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Rubinstein v. Clark & Green

January 19, 2010

RICHARD P. RUBINSTEIN AND KATHERINE KOLBERT, PLAINTIFFS,
v.
CLARK & GREEN, INC., DEFENDANT.



MEMORANDUM-DECISION AND ORDER

Plaintiffs Richard Rubinstein and Katherine Kolbert ("Plaintiffs") commenced this action against Defendant Clark & Green, Inc. ("Defendant"), alleging breach of contract. See generally Amended Complaint ("Am. Compl.") (Dkt. No. 9); Answer (Dkt. No. 12). Presently before the court are Defendant's Motion for summary judgment and Plaintiffs' Motion for partial summary judgment. Def.'s Mot. (Dkt. No. 43); Pls.' Mot. (Dkt. No. 42). For the reasons discussed below, Defendant's Motion for summary judgment is granted and the Complaint is dismissed. Plaintiff's Motion for partial summary judgment is denied.

I. BACKGROUND

The instant ligation arises from Plaintiffs' decision to build a home in the Town of Hillsdale, Columbia County, New York. See Am. Compl. (Dkt. No. 9). In October 2005, Plaintiffs contacted Defendant, a Massachusetts architecture firm, to discuss hiring Defendant to design the home. See Rubinstein Aff. ¶5; Email from Rubinstein, Ex. D (Dkt. No. 42). Prior to receiving a retainer, Alan R. Clark, a residential designer and a partner at Clark & Green, described the design process and fee structure. He explained that the firm preferred to do the entire job on an hourly basis, and that design and construction would proceed in a series of stages. Email from Clark, Ex. I (Dkt. No. 42). Clark proposed a work schedule, which indicated that Defendant would commence work on January 15, 2006, complete the "design development" stage by April 15, 2006, and ultimately begin construction on September 15, 2006. Email from Clark, Ex. B (Dkt. No. 42). Clark stated that this schedule was "a little tight." Id. He recommended beginning construction no later than October 1, 2006, or if commencing before that date was not possible, waiting until the following Spring.*fn1 Id.

Plaintiffs decided to hire Defendant on or about December 6, 2005. See Email from Rubinstein, Ex. D (Dkt. No. 42). Plaintiffs sent Defendant a $5,000 advance payment against hourly fees on January 9, 2006, and Defendant commenced the first stage of work on designing the home. Invoices, Ex. K (Dkt. No. 42). Defendant continued to develop the design of the home for approximately five months. See Am. Compl. (Dkt. No. 9). Defendant received payments for services in accordance with its standard hourly rates. See Invoices, Ex. K (Dkt. No. 42). During this period, Plaintiffs declined repeated requests by Defendant to enter into a formal written agreement. See Emails from Clark, Exs. D, I, M, P (Dkt. No. 42). Plaintiffs stated that they wished to "target a more comprehensive understanding in writing" before signing a formal document. Email from Rubinstein, Ex. D (Dkt. No. 42). The parties did not sign a written understanding or formal contract.

By July 2006, the Firm had not yet finished the "design development" phase. See Email from Rubinstein, Ex. L; Email from Clark, Ex. M (Dkt. No. 43). On July 13, 2006, Clark informed Plaintiffs that due to delays, construction would likely not begin before April 2007. Email from Clark, Ex. M (Dkt. No. 43). Plaintiffs discharged Defendant on or about July 30, 2006, on the stated basis that Defendant had failed to complete the design work in accordance with the proposed work schedule. See Am. Compl. (Dkt. No. 9). Plaintiffs commenced this action for breach of contract on July 24, 2008, seeking a sum no less than $343,000, together with interest from July 30, 2006 and costs and disbursements. Id.

II. STANDARD OF REVIEW

Federal Rule of Civil Procedure 56 provides that a court should grant summary judgment "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). A court must inquire whether genuine factual issues exist that can only be resolved by a finder of fact because "they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). The court is required to "resolve all ambiguities, and credit all factual inferences that could be rationally drawn, in favor of the party opposing summary judgment." Cifra v. G.E. Co., 252 F.3d 205, 216 (2d Cir. 2001); Brown v. Henderson, 257 F.3d 246, 251 (2d Cir. 2001).

The non-moving party may preclude summary judgment by "com[ing] forth with evidence sufficient to allow a reasonable jury to find in her favor." Brown, 257 F.3d at 252. To survive a motion for summary judgment, the non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586 (1986). The non-moving party may survive the motion for summary judgment by presenting evidence "that would be sufficient... to establish the existence of [an] element at trial." Grain Traders Inc. v. Citibank, N.A., 160 F.3d 97, 100 (2d Cir. 1998) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)).

III. DISCUSSION

Actions to recover upon alleged contracts often require courts to examine the intent of parties, and disputes of fact frequently arise in the process. See Brown v. Cara, 420 F.3d 148, 152-53 (2d Cir. 2005). However, the Second Circuit has held that "where a question of intention is determinable by written agreements, the question is one of law, appropriately decided on a motion for summary judgment." Arcadian Phosphates, Inc. v. Arcadian Corp., 884 F.2d 69, 71-72 (2d Cir. 1989). This Court must determine whether an issue of material fact exists as to whether the work schedule provided to Plaintiffs constituted a binding agreement. See Anderson, 477 U.S. at 250 (1986).

Defendant argues that a genuine issue of material fact does not exist, and that summary judgment is justified because neither party intended to be bound by the work schedule. See Def.'s Mot. (Dkt. No.43). Plaintiffs maintain that emails exchanged between the parties contained all the essential terms of a contract, and thereby created a binding agreement for Defendant to perform under the timetable. See Pls.' Mem. of Law (Dkt. No. 42). Thus, Plaintiffs argue that Defendant breached its obligation to complete the design development phase by April 15, 2006, which would have allowed construction to commence by September 15, 2006. Am. Compl. (Dkt. No. 9).

The Second Circuit applies the framework articulated in Teachers Insurance & Annuity Association v. Tribune Co., 670 F. Supp. 491 (S.D.N.Y. 1987), to determine whether preliminary agreements are enforceable. See, e.g., Arcadian, 884 F.2d at 71-72. Under this framework, there are two types of binding preliminary agreements. Parties create agreements of the first type when they agree "on all the points that require negotiation (including whether to be bound) but agree to memorialize their agreement in a more formal document." Adjustrite Sys., Inc. v. GAB Business Servs., Inc., 145 F.3d 543, 548 (2d Cir. 1998).

The second type, called a "binding preliminary commitment," is created "when the parties agree on certain major terms, but leave other terms open for further negotiation." Adjustrite, 145 F.3d at 548. Parties to the second type of agreement "accept a mutual commitment to negotiate together in good faith in an effort to reach final agreement." Tribune, 670 F. Supp. at 498. Neither party to the second type of agreement, however, may demand performance of the transaction. Adjustrite, 145 F.3d at 548.

The parties in the case at bar never entered into a formal, written contract. Both parties, however, contemplated memorializing terms at a later date. See Emails from Clark, Exs. D, I, M, P(Dkt. No. 42); Email from Rubinstein, Ex. F (Dkt. No. 42). Thus, the inquiry here is whether a preliminary agreement of the first type ...


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