costs under all possible circumstances. Thus, no reasonable
interpretation of the contract would require America West to pay
all costs under all circumstances.
Although the indemnity clause does not unequivocally require
America West to pay all fees and costs, it also does not
preclude imposition of such burden in all circumstances. The
indemnity clause might legitimately be interpreted to impose
such fees and costs on America West in certain circumstances.
One possible interpretation might be that America West agreed to
pay Echelon's legal fees should Echelon be required to defend a
frivolous or even a losing challenge to the lease. Another
possible interpretation might be that America West did not
consent to pay any of Echelon's legal fees arising from a
dispute over the lease between Echelon and America West, but
instead only for disputes between Echelon and a third party
arising from operation of the aircraft. Similarly, the rent
resetting costs might be imposed on either party depending upon
which party acted more reasonably in refusing to accept the
other's estimate of fair market rental. Evidence as to industry
custom would be admissible in resolving these ambiguities. See
Giles v. City of New York, 41 F. Supp.2d 308, 318 (S.D.N.Y.
1999) (holding that just enough contractual ambiguity existed to
allow introduction of extrinsic evidence for the fact finder to
consider in construing the contract).
If two legitimate interpretations of the contract exist such
that under one interpretation America West is obligated to pay
the attorneys' fees and rent reset costs and under the other
interpretation it is not, then this matter cannot be resolved by
summary judgment. Two such contractual interpretations exist
here. Thus, there is a genuine issue of material fact regarding
America West's obligation to pay for the rent resetting process
or for Echelon's litigation expenses in this matter and summary
judgment is inappropriate regarding these aspects of Echelon's
AMOUNT OF DAMAGES FOR RENT SHORTFALL
The court finds the monthly rental rate was properly reset to
$354,000 as per the terms of the parties' agreement. Since March
of 1998 America West's monthly rental payments have been short
$39,000. This rental shortfall was owing to Echelon as per the
payment schedules set by the contract. As this case arises under
diversity jurisdiction, New York law regarding pre-judgment
interest calculation governs. America West owed Echelon an
additional $39,000 in rent each month since March of 1998. As
such, monthly compounded prejudgment interest on these rent
shortfalls shall be ordered pursuant to N.Y. CPLR § 5001 at the
statutory rate of nine per percent per year.
For the reasons outlined above the court now grants summary
judgment as to the rent shortfall. America West will be ordered
to pay damages in the amount of $39,000 per month for rent
shortfall with interest accruing at nine percent annually from
the date each payment was due. The court finds that contractual
ambiguity as to the indemnity provision of the lease precludes
summary judgment regarding attorneys' fees and costs for the
rent reset process.
ORDER GRANTING PARTIAL SUMMARY JUDGMENT
For the reasons outlined in the opinion filed simultaneously
herewith plaintiffs motion for summary judgment is GRANTED in
part and DENIED in part. Plaintiffs motion for summary judgment
as to the rent shortfall is GRANTED. Plaintiffs motion for
summary judgment as to attorneys' fees and costs for the rent
resetting process is DENIED.
Defendant is ordered to pay a rent shortfall in the amount of
$39,000 per month as accruing since March of 1998. Defendant is
ordered to pay interest on this rent shortfall in the amount of
percent per year to be compounded monthly.
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