Opinion
No. 653482/2012.
2012-10-19
The REED FOUNDATION, INC., Petitioner, v. FRANKLIN D. ROOSEVELT FOUR FREEDOMS PARK, LLC, Respondent.
Roberta Kaplan, Esq. of Paul, Weiss, Rikfind, Wharton & Garrison LLP; Michael J. Garvey, Esq. of Simpson Thacher & Bartlett LLP, for Petitioner. James Zirin, Esq. of Sidley Auston LLP, for Respondent.
Roberta Kaplan, Esq. of Paul, Weiss, Rikfind, Wharton & Garrison LLP; Michael J. Garvey, Esq. of Simpson Thacher & Bartlett LLP, for Petitioner. James Zirin, Esq. of Sidley Auston LLP, for Respondent.
CHARLES EDWARD RAMOS, J.
Petitioner, The Reed Foundation, Inc. (the “Foundation”), seeks an order declaring that Respondent Franklin D. Roosevelt Four Freedoms Park LLC (the “LLC”) breached its contractual obligations to the Foundation based on the LLC's continuing failure to complete an agreed engraving at the FDR Four Freedoms Park (the “Park”).
Petitioner's Allegations
The LLC agreed to include an engraving on behalf of the Foundation at a specific location in the Park. The Foundation contends that the LLC's undertaking was clear. The LLC has now refused to perform. The Foundation thus seeks to enforce its contractually agreed upon right to specific performance by the LLC.
The Foundation is a charitable organization. The LLC is the developer of the Park. In 2010, the Foundation made a $2.5 million grant to the LLC (the “Grant”), which enabled the LLC to fund the Park's construction. The terms of the Foundation's grant are governed by various detailed contracts, negotiated at length by the parties (referred to collectively as the “Agreement” or the “Agreements”). Under the Agreements, as part of “Phase One” construction, the LLC was required to complete construction of a structure called the “Threshold” by “no later than December 31, 2011.” The Agreements specifically mandated that construction of the Threshold “will include” on an exterior west-facing wall, engraved text recognizing the Foundation for its contribution to the Park. This recognition is defined under the Agreements as the “Threshold Recognition Text.” The Agreements also identify the artisan who is to oversee the engraving work on the Threshold. Finally, the Agreements recognize the Foundation's right to specific performance in the event the LLC fails to complete the Threshold, including the Threshold Recognition Text, according to the Agreement.
It is undisputed that the LLC has failed to complete the Threshold Recognition Text in accordance with the Agreement, notwithstanding the fact that since June 2012, the LLC repeatedly assured the Foundation that it intended to complete the Threshold Recognition Text in accordance with the Agreement “as soon as possible.” The LLC never performed and has refused to provide the Foundation any assurance as to when performance would be complete. As of the filing of the Petition, the dedication of the Park was just two weeks away.
Finally, on October 2, 2012, the LLC advised the Foundation that it would not honor its obligation to complete the Threshold Recognition Text on the Threshold in light of “aesthetic concerns” recently voiced by the LLC's architects and consultants.
The Foundation asserts that the LLC's refusal to complete the Threshold, including the Threshold Recognition Text, is a breach of the Agreement. The LLC acknowledged in the Agreement that the Foundation's remedies at law for the LLC's “failure to perform, breach or threatened breach” of its obligations under the Agreement “would be inadequate and the Foundation would suffer irreparable harm as a result of such failure to perform, breach or threatened breach.”
The LLC further agreed that the Foundation's remedies for such conduct include “equitable relief in the form of specific performance” as well as a “temporary or permanent injunction.” The Foundation contends that the contractual provisions recognize and uphold the Foundation's right to receive what is an inherently unique and special benefit that is impossible to value.
Respondent's Contentions
The LLC does not dispute the Foundations factual allegations, but contends that the issue in this case addresses the conscience of the Court.
In this assessment, this Court is in complete agreement.
The LLC, the builder of the Park asserts that its agreement with the Foundation cannot be honored without defacing a work of art. It accuses the Foundation of framing this dispute as one of private contractual concern—wholly detached from any concept of the public good and the architectural integrity of the work—as though this were a crass commercial transaction, failing utterly to address the public's stake in this “great venture” and the “irreparable injury” it would cause to the public if it defaced the centerpiece of the Park over objections of the artistic and architectural community.
The LLC states that there is no evidentiary showing that the Foundation would be harmed in any real sense at all if it received recognition that did not deface this memorial and argues that the equities here weigh heavily in the LLC's favor.
BACKGROUND
What follows are the undisputed facts.
The Park was designed in the 1970s by the late architect Louis I. Kahn. The Park consists of a grand staircase, which ascends to a triangular garden of trees and paving stones bordered by a stone promenade, a forecourt area at the point of the triangle that leads to a large bronze bust of Roosevelt housed in a 12 foot-tall granite structure known as the “Threshold,” and, just beyond the Threshold, a square granite “Room,” which sits at the southernmost tip of Roosevelt Island overlooking the East River.
For over 30 years, efforts to develop the Park were unsuccessful. Then, in 2005, Reed and Jane Gregory Rubin, officers of the Foundation, helped resurrect the long dormant Roosevelt Island project by funding an exhibit on the project at the Cooper Union for the Advancement of Science and Art. The project thereafter gained momentum, with public and private donors displaying interest and ultimately contributing the necessary funds to finance the project.
Consistent with the Rubins' efforts to advance the project, in March 2010, the Foundation contracted to provide the Grant, the express purpose of which was “to support Phase One ... of construction of the [Park]....” The Grant was among the very first grants made in connection with this project, at a time when there was considerable doubt as to whether the project could be completed. The Grant enabled the LLC to secure public funding from New York State and New York City.
The Agreements
The Grant is governed by a series of interrelated agreements, including the Grant Agreement and the Recognition Agreement. The Grant Agreement and the Recognition Agreement are referred to collectively as the “Foundation–FDR Agreements.” These are detailed contracts, drafted by experienced attorneys representing all parties, which carefully documented the parties' mutual agreement at the time of the Foundation's grant.
Under the Grant Agreement, Phase One of the construction of the Park “must include the construction of the Threshold no later than December 31, 2011 (or such later date agreed to in writing by the Foundation)” and that the construction of the Threshold “will include ... the carving of, and/or other display of, the Threshold Recognition Text and the other text on the Threshold,” which is an excerpt of a speech by FDR entitled the Four Freedoms Speech.
The Recognition Agreement sets forth the precise location and wording of the “Threshold Recognition Text,” as well as the process for its inscription. The LLC, as developer of the FDR Four Freedoms Park, agreed that the Recognition would be permanently carved on the West–Facing Side of the Threshold as follows:
IN HONOR OF VERA D. RUBIN AND SAMUEL RUBIN THE REED FOUNDATION
The Recognition Agreement went on to specify the manner of carving, size, font and placement reasonably acceptable to the Foundation. It also specified that the Recognition would be designed by The John Stevens Shop under the supervision of Nick Benson, Creative Director, that no other text, signage or similar wording recognizing a donor or other contributor could be placed on the West–Facing Side of the Threshold or the North–Facing Side of the Threshold, and that no other carving, inscription, or other signage may be displayed on the West–Facing Side of the Threshold without the prior written consent of the Foundation.
The Recognition Agreement also provides that a “Default” occurs if “the Threshold has not been installed in the Sculpture Court by December 31, 2011.” In addition, the LLC agreed that “the Foundation's remedies at law for a failure to perform, breach or threatened breach of any of Sections 1 and 2 of this Recognition Agreement would be inadequate and the Foundation would suffer irreparable damages as a result of such failure to perform, breach or threatened breach.” In recognition of this fact, the LLC agreed that, in the event of the LLC's failure to perform, breach or threatened breach, in addition to any remedies at law, the Foundation, without posting any bond, would be entitled to seek equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available.” (Recognition Agreement, § 6).
Discussion
The LLC seeks to admonish the Foundation, and presumably all of the other donors to and benefactors of the Park whose names are set forth on the monument , by quoting from Maimonides in its memo of law: “Giving is most blessed and most acceptable When the donor remains completely anonymous.”
The LLC has also sought to prominently acknowledge its Chairman, Maimonides' rebuke notwithstanding.
This litigation would not have occurred if the LLC had articulated such a concern to the Foundation before it accepted and spent the Foundation's money.
This litigation would also have been avoided if the LLC's consultants had voiced their artistic objections in a timely manner.
The Foundation–FDR Agreements are governed by New York law and contain forum selection clauses in which the parties submit to this Court's jurisdiction.
Pursuant to the Grant Agreement, the Foundation paid the Grant to be used to construct Phase One of the Park, including parts of the Threshold.
On June 21, 2012, the Foundation and the LLC confirmed their agreement regarding placement of the Threshold Recognition Text on the West–Facing Side of the Threshold as reflected in a mock-up of the required engraving. On June 21, 2012, the Foundation also consented to a request by the LLC that the lettering for the Threshold Recognition Text be changed from black to gray. This Court has examined the Text and finds it to be understated, low to the ground, in small font, on the West–Facing Side of the Threshold, not facing the bust of FDR.
By July 2012, the LLC had completed the inscription of FDR's speech on the south-facing side of the Threshold but the LLC still had not commenced engraving of the Threshold Recognition Text. At that time, the designated artisan who was responsible for overseeing all engraving on the Threshold, Nick Benson, was on site. The LLC did not apprise the Foundation of its decision not to complete engraving of the Threshold Recognition Text while Mr. Benson was on site.
The LLC asked the Foundation to abdicate its right to the Threshold Recognition Text on the West–Facing Side of the Threshold, and, instead, agree to recognition text on the “grand stair” (where other donors' names would be engraved). The LLC reported complications with other donors and an evolving aesthetic view that the Threshold should not include the Threshold Recognition Text. The Foundation would not consent to relocating the Threshold Recognition Text.
On August 9, 2012, the LLC responded that it was “[o]f course, mindful of and will honor our contractual agreement with the Reed Foundation,” but again the LLC requested that the Foundation consider relocating the Threshold Recognition Text. On August 20, 2012, the LLC again suggested that the Foundation consent to relocate the Threshold Recognition Text. In response, the Foundation, through counsel, reiterated that the Threshold Recognition Text must be engraved “in accordance with ... the Recognition Agreement” attached to its letter a photo of the West–Facing Side of the Threshold with a Mylar strip displaying the agreed Threshold Recognition Text at its designated location.
The Foundation's letter further requested that the LLC confirm the timing for completing the engraving on the Threshold. The LLC failed to respond to the Foundation's request, and, on September 8, 2012, the Foundation again requested confirmation that the required engraving on the Threshold would take place on or before October 10, 2012, ten days after Mr. Benson was scheduled to return to the site and one week in advance of the scheduled dedication of the Park.
The LLC responded on September 13, 2012 “confirm[ing] that pursuant to your letter of August 20, 2012 ..., the Park agrees to the placement of the recognition of The Reed Foundation as described in the August Letter.” The LLC assured the Foundation that the Threshold Recognition Text would be carved in accordance with the Recognition Agreement “as soon as possible.”
On September 26, 2012, the LLC wrote to the Foundation, again acknowledging the Foundation's “ability to enforce the details of the March 2010 contract ” and that the LLC has “no doubt that [the Foundation] may prevail in a Courtroom.” However, the LLC refused to confirm that it would cure its breach and complete the Threshold Recognition Text before the Park's dedication.
The Reconition Agreement.
On October 2, 2012, just over two weeks before the Park's dedication, the LLC advised the Foundation that the LLC will not perform because “[o]ur architects and consultants have told us” that including the Threshold Recognition Text on the Threshold was not the “best aesthetic.” The LLC offered to either relocate the engraving or to agree to repay the Foundation's grant, with interest.
Other than the completion of the Threshold Recognition Text on the Threshold in accordance with the Foundation–FDR Agreements, all other phases of construction of the Park and the Threshold are essentially complete.
Specific Performance
The Foundation sought to invoke its rights to specific performance and injunctive relief under the Recognition Agreement and sought an order requiring the LLC to complete the Threshold Recognition Text on or before the Park's dedication on October 17, 2012.
Initially, the Foundation sought to require the LLC to postpone and reschedule the dedication until such performance under the Agreements was completed. However, the Foundation has consented to a waiver of its right to postpone the dedication.
The LLC has materially breached the Foundation–FDR Agreements by refusing to engrave the Threshold Recognition Text by December 31, 2011, as it is contractually obligated to do.
The construction of an unambiguous contract-such as the Grant Agreement and the Recognition Agreement here-is a matter of law for the court and “the intention of the parties may be gathered from the four corners of the instrument and should be enforced according to its terms” (Beal Sav. Bank v. Sommer, 8 NY3d 318, 324 [2007] ). It is also a “familiar and eminently sensible proposition of law [ ] that, when parties set down their agreement in a clear, complete document, their writing should ... be enforced according to its terms' “ (Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 NY3d 470, 475 [2004]quoting W.W.W. Assocs. v. Giancontieri, 77 N.Y.2d 157, 162 [1990] ).
Under the Recognition Agreement, the LLC acknowledged the Foundation's remedy for breach is specific performance. The LLC agreed that remedies at law were inadequate to redress the LLC's failure to perform and therefore the Foundation “shall be entitled to seek equitable relief in the form of specific performance” (Recognition Agreement, ¶ 6). The LLC's offer to agree to return the gift would negate that term of the Agreement and is hereby rejected. New York courts favor granting equitable relief where, as here, sophisticated parties agree to such remedies “in a clear, complete document” (Bank of Am., N.A. v. PSW NYC LLC, 29 Misc.3d 1216(A), 2010 N.Y. Slip Op 51848[U], 10–12 [2010] [granting equitable relief because the parties “agreed that monetary damages would not serve as an adequate remedy at law” and “their writing should ... be enforced according to its terms” citing Vermont Teddy Bear Co. at 475] ).
Specific performance is a proper remedy for a breach of contract if money damages would be inadequate to uphold the expectations of the injured party ( see Sokoloff v. Harriman Estates Dev Corp., 96 N.Y.2d 409, 415 [2001]citingRestatement (Second) of Contracts § 359 [1981] ), and when “the subject matter of the particular contract is unique and has no established market value” ( id. quoting Van Wagner Adver. Corp. v. S & M Enters., 67 N.Y.2d 186, 193 [1986];see also Cho v. 401–403 57th St. Realty Corp., 300 A.D.2d 174, 175 [1st Dept 2002] [“[S]pecific performance has been held to be a proper remedy in actions for breach of contract ... when the uniqueness of the [subject matter] in question makes calculation of money damages too difficult or too uncertain”] ).
Here, the Foundation's manifested expectation at the time of the Grant was an engraving of the Threshold Recognition Text on the Threshold in advance of this Park's dedication. By its very nature, such a unique and precise honorary recognition is not subject to monetary valuation. This Court understands that this lasting recognition of the Foundation's role in erecting the Park has significance to the Foundation and its principals. New York courts have granted specific performance in analogous situations involving unique projects and momentous events, with clear uncertainty in valuation ( see Robins v. Zwirner, 713 F Supp 2d 367, 374–75 [SD N.Y.2010] [seller's refusal to convey “unique works of art” by an artist constitutes irreparable harm to the purchaser]; Hoffmann v. Springchorn, No. 95–CV–0579E (Sc), 1997 WL 128352 at *1, 4 [WD N.Y.1997] [granting specific performance to the purchaser of a rare automobile because “there is no doubt that the [automobile] is unique”]; David Tunick, Inc. v. Kornfeld, 838 F Supp 848, 851 [SD N.Y.1993] [art collector who contracted to buy a specific Picasso print was not obligated under the UCC to accept a substitute print of the same Picasso painting because, as art prints are “by definition, unique,” an art purchaser is entitled to receive the print that “he viewed [ ] as uniquely beautiful”]; Chabert v. Robert & Co., 273 AD 237, 238–39 [1st Dept 1948] [specific performance appropriate to require promisor to sell a rare oil of “special and unascertainable value to the plaintiff” that could not be calculated for a damage award]; Raftery v. World Film Corp., 180 AD 475, 481–83 [1st Dept 1917] [specific performance appropriate to compel the return of photographic prints because of their “unique character” and the impossibility of “estimat [ing] the damage that may come to plaintiff”]; see also Destiny USA Holdings, LLC v. Citigroup Global Markets Realty Corp., No. 09–4157, 2009 WL 2163483, *18–19 [NY Sup Ct, Onondaga County 2009, J. Elfvin], aff'd as modified by69 A.D3d 212 [4th Dept 2009] [promisor required to fund pending loan advances under loan agreement in order to effect promisee's unique expectation interest in a landmark public improvement project]; Barry v. Dandy, LLC, No. 602282/07, 2007 WL 2917248, at *2 [NY Sup Ct, New York County 2007, J. Tingling] [ordering event planner to specifically perform obligation to provide promisee a suitable wedding hall] ).
The understanding, as carefully set forth in the Agreement, is that the Threshold Recognition Text will be engraved on the Threshold according to contract well in advance of the Park's dedication. The Foundation's right to the agreed recognition was not illusory. It was not subject to the arbitrary whims of the LLC or its consultants. Contract law-and philanthropic custom-require enforcement of an unambiguous undertaking to provide a donor, like the Foundation, the specific recognition it was promised. ( Cf. Capital City Cmty. Urban Redevelopment Corp. v. City of Columbus, No. 08AP–769, 2009 WL 5062063, at *8 [Ohio Ct App 2009, J. McGrath] [recognizing seller's right to select the “size, text, and location” of a bronze plaque to be installed on the front of a theater despite the City of Columbus' desire to remove the plaque so as not to “eviscerate” the seller's contractual rights by making them “subject to arbitrary rejection” by the city-purchaser] ).
This Court is disturbed by the actions of the LLC. No potential donor in this State should be made to fear that its generosity will be diminished by strategically delayed artistic whims of a charity's managers. Public policy and the public's interest in charitable giving require that philanthropy trump fashion.
Perhaps instead of insulting their donors by quoting Maimonides, the members of the LLC should have read Shelley instead:
I met a traveller from an antique land, Who said—“Two vast and trunkless legs of stone Stand in the desert.... Near them, on the sand, Half sunk a shattered visage lies, whose frown, And wrinkled lip, and sneer of cold command, Tell that its sculptor well those passions read Which yet survive, stamped on these lifeless things, The hand that mocked them, and the heart that fed; And on the pedestal, these words appear: My name is Ozymandias, King of Kings; Look on my Works, ye Mighty, and despair! Nothing beside remains. Round the decay Of that colossal Wreck, boundless and bare The lone and level sands stretch far away.
This Court expects that the inspiration of the Four Freedoms will far outlive the memory of King Ozymandias but the only path the courts can take to insure that New York's generous custom and practice of philanthropy survives is to require the LLC to honor its obligations that were so carefully articulated in the Agreements. The LLC is directed to complete the Threshold Recognition Text on the Threshold in accordance with the Agreements.
This Court hereby grants the Foundation's Petition.
Settle order on notice.