"secure and execute a performance bond and payment bond . . . for the amount of one-half of the performance bond required under the contract." The Agreement further provided that these bonds were to be delivered to Willets if Willets was awarded the Oyster Bay contract. No further clarification appears as to when such bonds were to be delivered, thereby presumably meaning that delivery was to occur within a reasonable time.
Defendants maintain the failure of Haulage to provide the required bonds, or in lieu thereof, a letter of credit, was a material breach by Haulage Enterprises that relieved Willets of any obligation under the February 10, 1986 Agreement, including any obligations to pay either of the two plaintiffs.
Plaintiffs counter by arguing that the bond requirement was not a condition to Willets's obligations coming into play, but rather merely a promise, the violation which would entitle Willets to sue Haulage for damages. Plaintiffs also urge that any obligations that Haulage Enterprises had under the agreement were separate and independent and "not applicable to nor binding upon plaintiffs under the February 10, 1986 contract."
Proceeding in reverse order, the evidence indicates that there was a definite linkage between Haulage Enterprises, DiMatteo, DeGange, Pierson, Longo and Cameron. As noted previously, each of the individuals was a member of the Haulage Group. That group prepared the bid proposal, and was to perform the work necessary for Willets to discharge its obligations to Oyster Bay if the bid was accepted. Granted, paragraph 4 of the February 10, 1986 Agreement provides that "if awarded the contract Willets shall name Haulage [Enterprises Corporation] as subcontractor for the performance of the Contract . . . ." However, the evidence -- including the listing of the duties and compensation for Cameron, Longo, Pierson and DeGange in paragraph 6 of the Agreement -- establishes that DiMatteo's corporation, and the individual team members were an integrated unit and were so viewed by all parties in February of 1986. Accordingly, Haulage Enterprises's failure to obtain a bond in favor of Willets, or a letter of credit, is not separate and apart from the plaintiffs' contractual rights. The February 10, 1986 Agreement was a single contract, not a series of separate, or divisible agreements contained in one writing. Nederlandse Draadindustrie NDI, B.V. v. Grand Pre-Stressed Corp., 466 F. Supp. 846, 852 (E.D.N.Y.) ("In determining whether a contract is divisible or entire, the controlling element is the intent of the parties, to be determined in light of the language employed by the parties and the circumstances existing at the time of contracting.") (citation omitted), aff'd, 614 F.2d 1289 (2d Cir. 1979); Matter of Wilson, 50 N.Y.2d 59, 427 N.Y.S.2d 977, 405 N.E.2d 220 (1980).
However, the mere fact that there is a nexus does not preclude recovery for the services rendered during the course of the joint venture. Approximately sixteen months elapsed between the time Willets was awarded the Oyster Bay contract and the signing of the Release Agreement on August 19, 1987. During that time, Willets and Haulage discussed the preparation of the necessary subcontract, and Willets insisted that Haulage provide the required bond or letter of credit to protect Willets. However, while these discussions were being had, Willets and Haulage continued to operate as joint venturers in keeping with their contract.
Willets never claimed that the February 10, 1986 Agreement was not in effect. Under the circumstances, it may not do so now in an effort to avoid its undischarged obligations to DeGange, or to recoup monies paid to Pierson.
In any event, Willets and Haulage Enterprises stayed the course and, in the process, lost money. Each company was required to devote considerable capital to the project, consistent with the contractual provision that they would share profits and losses. However, in 1987 Haulage was no longer financially able to make additional contributions, causing a further breach of its obligations. In that regard, it should be noted that Haulage Enterprises was the most and, perhaps only, indispensable member of the Haulage Group, for it was the monied member. Remember that Willets's obligation under the February 10, 1986 Agreement was simply to provide the necessary bonds for the Oyster Bay projects, and to share in any resulting profits or losses. Therefore, the initial costs associated with the venture presumably were to be borne by Haulage Enterprises, with the expectation that future costs could be funded from profits.
Willets did not resort to threats or litigation to oust Haulage Enterprises, following its material breaches of contract. Such tactics were not required. Rather, the parties agreed to terminate their relationship via the execution of the August 19, 1987 Release Agreement, with Willets paying $ 655,025 to Haulage Enterprises as a return of capital invested. When Willets and Haulage parted company, plaintiffs' rights -- as members of the Haulage Group -- also terminated.
In Point II of Defendant Willets's Brief After Trial, counsel employs a third-party beneficiary analysis to issues presently under discussion. See generally Burns v. Lindner, 59 N.Y.2d 314, 464 N.Y.S.2d 712, 451 N.E.2d 459 (1983); Alicea v. City of New York, 145 A.D.2d 315, 534 N.Y.S.2d 983 (1st Dep't 1988). However, assuming that plaintiffs may properly be labeled as "third-party beneficiaries," the same result is reached under that approach as is detailed above, to wit, that while plaintiffs have standing to sue under the February 10, 1986 Agreement, their corresponding rights to payment ended on August 19, 1987. The signatories to the February 10, 1986 Agreement understood, as did the plaintiffs, that the obligation to pay $ 1 a ton for services to be rendered would terminate upon the dissolution of the joint venture between Willets and Haulage. Plaintiffs had, consistent with that understanding, a vested right to payment for services rendered prior to August 19, 1987. However, no claimed detrimental reliance prior to notification, see Restatement (Second) of Contracts § 311, or other ground has been advanced by plaintiffs to justify payments beyond that date. As a member of the Haulage Group, each plaintiffs' right to $ 1 a ton ceased upon Haulage Enterprises material breaches of contract and concomitant execution of the Release Agreement.
In sum, plaintiff DeGange is entitled to $ 1 a ton until August 19, 1987. Plaintiff Pierson has already received the sums to which he is entitled, as previously explained.
3. Neither Plaintiff Abandoned his Rights, nor Breached his Duties Under the February 10, 1986 Agreement.
The questions of abandonment, and breach of contract by plaintiffs are interconnected and, thus, will be discussed together.
Willets maintains that plaintiffs abandoned their rights under the February 10, 1986 Agreement by distancing themselves from the project as problems arose, and losses began to mount. It is said they were unavailable to such a degree that they refused even to return telephone calls.
Plaintiffs response is twofold. Firstly, it is underscored that the burden of proving abandonment rests with the party which makes that assertion, i.e. Willets in this case. And secondly, they challenge the factual predicate for the abandonment claim.
Pierson and DeGange testified that they were unceremoniously excluded from the Oyster Bay project by the wrongful acts of Willets, but yet remained ready, willing and able to perform their duties as outlined in the February 10, 1986 Agreement. As noted previously, the Court has accepted as credible plaintiffs' evidence in this regard, and rejected that proffered by defendants.
The mere fact difficulties in performance occurred during the course of the joint venture -- even if traceable to plaintiffs' work product -- does not, in and of itself, evidence a breach of contract. A contract that calls for the performance of services requires only that the obligated party perform in a objectively reasonable manner under the circumstances. Infallibility is not to be expected. Lunn v. Silfies, 106 Misc. 2d 41, 431 N.Y.S.2d 282, 284 (1980). Moreover, to the extent DeGange was a "consultant," the fact defendants chose to ignore his advice does not affect his right to recovery under the contract. Teplitsky v. City of New York, 133 N.Y.S.2d 260, 261 (1954).
The Court finds that neither plaintiff abandoned his rights under the February 10, 1986 Agreement, nor breached any of its provisions.
4. Defendant Haulage Enterprises, as a Joint Venturer With Willets, is Also Liable to DeGange, and May Not Recoup From Pierson Monies Previously Paid.
As a joint venturer with Willets, Haulage Enterprises is jointly responsible for Willets's actions in the present context. N.Y. partnership Law § 26(a)(2). No claim has been asserted by Haulage Enterprises suggesting anything to the contrary, except insofar as reliance is placed upon an indemnification provision of the August 19, 1987 Release Agreement. That Agreement is the subject of the next section of this opinion.
5. Willets is Liable to Haulage Enterprises For Any Monies the Latter Corporation Must Pay As a Result of the Present Lawsuit.
The relevant portions of the previously identified Release Agreement of August 19, 1987, between Willets and Haulage Enterprises, are:
Agreement made August 19th, 1987 by and between Willets Point Contracting Corporation, a New York corporation having its principal place of business at 127-50 Northern Boulevard, Flushing, New York, 11368 (Willets) and Haulage Enterprises Corporation, a New York corporation having its principal place of business at 633 Dickens Avenue, Westbury, New York (Haulage).
The parties in February, 1986 entered into a pre-bid agreement ("Agreement") with regard to Town of Oyster Bay Contract TBI-85-361 "The Contract").