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August 31, 1995


Bernard Newman, U.S.D.J. by designation

The opinion of the court was delivered by: BERNARD NEWMAN


 BERNARD NEWMAN, Senior Judge:1

 Emanuel Law Outlines, Inc. (hereinafter "ELO"), a publisher of study aids for law students, brings this diversity action against Multi-State Legal Studies, Inc., (hereinafter "Multi-State"), a company that conducts state bar review preparation courses. ELO seeks $ 60,000 in damages for breach of contract; Multi-State counterclaims for $ 20,000 in damages, alleging breach of contract by ELO. This matter arises under the court's diversity jurisdiction in conformity with 28 U.S.C. § 1332(a), and the case was tried to the court in a one day bench trial. Pursuant to F.R.C.P. Rule 52(a), the following constitutes the court's findings of fact and conclusions of law.


 ELO offered the following two witnesses: Lazar Emanuel (hereinafter Lazar), General Counsel and Vice President of ELO and Steven Emanuel (hereinafter Steven), President of ELO. Multi-State offered one witness, Robert Feinberg, Multi-State's President. The parties submitted 16 documentary exhibits.


 ELO contends that Multi-State's failure to pay the base fees for the second and third years of a three year installment contract breaches the agreement. According to the relevant terms of the contract, ELO was to provide Multi-State with a criminal procedure outline supplement (hereinafter "supplement") no later than May 1, 1993. Although the supplement was not delivered until June 3, 1993, ELO maintains that it performed its obligation under the contract. ELO argues that: (1) Multi-State orally agreed to change the May 1, 1993 contractual deadline to early June 1993; (2) any alleged breach was cured under the terms of the contract; (3) any alleged breach by ELO caused by failing to meet the May 1, 1993 deadline was not material; (4) the nonconforming delivery did not substantially impair the value of the entire contract; and (5) Multi-State reinstated the contract by accepting the supplement without seasonably notifying ELO of the breach.

 Multi-State maintains that the failure of ELO to provide the supplements by May 1, 1993 constituted a breach of the agreement and excused Multi-State's obligations under the contract. Specifically, Multi-State disputes the existence of any modification or waiver of the May 1, 1993 deadline. It is further asserted by Multi-State that it sent ELO two letters, dated April 27, 1993 and May 7, 1993 respectively, informing ELO that the failure to meet the May 1st deadline would be considered a material breach of the contract. When ELO did not provide the supplement by May 1, 1993, Multi-State claims that ELO breached the agreement and excused any further performance by Multi-State. Multi-State also insists that the failure to timely provide the supplement by the agreed-upon date caused damage to Multi-State's business in the amount of $ 20,000.


 Since 1978, ELO (a New York corporation) has been a leading publisher and distributor of study aids for law students. Steven is the main editor and writer of the Emanuel Law Outline series. The corporation is a continuation of the business started by Steven during his first year at Harvard Law School. The company enjoys an outstanding reputation among law students across the country. In addition to writing and editing, Steven negotiates transactions for the corporation. Lazar, Steven's father, is ELO's general counsel and administrative officer. An experienced attorney and businessman, Lazar runs the office, finalizes contracts, oversees all printing and production of materials, and supervises the collections of accounts.

 Multi-State Legal Studies, Inc. (a California corporation) conducts bar review courses for law school graduates. The company, which employs approximately 15 people, offers courses in 42 states and is run by its president and founder Robert Feinberg, who is admitted to the bar of several states, including New York and California. As president of the company, Feinberg develops course materials, directs promotion and marketing of the company, and is one of Multi-State's principle lecturers around the country.

 In August 1992, Feinberg contacted ELO to propose an agreement whereby ELO would provide materials which could be distributed to students enrolled in Multi-State's course. As a result, the parties entered into a three-year contract beginning September 1, 1992 and ending August 31, 1995. Under the contract, ELO was required to supply at least 950 copies of each of two volumes of capsule summaries in nine subjects tested on the California bar exam in each of the three years. Multi-State agreed to pay ELO a fee of $ 30,000 per year and in addition pay printing and delivery costs. ELO did not receive the second installment of the first year payment of $ 15,000 from Multi-State by the due date of December 1, 1992. Accordingly, Lazar wrote Feinberg at Multi-State informing him that the payment was overdue and Multi-State should either send payment or a signed note. On December 16, 1992, Multi-State issued its check in the sum of $ 15,000 to ELO. There were no other disputes regarding payment of the first year fees.

 For all subjects except Constitutional Law and Criminal Procedure, ELO was required to take verbatim text of the Capsule Summaries it had published in the Emanuel Law Outline for the particular subject and cosmetically change them as required by Multi-State. For Constitutional Law, ELO was to prepare, edit, and revise a text outline from the review portion of the Constitutional Law Audio Tapes sold commercially by ELO. The Criminal Procedure Supplement was to ...

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