Opinion
602088/04.
Decided January 20, 2005.
Brill Meisel, New York, New York Rosalind S. Fink, Esq., Attorneys for Plaintiff.
Friedman, Kaplan, Seiler Adelman, LLP New York, New York, Eric Seiler, Esq., Katherine L. Pringle, Esq., Heather Windt, Esq., Attorneys for Defendant.
Plaintiff Joseph P. Ritorto seeks to enforce written and oral agreements with defendants Larry A. Silverstein (Silverstein) and Silverstein Properties Inc. (SPI). Defendants move to dismiss the second and fourth causes of action of the verified complaint. The second cause of action seeks to enforce a letter of agreement related to beneficial interests in a property handled by SPI. The fourth cause of action seeks to enforce an oral agreement between Ritorto and Silverstein related to the development of the World Trade Center. For the reasons set forth below, the motion to dismiss the second cause of action is denied, and the motion to dismiss the fourth cause of action is granted.
Second Cause of Action Breach of 10/10/80 Agreement
Ritorto was employed by SPI from April 1978 through May 8, 2001. In the period prior to October 10, 1980, Ritorto received beneficial interests in several projects of Silverstein. On or after October 10, 1980, Silverstein countersigned a letter of agreement (10/10/80 Agreement) in which Ritorto states that
as consideration for my continued employment with [SPI], I will receive from hereon, a five percent beneficial interest in your interests (remaining after transfers for consideration) in any properties acquired or developed or in the process of being acquired or developed during my employment.
At the time Ritorto started working for SPI, Silverstein was a partner in Stamford Ridgeway Associates, L.P. (SRA), which owned Ridgeway Shopping Center (Ridgeway). In or around 1996, Silverstein and a group of investors infused capital into SRA for its reconstitution, and into Ridgeway with the goals of redevelopment and resale of the property.
Ritorto maintains that the 10/10/80 Agreement required Silverstein to grant Ritorto the customary beneficial interest in Ridgeway, since the property underwent a phase of development during Ritorto's employment. Ritorto's second cause of action seeks the beneficial interest allegedly due.
Defendants maintain that Ridgeway is not contemplated by the 10/10/80 Agreement because it had already been developed before Ritorto's employment and was simply being redeveloped during the period in question. Defendants argue that the 10/10/80 Agreement, by its plain terms: (I) applies only to property developed after the date of the Agreement; and (ii) generally does not apply to the redevelopment, but only to the first development of properties. Further, defendants argue that to the extent that there is any ambiguity in the meaning of the term "develop" in the 10/10/80 Agreement, the contract is to be strictly construed against Ritorto, the drafter.
It is well-established that "where the terms of a contract are clear and unambiguous, its construction, including the intent of the parties as expressed in the agreement, involves questions of law for the Court to determine." Levin v. Hoffman Fuel Co., a Div. of Chevron, U.S.A., Inc., 94 AD2d 640, 641 (1st Dept), affd 60 NY2d 665 (1983) (citation omitted).
Where, however, "interpretation of a contract term is susceptible to varying reasonable interpretations and intent must be gleaned from disputed evidence or from inferences outside the written words" the matter is to be decided by the finder of fact. Time Warner Entertainment Co., L.P. v. Brustowsky, 221 AD2d 268, 268 (1st Dept 1995) (citation omitted); see also Amusement Bus. Underwriters, a Div. of Bingham Bingham, Inc. v. American Intl. Group, Inc., 66 NY2d 878, 880 (1985). Nonetheless, the question of whether there is any ambiguity is one for the court. Sutton v. East River Sav. Bank, 55 NY2d 550, 554 (1982).
The term "develop" in the 10/10/80 Agreement is ambiguous. Defendants strenuously argue that the term applies only to first development. Ritordo contends that the term incorporates the idea of redevelopment. The provisions of a contract are not ambiguous merely because the parties interpret them differently ( see Mount Vernon Fire Ins. Co. v. Creative Hous. Ltd., 88 NY2d 347, 352), but where nothing in the record that indicates one interpretation of the word "develop" should predominate over the other, an ambiguity exists.
Since interpretation of an ambiguous term in a contract may be the province of the fact-finder ( Time Warner Entertainment Co., L.P. v. Brustowsky, 221 AD2d at 268), the motion to dismiss is denied with leave to renew if appropriate.
Fourth Cause of Action Breach of Oral Agreement
During the course of his employment with SPI, Ritorto also allegedly participated in efforts to acquire lease interests in the World Trade Center (WTC Leases). On April 26, 2001, Silverstein entered into agreements with the Port Authority of New York and New Jersey for acquisition of the WTC Leases.
Through an arrangement with Silverstein WTC Properties LLC (Silverstein WTC), Silverstein owned one-third (1/3) of a holding company for the World Trade Center (Holding Company), with the remaining two-thirds (2/3) owned by a separate investor group. Silverstein, under loan arrangements, was required to maintain a certain minimum level of ownership in the venture. Silverstein's remaining interest in the venture was sold to other investors, including Ritorto, who invested $500,000 in Silverstein WTC.
The returns on the investments in the WTC Leases were to be paid in two stages. In the first stage (Promote I), the investors in the Holding Company were to receive 12.55% on their investment, and, after all investors were paid this percentage, future profits were to be split evenly between Silverstein WTC and the investor group. In the second stage (Promote II), Silverstein WTC, was to pay its own investors 12.00% on their investment, and similarly, after all the Silverstein WTC investors were paid, future profits were to be split evenly between Silverstein and the investors.
Prior to making his investment in Silverstein WTC, Ritorto allegedly had the following conversation with Silverstein:
Ritorto: I have so much good feeling about this project that, in addition to my usual beneficial interest, I would like to make a positive investment, if you would be willing to let me stand beside you with respect to your Promote.
Silverstein: Okay, how much do you want to invest?
Ritorto: Five hundred thousand dollars.
Silverstein: Okay, but get your money in right away.
Ritorto understood this alleged conversation to be an agreement that payments for Ritorto's investment would be under the Promote II scheme (Oral Agreement). In connection with his $500,000 investment, Ritorto signed a Limited Liability Company Operating Agreement of Silverstein WTC Associates, dated April 8, 2001 (Silverstein LLC Agreement).
The Silverstein LLC Agreement states that it "constitutes the entire agreement among the parties with respect to the subject matter herein or therein and supersedes any prior agreement or understanding among the parties hereto." As Ritorto does not claim he made the Oral Agreement with Silverstein after the Silverstein LLC Agreement, this merger clause applies to it.
The Silverstein LLC Agreement also states that "[n]o provision of this Agreement shall be deemed to have been waived unless such waiver is contained in a written notice given to the party claiming such waiver occurred. . . ."
Ritorto states that he received the 12.00% due on his investment, however, he avers, despite repeated requests and letter drafts, he received neither documentation of the Oral Agreement, nor his beneficial interest in Silverstein WTC. Ritorto's fourth cause of action seeks the beneficial interest allegedly due.
Defendants argue that the Oral Agreement is not enforceable because it is: (i) extinguished by a subsequent integrated writing; (ii) in contravention of the Statute of Frauds; and (iii) too indefinite.
Under well-established principles, in order for parol evidence to be considered, Ritorto must show that: (i) the applicable agreement is either not complete, or not designed to represent the full understanding between the parties ( NAB Construction Corporation v. The City of New York, 276 AD2d 388, 714 N.Y.S.2d 279 (1st Dept. 2000)); and (ii) the parol evidence is consistent with, and does not contradict the Agreement. See Thomas v. Scutt, 127 NY 133, 142 (1891); accord Maher v. Garry, 3 A.D. 480 (1st Dept 1896).
Ritorto has made no showing, that the Silverstein LLC Agreement is incomplete. See Unisys Corp. v. Hercules Inc., 224 AD2d 365, 368 (1st Dept 1996); 3 Corbin, Contracts § 573 (1960). Ritorto's contention that he had prior business dealings with Silverstein that were informal does not constitute the type of course of dealings that render a complete agreement incomplete.
As the complaint makes no allegation of fraud ( see Hobart v. Schuler, 55 NY2d 1023, 1024), the merger clause contained in the Silverstein LLC Agreement operates to bar parol evidence, such as the alleged Oral Agreement, from varying its terms. See e.g. NAB Const. Corp. v. Consolidated Edison Co. of New York, Inc., 222 AD2d 381, 636 N.Y.S.2d 37 (1st Dept 1995).
Ritorto also argues, that the Oral Agreement was made with Silverstein as an individual, whereas the Silverstein LLC Agreement was with Silverstein's company. Thus, Ritorto concludes, the Oral Agreement is enforceable in its own right. This argument is unavailing.
The Oral Agreement in effect covers the same subject matter as the Silverstein LLC Agreement. There is a presumption against enforcing oral agreements where there are complete written agreements that relate to the same subject matter, because the written agreement "imparts stability to the commercial transaction." See W.W.W. Associates, Inc. v. Giancontieri, 77 NY2d 157, 162, 565 N.Y.S.2d 440 (1990).
In addition, the Oral Agreement standing alone does not satisfy the requirements of contract formation; there is no indication that essential terms were established in the conversation between Silverstein and Ritorto. See Perfect Trading Co., Inc. v. Goldman, Sachs Co., 236 AD2d 221, 222 (1st Dept 1997); Central Fed. Sav., F.S.B. v. National Westminster Bank, U.S.A., 176 AD2d 131, 133 (1st Dept 1991).
Nor are the terms of the Oral Agreement definite. For instance, there is no indication in the alleged conversation that created the Oral Agreement of whether Ritorto was to "stand beside" Silverstein under the terms of Promote I or Promote II. Such a fundamental omission makes the alleged Oral Agreement too vague. See Cobble Hill Nursing Home, Inc. v. Henry and Warren Corp., 74 NY2d 475, 482 (1989) ("[i]f an agreement is not reasonably certain in its material terms, there can be no legally enforceable contract") (citation omitted); Marlio v. McLaughlin, 288 AD2d 97, 99 (1st Dept 2001); Muhlstock v. Cole, 245 AD2d 55, 58 (1st Dept 1997). Moreover, subsequent actions by Ritorto in attempting to commit the agreement to writing is further evidence that it was at best an agreement to agree and thus not an enforceable agreement. Joseph Martin, Jr. Delicatessen v. Schumacher, 52 NY2d 105 (1981).
Consideration of defendants' arguments concerning the Statute of Frauds may be superfluous in view of the finding that the agreement suffers from the infirmities discussed. However the statute of Frauds G.O.L. 5-701 requiring contracts that can not be performed with a year to be in writing also affects this claim. First, it is unclear when the terms of this contract would have begun. Second, the unusual events that would hypothetically have allowed the contract to be performed within a year would also have made any return speculative.
Accordingly, it is hereby ORDERED that the motion of defendants Larry A. Silverstein and Silverstein Properties Inc., pursuant to CPLR 3211(a)(7), to dismiss the second and fourth causes of action of the verified complaint is granted to the extent that the Fourth Cause of Action is dismissed, and it is otherwise denied; and it is further ORDERED that the defendants Larry A. Silverstein and Silverstein Properties Inc. are directed to serve an answer within 20 days after receipt of this order and to appear for a preliminary conference March 8, 2005 in Room 208 at 9:30 a.m.