Summary
applying N.J. law
Summary of this case from Doynow Sales Associates, Inc. v. Rocheux Int. of N.J.Opinion
00 Civ. 0851 (HB).
November 28, 2000.
OPINION ORDER
Plaintiff Pall Mall Corporate Hospitality, Inc. ("Pall Mall") brought this action to recover damages for breach of contract and defendants Gage Travel, Inc. and Gage Marketing Group ("Gage") cross-claimed for breach. The parties have submitted two sets of motion papers. First, defendant has moved for partial summary judgment pursuant to Federal Rule of Civil Procedure 56 for breach of contract, and plaintiff has cross-moved for partial summary judgment. Second, defendant moved for partial summary judgment on its remaining claims for unfair trade practices and frivolous litigation and plaintiff cross-moved for judgment on the pleadings on these claims. For the reasons stated below, the defendant's motion contending that the plaintiff breached the contract is GRANTED and the plaintiff's cross-motion is DENIED. The defendant's motion for unfair trade practices and frivolous litigation is DENIED and plaintiff's motion for judgment on the pleadings on these allegations is GRANTED.
Pall Mall has also moved for reconsideration of this Court's decision to strike two of its briefs. The first brief was a "reply" of 25 pages, 15 pages longer than is permitted by this Court's individual practices, and the second one was a "supplemental submission" in support of, but filed months after, plaintiff's first motion for partial summary judgment. I can find no recognition of such a paper in the Federal Rules. In response to Pall Mall's motion, I considered the supplemental affidavits submitted by Pall Mall, but not its supplemental memo of law. I also considered the last nine pages of Pall Mall's 25 page "reply" which Pall Mall offered so as to come within the limits as spelled out in this Court's individual practices. To this extent, Pall Mall's motion for reconsideration is granted and otherwise denied.
I. BACKGROUND
On May 27, 1999, Pall Mall and Gage entered into a single page agreement in which Pall Mall agreed to provide Gage a hospitality package for 56 guests at Super Bowl XXXIV in Atlanta, Georgia on January 30, 2000. Pall Mall is a provider of corporate entertainment packages, and Gage sought its services to provide its client, U.S. West, with a Super Bowl package. The "Gold Package" as it was called included an assortment of amenities in addition to rooms at the Swissotel from January 27 to January 31. The total cost for the package was $394,600 with a 50% payment due on receipt of Pall Mall's invoice and the remaining balance due by November 30, 1999. The. contract included a handwritten provision that "Pall Mall Corporate Hospitality must submit a letter from the Swissotel Atlanta to Gage as proof of room block confirmation or this agreement is null and void." Initially, the contract provided no date by which Pall Mall had to provide this confirmation letter and it is this missing term that, at least in part, led to this action.On July 2, 1999, Jeremy Purchase, General Manager of Pall Mall, sent a letter to Gage promising that Pall Mall would "confirm" the package as described in the contract. The letter went on to say, "As I had stated to you earlier, due to the sensitive nature of our contact, I have agreed to wait until no later than October 31, 1999 for definitive confirmation from the hotel, however, should I receive the confirmation sooner, I will pass it on to you immediately. In the interim, please accept this letter as my formal guarantee to provide you with all of the above mentioned amenities." Virtually on receipt of the July 2 letter, on July 8, 1999, Gage sent their check in the amount of $39,460, 10% of the total cost of the package, to Pall Mall accompanied by a letter from Cathy Olson, Purchasing Manger at Gage that requested a revised package price that would exclude many of the "extras" that the Gold Package included. This letter also requested that a contact at the Swissotel be made available for an inspection trip that Gage's client planned to make. The letter read, "In regard to the inspection trip, I don't really think it's necessary for you to join them since the inspection trip is mostly focused on exclusive off-site venues. My only concern at this point would be establishing a contact at the Swissotel for any on property functions that need to be discussed. Hopefully everything will be worked out by then. I'm sure you'll keep me posted."
On July 23, 1999, Pall Mall offered Gage rooms at the Grand Hyatt in lieu of those at the Swissotel. Gage objected apparently because the Grand Hyatt was a host hotel, i.e. the hotel to be occupied by one or another of the Super Bowl teams.
On October 12, 1999, Gage sent its 40% deposit of $157,840 to Pall Mall. The accompanying letter from Olson stated, "I understand that upon receipt of this check you will be able to finalize arrangements with the Swissotel Atlanta." The letter also requested assistance with the inspection trip to Atlanta. On October 20, 1999, Gage sent a fax to Pall Mall expressing its concern that the rooms at the Swissotel had not as yet been confirmed. The letter requested that Pall Mall take immediate action to confirm the availability of the rooms and that Pall Mall allow Gage to deal directly with the Swissotel and that the plan be consummated by October 21, 1999. On October 25, 1999, Gage sent another letter to Pall Mall that listed alternative hotels that Gage's client may consider to be "excellent or good options to the Swissotel." Gage wrote, "We feel we have no option at this point but to offer alternative options to our client, however, are still hopeful that something will be resolved at the Swissotel." Gage added that it had not yet notified its client that the plaintiff had been unable to confirm the rooms at the Swissotel as its hope was "that we can entice [the client] with a hotel that is superior to the Swissotel." The letter from Gage closed, "I know you will keep me informed on any developments for the program as the situation is critical."
From October 25 to October 28, Gage itself sent letters of inquiry to approximately ten other providers of Super Bowl packages and hotels in the Atlanta area. All of these letters explained that Gage's client was not satisfied with the Swissotel and had asked the defendant to "research alternative options." The letter lists the six hotels in the October 25 letter to Pall Mall and the types and number of required rooms, but states that "Obviously we would consider any room block at this time even though it may not meet all of the specifics outlined above . . . Please let me know if you have any options for us. Obviously, timing is critical this close in to the event."
As of October 31, 1999, Pall Mall had not obtained confirmation for the room at the Swissotel or for that matter for any other hotels listed in Gage's letter as potential alternatives. Instead, on October 30 Pall Mall informed Gage that it was able to confirm 15 rooms at the Omni Hotel, a hotel that, according to Gage, was superior to the Swissotel. Although 15 rooms fell woefully short of what Gage needed, Pall Mall explained that it was confident that it would obtain the remainder of the rooms by mid-November.
On November 1, Gage was contacted by one of the providers to whom it sent a letter on October 25 regarding a block of rooms at the Hyatt. Apparently, Gage entered into negotiations with the provider to obtain these rooms and eventually did obtain these rooms.
On November 2, 1999, Pall Mall sent Gage a letter stating that it had confirmed rooms at one of the hotels listed as an alternative to the Swissotel in Gage's letter of October 25. Gage did not respond directly, but, on November 4, Gage requested that Pall Mall return all deposit money that it had paid to Pall Mall. In a November 8 letter, Pall Mall refused to return the deposit and stated that Pall Mall rejected Gage's November 4 letter.
Finally, on November 22, Pall Mall offered Gage rooms at a hotel listed on Gage's October 25 letter. On November 24, Gage declined to accept these rooms.
DISCUSSION
Summary judgment is appropriate where there are no disputed issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-52 (1986); Tomka v. Seiler Corp., 66 F.3d 1295, 1313 (2d Cir. 1995). On a motion for summary judgment, the moving party has the burden of demonstrating the absence of any genuine issue of material fact. See Adickes v. S.H. Kress Co., 398 U.S. 144, 157 (1970). On the other hand, a party opposing a motion for summary judgment must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather the party must enumerate "specific facts and circumstances supported by deposition, affidavits based on personal knowledge, and admissions," and cannot rely on conclusory allegations or denials. General Elec. Co. v. New York State Dep't of Labor, 936 F.2d 1448, 1452 (2d Cir. 1991). Furthermore, a scintilla of evidence in support of the non-moving party's position is not sufficient to oppose successfully a summary judgment motion; "there must be evidence on which the jury could reasonably find for the plaintiff." Anderson, 477 U.S. at 250, 106 S.Ct. at 2511.
A. The Parties' Claims for Breach of the May 27 Contract
Both parties claim that the other breached the May 27 contract and have moved for summary judgment on their respective claims. Pall Mall alleges that Gage breached the contract when it failed to pay the remaining balance due under the contract. Gage counters that it was Pall Mall that breached the contract by failing to comply with the provision of the contract that required Pall Mall to provide confirmation of hotel rooms at the Swissotel and that this breach released it from any obligation to pay the remainder of the amount and entitles Gage to the return of its deposit.
I find: 1) that the May 27 contract coupled with Pall Mall's letter of July 2, 1999 required Pall Mall to provide confirmation of the rooms by October 31, 1999; 2) that there was no valid modification to this contract; and 3) that Pall Mall's inability to provide confirmation was a material breach.
1. The Confirmation Provision in the May 27 Contract
Both parties agree that the May 27, 1999 agreement is a valid contract. They dispute, however, the significance of the handwritten provision that reads, "Pall Mall Corporate Hospitality must submit a letter from the Swissotel Atlanta to Gage as proof of room block confirmation or this agreement is null and void." Neither party contends that the language was not agreed to. Pall Mall contends that without a specific date the contract does not require confirmation until January 30, 2000. Gage, on the other hand, argues that the letter from Pall Mall to Gage dated July 2, 1999 acknowledges the fact that the confirmation term is agreed to and makes it clear that the parties intended the deadline for the confirmation to be October 31, 1999.
It is well-established that extrinsic evidence is admissible under New Jersey law to aid in the interpretation of a contract. "Under New Jersey law, extrinsic evidence is admissible to aid in the interpretation of an agreement even where the agreement is unambiguous on its face." Nat'l Utility Serv., Inc. v. Chesapeake Corp., 45 F. Supp. 438, 446 (D.N.J. 1999). "The intention of the parties is the guiding principle of the contract's construction, 'and, in the quest for the intention, the situation of the parties, the attendant circumstances, and the objects they were thereby striving to attain are necessarily to be regarded.'" Id. (citing Atlantic Northern Airlines, 12 N.J. at 301, 96 A.2d at 656). Furthermore, to determine whether a contract is ambiguous, "the Court looks to the actual words of the agreement, the alternative meanings offered by counsel, and extrinsic evidence offered in support of those alternative meanings." Neff MD. v. Cooper Hospital, No. Civ A. 96-5875, 1999 WL 667283, at *8 (E.D. Pa. 1999).
The July 2, 1999 letter from Pall Mall to Gage provides the needed extrinsic evidence. See Hall v. Board of Education, 593 A.2d 304, 306 (N.J. 1991) ("If contract terms are unspecific or vague, extrinsic evidence may be used to shed light on the mutual understanding of the parties."). Pall Mall's General Manager wrote, "As I have stated to you earlier, due to the sensitive nature of our contact, I have agreed to wait until no later than October 31, 1999 for definitive confirmation from the hotel," and his letter ended with, "If for any unforseen reason Pall Mall is not able to provide any aspect of the above-mentioned package Gage will receive a full refund." Not only was this letter written by Pall Mall, who does not dispute its authenticity, but it notes that Pall Mall and Gage had discussed and agreed upon the October 31, 1999 deadline for the confirmation prior to the writing of this July 2 letter. To me at least, this is a crystal clear expression of intent by the parties as to when the last day confirmation would be acceptable. See Barco Urban Renewal Corp. v. Hous. Auth. of the City of Atlantic City, 674 F.2d 1001, 1007- 08 (3d Cir. 1982).
This date, as the last date to confirm, is supported by other letters between the parties accepted without objections from plaintiff that discussed planning with the Swissotel and by the fact that Gage paid 50% of the price for the package by October 12, 1999.
Pall Mall argues that the contract is not ambiguous but that the contract simply requires it to provide the confirmation by January 30, which, curiously, is three days after Gage's client contracted to begin using the rooms. Further, this interpretation would render confirmation meaningless since the concept behind confirmation is to assure a buyer that he has or will have what he bargained for in advance of the use date. Particularly here, where the provision was added by hand to Pall Mall's letter agreement and provided that the agreement would be "null and void" without confirmation, the intention of the parties is clear. It is beyond peradventure that the parties expected Pall Mall to provide confirmation not only prior to occupation but on or before October 31, 1999.
In fact, at oral argument counsel for Pall Mall conceded that a reasonable earlier deadline would be the appropriate deadline for room confirmation and not January 30. The specific language in the contract says "Thirty-one rooms at the Swissotel from Jan 27 — Jan 31 plus 12 adtl room nights". Reliance on the January 30, 2000 date by plaintiff is at best a red herring, that date is the date for the game and has no bearing on the October 31 date agreed to for the room confirmation.
2. The October 25 "Amendment" to the Contract
In the alternative, Pall Mall argues that even if the contract required a confirmation letter by October 31, 1999, that there was no breach because the contract was amended to permit Pall Mall to provide alternative accommodations to the Swissotel.
Pall Mall devotes significant time to its argument that Gage was pleased that the contract was not performed because Gage's client did not want to stay at the Swissotel. Pall Mall submitted evidence that Gage's client became dissatisfied with the Swissotel and wanted a better quality hotel. Pall Mall also submitted evidence that Gage wanted a Super Bowl package with fewer amenities, which, according to Pall Mall, were integral to its services. However, since Pall Mall was responsible for the initial material breach what may have happened later including the state of mind of the defendant need not enter into the equation. On the other hand, if Pall Mall had provided the confirmation by October 31, 1999 then Gage would have had to perform its part of the bargain — the full payment price — regardless of their feelings about the hotel. Significantly, Pall Mall points to no evidence that Gage interfered with Pall Mall's performance of the contract by instructing Pall Mall not to obtain rooms at the Swissotel. In fact, the October 25 letter from Gage to Pall Mall clearly states that Gage is still hopeful that something would work out at the Swissotel. Thus, there is no material issue of fact, only a material breach by the plaintiff, for which summary judgment is appropriate.
Under New Jersey law, a modification to a contract is cognizable only where the intention is clear and there is additional consideration for the modification. See County of Morris v. Fauver, 153 N.J. 80, 707 A.2d 958 (1998) ("[A] modification can be proven by an explicit agreement to modify, or, . . . by the actions and conduct of the parties, so long as the intention to modify is mutual and clear. A proposed modification by one party to a contract must be accepted by the other to constitute mutual assent to modify . . . Finally, an agreement to modify must be based upon new or additional consideration.").
Here, Gage's letter of October 25 does not evince a clear intent by Gage to agree to any modification. Rather, the letter reflects that Gage was gravely concerned that Pall Mall would be unable to provide rooms at the Swissotel and that men and women would be sleeping between the goal posts. Gage was so concerned about its clearly significant client that it stated in the letter that it had not even told the client of the possibility that the Swissotel rooms were at best dubious but rather hoped to "entice" them with alternatives if the plaintiff was unable to confirm the Swissotel rooms. Gage ends the letter by describing the situation as "critical," hardly evidence of a clear intention to modify the contract.
Significantly, Pall Mall has also failed to demonstrate the existence, or even allege the existence, of any additional consideration. Levine v. Blumenthal, 117 N.J.L. 23, 186 A. 457 (N.J. 1936) ("It is elementary that the subsequent agreement, to impose the obligation of a contract, must rest on new and independent consideration.").
B. Pall Mall's Claim of Promissory Estoppel
Gage also moves for summary judgment on Pall Mall's claim for promissory estoppel. The promises upon which Pall Mall relies were those made in the course of contract negotiations and were reduced to writing in the May 27, 1999 contract. Under New Jersey law, promissory estoppel may provide a remedy when parties have failed to meet the requisite formalities for forming a contract. See Healthcare Servs., Inc. v. Nat'l Prescription Administrators, Inc., 867 F. Supp. 1223, 1228 (E.D. Pa. 1994) ("The promissory estoppel doctrine allows a court to enforce a party's promise in order to prevent unfairness in situations where there is an absence of consideration. . . Thus, promissory estoppel is usually applicable only when there is no enforceable contract.") ( citing Carlson v. Arnot-Odgen Memorial Hosp., 918 F.2d 411, 416 (3d Cir. 1990). That is not the case here.
C. Gage's Second Motion for Summary Judgment/Pall Mall's Motion for Judgment on the Pleadings
In Gage's second motion for summary judgment, Gage seeks summary judgment on its counterclaims under New Jersey's Unfair Practices Act, New Jersey Stat. Ann. § 56:8-2 (1999) (the "Act") and New Jersey's law governing frivolous litigation, New Jersey Stat. Ann § 2A: 15-59.1 (1999). In response, Pall Mall moves for a judgment on the pleadings pursuant to FRCP 12(c) on both of these claims and on Gage's one remaining claim for breach of the covenant of good faith and fair dealing.
1. New Jersey's Unfair Trade Practices Act
Turning first to the cause of action for unfair trade practices, Gage alleges that Pall Mall violated the Act by engaging in a "bait and switch," i.e. by agreeing to provide hotel rooms at the Swissotel but then actually offering rooms at the 0mni. Pall Mall contends that the law of New York and not New Jersey governs this claim and that under New York law there is no such cause of action.
a. Choice of Law
A federal court applies the choice-of-law principles of the forum state to decide which state's substantive law governs. See Klaxon Co. v. Stentor Elec. Mfg Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). In New York, courts have adopted an "interest analysis" test to resolve conflicts of law. See Bergeron v. Philip Morris, Inc., 100 F. Supp.2d 164, 169 (E.D.N.Y. 2000).
Under New York's interest analysis, courts draw a distinction between "conduct-regulating" and "loss-allocating" laws. Loss allocating laws are "those which prohibit, assign, or limit liability after a tort occurs, such as charitable immunity statutes, guest statutes, wrongful death statues, vicarious liability statutes, and contribution rules," Hamilton, 47 F. Supp.2d at 336, while conduct regulating laws "have the prophylactic effect of governing conduct to prevent injuries from occurring." Id. A consumer protection statute is a conduct regulating statute as "these laws seek to prevent deceptive acts and practices and false advertising by merchants, service providers, and manufacturers that will adversely affect consumers and others." See Bergeron, 100 F. Supp.2d at 169.
In the case of conduct regulating laws, "[g]enerally, when the laws in conflict are conduct regulating, the law of the locus jurisdiction applies . . . The locus jurisdiction 'has the predominant interest where rules regulating conduct are at issue, because of its interest in affecting the conduct of those who act within the jurisdiction and of a reliance interest on the part of the actors whose conduct is at issue." 777388 Ontario Limited v. Lencore Acoustics Corp., 105 F. Supp.2d 56, 61 n. 3 (E.D.N Y 2000) ( citing AroChem Int'l, Inc. v. Buirkle, 968 F.2d 266 (2d Cir. 1992); Borgognone v. Trump Plaza, No. 98-CV-6139, 2000 WL 341135, at *6 (E.D.N.Y. March 9, 2000) ("Under Babcock choice of law analysis, rules of law that regulate conduct, such as rules concerning the duties of innkeepers and hotel owners to their guests, are generally supplied by the law of the place where the tort occurred because that state has the greatest interest in regulating behavior within its borders.") (internal quotations and citations omitted).
Here, Pall Mall is incorporated in New Jersey with its office in New York, and Gage is a Minnesota corporation with its principal place of business in Minnesota. I find that New York has the greatest interest in the matter. It is the jurisdiction where the alleged fraudulent activity took place, the place of business of the plaintiff and it has a substantial interest in protecting its consumers. Indeed "[t]he purpose of [the New York consumer protection laws] is to provide to consumers 'an honest market place where trust prevails between buyer and seller.'" Goldberg v. Manhattan Ford Lincoln-Mercury, 492 N.Y.S.2d 318, 321 (Supr. Ct. 1985) ( citing Memorandum of Governor Rockefeller approving [the statute]).
Neither party suggests Minnesota as the appropriate law. However, Minnesota has a stronger argument than New Jersey under New York's interest analysis test since the alleged loss by Gage was felt there at Gage's headquarters. However, I find that New York where the complained of conduct occurred has the greater interest in this claim. See AroChem Int'l, Inc. v. Buirkle, 968 F.2d 266, 271 (2d Cir. 1992) (holding that the interests of the state where the actionable activity occurred "prevailed" over the state where the injuries occurred when a conduct regulating law is at issue).
Gage argues that New Jersey law applies since it is the plaintiff's domicile. Unfortunately for Gage New York's interest analysis is not governed by the domicile of one party, it is interest driven. On the other hand, this is not to say that the bait and switch scheme may not be found in either jurisdiction.
Gage also argues that the choice of law provision in the May 27 contract should extend to its claim for unfair trade practices. This is incorrect. Whether a choice of law clause in a contract governs tort claims between the parties depends upon the breadth of the clause. See Schuster v. Dragone Classic Motor Cars, Inc., 67 F. Supp.2d 288, 290 (S.D.N.Y. 1999) ("The effect of a governing law clause in circumstances like this depends on its breadth."). Here, the clause states, "Pall Mall is a New Jersey corporation, so this contract is governed by New Jersey state law." This clause is quite narrow and does not indicate any intent to extend the chance of law beyond the contract. See BBS Norwalk One, Inc. v. Raccolta, Inc., 60 F. Supp.2d 123, 128-29 (S.D.N.Y. 1999).
Gage further argues that there is a "false conflict" between New York and New Jersey consumer protection laws and therefore it does not matter which law the court applies. However, Gage concedes that the statutes are not identical on the issue of damages. While both jurisdictions permit treble damages, New York caps these damages at $1,000.
b. New York's Consumer Protection Statute
Turning to New York's consumer protection statute, N.Y. General Business Law § 349-50, the elements of a claim for deceptive practices are: 1) that the act or practice was misleading in a material respect, and 2) that the plaintiff was injured. The difference is that in New York, "[i]t is generally agreed that 'consumer-oriented' conduct must have a broader impact on consumers at large . . . While the statute does not require the plaintiff to prove a repetition or pattern of deceptive behavior . . . it does require a showing of potential impact on consumers at large . . ." Teller v. Bill Hayes, Ltd, 630 N.Y.S.2d 769, 772 (App.Div.2d Dep't 1995). Furthermore, "'private contract disputes, unique to the parties, for example, would not fall within the ambit of the statute.'" Id. at 773 (citing Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, 623 N.Y.S.2d 529, 647 N.E.2d 741).
Here, the $400,000 contract between Gage and Pall Mall was a personalized unique and exclusive entertainment package and simply falls outside the scope of the New York statute.
2. New Jersey's Frivolous Litigation Statute
Gage also has brought a claim against Pall Mall for frivolous litigation pursuant to New Jersey Stat. § 2A:15-59. Pall Mall claims that this claim should be dismissed as it is impermissible under Erie R. Co. v. Tompkins, 304 U.S. 64 (1938). "[When] the state rule is in actual conflict with one of the Federal Rules of Civil Procedure, so that enforcing the state rule would knock out the federal rule . . . then [then] the Supremacy Clause requires that the state rules give way." S.A. Healy Co. v. Milwaukee Metropolitan Sewarage District, 60 F.3d 305, 310 (7th Cir. 1995) (Posner, Chief Judge); Corp. of the Presiding Bishop of the Church of Jesus Christ of the Latter-Day Saints v. Assoc. Contractors, Inc., No. C-86-205 5-A, 1987 WL 49411, at * (N.D. Ga. June 19, 1987) (denying motion to amend counterclaim to include a claim under Georgia's frivolous litigation statute because of potential conflict with FRCP 11).
In short, Pall Mall's motion for judgment on the pleadings is granted.
3. Gage's Claim for Breach of the Covenant of Good Faith and Fair Dealing
Finally, Pall Mall moves for a dismissal of Gage's counterclaim for breach of the covenant of good faith and fair dealing. "A party may maintain a claim for breach of the duty of fair dealing only if it is based on allegations different than those underlying the accompanying breach of contract claim." Siradas v. Chase Lincoln, No. 98 CIV 4028, 1999 WL 787658, at * (S.D.N Y Sept. 30, 1999).
Here, Gage's claim for breach of the duty of good faith is based upon the same obligations as it's claim for breach of contract. Therefore, Pall Mall's motion for judgment on the pleadings is granted as to this claim as well.
CONCLUSION
Based on the foregoing, I find that plaintiff's motion for partial summary judgment is denied, defendant's first motion for partial summary judgment is granted, and defendant is entitled to recover from plaintiff the amount of its deposit plus applicable pre-judgment interest. Plaintiff's motion for a judgment on the pleadings is granted, and defendant's second motion for partial summary judgment is denied. These two sets of motion papers resolve all of the claims in this matter, and the clerk is instructed to close the case.
SO ORDERED.