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October 31, 2002


The opinion of the court was delivered by: McMAHON, Judge.


This case begins with the aborted sale of a "Beach King Air 350" twin-prop airplane, referred to by its serial number FL-165. Plaintiff Hidden Brook Air, Inc. ("Hidden Brook") alleges that defendants Clermont Levasseur and his closely-held corporation, 161768 Canada, Inc. (collectively "Levasseur Defendants") breached a contract to buy FL-165, and that defendant Raytheon Aircraft Corporation ("Raytheon") tortiously induced that breach of contract. The Levasseur Defendants, in turn, counterclaim that it was Hidden Brook, not they, that breached the contract. Hidden Brook moves for summary judgment on all claims, and Raytheon moves for summary judgment on Hidden Brook's tortious interference with contractual relations claim.

For the reasons stated below, I must deny all parties' motions. Some issues are amenable to summary judgment, however, which should shorten the trial. I also take this opportunity to make several rulings of law that need not await trial.


The following facts are undisputed unless otherwise noted.

A. The Parties

Hidden Brook is a corporation that owns and maintains an aircraft for Marshall Field, IV ("Field"). Field is the corporation's President and sole shareholder. Hidden Brook owned and maintained a twin-prop airplane, known by its serial number FL-165, which it had purchased in 1997 from the airplane's manufacturer, Raytheon. In late 1998, Hidden Brook decided to sell FL-165 and acquire a jet to replace it. The corporation hired Robert Abrams ("Abrams"), an individual with experience in the sale and marketing of aircrafts, to help it complete the sale. Abrams advertised the aircraft in several publications and on the Internet.

Defendants Clermont Levasseur and 161768 Canada, Inc. ("Levasseur Defendants") own and maintain various aircrafts. In early 1999, they wanted to purchase a Beech King Air 350. Toward that end, they opened discussions with that model aircraft's manufacturer, Raytheon. More specifically, they began negotiations with William J. Spencer ("Spencer"), a Raytheon sales director, for the purchase of a "New Ultra Quiet Super King Air 350" known by the identification number FL-259. On or around June 7, 1999, Raytheon offered to sell FL-259 for $5 million. The Levasseur Defendants did not accept the offer.

B. The Offer to Purchase FL-165

In late May 1999, Thabet learned through one of Abrams's advertisements that FL-165 was for sale. He contacted the Levassuer Defendants and told them that he had found a plane they might be interested in purchasing. The Levassuer Defendants told Thabet to gather more information, so he contacted Abrams. Thabet was to receive a $50,000 commission from the Levasseur Defendants if he introduced them to a plane that they ultimately purchased.

After contacting Abrams, Thabet advised "M. Levasseur," by fax dated June 1, that Hidden Brook's asking price was $4.2 million. What was attached to the fax is in dispute. Hidden Brook (based solely on Thabet's testimony) claims that Thabet sent two draft offers to the Levasseur Defendants for them to review, one at a price of $3.95 million and one at $4 million. The Levasseur Defendants contend that they received only the draft offer for $3.95 million.

Except for the price, the two draft offers were not materially different. In particular, both draft offers stated: "WE HEREBY OFFER TO PURCHASE THE AIRCRAFT DESCRIBED BELOW ON BEHALF OF OUR CUSTOMER CLERMONT LEVASSEUR," and included several terms and conditions. They provided, for example, that (1) $200,000 was to be put in escrow upon acceptance of the offer, (2) Hidden Brook was to correct any major deficiency found during an inspection of FL-165, (3) title was to be free and clear of all liens and encumbrances at closing, (4) all original aircraft records were to be handed over with the plane, and (5) the plane was to be delivered with all systems and avionics in good working condition. In addition, the offers stated that "IF THE AIRCRAFT SUCCESSFULLY PASSES THE PRE-PURCHASE INSPECTION, WILL PURCHASE THE AIRCRAFT."

Hidden Brook claims, again based on Thabet's deposition testimony, that the Levasseur Defendants authorized Thabet to send Hidden Brook the higher offer, for $4 million. Levasseur testified that he authorized Thabet to offer $3.95 million, which was the only offer he knew about. There is no dispute that Levasseur authorized some offer to be sent, or that Thabet sent Hidden Brook the $4 million offer, signed by him and dated June 1. Field ultimately counter-signed the offer. He testified the signature on the document was his, although he did not recall signing it.

C. The Trip to Poughkeepsie and its Aftermath

On June 6, Clermont Levasseur, his wife Therese Levasseur (161768 Canada's Secretary and Treasurer), his son Thomas Levasseur (161768 Canada's Vice-President and pilot), and Thabet flew to Poughkeepsie, New York to take a look at FL-165. Field and Abrams were present representing Hidden Brook. The Levasseur Defendants spoke with Field about some of the plane's features and inspected its exterior and interior. Everyone agreed it was in excellent condition. Clermont Levasseur told Abrams he should speak with Thabet to "move the plane." This was the only actual contact between the Levasseur Defendants and Hidden Brook.

The next day, June 7, Thabet sent a fax to "M.C. Levasseur." The fax's cover sheet explained that Thabet had opened a trust account with an escrow agent and that he was preparing a formal purchase contract "similar to what I signed June 1" (i.e. the offer to purchase FL-165) but with four additional terms: (1) delivery of the aircraft to Quebec, (2) the "[t]ransfer of guarantees," (3) inclusion of a "gravel kit" with the plane, and (4) the condition that final payment be made six days "after receiving `export license' document." [Hidden Brook Decl. Ex. 16]

Thabet's fax also contained a copy of a document he had sent to Aero Space Reports, the escrow agent, as well as a copy of the fully executed offer for $4 million, signed by both Thabet and Field. The document sent to the escrow agent also contained the $4 million figure, stating "[t]he price for the aircraft is $4,000,000.00 US." [Hidden Brook Decl. Ex. 16] In addition, it stated, "We are making a deposit of $200,000 to hold the aircraft for the pre-buy inspection. that will be done at Stevens Beechcraft in South Carolina. Will adivise [sic] you when the deposit become non refundable." [Hidden Brook Decl. Ex. 16]

Levasseur claims he first saw the $4 million figure when he received this June 7 fax. There is no evidence, however, that he protested, or attempted to retract the offer on the ground that it was not authorized. Indeed, around the time this fax was sent, Thabet, with the Levasseur Defendants' knowledge, took additional steps to culminate the purchase of Hidden Brook's airplane. To induce Hidden Brook to take the plane off the market, Thabet obtained $200,000 from 161768 Canada and wired it to the escrow agent. Thabet also sent a fax to Abrams concerning the four additional terms that he had mentioned in his June 7 fax to the Levasseur Defendants. And on or about June 7, Robert Philpott, a consultant and occasional pilot for Hidden Brook, flew the plane to South Carolina for its formal inspection by Stevens Aviation. The inspection took place on or around June 7-9.

D. The Purchase Agreement and the Hidden Commission

On or about June 11, Thabet faxed Abrams a purchase agreement for FL-165 signed by Thabet (hereinafter "the purchase agreement"). The fax cover sheet stated: "This is the sign [sic] copy of the purchase agreement for s/n FL-165. When able send me the signed copy back." [Hidden Brook Decl. Ex. 19] The purchase agreement provided that the purchaser (Thabet Aviation International, Inc.) would pay $4 million for FL-165 — an amount that Levasseur had known about since June 7. At some point, Philpott signed the purchase agreement on behalf of Hidden Brook. He testified that he did not remember precisely when he did so, but it was at some time when he was at Stevens Aviation awaiting FL-165's export certification. [Hidden Brook Decl. Ex. 2, Philpott Dep. 37]

At Thabet's request, the purchase agreement contained a term that was not in the offer to purchase. This new term obligated Hidden Brook to pay $50,000 to "the broker designated by the purchaser" — who, of course, was Thabet. Hidden Brook was indifferent as between $4 million and $3.95 million; it viewed the $50,000 as a finder's fee. Hidden Brook did not ask Thabet to do anything improper for the $50,000 and insisted that the fee be disclosed in the contract. As a result, every draft of the contract mentioned the fee, including the draft that Hidden Brook eventually signed. When Thabet provided the Levasseur Defendants with a copy of the final purchase agreement, however, he "whited out" the provision concerning the $50,000 fee.*fn1 The Levasseur Defendants did not learn about $50,000 the fee until the present litigation was well advanced.

Section 4 of the purchase agreement provided that the $200,000 deposit was to become non-refundable once the "purchaser" informed Hidden Brook and the escrow agent, via fax, that the pre-purchase inspection was completed and "purchase of the AIRCRAFT is ACCEPTED." Thabet later informed the escrow agent, at least twice, that the $200,000 was non-refundable. On June 10, he sent the escrow agent a fax stating that "[t]he deposit of $200,000 that you have in escrow on the aircraft King Air 350 . . . is now non refundable." [Hidden Brook Decl. Ex. 18] More explicitly, Thabet faxed Abrams on June 21 a copy of a document he had sent to the escrow agent, which stated: "We are satisfied with the inspection and all the discrepancy's [sic] have been repaired and accomplished by Stevens Aviation ordered by Hidden Brook Air Inc and we accept the pruchase [sic] of the aircraft." [Hidden Brook Decl. Ex. 33]

E. The Closing Approaches

During the week or so after Thabet faxed the executed contract to Abrams, the Levassuer Defendants took several more steps toward closing the deal. In his capacity as President of 161768 Canada, Levasseur asked Thabet to reserve registration "letters" for FL-165 with Canada's Transportation Department. In addition, 161768 Canada applied for insurance and financing for the plane. The Levasseur Defendants also obtained an "Export Certificate of Airworthiness" to facilitate importation of the plane from the U.S. to Canada. Thabet faxed this document to Levasseur on June 16.

The closing was set for June 21.*fn2 Thabet informed Levasseur, via a June 18 fax, that $3.8 million should be transferred as the "[b]alance payable for aircraft" on June 21. The Levasseur Defendants contend that they never knew that Thabet had signed a purchase agreement for FL-165. But they do not dispute that a contract would necessarily have had to be in place before closing, and they do not dispute that Levasseur received the June 18 fax. The record does not contain any evidence that Levasseur either (a) protested that the Levasseur Defendants never agreed to buy the plane, or (b) complained that the price was $50,000 higher than they had discussed with Thabet.

F. Enter Raytheon

One June 21, with Philpott already in South Carolina waiting to fly the plane to Quebec post-closing, Levasseur directed Thabet to seek an extension, claiming that he needed additional time to arrange for financing. There is no evidence that Levasseur protested that he had never authorized Thabet to purchase the plane; his sole interest lay in delaying the closing.

Thabet faxed Abrams, informing him that the transfer of the amount due on FL-165 could not take place before June 25. He told Abrams that Levasseur could not liquidate some mutual funds without incurring a penalty and thus had to arrange for financing. Hidden Brook consented to postpone the closing to June 25. More specifically, Hidden Brook informed Levasseur, through Thabet, that the closing had to occur by 11 a.m. on that day. [Levasseur Defendants 56.1 Statement ¶¶ 55-56]

Levasseur used the additional days to continue discussions with Spencer on a deal for a new plane. Clermont Levasseur sent a letter to Spencer on June 21, stating that he would buy FL-259 from Raytheon for $4.8 million if Spencer "engage[d] [him]self to find a firm buyer for FL-165 at $4,000,000 USD and reimburse us the $200,000 USD deposit." [Hidden Brook Decl. Ex. 34.] Spencer said that Raytheon could not and would not find a buyer for FL-165, and in response he sent a letter offering to accept FL-165 as a trade-in for a credit of $4 million if the Levasseur Defendants purchased FL-259. The Levasseur Defendants responded with a new proposal under which they would purchase FL-259 if Raytheon "honours the Super King Air 350, FL-165 agreement, for $4,000,000 USD including, $200,000 USD reimbursement (certified cheque) to 161768 Canada Inc." And on June 22, Levasseur informed Spencer via fax that "[w]ithout reception of a firm agreement from your part and after discussion with my agent, Raymond Thabet, there will be no delay from the owner of the Super King Air 350, FL-165, to pursue any discussion. We have to purchase the plane by Friday, June 25, 1999." Thus, Levassuer admitted, in three separate communications to Spencer, that he was contractually obligated to purchase FL-165.

Spencer flew to Quebec on June 24 to meet with Clermont Levasseur. He brought with him a copy of a contract for the purchase of FL-259, and the two had dinner together alone that night. Clermont Levassuer informed Spencer that he would not purchase FL-165, Hidden Brook's plane, and he signed a contract to purchase FL-259.

G. The Events of June 25

Spencer arrived at the office of the Levasseur Defendants' lawyer on the morning of June 25. Hidden Brook claims that Abrams received a call from Thabet telling him that the deal was off because Levasseur had decided to buy another airplane. Levasseur testified that he wanted to close by the 11 a.m. deadline, but could not because he did not receive financing until that afternoon. At 12:45 p.m., 161768 Canada, Inc. closed the deal to purchase Raytheon's plane, FL-259.*fn3

After the deal with the Levasseur Defendants fell through, Hidden Brook put FL-165 back on the market. Hidden Brook sold the plane to R.J.M. Aviation three weeks later, on July 16, 1999, for $3.4 million.

H. Prior Proceedings

Hidden Brook first sued Thabet on December 8, 1999. It amended its complaint on March 30, 2000 to sue the Levasseur Defendants. The Levasseur Defendants moved to dismiss the lawsuit for lack of personal jurisdiction. They argued that this Court could only exercise jurisdiction over them, if at all, by virtue of acts performed on their behalf by Thabet. The Levassuer Defendants denied that Thabet was their agent and argued that neither their personal contacts with New York nor Thabet's contacts were sufficient for the Court to exercise its jurisdiction. I denied the Levasseur Defendants' motion because the evidence that Thabet was the their agent for the purposes of negotiating the sale of FL-165 was so overwhelming that no trier of fact could find otherwise. Hidden Brook Air, Inc. v. Thabet Aviation Int'l Inc., No. 99 Civ. 11865 (S.D.N.Y. filed Aug. 16, 2001). I found that the Levasseur Defendants' contacts with New York, through their agent Thabet, were sufficient to satisfy New York's long-arm statute, as well as to meet constitutional due process standards. Id.

Hidden Brook then amended its complaint again, this time to add Raytheon as a defendant. This Second Amended Complaint contains three counts: (a) a breach of contract claim against Thabet Aviation International Inc., (b) a breach of contract claim against the Levasseur Defendants, and (c) a tortious interference with contract claim against Raytheon. Thabet has long since defaulted. The Levasseur Defendants filed a counterclaim against Hidden Brook for breach of contract.


A party is entitled to summary judgment when there is no "genuine issue of material fact" and the undisputed facts warrant judgment for the moving party as a matter of law. Fed.R.Civ.P. 56(c), Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986). When considering a motion for summary judgment, "the court must view the evidence in the light most favorable to the party against whom summary judgment is sought and must draw all reasonable inferences in [its] favor." Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

The moving party has the initial burden of demonstrating the absence of a disputed issue of material fact. Celotex v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has made such a showing, the non-moving party must present "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). The party opposing summary judgment "may not rely on conclusory allegations or unsubstantiated speculation." Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998). Moreover, not every disputed factual issue is material in light of the substantive law that governs the case. "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude summary judgment." Anderson, 477 U.S. at 248.

A. Hidden Brook's Motion for Summary Judgment on its First Cause of Action, for Breach of Contract, is Denied

Under New York law,*fn4 "[t]he essential elements of an action for breach of contract . . . are: (1) formation of a contract between the parties; (2) performance by plaintiff; (3) non-performance by defendant; and (4) resulting damages to plaintiff." Nakano v. Jamie Sadock, Inc., No. 98 CIV. 0515, 2000 WL 680365, at *5 (S.D.N.Y. May 25, 2000); see also First Investors Corp. v. Liberty Mut. Ins. Corp., 152 F.3d 162, 168 (2d Cir. 1998); Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522, 525 (2d Cir. 1994).

Hidden Brook claims that (1) it entered into a valid contract with the Levasseur Defendants, signed by Thabet, who acted within his authority as their agent, (2) it fully complied with the terms of the contract, (3) the Levasseur Defendants failed to perform under the contract, and (4) it suffered damages as a result of the Levasseur Defendants' breach. In response, the Levasseur Defendants argue that (1) they did not enter into a valid contract with Hidden Brook because Thabet did not act as an agent within the scope of his authority, (2) in any case, the purchase agreement is void and unenforceable due to misconduct on Thabet's part, (3) it was Hidden Brook that did not perform under the terms of the purchase agreement, and (4) Hidden Brook failed to mitigate its damages.

1. Thabet Had Apparent Authority to Sign the Purchase Agreement

It is black letter law that an agent binds his principal when he enters into a contract within the scope of his authority. British American & Eastern Co. v. Wirth Ltd., 592 F.2d 75, 80 (2d Cir. 1979) ("An agent serves under the control and supervision of his principal; so long as he acts within the ambit of his authority to represent his principal, he binds him."). In my previous Memorandum Decision and Order, I concluded that the evidence concerning Thabet's agency for the purpose of negotiating the FL-165 transaction was so overwhelming that no reasonable trier of fact could conclude that he was not the Levasseur Defendants' agent. I did not, however, address questions about the scope or parameters of Thabet's authority. On this motion, the material issue is whether the scope of Thabet's authority allowed him to enter into the purchase agreement on behalf of the Levasseur Defendants.

An agent's authority may be actual or apparent. Actual authority exists when an agent has the power "to do an act or to conduct a transaction on account of the principal which, with respect to the principal, he is privileged to do because of the principal's manifestation to him." Minskoff v. American Exp. Travel Related Servs. Co., 98 F.3d 703, 708 (2d Cir. 1996) (quoting Restatement (Second) of Agency § 7 cmt. a (1958)). Actual authority may be express or implied. The distinction between express and implied actual authority turns on the nature of the representation by which the principal delegates authority to that agent. Express authority is "[a]uthority distinctly, plainly expressed, orally or in writing." Nationwide Life Ins. Co. v. Hearst/ABC-Viacom Entm't Servs., 1996 WL 263008, at *8 (S.D.N.Y. May 17, 1996) (quoting Black's Law Dictionary 521 (5th ed. 1979)), while implied authority exists "when verbal or other acts by a principal reasonably give the appearance of authority to the agent." 99 Commercial St., Inc. v. Goldberg, 811 F. Supp. 900, 906 (S.D.N.Y. 1993). In addition, as Judge Weinfeld explained, under New York law,

"Implied authority" has also been defined as "a kind of authority arising solely from the designation by the principal of a kind of agent who ordinarily possesses certain powers." The general rule in New York with regard to implied authority is that "an agent employed to do an act is deemed authorized to do it in the manner in which business entrusted to him is usually done."

Songbird Jet Ltd., Inc. v. Amax, Inc., 581 F. Supp. 912, 919 (S.D.N.Y. 1984).

"Apparent authority is `entirely distinct from authority, either express or implied,' and arises from the `written or spoken words or any other conduct of the principal which, reasonably interpreted, causes [a] third person to believe that the principal consents to have [an] act done on his behalf by the person purporting to act for him.'" Minskoff, 98 F.3d at 708 (citations omitted) (quoting Restatement (Second) of Agency § 8 cmt. a, § 27 (1958)). Thus, in contrast to actual authority, apparent authority does not turn on the representations made by a principal to his agent, but rather on whether the representations made by the principal to a third party created the appearance of authority. These representations, however, need not be made through actual contact between the principal and third party. See Chem. Bank v. Affiliated FM Ins. Co., 169 F.3d 121, 130 (2d Cir. 1999); Prop. Advisory Group, Inc. v. Bevona, 718 F. Supp. 209, 211 (S.D.N.Y. 1989); Gen. Motors Acceptance Corp. v. Finnegan, 156 Misc.2d 253, 255, 592 N.Y.S.2d 570, 572 (N.Y.Sup.Ct. 1992).

While there exist disputed issues of fact about the parameters of Thabet's actual authority, there is no dispute that he had apparent authority to bind Clermont Levasseur to purchase FL-165.

a. There is a Disputed Issue of Fact Concerning Express Actual Authority

Hidden Brook argues that Thabet had express actual authority to enter into the purchase agreement. To support this argument, Hidden Brook first points to Thabet's deposition testimony, in which he states that he showed the Levasseur Defendants a copy of the purchase agreement before he signed it, and they authorized him to sign it. Second, Hidden Brook refers the Court to the letters exchanged between the Levasseur Defendants and Raytheon in which the Levasseur Defendants admit that they are bound by the purchase agreement signed by Thabet. Third, Hidden Brook argues that the Levasseur Defendants' conduct after Thabet signed the purchase agreement, such as registering FL-165 in Canada in their name and failing to request that Hidden refund the $200,000 deposit they paid on the plane, demonstrate they knew and approved of Thabet's actions.

The Levasseur Defendants offer little to counter this showing. Instead, they rely heavily on the fact that Thabet procured for himself a $50,000 commission from Hidden Brook and then hid that commission from the Levasseur Defendants.

The fact that Thabet deceived the Levasseur defendants, however, does not necessarily preclude Thabet from acting within his authority. Hidden Brook correctly cites to Judge Hand's opinion in Ricketts v. Pennslyvania R.R. Co., 153 F.2d 757, 760 (2d Cir. 1946), in which he explains:

[A]n agent does not cease to be acting within the scope of his authority when he is engaged in fraud upon a third person. . . . We can see no distinction in principle between that situation and on in which the agent deceives, not the third person, but his principal.

Thus, an agent may deceive his principal with respect to a contract that it is within his authority to enter into, and that deception does not automatically negate such authority. It is true, that "an agent cannot bind his principal, even in matters touching his agency, where he is known to be acting for himself, or to have an adverse interest." Wagner v. Nichols, 5 A.D.2d 191, 194, 170 N.Y.S.2d 542, 545 (1st Dep't 1958) (quoting Manhattan Life Ins. Co. v. Forty-Second & G. St. Ferry R. Co., 139 N.Y. 146, 151, 34 N.E. 776, 777 (1893)). But a principal is still liable on a contract made by his agent in such circumstances if "the party with whom the agent deals has no knowledge of the agent's faults and is not cognizant of any fact charging him or her with knowledge thereof." 2A N.Y. Jur.2d Agency and Independent Contractors § 279 (citations omitted).

Similarly, the Restatement (Second) of Agency states:

A disclosed or partially disclosed principal is subject to liability upon a contract purported to be made on his account by an agent authorized to make it for the principal's benefit, although the agent acts for his own or other improper purposes, unless the other party has notice that the agent is not acting for the principal's benefit.

Restatement (Second) of Agency § 165 (1958).

The Levasseur Defendants do not allege that Hidden Brooks knew that Thabet was acting without his principals' knowledge and contrary to their interests. They describe Thabet's actions as "unethical, dishonest and illegal." That may not be an unfair characterization. But there is no evidence that Hidden Brook knew that Thabet was not authorized to ask for the $50,000 finder's fee. Indeed, on the undisputed evidence, Hidden Brook insisted that the fee be disclosed in the contract, and it was. There is no evidence that Hidden Brook knew anything about Thabet's duplicitous "whiting out" of the term in copies given to the Levasseur Defendants.

The Levasseur Defendants also assert that it is "ludicrous" to think that Levasseur would agree to a purchase agreement that included a "kickback" to Thabet, and that their conduct after Thabet signed the purchase agreement merely indicates that they wanted to purchase FL-165 and were preparing to do so. Neither of these assertions, however, raises a genuine issue for trial: The Levasseur Defendants cannot "rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment." Knight v. United States Fire Ins. Co., 804 F.2d 9, 12 (2d Cir. 1985).

Nonetheless, there is still a genuine issue of fact concerning express authority. While Thabet testified that the Levasseur Defendants told him to sign the contract, Clermont Levasseur testified otherwise:

Q: What I'd like you to do, Mr. Lavesseur, is take a look, please, at the . . . Exhibit D to that affidavit. Can you ...

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