MEMORANDUM ORDER

WHITMAN KNAPP, Senior United States District Judge.

Defendant County of Westchester (hereinafter, the "County") and plaintiff Liberty Environmental Systems, Inc. ("Liberty") had both moved for judgment as a matter of law. We deferred ruling until after a verdict. After a six-week trial, the jury has since rendered a verdict awarding Liberty $60,000 on its claim for breach of the implied covenant of good faith and fair dealing. The jury found the County not liable on claims of violation of equal protection and of tortious interference with prospective contractual relations. It also found Liberty not liable on counterclaims for prima facie tort. On the merits, we deny the County's motion for judgment as a matter of law on the implied covenant cause of action. Furthermore, since the jury found no liability on any other claims, we deny as moot the remainder of defendant's motion, which requests dismissal of Liberty's other causes of action. Finally, we deny as moot Liberty's motion for judgment as a matter of law on the counterclaims, since the jury has rendered a "not liable" verdict on the counterclaims.

BACKGROUND

In order to understand the factual contentions of Liberty and the County, one must first understand the status of litigation that the United States and the State of New York (the "Ocean Dumping Plaintiffs") commenced in 1989 to enforce a statutory ban on the County's dumping its wastewater sludge into the ocean. This Ocean Dumping Litigation resulted in a Consent Decree, approved by this Court in 1989, that required the County to build a land-based sludge treatment facility according to strict deadlines set out in the Decree. We also appointed a Special Master to oversee enforcement of the Decree.

The original Consent Decree specified that the County itself must build and operate the sludge plant. However, the County, in consultation with the Ocean Dumping Plaintiffs and the Special Master, proposed that a private firm might build a better facility. The County understood that the Consent Decree had to be amended, with permission from this Court, to permit private as opposed to public construction.

The County then initiated a procedure to choose a private vendor. After a request for proposals and an evaluation process, the County in April 1991 indicated that it had selected Liberty as the "prime private venture proposer" for building and operating such a facility. Soon thereafter, the County's Board of Acquisition and Contract passed a formal resolution identifying Liberty's proposal as preferred and authorizing the County "to negotiate" with Liberty. In May 1991, the County met with Liberty representatives so to negotiate. On June 12, 1991, the parties executed a detailed Memorandum of Understanding ("MOU").

On the day after signing the MOU, the County requested an amendment to the Consent Decree, and it then continued to negotiate with the Ocean Dumping Plaintiffs and with the Special Master. According to some disputed evidence at trial, the County assured Liberty that such an amendment would prove relatively routine — a mere formality — and that Liberty should begin work immediately on its project, in order to comply with the Consent Decree's deadlines. Liberty proffered evidence that, during the summer of 1991, it embarked, with the County's encouragement, upon engineering and environmental reviews at its proposed site.

County witnesses testified that they had not led Liberty to believe that the amendment process would prove effortless. However, the jury had ample reason to believe that the County, when it helped to prepare and then signed the long MOU, displayed confidence in the ultimate success of its amendment application. The jury might well have concluded that the County employees satisfied themselves that their proposal was reasonable and then expressed their optimism to Liberty. But, during the course of the summer, Liberty's prospects began to worsen.

Other than making a presentation to the Special Master on June 25, 1991, Liberty was not involved in the amendment negotiations. However, during such negotiations, a citizens' group (the Ludlow Park Homeowners' Association) and a rival bidder (Tully Construction Co.) were allowed to criticize Liberty's proposal without Liberty's presence or response. Later that summer, the Ocean Dumping Plaintiffs and the Special Master made it clear that they would not approve the plan to go forward only with Liberty. Instead, these parties insisted that the proposal review process be reopened to include Liberty's rivals, and the County realized that it could not realistically fight this counterproposal.

It is undisputed that the Ocean Dumping Plaintiffs submitted their written counterproposal on August 15, 1991, and that Liberty saw a related newspaper article printed on the next day. It is also undisputed that on September 4, 1991, the County sent Liberty a letter advising it, in effect, that the County had accepted the counterproposal, that Liberty no longer enjoyed prime bidder status, and that the process would be reopened. Liberty told the County that it objected to the counterproposal but would remain in the sludge facility selection process.

In the instant lawsuit, Liberty claimed, and the jury agreed, that the County breached the covenant of good faith and fair dealing implied in the MOU by deliberately concealing from Liberty (during the period from June 12 until September 4, 1991) the County's knowledge that the outcome of the negotiations would inevitably disfavor Liberty. (See Tr. 2394-95 [Jury Charge # 14]).

DISCUSSION

Under Federal Rule of Civil Procedure 50(b), we may enter a post-verdict judgment as a matter of law on a "pure question of law" or upon consideration that the evidence, viewed in the light most favorable to the nonmovant, reasonably permits only a conclusion in the movant's favor.

[I]n entertaining a motion for judgment as a mater of law, the court should review all of the evidence in the record. In doing so, however, the court must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence. . . . Thus, although the court should review the record as a whole, it must disregard all evidence favorable to the moving party that the jury is not required to believe. That is, the court should give credence to the evidence favoring the nonmovant as well as that evidence supporting the moving party that is uncontradicted and unimpeached, at least to the extent that that evidence comes from disinterested witnesses.

Reeves v. Sanderson Plumbing Prods., Inc. (2000) ___ U.S. ___, 120 S.Ct. 2097, 2110 (citations internal quotation marks omitted).

As we instructed the jury,

The implied covenant of good faith and fair dealing requires each party to act in good faith towards the other party and to refrain from engaging in conduct designed to defeat or obstruct the other party's ability to perform or fulfill the requirements of the MOU. In order to sustain this claim, Liberty must prove, by a preponderance of the evidence, each one of the following elements: (1) that the MOU was a binding contract between Liberty and the County; (2) that the County breached its obligation of good faith; and (3) that Liberty sustained damage by reason of the County's breach. (Tr. 2393 [Jury Charge # 12])

A. REASONABLE FACT-FINDING

The County has not asked us to overturn the verdict based on any alleged unreasonableness of the jury's conclusion that the County in fact intentionally withheld information. For the record, we emphasize our perception of the reasonableness of this conclusion. Although key County employees, particularly Robert Matarazzo of the County's Department of Environmental Facilities, piously attested to their thoughtful and speedy communications to Liberty, the fact-finder could easily question these employees' memories and credibility, given contradictory deposition testimony, the unexplained lack of any reaction from Liberty to the alleged revelations, Liberty's contrasting recollections, and other evidence.

B. CAPACITY AUTHORIZATION TO CONTRACT

The County argues that we should not have presented the case to the jury because a Westchester County statute provides that the County cannot be bound by any contract unless it follows specific mandated procedures, and the County allegedly did not follow such procedures when executing the MOU. We disagree for two reasons.

First, while we do not dispute that municipalities usually can form contracts only via the mode prescribed by their legislatures, see, e.g., Modern Amusements, Inc. v. Marriott Corp. (S.D.N.Y. 1985) 599 F. Supp. 1548, 1550-53, a close reading of the relevant provisions of the County of Westchester Charter demonstrates that it applies only to contracts authorizing the expenditure of public funds. Here, the MOU does not fall into that definition of "contract."

Section 161.01 of the Charter empowers the Westchester County Board of Acquisition and Contract (the "Board") to "award on behalf of the county all contracts, including but not limited to contracts for the construction, reconstruction, repair or alteration of all public works. . . ." We then locate throughout the Charter's next section pervasive and particular references to expenditures of money — to "contracts . . . relating to matters which have been the subject of an appropriation" (id. § 161.11(a)(2)), to contracts that "do not exceed in total amount the maximum set forth in such written authorization" (id. § 161.11(a)(3)), and to contracts in excess of specific dollar amounts (see id. §§ 161.11(a)(1), (b)). Reading these sections as a whole or separately, we find that they contemplate only contracts by which the County receives or grants goods or services involving the disposition of public assets. The definition of "contract" implicit in this statutory chapter, and particularly in §§ 161.11(a)(2), (3), does not encompass contracts (such as the MOU) that bind the County simply to future negotiations.

In fact, Judge Weinfeld, in a case cited by the County, interpreted this chapter as an effort to protect public assets. See Modern Amusements, 599 F. Supp. at 1552 (quoting Genesco Entertainment, Inc. v. Koch (S.D.N.Y. 1984) 593 F. Supp. 743, 749) (interpreting the Westchester County Charter § 161.11 in light of the "power to dispose of public assets"); see also Trick v. County of Westchester (2d Dep't 1995) 216 A.D.2d 555, 628 N.Y.S.2d 759 (Westchester County Board approval required for award of golf driving-range concession). Moreover, we have reviewed numerous other cases construing similar statutes in the same manner. Cf., e.g., Lutzken v. City of Rochester (4th Dep't 1959) 7 A.D.2d 498, 184 N.Y.S.2d 483, 486 (formalities established "to prevent careless and loose dealing by persons charged with the responsibility of purchasing services or commodities for a municipal entity"). We interpret the Charter as drawing a logical and bright line between preliminary agreements that do not commit public funds and agreements that do commit such funds. True, the County now finds itself liable for money damages on the basis of the MOU's implied terms, but the potential for liability does not transform a preliminary contract into a procurement contract. Cf. In re New York Pub. Interest Research Group Inc. v. Broome County Resource Recovery Agency (3d Dep't 1993) 189 A.D.2d 1079, 592 N.Y.S.2d 883 (determining whether a specific "letter of intent and agreement" fell within definitions of "contract" in the N.Y. Public Authorities Law). Here, the MOU did not commit the County to expend money; for instance, it did not command the County to reimburse Liberty for the corporation's ongoing expenses during the summer of 1991.

In addition, by authorizing the County to negotiate with Liberty, the Board a fortiori "awarded" and "approved" the MOU. The Board's formal resolution contemplated negotiation prior to a final contract award, and the MOU is a contract to negotiate further. Thus, even though not required to do so, the Board actually (for all intents and purposes) followed the procedures prescribed in § 161.11. We therefore rule that we made no error in declining to direct a verdict on this ground.

C. MUTUAL ASSENT

Next, the County contends that the MOU could not, as a matter of law, constitute a binding agreement, since the County did not assent to be bound by it. We agree with the County's position that, under New York law, a binding contract is a prerequisite to the implied covenant of good faith. But, as we charged the jury, "a binding contract need not constitute a `final agreement' and need not embody all of the provisions and understandings that a final agreement would entail. For two parties can bind themselves to a concededly incomplete agreement, in the sense that they accept a mutual commitment to negotiate together in good faith in an effort to reach final agreement within the scope that has been settled in the preliminary contract." (Tr. 2393-94 [Jury Charge # 13], quoting Teachers Ins. Annuity Ass'n v. Tribune Co. (S.D.N.Y. 1987) 670 F. Supp. 491, 498). We then directed the jury to "determine if such a preliminary binding contract existed between Liberty and the County. Proof of the existence of a contract requires that the parties each intended to create a binding agreement. In determining the parties' intent, you should initially focus on the language of the MOU as the expression of the parties' wishes." (Tr. 2394 [Jury Charge # 13]).

The jury's conclusion — that the parties manifestly desired to enter into a binding contract to negotiate further — finds reasonable evidentiary support. First, notwithstanding its express, first-page warning that it did not constitute a "final agreement," the MOU is a detailed, 62-page document.

Granted, the first page of the MOU also contains the following sentence: "Any reference in this document to `the Agreement' refers to the anticipated final agreement between the parties and shall not be construed to mean that this document is a binding and final agreement between the parties." This sentence, however, is ambiguous and thus presents a question of fact. The jury reasonably could have concluded that "binding and final" means both "binding" and "final," and consequently that this sentence merely rephrases the earlier admonition that the MOU, while it binds the parties, does not purport to bind them to a "final" agreement. It remains possible for parties to intend a binding obligation when their agreement includes open terms, calls for future approvals, and expressly anticipates future preparation and execution of contract documents. Teachers Ins. Annuity Ass'n, 670 F. Supp. at 499 (strong but not irrefutable presumption against a binding obligation under such circumstances). The jury could reasonably discover such an obligation here by examining the MOU as a whole.

If the jury could not base its conclusion solely upon the text itself, the jury permissibly could have considered the course of dealing between the parties as evidence of their intentions. In the case at bar, participation in lengthy negotiations and discussions may have signaled a wish to solidify a preliminary obligation to negotiate further in good faith, in an effort ultimately to establish final agreement. Cf. id. at 500-01.

D. SELF-INTEREST

The County also argues on several grounds that, even if the MOU represented a binding contract carrying an implied covenant of good faith, the County did not breach the covenant. First, the County avers that "the duty of good faith does not require a party to act contrary to its own self-interest." (Def. Mem. at 19). Unsurprisingly, the cases cited do not stand for such an expansive doctrine, which would eviscerate the cause of action. Instead, they make limited declarations such as, "[S]o long as the promisee is allowed to reap the benefits of the contract, the implied covenant of good faith does not require the promisor to take actions contrary to his own economic interest such as extending, or even negotiating the possible extension of, a risky loan." Bank of New York v. Sasson (S.D.N.Y. 1992) 786 F. Supp. 349, 354 (citing Van Valkenburgh, Nooger Neville, Inc. v. Hayden Publishing Co. (1972) 30 N.Y.2d 34, 45, 330 N.Y.S.2d 329, cert denied, 409 U.S. 875 (1972)) (emphasis added). A primisor may legitimately "act on its own interest in a way that may incidentally lessen" the other party's anticipated benefit. However, "there may be a point where that activity is so manifestly harmful . . . as to justify the court in saying there was a breach of the covenant. . . ." Van Valkenburgh, 330 N.Y.S.2d at 334 (emphasis added); accord, M/A-Com Security Corp. v. Galesi (2d Cir. 1990) 904 F.2d 134, 136 (quoting Van Valkenburgh).

We properly instructed the jury along these lines, noting that:

[Y]ou should consider whether, during the [Consent Decree] modification process, the County deliberately withheld information about that process from Liberty that the County knew was reasonably necessary for Liberty to carry out the (short or long-term) goals of the MOU. If so, you may find that the County breached its duty of good faith by such behavior. (Tr. 2396-97 [Jury Charge # 14]) (emphasis added)

Given this direction, the jury reasonably found that the County's concealment stymied the MOU's goals. Liberty did not reap the benefits it should have enjoyed, and the County's self-interested acts or failures to act did more than merely "incidentally lessen" such benefits.

E. FUTILE ACTS

The County further states that any implied term of the MOU could not, as a matter of law, oblige it to pursue a futile act. Good faith and fair dealing does not require a futile act. See, e.g., Safeco Ins. Co. of Am. v. City of White House (6th Cir. 1994) 36 F.3d 540, 548; see also United States v. Casamento (2d Cir. 1989) 887 F.2d 1141, 1169-70, cert. denied, 493 U.S. 1081 (1990). We extensively instructed the jury about this legal proposition, including common sense limitations applicable to the instant facts. The County did not object to these instructions. The jury could reasonably have felt that the attempt to seek the Consent Decree modification contemplated in the MOU was not futile from the onset. Moreover, the jury could reasonably have perceived that if the effort later become hopeless, the County had the simple duty to apprise Liberty accordingly.

F. GENERAL OBLIGATION TO KEEP LIBERTY INFORMED

The County complains that the duty of good faith did not extend to keeping Liberty "advised of every ripple in the stream" of Consent Decree negotiations (Def. Mem. at 20). The precise question is whether the County deliberately concealed information that it knew was reasonably necessary for its contractor to carry out its contemplated goals under the MOU. Naturally, the County need not have provided hourly updates. Nevertheless, when a ripple becomes a torrent that breaks down the dam, the law requires action. Here, sound testimony reflects that the County knew about, and indeed actively promoted, Liberty's progressing expenditures in reliance on what the County (at one point) had described as a fairly routine negotiation with the Ocean Dumping parties. Under the circumstances, the more detailed and prompt the disclosures to Liberty, the less money Liberty would have foreseeably spent in a perhaps needless pursuit.

It is not our job to weigh the factual evidence, nor must we delineate the exact kind of disclosure that the County reasonably should have provided in order to escape liability. The jury has rationally decided that the County realized that it should have swiftly warned Liberty but instead took no action.

G. DAMAGES — WHAT LIBERTY ACTUALLY KNEW

The County apparently reasons that, even if it deliberately did not inform Liberty in a timely fashion about ominous developments, Liberty could and should have mitigated its damages (i.e., stopped its ongoing expenses) on the basis of other sources of material information at its disposal. The County cites two examples, neither of which we find persuasive. First, a Liberty principal, Bruce Bernacchia, admitted that he read a newspaper article dated August 16, 1991 (Pls. Ex. 59), in which the Westchester County Attorney said that the County may possibly reopen bidding. But, the jury could have concluded that Liberty suffered damages prior to that date. Also, the jury was entitled to believe that a reasonable person in Mr. Bernacchia's shoes would have waited to hear directly from the County about significant developments rather than to rely on a newspaper article, especially since the article contained a confusing remark about a competitor's site. (See Tr. 59-60, 246, 281-82.)

Similarly, Liberty knew that the Ludlow Park Homeowners' Association would oppose Liberty's local site in any way within its power. (See, e.g., Tr. 210-12.) Liberty may also have been aware of the efforts of its rival, Tully, to interject itself into the Consent Decree negotiations. Again, a reasonable fact-finder could resolve that Liberty could permissibly attach great weight to what it heard — or did not hear — from the County, an "insider" and its supposed partner in attempting to reach common goals. Consequently, the fact-finder could reasonably also conclude that Liberty need not have acted based on relatively vague or second-hand data (especially given the longstanding prior relationship between Liberty and the County). It remained a question of fact for the jury whether third parties had placed Liberty on sufficient notice to create a duty on its part to inquire further. Reviewing the record as a whole, we do not deem the verdict in error. For instance, the jury could reasonably have discounted the County's suggestion that Liberty take the initiative to examine the court docket in the Ocean Dumping Litigation.

CONCLUSION

The motion of defendant County of Westchester for judgment as a matter of law is DENIED. The motion of plaintiff Liberty Environmental Systems, Inc. for judgment as a matter of law is also DENIED as moot.

SO ORDERED.