damage computation, and the parties have submitted briefs on this subject.
I agree with TIAA that a breach of contract by one party, not excused by a prior sufficiently material breach by the other, cannot be mitigated by a concept of comparative fault borrowed from tort law. Thus I will instruct the jury to determine initially whether (a) Coaxial, or (b) TIAA, by abandoning the effort to negotiate in good faith on terms to implement the commitment letter, first prevented the commitment letter from ripening into an actual transaction.
If, however, the jury finds that neither party first prevented the commitment letter from ripening into an actual transaction, because both acted simultaneously in a process of mutual disengagement - for example by escalating hostility simultaneously through raising the ante each time the other provided an excuse to do so - the parties will share responsibility for failure to consummate the loan agreed upon. Shared responsibility for such intentional behavior is consistent with New York law. The courts of New York traditionally insure that the purposes of legal concepts are fulfilled by tailoring their application to the facts at hand, provided that predictability is not sacrificed. See especially Tedla v. Ellman, 280 N.Y. 124, 19 N.E.2d 987 (1939). New York law specifically recognizes that what might be termed cliffs of liability shifting from 0% responsibility to 100% at a razor's edge are inappropriate where both parties are substantially responsible for a result. See CPA 1411, broadly construed in, e.g., Arbegast v. Board of Education, 65 N.Y.2d 161, 490 N.Y.S.2d 751, 480 N.E.2d 365 (1985); Lippes v. Atlantic Bank of New York, 69 A.D.2d 127, 419 N.Y.S.2d 505 (1st Dept. 1979); McLaughlin, Practice Commentary to § 1411 at 386 (McKinney's 1976).
It is, of course, important to distinguish between the concept of concurrent responsibility where good faith negotiations are required to implement a contract, and the distinct concept of comparative fault in tort cases. The latter involves negligence, whereas the contract concept, in addition to being articulated in entirely different terms, involves intentional conduct by the party claiming breach which may contribute to that breach or damages caused by the breach. This concept has been articulated "in the field of public contract law. James, Concurrency and Apportioning Liability and Damages in Public Contract Adjudications, 20 Public Contract L.J. No. 4, at 495 (ABA Summer 1991).
The concept of concurrent responsibility is supported by several cases ruling that concurrent responsibility may be used to apportion damages where intentional conduct is involved. Dynalectron Corp. (Pacific Division) v. United States, 207 Ct. Cl. 349, 518 F.2d 594, 603 (Ct. Cl. 1975); Grumman Aerospace Corp. v. United States, 213 Ct. Cl. 178, 549 F.2d 767, 774-75 (Ct. Cl. 1977); E.H. Marhoefer, Jr. Co., DOTCAB No. 70-17, 71-1 BCA8791; Dale Constr. Co. v. United States, 168 Ct. Cl. 692 (1964); Hilltop Electric Const. Co., DOTCAB 78-6, 78-2 BCA13,421. In these cases the cost created by the delay was apportioned between the parties in proportion to their respective responsibilities.
Background for this approach can be found in the increasing recognition that the calibration of legal consequences rather than simplistic liable-or-not-liable characterization is appropriate. As long ago as 1899, Justice Holmes criticized the archaic notion that conduct must fit into a rigid two-valve grid limited to the options of 100% or 0%. Holmes, Law in Science-Science in Law, 12 Harv. L. Rev. 433 (1899), also in Holmes, Collected Legal Papers, pp. 210-243 (1921). More recently, in United States v. Reliable Transfer Co., 421 U.S. 397, 411, 44 L. Ed. 2d 251 , 95 S. Ct. 1708 (1975), the Supreme Court overturned a longstanding precedent in admiralty law to adopt an apportionment approach to collision damages. In that case Justice Stewart held that the admiralty rule of equally divided damages should be replaced by one apportioning liability for damages in proportion to each party's fault.
Limiting the jury to an all-or-nothing choice if the facts do not fit that model would involve what has been described as the trap of "delusive exactness," Holmes, J. dissenting in Truax v. Corrigan, 257 U.S. 312, 342-43, 66 L. Ed. 254 , 42 S. Ct. 124 (1921). It would likewise ignore the reality that a complex series of events must sometimes be perceived as a whole when it is not found workable by the factfinder to break them down into discrete independent events. This error is sometimes known as "disaggregation," see Tushnet, "Book Review," 82 Colum. L. Rev. 1531, 1536-39 (1982); see Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 707, 8 L. Ed. 2d 777 , 82 S. Ct. 1404 (1962); Direct Sales Co. v. United States, 319 U.S. 703, 87 L. Ed. 1674 , 63 S. Ct. 1265 (1943).
Shared responsibility for events is, indeed, a generally recognized concept in the legal system whenever the factual situation calls for its invocation. See City of St. Louis v. Praprotnik, 485 U.S. 112, 126, 99 L. Ed. 2d 107 , 108 S. Ct. 915 (1988)(O'Connor, J.)("We are also aware that there will be cases in which policymaking responsibility is shared among more than one official or body.").
In this case it would seem logical that if the jury finds that rather than one side breaching the contract first, both parties agreed to negotiate in good faith towards the implementation of a binding agreement and both of the parties failed to do so, the concept of concurrent responsibility should be applied. The situation would then be one in which each party "regards [effective or announced] withdrawal by the other. . . as unjustified," Knapp, "Enforcing the Contract to Bargain," 44 N.Y.U.L. Rev. 673, 685-86 (1969). If both sides acted unreasonably at the same time and the jury cannot determine which one spoiled the situation first, "the situation is possible of each of the two parties having a right of specific performance against the other," and in that event, "it is not possible that each shall have a right to damages for total breach of contract," 6 S. Williston, Contracts § 832 (3d ed 1962), quoted in 2 Farnsworth, Farnsworth on Contracts 440 n 21 (1990).
Overall damages should in such an event then be apportioned in proportion to each party's responsibility for the breakdown of good faith negotiations.
Dated: White Plains, New York
July 21, 1992
VINCENT L. BRODERICK, U.S.D.J.
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