Dyna Toys involvement was mentioned, there was no discussion of any price, style, delivery schedules or payment terms. Although Keller believes he understood Law to be telling him that Pepsi stood behind the project, this understanding was never confirmed orally or in any writing.
23. Law, whose recollection of the conversation was stronger and more detailed than Keller's, testified that Keller called her to tell her that Merton, having received a commitment from Dyna Toys was working on the Pepsi Gang project. She testified that Keller asked her for the first time if she had heard of the project, and she informed him that it was a project Pepsi was pursuing, but since the project was not in her area of responsibility, she did not know its status. Keller asked Law if she knew whether Pepsi had opened a letter of credit for the project and Law told Keller she did not know. In that conversation Law made no commitment to Merton to assist it, or to facilitate payment to Merton by others. Further, Law did not tell Keller that Pepsi would pay anything to Merton or that Pepsi would take any steps to see that Merton was paid by others. I credit this testimony.
24. By the time of Keller's December, 1991 conversation with Law, Merton already had performed the work which is the basis for its claims in this lawsuit. Keller does not recall whether he contemplated legal action against Dyna Toys as a result of the Pepsi Gang project.
25. Merton and Pepsi had no further communications until March 1992 when Merton sought the assistance of PepsiCo in attempting to obtain reimbursement from Dyna Toys for work Merton had done for Dyna Toys in connection with the Pepsi Gang project. Merton used Law and Mike Welton, one of her superiors from the New York offices of Pepsi World Trade, to try to arrange a meeting with Dyna Toys to discuss Merton's attempt to seek reimbursement from Dyna Toys. Welton was planning a visit to Hong Kong on other, unrelated business in the Spring of 1992. Dyna Toys, however, failed to attend the meeting with Merton. Then, as a courtesy to Merton, Welton and Law agreed to visit the Merton factory to view the gear boxes Merton had obtained. Welton agreed to try to help Merton, but he did not agree to pay Merton anything.
26. Law and Welton's conversations with Merton during the Spring of 1992 came months after the activities for which Merton is seeking damages in this matter and did not constitute retroactive authorization for Merton's work for Dyna Toys in the Fall of 1991.
27. Merton commenced this proceeding against PepsiCo only after Dyna Toys, the company that supposedly encouraged Merton to engage in the activities in question, refused to reimburse Merton.
28. As this litigation has unfolded, Merton has sold or used all the gear boxes that were the principal subject of its original damage claim.
B. CONCLUSIONS OF LAW
Merton seeks recovery under two theories. First, Merton claims that PepsiCo breached a contract with Merton when it discontinued the Pepsi Gang project and refused to pay Merton despite Law's statement to Keller that the project was a Pepsi project. Second, Merton alleges that as a result of Law's misleading statements about the Pepsi Gang project, Pepsico is liable under the theory of negligent misstatement.
1. This Court has subject matter jurisdiction over this litigation, based upon diversity of citizenship.
2. New York law applies to determine conflict of law issues. Machleder v. Diaz, 801 F.2d 46, 51 (2d Cir. 1986), cert. denied, 479 U.S. 1088, 94 L. Ed. 2d 150, 107 S. Ct. 1294 (1987).
3. Applying New York conflict of law principles, Hong Kong law determines the respective rights and obligations. Schultz v. Boy Scouts of America, 65 N.Y.2d 189, 196-97, 491 N.Y.S.2d 90, 480 N.E.2d 679 (1985); Auten v. Auten, 308 N.Y. 155, 124 N.E.2d 99 (1954).
4. In accordance with Chapter 88 of the Laws of Hong Kong, British law, both common and statutory, is the law of Hong Kong. Chapter 88, Application of English Law Ordinance (1966) § 3.
5. Applying principles of British contract law, the evidence fails to establish the existence of a contract. Under those principles, an agreement (even one that is collateral) is not binding if it lacks certainty, either because its terms are too vague or because it is obviously incomplete. See Chitty, J. Chitty on Contracts, General Principles, of Terms," § 123 at 90 (26th Ed. 1989); Treitel, G.H. The Law of Contract, "Certainty," § 5 at 48 (3rd Ed. 1970). At the outset, I credit Law's testimony that she was then not even aware of the Pepsi Gang project. However, even if Law confirmed the existence of a Pepsi Gang project, her fleeting response to Keller's generalized questions fails to amount to a "meeting of the minds" sufficient to form an enforceable contract between Merton and PepsiCo. Keller himself admitted that he and Law never even discussed, much less agreed on, essential terms such as price, quantities, shipping terms, payment terms or time for performance in the December 1991 phone conversation or in any other with Law.
6. Similarly, the evidence fails to establish PepsiCo's liability under the theory of negligent misstatement. Under British law, a negligent misrepresentation may give rise to liability for pecuniary loss in circumstances where a "special relationship" exists between the parties. Hedley Byrne & Co. v. Heller Partners,  2 All E.R. 575, 601 ("plaintiff cannot . . . recover for financial loss caused by a careless statement unless he can show that the maker of the statement was under a special duty to him to be careful"). See also Morgan Crucible v. Hill Samuel Bank,  1 All E.R. 148, 149 (duty of care imposed where there was a relationship of proximity).
7. The evidence at trial plainly indicated that Merton and PepsiCo never had a "special relationship." Prior to the Pepsi Gang project, Merton had never had any business dealings with Pepsico. Keller had just met Law two months prior to the alleged misstatement and they had only limited introductory contacts. Their only face-to-face contact during those two months consisted of a solicitation breakfast meeting (at Keller's request), followed by a routine visit to the Merton factory. Moreover, any telephone conversations between Keller and Law in the time period between the factory visit and the September phone call could be characterized, at best, as vague inquiries about a Pepsi project which involved gear boxes. These two introductory meetings followed by nebulous conversations did not as a matter of law create a special relationship.
8. Further, even if Merton and Pepsico had a special relationship prior to the December phone call, Law's unspecific statements to Keller to the effect that Pepsi Gang project was a PepsiCo venture fails to amount to a misleading statement actionable under a theory of negligent misrepresentation.
9. Given this Court's decision that Merton has been unable to establish any liability on behalf of PepsiCo, it is not necessary to consider Merton's damage claims.
10. Were New York law to be applied, the Court would still conclude that Merton has not established the breach of a contract or the tort of negligent representation. White v. Guarente, 43 N.Y.2d 356, 362-63, 401 N.Y.S.2d 474, 372 N.E.2d 315 (1977); T'AI Corp. v. Kalso Systemet, Inc., 568 F.2d 145 (10th Cir. 1977) (applying New York law).
For, the foregoing, reasons, this Court finds that PepsiCo is not liable to Merton. The complaint is dismissed.
The clerk is directed to enter judgment for defendant and against plaintiff in this action.
BARRINGTON D. PARKER, JR.
Dated: White Plains, New York
February 6, 1995
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