintiff in what is traditionally known as a
sale/leaseback. After the term of the lease, which was set to expire in
1995, the property was to revert to Ozark. In 1987, defendant TWA merged
with Ozark and assumed Ozark's obligations, including the Agreement at
issue. Thus, TWA was to make payments to plaintiff and when the lease
expired, the property would become TWA's.
As has become common practice with TWA, it defaulted in May 1991 and
the debt was accelerated as is permitted under the Agreement. Agreement
§ 7.02(a). The debt in this case is approximately $6 million, which
is relatively small compared to TWA's other outstanding obligations.
Thereafter, plaintiff brought the instant action demanding return of the
property at issue under theories of specific performance and foreclosure
of a security interest. Plaintiff now moves for summary judgment.
This action is quite similar to the case of Connecticut National Bank
v. Trans World Airlines, Inc., 762 F. Supp. 76 (S.D.N.Y. 1991), decided
by this court some four months ago. In that case, similar sale/leasebacks
were involved and when TWA defaulted, the trustee sought return of its
property. In that case, significantly more planes and engines were at
issue than in the case at bar. In addition, TWA's debt was over $300
million in that case. We found for the plaintiff and ordered TWA to
return the Bank's planes and engines.
TWA's initial argument is that we should not entertain a summary
judgment motion because little discovery has taken place, the action
having only been commenced on July 1, 1991. While we acknowledge that
summary judgment should not be granted if the non-moving party has not
had an opportunity for discovery, it must be established that the
discovery sought will facilitate the creation of a genuine issue of
material fact. See Hudson River Sloop Clearwater, Inc. v. Department of
the Navy, 891 F.2d 414, 422 (2d Cir. 1989). In this case, TWA suggests it
needs further discovery on the nature of the transaction between Ozark
and plaintiff. TWA points to the fact that plaintiff's moving papers
refer to the transaction as a sale/leaseback and, alternatively, "as a
conditional sale of [property] to Ozark, with the Trustee's retention of
a security interest in the [property] to protect against defaults on
Ozark's obligations to the Trustee." Plaintiff's Memorandum of Law at
19. There is no doubt that the transaction at issue was a sale/leaseback
and plaintiff's alternative suggestion was only offered so as to afford
it an additional remedy under the Uniform Commercial Code. Nonetheless,
regardless of how the transaction is denominated, plaintiff is entitled
to the requested relief and further discovery will not change this
TWA next argues that plaintiff is merely a "`naked trustee' [acting]
as [a] `mere conduit' for a remedy flowing to others." Navarro Say.
Ass'n v. Lee, 446 U.S. 458, 465, 100 S.Ct. 1779, 1784, 64 L.Ed.2d 425
(1980) (citations omitted). Thus, plaintiff is allegedly not the real
party in interest and we must look to the citizenship of the trust
beneficiaries to determine if diversity jurisdiction exists. TWA further
contends that since there are only four beneficiaries in this case, while
there were many more in the Connecticut National Bank action, it is
obvious that the beneficiaries are controlling this litigation. Once
again, we reject this argument. The Agreement specifically affords
plaintiff the power to seek return of the property at issue. Agreement
§ 7.02(b). Moreover, the trustee is entitled to sue in its own
name. Id. § 7.10. It is rather disingenuous for TWA to claim that the
Agreement it specifically entered into, and which affords plaintiff these
rights, should now be ignored.*fn2 See Fleet Nat'l Bank, at 514-15
(further discussion of TWA's "naked trustee" argument).
Another argument raised, and previously rejected, is that TWA cannot
meet its obligations because of the Persian Gulf War earlier this year.
We rejected this argument four months ago when the events in the Middle
East were more recent and we reject it now. The threats of war,
terrorism, and excessive oil prices are part of the cost of doing
Finally, TWA claims that the equitable remedy of specific performance
is inappropriate when plaintiff has an adequate remedy at law. TWA also
contends that before such an equitable remedy can be granted, we must
balance the hardships that would result from such a ruling.
In the case at bar, the contract specifically states that in the event
of a default, plaintiff can demand return of the property at issue.
Agreement § 7.02(b). Moreover, the Agreement expressly states that
plaintiff can go before any court having jurisdiction to seek "a decree
against [TWA] requiring the specific performance [of TWA's covenants
under the Agreement]." Agreement § 7.07. This clause makes an even
stronger case for plaintiff than was available in Connecticut National
Bank where no such contractual language was present.