was prepared for settlement purposes only, prior to the institution of this lawsuit by Whittaker, and that, once Whittaker began the lawsuit, the propositions discussed in the memorandum were moot. For the purposes of this motion only, Whittaker agrees that the FIDL system did not fully meet the contract specifications.
After review of the record provided by the parties, the court concludes that there is a question of material fact as to what amount if due and owing to Whittaker from Dynaspan for the FIDL system. Whittaker sued for the full amount of $ 68,500, and is willing to accept $ 57,083. Dynaspan was willing to settle for $ 57,083, but is now unwilling to do so in light of the instant litigation. It is a material question of fact as to what the actual variances from the contract specifications were, and how they subsequently affected the actual value of the FIDL system as finally delivered. Therefore, Whittaker's motion for summary judgment on the second cause of action should be DENIED.
3. Defendants' cross-motion for summary judgment
Defendants filed a cross-motion for summary judgment, seeking Calspan's and CFS' dismissal from this action on the ground that these entities were not parties to the contract between Whittaker and Dynaspan, and that, absent any allegations that Dynaspan, as a joint venture of Calspan and DynCorp, is in danger of being insolvent, Calspan could have no liability for any judgment incurred by Dynaspan. Whittaker claims that Calspan provided technical assistance and consulting services in connection with the contracts at issue, and, therefore, was actively involved in the project and is a proper party.
Defendants rely on New York law for their argument; Whittaker, while commenting that it is ironic that Defendants seek to rely on New York law for their cross-motion while vigorously arguing for the application of New Mexico law on Whittaker's motion, do not appear to contend that New York law should not apply to the construction of this joint venture. The court, while noting that the result may be the same under either New York or New Mexico law, will apply New York law as there does not appear to be a serious conflict of law issue present on this issue. See, Chandler v. H.E. Yerkes & Associates, 784 F. Supp. 119, 123 n.2 (S.D.N.Y. 1992) (citing, Tehran-Berkeley Civil & Environmental Engineers v. Tippetts-Abbett-McCarthy-Stratton, 888 F.2d 239, 242 (2d Cir. 1989) (court noted that as parties relied on New York law, court would apply New York law "under the principle that implied consent to use the forum's law is sufficient to establish choice of law").
In support of their cross-motion, Defendants argue that a partner to a joint venture cannot be held liable for the joint venture's obligations, absent a showing that the joint venture is insolvent and unable to pay its debt. Whittaker maintains that, in his denial of Defendants' motion for change of venue, dated July 25, 1990, Judge Arcara implicitly made a finding that Calspan should be involved in this action, and that, therefore, this is the law of the case. In addition, Whittaker states that, if Dynaspan is found to be insolvent, Calspan, along with its joint venture partner, DynCorp, would be liable for the amount of Dynaspan's damages. The court notes that no allegation of insolvency on the part of Dynaspan was set forth in the complaint filed by Whittaker.
While Whittaker claims that Calspan controlled the activities of Dynaspan, both sides have agreed that DynCorp owns 60% of Dynaspan and Calspan owns 40% of Dynaspan. Certainly, there was some degree of control over Dynaspan by Calspan by virtue of ownership. The copies of answers to interrogatories and depositions provided to the court establish that employees of Calspan were providing technical expertise to the project along with Dynaspan, and were very much involved with the project. However, the fact remains that a prerequisite to individual liability on a joint partnership or joint venture obligation is that "resort may be had against them only if the joint or partnership property is insufficient to pay the [partnership] debts or it appears that there can be no effective remedy without resort to individual property." Tehran-Berkeley Civil & Environmental Engineers, supra, at 243 (citing, Wisnouse v. Telsey, 367 F. Supp. 855, 859 (S.D.N.Y. 1973)). Further, a complaint that fails to allege a partnership is insolvent and unable to pay its debts is insufficient to state a claim for breach of contract against the partners as individuals. Tehran-Berkeley Civil & Environmental Engineers, supra, at 243 (citing, Pine Plains Lumber Corp. v. Messina, 78 A.D.2d 271, 435 N.Y.S.2d 381, 384 (App. Div. 3d Dep't 1981). Therefore, Defendants' cross-motion for summary judgment as to Calspan should be GRANTED.
Additionally, there is no evidence that CFS participated in this contract in any way. Both sides to this action agree that CFS ceased to be an entity on January 1, 1985 and was merged with Calspan. There has been no allegation of any action in this matter by CFS, except that it is alleged that Dynaspan was originally formed as a joint venture by Calspan through CFS. As CFS ceased to exist prior to the inception of the contract at issue, there is no basis on which to hold CFS liable for any damages pursuant to a breach of such contract. Accordingly, the court recommends that CFS be dismissed from the action, and that Defendants' motion for summary judgment as to CFS be GRANTED.
Based on the foregoing discussion, I recommend that Plaintiff Whittaker's motion for summary judgment be DENIED; Defendants' motion for summary judgment as to Defendant Calspan be GRANTED; and, Defendants' motion for summary judgment as to Defendant CFS be GRANTED.
LESLIE G. FOSCHIO
DATED: December 4th, 1992
Buffalo, New York
Pursuant to 28 U.S.C. § 636(b)(1), it is hereby
ORDERED that this Report and Recommendation be filed with the Clerk of the Court.
ANY OBJECTIONS to this Report and Recommendation must be filed with the Clerk within ten (10) days of receipt of this Report and Recommendation in accordance with the above statute, Rules 72(b), 6(a) and 6(e) of the Federal Rules of Civil Procedure and Local Rule 30(a).
Failure to file objections within the specified time or to request an extension of such time waives the right to appeal the District Court's Order. Thomas v. Arn, 474 U.S. 140 (1985); Small v. Secretary of Health and Human Services, 892 F.2d 15 (2d Cir. 1989); Wesolek v. Canadair Limited, 838 F.2d 55 (2d Cir. 1988).
Let the Clerk send a copy of this Report and Recommendation to the attorneys for the Plaintiff and the Defendants.
LESLIE G. FOSCHIO
UNITED STATES MAGISTRATE JUDGE
DATED: December 4th, 1992
Buffalo, New York