Petition for Writ of Certiorari — Parke-Hayden, Inc. v. Loews Theatre Management Corp.

Supreme Court, U.S.

rILBSsS -

94 195 JUL 28 1994

October Term, 1994

PARKE-HAYDEN, INC.,

Petitioner,

VS.

LOEWS THEATRE MANAGEMENT CORP.,

Respondent.

Petition for Writ of Certiorari to the United States Court of

Appeals for the Second Circuit

PETITION FOR WRIT OF CERTIORARI

ISRAEL WEINSTOCK

Counsel of Record

Attorney for Petitioner

140-06 Rockaway Beach Blvd.

Belle Harbor, New York 11694

(718) 318-1000

L te (800) 3 APPEAL « (800) 5 APPEAL (800) BRIEF 21

QUESTION PRESENTED FOR REVIEW

The District Court first found an

employment contract between petitioner and

respondent, then, expressing a personal

bias against litigants such as petitioner,

prevented the question of such contract

from being specially submitted to the

Jury, and thereupon abrogated the Jury’s

Verdict due, inter alia, to its own prior

omission of the said question.

Did the District Court's abrogation

of the Verdict violate petitioner’s VIIth

Amendment rights, when the Court’s General

Charge included the purportedly omitted

Question, respondent’s key employees

admitted its employment of petitioner so

as to procure its desired theater lease,

and New York law authorized the Verdict

due to respondent’s subsequent arbitrary

abrogation of the lease?

ii

Page

QUESTION PRESENTED FOR REVIEW......... i

ee | Soe. ES, “a. 6 i oo 6-0 & 6 6 & eek 1ii

REPORTS OF OPINIONS

a Ce ee ee GS 0g & eee Cd eee ewes 1

GROUNDS OF JURISDICTION cc cc cccccccsses 2

U.S. CONSTITUTION, AMENDMENT VII...... 3

STATEMENT | Re Ne ek er eee 3

REASONS FOR GRANTING THE WRIT......... 27

Blatant Legal and Factual

Error In Court’s Decasacmh....... 29

Clear “Fee Shifting” Rule

ie ee Se a oa hae ee hs en Se 32

Blatant Violation

Of Seventh Amendment ........... 36

GOmGTUGEO os caccek cewek ante 38

ili

TABLE OF AUTHORITIES

CASES

Aikens v. State of Wisconsin, 195 U.S.

pO ee | 27

Arnold v. Schmeidler, 144 App. Div.

408, 129 N.Y.S.2d 408 (lst Dept.

NESE TREES S21 Si I ee er 31-32

Charles H, Coppard, Inc. v. Chesbro, 34

A.D.2d 879, 312 N.Y.S.2d 444, 445 (4th

a ie os cig tb wide ald o és beck é ee 31

& Carbon Corp., 370 U. S. 690, 82 S.

I I ode kino O'S wD Coe Soe cc cece 36

Duross Co. v. Evans, 22 A.D.2d 573,

574, 257 N.Y.S.2d 674, 676-77 (1st

I oe 32-33

Fortunato v. Ford Motor Co., 464 F.2d 962

(2nd Cir. 1972), cert. denied, 409 U.S.

ee Ee Oe Be. | 37

Galloway v. United States, 319 U.S. 372,

ee ee eceen 36-37

Grossman v. Herman, 266 N.Y. 249, 253, 194

eee OE cee bees 33-34

Julien J, Studley, Inc. v. New York News,

Inc., 122 A.D.2d 633, 505 N.Y.S.2da 419

eee Pe bec Cee eee ae 33-34

Kaelin v. Warner, 27 N.Y.2d 352, 318

Lg 8S Sn ae 31

Kinnell v. Mid-Atlantic Mausoleums, Inc.,

a en eee ee ee EU eee ences 37

iV

Konok v. Champlain Valley Physicians

Hosp., 733 F.2d 1007 (2nd Cir.), cert.

denied, 469 U.S. 884, 104 S. Ct. 253

I iii ee ew eee 37

Lane—The Real Estate Department

Store, Inc. v. Lawlet Corp., 28

N.Y.2d 36, 319 N.Y.S.2d 836, 838

FO 2 nO ERA aE RO RCD Che Eee es Cee ee as. aas 35

McKnight v. McGuire, 117 Misc. 306, 191

N.Y.S. 323 (lst Dept. Appellate Term

ph ence ep ai AR MEARE ASE GRY Se eee rs a eK 2 ee eae 33

Rogers v. Missouri P. R.R., 352 U.S. 500,

oi a i ee 36

Schaechter v. Regency Properties, Inc.,

115 A.D.2da 981, 497 N.Y.S.2a@ 793 (4th

Ee bs sk ha a eek cbs Gauss ows 32

Sirota v. Silitron Devices, Inc,., 673 F.2d

566, 573 (2d Cir.), cert. denied, 459 U.S.

a Pe i ee re ea 37

U.S. v. Miller, 997 F.2d 1010, 1023 (2nd

i eC. ERS A a eg oa ey Te ren 5

Webb v. Illinois Central R.R., 352 U.S.

BEC ae Ee eee 36

Westhill Exports, Ltd. v. Pope, 12

N.Y.2d 491, 496, 240 N.Y.S.2d 961, 964

ee a ae 32

Wilkerson v. McCarthy, 336 U.S. 53, 63, 69

SiGe. Mae SAGE Bk oe oe eh en oseeee HUH at, 36

v

CONSTITUTIONAL PROVISIONS

United States Constitution, Amendment

VBS Ce vecev cabewe vee uh whee 8 ke ee ewe

STATUTES

ae U.8.C. 9 Sees See ee cks ekeesn sea

ao Uoe GC. B. Seem SOT Scie l eves thea tae

Rule 10 .1. (a) and (c) of this

COMPS. 6's 06a ee ESE Ae Ree 28,

OTHER AUTHORITIES

5A P. Kurland, D. Epstein, C.

Levine, F. Carlisle, K. Shirley,

Moore’s Federal Practice, q 50.02

ere Mk Bere ar ern bose eee

vi

APPENDIX

Appendix A— Order of the United States Court of Appeals

for the Second Circuit Filed April 28,1994 .........

Appendix B — Order of the United States Court of Appeals

for the Second Circuit Filed March 15,1994 ........

Appendix C — Opinion of the United States District Court

for the Southern District of New York Dated July 24,

OOTP ET TO PE rere Pr ey Perry Ty ere Tee

Appendix D — Opinion of the United States District Court

for the Southern District of New York Dated July 27,

BD shsicntsctenvesdccsakhsenbereas pea b eae

Appendix E— Opinion of the United States District Court

for the Southern District of New York Dated April 20,

PRE cise taviaethesbesasevevedeconsebesennees

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4a

24a

a

]

REPORTS OF OPINIONS

DELIVERED IN THE CASE

The District Court’s April 20, 1992

opinion denying both parties summary

judgment is reported -< 789 F. Supp. 1257.

The District Court’s opinion both denying

respondent’s motion to disqualify

petitioner’s trial attorneys and

discussing the landlord mortgagee

partnership agreement at times relied on

respondent is reported at 794 F. Supp.

525.

The Court of Appeals’ summary affirmance

is reported at 22 F.3d 1091.

2

GROUNDS OF JURISDICTION

(1) The date of the entry of the judgment

below sought to be reviewed is March

15, 1994.

(ii) The date of the order of the Court

below denying petitioner’s timely

petition for rehearing is April 28,

1994.

(111i) The statutory provision believed by

' petitioner to confer on this Court

jurisdiction to review the judgment

below by writ of certiorari is 28

U.S.C. § 1254 (1).

3

U.S. CONSTITUTION, AMENDMENT VII:

In Suits at common law, where the value in

controversy shall exceed twenty dollars,

the right of trial by jury shall be

preserved, and no fact tried by jury,

Shall be otherwise re-examined in any

Court of the United States, than according

to the rules of the common law.

STATEMENT OF THE CASE

Petitioner is a commercial real

estate brokerage company, whose sole

employees are Hy Teich and his brother.

Petitioner’s action for damages

representing its lost broker’s commission

commenced on January 9, 1991. Jurisdiction

in the District Court was predicated on 28

U.S.C. § 1332 (1988), petitioner being a

New York corporation with its principal

place of business in New York and

respondent a wholly owned subsidiary of a

4

Delaware corporation with its principal

place of business in New Jersey, the

Delaware holding in turn being a wholly

owned subsidiary of Sony Corporation, a

Japanese concern, and the amount in

controversy exceeding $50,000, exclusive

of interest and costs.

Cross-motions for summary judgment

resulted in an April 20, 1992 District

Court Opinion explicitly determining that

respondent “employed” petitioner to

acquire a lease at or near the

intersection of Broadway and 72nd Street

in Manhattan for a planned new theater

complex; and that petitioner thereafter

materially aided respondent not only in

locating the lease site but in starting

negotiations with the property’s landlord

and in moving them forward in the precise

manner desired by respondent prior to the

ultimate preparation of a final lease.

5

The District Court’s central legal

determination in its April 20, 1992

decision read:

“In New York, absent an agreement

to the contrary, a real estate

broker earns his commission when

he procures a buyer who is ready,

willing and able to purchase at

the terms set by the seller

The affidavits and deposition

testimony . . . leave no doubt

that, under relevant New York

law, Loews emploved Teich to

r r f h 72nd

Street Property by soliciting and

accepting his services on Loews’

BGRALE".° Tee. ©. Bape. i257, at

1263. (emphasis added).

This ruling received immediate and

prominent coverage in the Wall Street

Journal”: and moreover has since been

cited with approval by the Second Circuit

Court of Appeals. U.S. v. Miller, 997 F.2d

1020, 12023 tana Cis. 2993).

Nevertheless, the District Court

denied petitioner’s motion for summary

judgment, finding the terms of its agency

“See Judge Sticks Buyer With Broker's Fee,

Wadi @t.. d., @peil 26, 32992, at B6,.coi.

3.

6

contract with respondent, j.,e., as

producing a “deal .. . palatable... to

both parties” “too indeterminate to form a

basis upon which to conclude .. . a

motion for summary judgment.” 789 F. Supp.

at 1263-64 and Note 2. The Court further

determined that despite the parties’

agreement on all of the terms as

determined in their final lease,

respondent’s access to results from rock

borings and asbestos tests under the site

might conceivably have constituted a

condition precedent to its signing the

lease, which condition was further

communicated to the Owner. JIJd., at 1264-

65.

At trial respondent’s site selector

Gil Littman testified that on his first

day of work in December 1987, he called

“about 88 brokers that I have been dealing

with for many years” to carry into effect

respondent’s intent to acquire theater

EA SS SEES son treme

7

sites in both Manhattan and its suburbs.

Littman testified in this regard: “Working

with brokers is a normal part of your job.

When you want to get a site the normal way

to do that is to get a broker who knows

the area.” One of the 88 brokers contacted

by Littman was petitioner. (J.A. 48, 50).*

According to Littman, petitioner at

this time was instrumental in developing

for respondent’s consideration additional

theater sites on Long Island and in

Brooklyn; Danbury, Connecticut;

Pree Srey Massachusetts; and Tinton

Falls, New Jersey (J.A. 53-58), and in the

same time period acquired for respondent a

further site at Third Avenue and 11th

Street in Manhattan.

Subsequent to petitioner’s Third

Avenue and llth Street acquisition, the

president of respondent’s then corporate

ey i Mena hs she

*“J.A.”" references are to the “Joint

Appendix Pursuant to F. R. App. P. 30” 4

filed by petitioner in the Court below. 2

8

parent, Columbia Pictures Entertainment,

Inc., Lew Korman, informed Littman that

Columbia strongly desired that respondent

acquire a further site at the Broadway and

72nd Street intersection in Manhattan.

Korman’s reasons for his interest in this

intersection included respondent’s

possession of a successful functioning

theater complex twelve blocks north, at

Broadway and 84th Street, and the crucial

paradox that the Broadway and 72nd Street

intersection, despite being “perhaps the

biggest trading area in the city” had “no

real theater”. (J.a.°:° Si) 4640 0Han

thereupon contacted three brokers to this

end, among them petitioner.

According to Littman, Teich

thereafter took Littman, Littman’s

“construction man, George McNeill and Jack

Held, an architect” to the Beacon Theater,

at 74th and Broadway. There, Littman

testified: “We all loved the site, great

location, perfect for a theater, but the

9

city has it landmarked so you can't do

anything with it”. As the parties exited

the Beacon, Littman testified:

“A. [W]e headed south towards

72nd. We came to 72nd and

Broadway[.] Teich pointed to the

building on 72nd and Broadway,

the southwest corner, and said,

‘{H]ow would you like that for a

theater?’ I immediately looked at

him and I recall the exact words

I told him. I said, ‘[B]Joy, you

are hired, get me that site.’

That is exactly what I told him’.

(J.A. 60).

Littman testified that he thereafter

reported to Korman: “Teich is on it and

it's owned by his friend Phil [Pilevsky,

general partner of the property's owner,

Broadway-72 Associates] and he got

instructions to get it.” Korman then

responded, Littman testified, by saying

“the same thing, ‘get it.’” (J.A. 61).

Teich thereafter reported back to

Littman that Pilevsky had no interest

whatsoever in leasing the site to

respondent, because he was making “more

money” with his existing commercial

10

tenants. (J.A. 62). Littman relayed

Pilevsky's categorical rejection to

Korman, who then, according to Littman,

once again insisted that petitioner

procure the site for respondent. Littman

thus testified:

"A. « « « Sie fRenmens eaae,

[‘GJet Teich, bust his horns, do

what you have to do. Get the

location’. I in turn got back to

Teich. I never forget, I called

him 12[:00] at night to make sure

he was home. I said, ‘[BJoy, we

want the site. You do what you

have to do. I will meet with you

and Phil. Get the location”.

(J.A. 63).

Littman some time thereafter

received a telephone call from the

landlord, Pilevsky, inviting Littman to a

meeting with himself and Teich in order to

discuss a letter received from Korman,

further urging Pilevsky to lease the site

to respondent. In the course of this

meeting, Littman testified:

“A. Pilevsky took the [Korman]

letter, tore it up and threw it

away.

Q. What did Mr. Teich do?

11

A. He went berserk. He grabbed

him. He said, ‘[({W])hat, are you

crazy? I want that for Littman

for Loews’ theater.’ I never saw

Teich that way. He flipped out

and he went after Phil[,] ina

friendly way[,] of course.” (J.A.

63-64).

Littman further testified that Teich

did more than locating the site and ‘going

after’ its owner, his friend Pilevsky.

Under the direct instructions of

respondent’s former President and Chief

Operating Officer, Jerry Esbin, Teich

further acted as respondent's exclusive

agent in gaining Pilevsky’s assent to

respondent’s essential lease terms.

Littman testified in this regard:

“Q. What role, if any, did you

ask Mr. Teich to play to help

Loews in connection with those

negotiations?

A. Well, start them and any time

we had anything to negotiate

further or get a lower rent we

would get Teich to handle it.

QO. Who was it who would get

Teich to handle it?

A. Esbin would get him to handle

it. I would get him to handle it.

Esbin would tell me, I would tell

Teich.

Q. Give us an example of

something that Mr. Esbin asked

12

you to get Mr. Teich to do in

terms of the deal that Mr. Esbin

asked you to get to Teich to.

A. I think he wanted the rent

lowered. So I told Teich to get

it lowered, and he got it

lowered.

Q. Did Mr. Teich respond to your

request?

A. Yes.

Q. And he --

A. He flipped out and got it

lowered.” (J.A. 64-65).

Esbin’s testimony was in complete

accord with Littman’s on this point. At

the outset of his cross-examination Esbin

thus graphically described the avidity

with which he, too, coveted Broadway and

72nd Street as a possible theater site for

Loews. In response to respondent’s trial

attorney’s question “[{W]Jhat did [Mr.

Littman] tell you [with respect to]

the 72nd Street transaction” Esbin thus

replied:

“He [Littman] said there is a

great location on 72nd and

Broadway to put up a theater, and

right off the bat I started to

Salivate because if I had the

money I would have put it up

myself.” (Esbin trial transcript,

at 438).

13

Esbin further testified that if

respondent: “had a problem with the

agreement or if we found something lacking

that Loews wanted probably to get a better

advantage, I would talk to Hy Teich or

[respondent’s vice president for real

estate] Ken Benjamin. I would tell Ken

Benjamin to talk to Hy Teich at times and

he would, and at times I would talk to Hy

Teich to try to resolve certain

problems.” (Esbin trial transcript, at

406-07). Esbin estimated that Teich

“went to Pilevsky . . . on about 80

percent of the time I needed to get

something done”. (id., at 408).

Esbin included among the "things"

that Teich accomplished for him both the

reduction of a year’s rent on the property

and a delay in any rent increase from the

fifth to the eleventh year of the lease.

With respect to the rent, Esbin testified:

“(W]e were at loggerheads. So I called in

Teich and I said, ‘[Y]Jou better get this

14

straightened out .. . The rent is too

high now and it will just be impossible. ’

Hy Teich went back to Pilevsky and we then

had a meeting with Pilevsky and it was

agreed .. . that the increase will be in

the eleventh year”. (id., at 409)

Esbin concluded his discussion of

respondent’s two-year employment of

petitioner by observing (id., at 409-10):

° . . © would say he was

performing services not only for

Loews but really for himself

because if these things didn’t

work the deal would have been

gone. I couldn’t live with a deal

in certain ways. So Hy Teich

worked for me to get my deal done

and at the same time he was

working for himself to get his

deal done. .. . He had a role

for himself and by my asking him

what to do, he was very prominent

in getting things done for

myself. Personally I don't think

I could have got some these

things done going head to head at

the beginning with Phil

Pilevsky”.

Between January and March 1990,

respondent’s and Pilevsky's attorneys

prepared and exchanged comments on

15

succeeding drafts of the proposed lease,

all of which drafts and comments, with

respondent’s evident knowledge and

consent, were communicated to petitioner.

(FAs BES, 216-27, 234-36, 243).

Respondent’s parent, Columbia, also

approved the lease. (J.A. 228, 242).

Petitioner separately agreed with

Pilevsky, who in accord with customary New

York real estate practice was expected by

all parties to pay petitioner’s commission

on the deal as landlord (J.A. 59), ona

figure of $792,333.00, based on

respondent’s agreement to pay $1,100,000

monthly in rent. (J.A. 207).

The parties thereafter completed a

final lease dated April 6, 1990, and

projected a May 1, 1990 closing date,

without stipulating in any way that time

was of the essence. (J.A. 99-202; 247).

The final lease further included an

Article 35, in which respondent and

Pilevsky identified petitioner as the sole

16

broker with whom any “conversations or

prior negotiations were had” by them in

connection with the lease and further

agreeing to hold each other harmless from

any “claims for brokerag2 commissions”

made by any other “broker or finder”.

(J.A. 179).

The final lease’s May 1, 1990

closing was aborted by a change in

respondent’s corporate ownership. Sony

Corporation having acquired respondent’s

parent, Columbia, in or about September

1989, Sony thereupon replaced Korman. In

or about the end of April 1990,

contemporaneously with the parties’

preparation of the final lease, Columbia’s

new management installed Alan Friedberg as

respondent’s chief executive. Friedberg

stated in an April 16, 1990 letter to

respondent’s General Counsel, Seymour H.

Smith, which letter was shown to the Jury,

that he killed the Broadway and 72nd

Street deal negotiated by Littman, Esbin,

17

Korman and petitioner due to his personal

opposition to several of the essential

lease terms already agreed on between

respondent and landlord Pilevsky. (J.A.

68-69, 203-06); see also 789 F. Supp. at

1261.

Subsequent to petitioner’s resting

of its trial case, respondent’s attorney

presented the District Court with a two-

part Fed. R. Civ. P. 50 (a) (1) motion,

the first branch of which asserted that

“at the time Loews decided not to proceed

with the lease” the evidence was

insufficient to show that the property’s

mortgagee had consented to it, as required

by the Pilevsky partnership agreement

(J.A. 276-77)* and the second branch of

“Beyond the fact that Friedberg’s above-

referenced April 16, 1993 letter to Smith

made it very clear that the presence or

absence of the mortgagee’s consent was

perfectly irrelevant to Loews’ decision to

abort the deal (J.A. 205), petitioner’s

trial attorney reminded the District Court

that it had found in its second opinion in

this action that the partnership’s escrow

Footnote continued

18

which resuscitated the “indeterminate

terms” theory appearing in the Court’s

April 20, 1992 summary judgment decision,

namely, that “the Petitioners have failed

to prove an agreement that existed between

respondent and the petitioner in this case

which was of sufficient definiteness to be

enforceable under the laws of New York”.

(J.A. 278).

Despite Teich's attorney's clear

rejoinder to this argument that the amount

of Teich’s broker's commission was not

only totally irrelevant to the Teich-Loews

agency agreement but in addition had been

definitely “reasonably certain” and

“agreed upon”, in this particular instance

between Pilevsky and petitioner,*~ the

agreement stipulated a never-attained May

31, 1990 deadline for the mortgagee's

consent. (J.A. 37, 279; 794 F. Supp. 525,

528).

*Teich's attorney further explained

petitioner’s theory of legal recovery to

the District Court, stating: “There is no

need that it be a term of an agreement as

to the financial terms of it between Loews

Footnote continued

19

District Court reacted to respondent’s

motion by demonstrating a callous

indifference to its constitutional duty

clearly to delineate the legal boundaries

of petitioner’s claim.

Thus, while denying respondent’s

dismissal motion under the correct theory

that petitioner’s performance of its

“employment” by respondent earned it its

commission due to respondent’s backing out

of the lease at the last moment, the

District Court, resuscitating once again

the “indefinite terms” objections voiced

in its April 20, 1992 summary judgment

opinion, nevertheless purported to

“dismiss” petitioner’s “contract claim’,

on the erroneous ground that petitioner’s

employment at the outset lacked the

preliminary precision thought by the

and the broker because indeed Loews was

not supposed to pay the broker except at

the end by backing out of the deal.” (J.A.

281) (emphasis added).

20

District Court to be a prerequisite to the

existence yel_ non of any

all.

The Court thus stated:

“My conclusion with respect to

the motion is yes and no. There

is not enough evidence in this

record to establish terms and

conditions of an agreement

between Loews and Parke-Hayden

with respect to the amounts or

time of payment. At least those

two conditions are certainly not

clear.

So a contract claim on behalf of

Parke-Hayden against respondent

is dismissed.

However, as I understand the

law, and I may be wrong about

this and I would be pleased to be

corrected at some other time, in

the event there is an agreement

between the parties on all the

essential terms and agreement,

even though it is not executed

and therefore not an enforceable

agreement under the statute of

frauds, if the buyer or in this

case the lessee frustrates the

agreement, the frustrator, in

this case the lessee, can be held

liable for the fee.

In other words, the broker

has earned his fee and is not

going to be deprived of the fee

in the event that the |

lessee determines he is not going

to go forward in the face of a

completed agreement.” (J.A. 285-

86) (emphasis added).

“agreement”

at

21

Further pressed thereafter by

respondent’s trial attorney to elucidate

his reasoning respecting its denial of

respondent’s motion, the District Judge

reiterated pot only its above-quoted

deliberate indifference to petitioner’s

basis for recovery but an evident personal

bias against litigants happening to

exercise petitioner’s particular

. *

profession.

“See April 28, 1993 proceedings (J.A. 296-

97, 299) (Court proclaims: “[T]his is an

area of the law which I am frank to tell

you I think is extremely confusing and

results from the courts cooking up a claim

really see a basis for it.

Parenthetically, no sense wasting time on

it, but what has created this problem is

the peculiarity of the real estate

profession where the broker is serving two

masters and is paid by one. Anybody who

has rented an apartment or bought a house

is very familiar with the bind in which

the innocent — and maybe Loews isn’t so

innocent — but the innocent purchaser

Finds bi Ee

Footnote continued

22

The Court thereafter on May 3, 1993

sent the case to the jury with the

following five Special Interrogatories

authorized by Fed. R. Civ. P. 49:

“Did Parke-Hayden, Inc.

(“Parke-Hayden” ) have an

agreement with [the landlord

partnership] Broadway 72

Associates to be paid a brokerage

commission in connection with the

execution of a lease to

respondent Theater Management

Corp. (“Loews”) of a portion of

the property owned by Broadway 72

ey N pee hic]

get around”.) (emphasis added); April 28,

1993 proceedings (J.A. 300-01) (Court

opines that potential quantum meruit basis

for recovery — put forward by petitioner’s

trial attorneys in evident desperation at

the Court’s above-quoted “dismissal” of

petitioner’s “contract claim” — “doesn’t

go to the jury at all because it's an

equity claim”, stating: “I don't see how

it goes to the jury so I can just quietly

deep sixth [sic] it as far as the jury is

concerned and then get to it in my own

time” thereupon querying counsel: “I don't

see it as a jury case, do you?”); April

30, 1993 proceedings (J.A. 314)

(addressing potential implied contract

basis for recovery, Court states: “Implied

contract by definition, it seems to me,

means you can't find a contract on the

facts.”)

23

Associates at Broadway and 72nd

Street (the lease)?

Was Broadway 72 Associates

ready, willing, and able to enter

into the lease?

Did Loews have a valid

reason not to proceed with the

execution of the lease?

Did Loews act in bad faith,

wrongfully or arbitrarily in not

proceeding with the execution of

the lease?

What damages, if any, to

which Parke-Hayden is entitled as

a result of the conduct of

Loews?” (J.A. 353-54).

The District Court's General Charge

supplemented the Special Interrogatories

by reinforcing in several ways the idea

that respondent need be found to be fully

satisfied with the lease terms acquired

for it by petitioner, as said terms were

communicated to petitioner by Littman and

Esbin. Thus the Instructions at numerous

points stated that respondent had to be

found to have “benefited” from, was

“satisfied” with, got “the deal it wanted

to get” and achieved its own “essential

terms” in the terms procured by petitioner

24

on its behalf. (J.A. 320, 323, 325, 326,

329, a3hy. 3eer

Under the heading “Loews’ Wrongful,

Arbitrary Conduct or Bad Faith Acts”, the

Instructions in fact concisely stated the

essence of petitioner’s legal claim

against respondent:

“The question is whether there

was a deliberate attempt in bad

faith to cause the failure of

negotiations. A party who has

engaged the broker to procure an

agreement cannot, after

negotiating terms to the point

that completion of the

transaction is imminent, then

change his mind and willfully

prevent a final agreement.” (J.A.

330).

The Jury on May 3, 1993 answered the

Court's Special Interrogatories and

General Charge by finding respondent

liable to petitioner for $792,553.00, the

full amount of his broker’s commission

initially agreed upon with Pilevsky. (J.A.

355-56, 207). ;

Respondent on May 19, 1993, prior to

the entry of Judgment on the Jury's

a

verdict, renewed its prior Fed. R. Civ. P.

50 motion, joining with it motions for a

stay of enforcement of the Verdict and for

a new trial. Respondent’s motion argued at

great length the same “indeterminate

terms” theory respecting the Teich-Loews

agency contract appearing in both the

District Court’s summary judgment opinion

and its denial of respondent’s Rule 50

motion. It further asserted, without any

additional elaboration -—- and indeed

without explaining in any manner whether

it was referring to alleged the lack of

mortgagee consent, raised by respondent’s

trial attorney on April 27, 1993, or, on

the other hand, to the year-old issue of

asbestos tests, surfacing in the District

Court’s summary judgment opinion but

completely omitted by respondent’s

attorney on April 27, 1993 — *“{T)he

landlord was not, at any time, ready,

willing and able to execute and deliver a

26

lease to respondent (see Special Verdict

Form % 2)”.*

The District Court thereafter on

July 24, 1993, without entering Judgment

on the Jury's verdict, issued an Opinion

and Order dismissing petitioner's

Complaint, or in the alternative (for the

identical reasons) granting a new trial,

pursuant to respondent’s motion. (J.A.

357-80). The Court’s opinion (see Appendix

hereto) is a discursive one, whose central

apparent point concerns the Court’s

deliberate failure specially to submit to

the Jury the Question of respondent’s

“contract” with petitioner. (see pages 3

and 6-7 thereof). The Court’s opinion

further enunciated certain flatly

erroneous findings of law and fact

*Respondent additionally asserted,

similarly without any further elaboration

or explanation: “[T]Jhere was no valid,

enforceable contract between petitioner

and Broadway-72 Associates as required by

the Court’s instructions (see Special

Verdict Form q 1)”.

27

directly contradicting its April 20, 1992

summary judgment opinion, discussed under

“Reasons for Granting the Writ”, below.

REASONS FOR GRANTING THE WRIT

Justice Holmes declared in Aikens vy.

State of Wisconsin, 195 U.S. 194, 25 S.Ct.

3, 6 (1904) (quoted in Wilkerson vy.

MeCarthy, 3384 U.S. S3, 63, GF S.ce. 418

(1949)): “But it must be assumed that the

constitutional tribunal does its duty, and

finds facts only because they are proved.”

The callous indifference to “the

constitutional tribunal” manifested by the

Article III District Court Judge herein,

i.e., successively to his own decision

earlier in this same litigation, to the

Verdict of the Jury following his own

Instructions, and — in arbitrarily and

Ccapriciously overturning the Verdict, to

the decisions of this Court and the Court

of Appeals -—- reveals an abuse of the

28

judicial power of the United States so

blatant and cynical as to cry out for this

Court’s exercise of its supervisory power.

The Court of Appeals’ affirmance, solely

on the basis of what it chose to call

“Judge Sweet’s thorough and well-reasoned

opinion below” clearly “sanction[s]” the

District Court’s abuse herein of its noble

constitutional role, within the meaning of

Rule 10 .1. (a) of this Court.

Here, a published opinion of the

United States District Court for the

Southern District of New York, prominently

displayed in the nation’s leading

commercial news service and followed

thereafter as guiding jurisprudence in the

leading federal Circuit, has now been

directly contradicted, by the same

District Court initially authoring the

opinion. Moreover, this Court delights in

proclaiming before litigants such as

petitioner not only that they manage to

“get something each way” but that he “may

29

be wrong about [the law governing their

claims]” and “would be pleased to be

corrected at some other time’.

Here, that “some other time”

occurred after the Court had sent the case

to the Jury under Special Interrogatories

well supporting its ensuing Verdict. The

District Court had this case right the

first time; its feverish attempt to undo

the Verdict produced by its

Interrogatories and General Instructions

cannot stand against this Court’s power to

enforce “the accepted and usual course of

judicial proceedings”.

Blatant Legal and Factual Error

The District Court's July 24, 1993

opinion rests on the following clearly

erroneous conclusions of law and fact, all

of them flatly contradicting the same

court’s April 20, 1992 summary judgment

opinion:

30

(i) The parties having been prevented by

respondent from executing their final

lease of April 6, 1990, the District

Court on this basis erroneously

concluded: “This fee-shifting of the

broker's commission [sought by

petitioner herein] has occurred only

in cases where the transaction

actually closed . , . if the

transaction does not close for

whatever reason, the broker can

recover only from the party which

employed him.” (J.A. 368).

(ii) Flatly ismenten the testimony of

Littman and Esbin (as well as Teich

and Pilevsky) conclusively

demonstrating respondent ’s

solicitation and two-year use of

petitioner’s services, the Court’s

opinion further purported to find as

a fact: “Although Loews requested

Parke-Hayden to locate properties in

3]

which it might be interested, Loews

never requested that Parke-Hayden act

as its broker in connection with the

potential lease transactions.” (J.A.

3763.”

“The District Court’s opinion further

reiterated at length its essential error

respecting petitioner’s broker’s fee,

surfacing both in its April 20, 1992

summary judgment opinion and in its April

27, 1993 response to respondent's initial

Rule 50 motion, j,e,: “Testimony at trial

indicated that Parke-Hayden had never

agreed on the amount of its fee with

respomaent . . . *., (WJ.A. 373; eee also

J.A. 375). As fully recognized in the

District Court’s April 20, 1992 summary

judgment opinion, petitioner’s claim

against respondent was grounded not in

contract but in the “fee-shifting” cases

erroneously distinguished by the District

Court — as of July 24, 1993 — as requiring

a formal closing between the principals.

Moreover, with respect to the Court’s

“indefinite terms” confusion, clear New

York authorities reveal that a broker, as

common understanding would suggest, may

earn his commission by negotiating a deal

whose terms are not yet in existence.

inc,, 28 N.Y.2d 36, 319 N.Y.S.2d 836, 838

(1971) (dictum); Kaelin v. Warner, 27

N.Y¥.2d 352, 318 N.Y.S.2d 294 (1971);

» 24

A.D.2d 879, 312 N.Y.S.2d 444, 445 (4th

Dept. 1970) (agreement to find client “a

home of our desire”); Arnold vy.

Footnote continued

32

As set out in the District Court’s

own April 20, 1992 summary judgment

opinion, authoritative New York decisions

stretching back into the nineteenth

century impose liability for a real estate

broker’s lost commission on a principal

who after employing the broker

unjustifiably aborts a fully consummated

deal subsequently achieved by him, despite

the fact that the commission was to be

paid by the other contracting principal,

and further despite the lack of any

written “contract” between the broker and

the principal thus found liable. Westhill

Exports, Ltd. v. Pope, 12 N.Y.2d 491, 496,

240 N.Y.S.2d 961, 964 (1963); Schaechter

vy. Regency Properties, Inc,, 115 A.D.2d

981, 497 N.Y.S.2d 793 (4th Dept. 1985);

Duross Co. v. Evans, 22 A.D.2d 573, 574,

Schmeidler, 144 App. Div. 408, 129

N.Y.S.2d 408 (lst Dept. 1911).

33

257 N.Y.S.2d 674, 676-77 (1st Dept. 1965) ;

McKnight v. McGuire, 117 Misc. 306, 291

N.Y.S. 323, 324 (lst Dept. Appellate Term

1921) (defining the lost commission as the

broker's consequential damages, fully

foreseeable to the aborting principal) ;

compare Lane—The Real Estate Department

Store, Inc, v, Lawlet Corp,, 28 N.Y.2d 36,

319 N.Y.S.2d 836, 838 (1971) (broker earns

commission despite landlord’s subsequent

conveyance of property prior to closing,

or due to failure of any condition for

which his principal is responsible) .

The District Court’s opinion relies

principally on Grossman v. Herman, 266

N.Y. 249, 253, 194 N.E. 694, 695 (1934);

and Julien J. Studley, Inc, vy. New York

News, Inc,, 122 A.D.2d 633, 505 N.Y.S.2a

419 (lst Dept. 1986), both of which are

completely inapposite to the case at bar.

Thus, in Grossman, a broker employed

by the owner of real property repeatedly

solicited a buyer before gaining the

ie

34

buyer’s assent to an oral proposition to

purchase the property, formulated by the

broker. The owner thereupon gave an “oral

acceptance” of the proposition relayed

back to him by the broker. In exculpating

the buyer from its purchase contract, the

court stressed the parties’ failure to

agree on any of the conveyance’s essential

terms. 194 N.E. at 695.

In Studley, the broker learned from

an unsolicited approach to the owner that

its property was for sale, but also that

no asking price had yet been determined.

The broker later returned to the owner

with an offer specifying a 3% commission

for itself, but without further specifying

who ‘would pay it. The court held that the

owner had never employed the broker. 505

N.Y.S.2d at 420.

Relying on Grossman and Studley, the

Court’s central legal determination in its

opinion is that “This fee-shifting of the

broker's commission has occurred only in

35

cases where the transaction actually

closed” (J.A. 368; 379). This conclusion,

however, directly contravenes governing

New York law, as set out in the Court’s

April 20, 1992 summary judgment opinion.

eee Lane—The Real Estate Department Store,

inc., Supra, 28 N.Y.2d at 42, 319 N.y.S.2a

at 840-41 ("“[I]t is a well-settled rule in

this State that in the absence of an

agreement to the contrary, a real estate

broker will be deemed to have earned his

commission when he produces a buyer who is

ready, willing and able to purchase at the

terms set by the seller. ... The parties

are, of course, free to provide otherwise

by agreement. For example, they can

condition the seller's liability on the

Closing of title... *).

36

Wistet Wotan Es —e en

This Court has regularly reinstated

jury verdicts illicitly overturned by both

the District and Circuit Courts on

arbitrary and insufficient bases. This

Court thus stated in Continental Ore Co,

v. Union Carbide & Carbon Corp., 370 U.S.

690, 82 S. Ct. 1404, 1409 (see also Note 6

thereto):

“The Court of Appeals, was, of

course, bound to view the

evidence in the light most

favorable to Continental [the

party against whom the Court of

Appeals directed a judgment] and

to give it the benefit of all

inferences which the evidence

fairly supports, even though

contrary inferences might

reasonably be drawn”.

Accord: Webb v. Illinois Central

2.2... 352 08.- $42, 37. 83.Ct. 491. £2957);

Rogers v. Missouri P. R.R., 352 U.S. 500,

77 §.Ct. 459 (1957); Wilkerson vy.

McCarthy, supra; Galloway v. United

37

atates, 319 U.S. 372,.63 s.ct. 109779

(1943).

The Second Circuit follows the

identical rule. See, e.g,, Sirota vy,

Silitron Devices, Inc., 673 F.2d 566, 573

(2d Cir.), cert, denied, 459 U.S. 838

(1982); Konok v, Champlain Valley

Physicians Hosp., 733 F.2d 1007 (2nd

Cir.), cert, denied, 469 U.S. 884, 104 Ss.

Ct. 253 (1984); Fortunato v. Ford Motor

Co,, 464 F.2d 962 (2nd Cir. 1972), cert,

denied, 409 U.S. 1038, 93 S. Ct. 517

(1972);. see also, e.g., Kinnell v. Mid-

Atlantic Mausoleums, Inc., 850 F.2d 958

(3d Cir. 1988); see generally 5A Moore’s

Federal Practice, ¢ 50.02 [1] at 50-33-35.

38

CONCLUSION

Petitioner respectfully concludes

that the District Court’s conduct herein

justifies the issuance of this Court’s

writ pursuant to both Rule 10 .1. (a) and

.1. (c). The Judgment and Order under

review should be reversed in all respects

and the Jury's May 3, 1993 Verdict

awarding petitioner the full amount of its

lost $792,553.00 commission in damages

against respondent, plus interest,

reinstated by this Court.

Dated: New York, New York

July 25, 1994

Israel Weinstock

Counsel of Record

140-06 Rockaway

Beach Boulevard

Belle Harbor, N.Y. 11694

(718) 318-1000

la

APPENDIX A — ORDER OF THE UNITED STATES

COURT OF APPEALS FOR THE SECOND CIRCUIT

FILED APRIL 28, 1994

UNITED STATES COURT OF APPEALS

FOR THE

SECOND CIRCUIT

Ata stated term of the United States Court of Appeals for the

Second Circuit, held at the United States Courthouse in the City of

New York, on the 28th day of April one thousand nine hundred and

ninety-four.

DOCKET No. 93-7864

Parke-Hayden, Inc.

Plaintiffs-Appellants,

vs.

Loews Theatre Management Corp.,

Defendant-Appellee.

A petition for rehearing having been filed herein by Plaintiff-

Appellant Parke-Hayden, Inc. in the above entitled matters,

Upon consideration by the panel that decided the appeal, it is

Ordered that said petition for rehearing is DENIED.

FOR THE COURT

GEORGE LANGE

By: s/ Carolyn Clark Campbell

Carolyn Clark Campbell

Chief Deputy Clerk

2a

APPENDIX B — ORDER OF THE UNITED STATES

COURT OF APPEALS FOR THE SECOND CIRCUIT

FILED MARCH 15, 1994

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Ata stated term of the United States Court of Appeals for the

Second Circuit, held at the United States Courthouse in the City of

New York, on the 15th day of March, one thousand, nine hundred

and ninety-four.

Present:

Honorable John M. Walker, Jr.,

Honorable Dennis G. Jacobs,

Circuit Judges,

Honorable Richard Owen,*

District Judge.

No. 93-7864

PARKE-HAYDEN, INC.,

Plaintiff-Appellant,

Vv.

LOEWS THEATRE MANAGEMENT CORP.,

Defendant-Appellee.

ORDER

* The Honorable Richard Owen, United States District Judge for the

Southern District of New York, sitting by designation.

3a

Appendix B

Appeal from the United States District Court for the Southern

District of New York.

This cause came on to be heard on the transcript of the record

from the United States District Court for the Southern District of

New York (Sweet, J.) and was argued.

ON CONSIDERATION WHEREOF, it is now hereby

ordered, adjudged, and decreed that the judgment of said District

Court be and it hereby is AFFIRMED.

The plaintiff Parke-Hayden, Inc. appeals from the district

court’s order entering judgment as a matter of law in favor of

defendant Loews Theatre Management Corp. following a jury

trial.

We have carefully considered the issues presented by the

parties, and we affirm the district court’s judgment for

substantially the reasons stated in Judge Sweet’s thorough and

well-reasoned opinion below. See Parke-Hayden, Inc. v. Loews

Theatre Management Corp., No. 91 Civ. 0215 (RWS), 1993 U.S.

Dist. LEXIS 10318 (S.D.N.Y. July 24, 1993).

Accordingly, judgment of the district court is affirmed.

s/ John M. Walker, Jr.

Hon. John M. Walker, Jr., U.S.C.J.

s/ Dennis G. Jacobs

Hon. Dennis G. Jacobs, U.S.C.J.

s/ Richard Owen

Hon. Richard Owen, U.S.D.J.

4a

APPENDIX C — OPINION OF THE UNITED STATES

DISTRICT COURT FOR THE SOUTHERN DISTRICT OF

NEW YORK DATED JULY 24, 1993

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

91 Civ. 0215 (RWS)

PAR KE-HAYDEN, INC.,

Plaintiff,

- against -

LOEWS THEATRE MANAGEMENT CORP.,

Defendant.

OPINION

APPEARANCES:

DAVIS & GILBERT

Attorney for Plaintiff

1740 Broadway

New York, NY 10019

By: HOWARD J. RUBIN, ESQ.

Of Counsel

MARKS & MURASE

Attorney for Defendant

399 Park Avenue

New York, NY 10022

By: DOUGLAS J. DANZIG, ESQ.

GLENN T. IKEDA, ESQ.

Of Counsel

Sa

Appendix C

Sweet, D.J.

Defendant Loews Theater Management Corp. (“Loews”) has

renewed its motion submitted at the close of trial for judgment as a

matter of law pursuant to Rule 50(b), Fed. R. Civ. P., or, in the

alternate, for a new trial pursuant to Rule 59, Fed. R. Civ. P. anda

stay of the enforcement of judgment pursuant to Rule 62 (b), Fed.

R. Civ. P.

For the reasons given below, the motion for judgment as a

matter of law pursuant to Rule 50(b) is granted.

Parties

Loews is a Delaware corporation with its principal place of

business in Secaucus, New Jersey. Loews’ parent company at all

relevant times was Columbia Pictures Entertainment, Inc.

(“Columbia Pictures”). Loews engages in the operation and

management of movie theaters throughout the United States

through its own subsidiary and affiliated corporations.

Parke-Hayden, Inc. (“Parke-Hayden”) is a licensed New York

real estate broker with its principal place of business in Great

Neck, New York.

Broadway-72 Associates (“Broadway-72”) is a New York

partnership which was seeking to lease property located at 72nd

Street and Broadway in New York City (the “72nd Street

Property”) to Loews upon the understanding that Loews would

construct and operate a partially below-grade movie theater

complex.

6a

Appendix C

Prior Proceedings

After Parke-Hayden brought suit, both parties moved for

summary judgment. Loews alleged that it was under no obligation

to the broker in the absence of an express or implied contract of

employment with the broker and in the absence of a signed and

executed lease. This Court found that Parke-Hayden had alleged

sufficient evidence of a contract between Parke-Hayden and

Loews to allow the case to go to trial. See Parke-Hayden Inc. v.

Loews Theatre Management Corp., 789 F. Supp. 1257 (S.D.N.Y.

1992), familiarity with which is assumed.

The case went to trial on April 20, 1993. At the close of the

plaintiff’s case, prior to presenting its defense, Loews moved for

judgment as a matter of law, again alleging that Parke-Hayden had

failed to demonstrate an enforceable contract either with Parke-

Hayden or with Broadway-72 and that, in the absence of either

contract, Loews owed no obligation to the broker. The motion was

granted in part and denied in part. On April 27, 1993, the court

ruled from the bench that although Parke-Hayden had failed to

allege all the necessary elements of an express contract,' the jury

could still find that Loews liable if it found all of the following

elements:

First, Parke-Hayden must establish that it was

employed as a broker by Broadway-72

Associates. Second, ParkeHayden must prove

that it performed the services required by its

brokerage agreement, and that Loews

benefited by its services. Third, it must prove

1. The court in granting the motion to dismiss the contract claim referred

generally to “contract.” All the cases relied upon by Loews in its motion papers were

examples of express contracts, usually written option riders on other agreements.

7a

Appendix C

that Loews and Broadway-72 Associates had a

meeting of the minds on all essential terms of

the agreement. Fourth, it must prove the Loews

broke off the transactions wrongfully,

arbitrarily and in bad faith.

The jury returned a verdict for Parke-Hayden via special

verdict which did not ask whether the jury had found an

emp!oyment agreement between Parke-Hayden and Loews.

Facts

The facts set forth below were established during the trial and

are not presently in contention.

Sometime in early 1988, Hy Teich (“Teich”), the president of

Parke-Hayden, brought the 72nd Street Property to the attention of

Loews’s employee, Gil Littman (“Littman”), who had been hired

by Loews in December 1987 to locate potential theater sites for

Loews. Loews, Parke-Hayden, and the New York real estate

developer Philip Pilevsky (“Pilevsky”) began negotiations in 1988

about Loews’ purchase of two properties partly owned by

Pilevsky: one located at Third Avenue and Eleventh Street in

Manhattan and the other the 72nd Street Property. Loews’ sublease

of the property at Third Avenue and Eleventh Street was ultimately

executed, and Pilevsky paid Teich a brokerage fee in connection

with this sublease.

Negotiations for the 72nd street lasted for almost two years.

Teich alleges that in the course of negotiations his efforts led to

agreements between the parties on several key points. By about

March 1990, Loews and Broadway-72 had reached agreements on

term, rent, taxes, construction of the theater, options for additional

8a

Appendix C

years, air rights, changes in zoning and mortgages, and other

matters. Several drafts of the lease agreement were drawn up,

although Parke-Hayden alleges that the last represents a “final”

draft agreement. All provided that Parke-Hayden was the sole

broker or finder and that Broadway-72 would pay Parke-Hayden

its brokerage commission for the lease transaction. No lease

agreement was ever signed or executed.

Because the theater complex was to be partially below-grade,

demolition of the existing building and construction of a new

facility would be necessary. Loews contended at trial that it had

always conditioned its signing of the lease upon satisfactory

results from soil and environmental tests at the 72nd Street

Property. Physical due diligence conducted at the request of Loews

revealed the presence of bedrock and asbestos. The estimated cost

of excavation through bedrock would increase the cost of the

project by $800,000 to $1,000,000. Loews’ officials informed

Pilevsky that it was concerned about bearing the one million dollar

cost of excavation and asbestos removal and inquired about

possible concessions from Broadway-72.

Meanwhile, in September 1989, Columbia had been taken

over by Sony Corporation, at which time certain of the Loews

executives who had been dealing with Teich and Parke-Hayden left

and were replaced by new management. Loews’ new management

refused to sign the draft lease agreement and terminated the lease

negotiations. Parke-Hayden then brought suit against Loews,

alleging that since it had provided Loews with a “ready, willing,

and able” seller according to the terms initially set by Loews, it had

performed its duties as a broker and was still entitled to its

commission.

9a

Appendix C

Discussion

Judgment as Matter of Law

In reviewing a jury’s verdict, “the judge’s duty is essentially to

see that there is no miscarriage of justice. If convinced that there

has been then it is his duty to set the verdict aside; otherwise not,”

Berevino v. Saydjari, 574 F.2d 676, 684 (2d Cir. 1978). Where a

jury verdict imposes liability, and the applicable law does not

impose liability under the factual circumstances established at

trial, such a miscarriage of justice occurs and a motion for

judgment as a matter of law should be granted.

Loews maintains that instructing the jury to determine

whether Loews bargained in good faith without first finding either

an express or an implied contract of employment as a matter of law

between Loews and Parke-Hayden misinstructed the jury. In

reviewing a claim that the jury was erroneously instructed, a court

will determine whether the jury was misled in any way and whether

it had understanding of the issues and its duty to determine those

issues. The court should grant judgment as a matter of law if the

charge creates substantial and ineradicable doubt about whether

the jury has been properly guided in its deliberations. Pierce v.

Ramsey Winch Co., 753 F.2d 416, 425 (Sth Cir. 1985) (citations

omitted). In this case, it was error to instruct the jury to determine

Loews’ good faith without first determining, as a matter of law, the

source of such an obligation to Parke-Hayden.

Duty to Bargain in Good Faith

Traditional principles of Anglo-American common law

grounded a duty of good faith-only in some form of obligation

either incurred by the parties or else imposed by law. Absent fraud,

10a

Appendix C

misrepresentation, concealment, and duress, parties negotiation

for a contract are dealing at arm’s length and therefore have no duty

to act in good faith. “A duty to negotiate in good faith arises only

when there is a binding agreement between the parties . . . or a

binding agreement to negotiate,” Ogden Martin Systems, Inc. v.

Tri-Continental Leasing Corp., 734 F. Supp. 1057, 1071 (S.D.N.Y.

1990) (Sweet, J.), citing Reprosystem, B.V. v. SCM Corp., 727 F.2d

257, 264 (2d Cir. 1984), cert. denied, 469 U.S. 828 (1985) and

Teachers Ins. and Annuity Ass’n v. Tribune Co., 670 F.Supp. 491,

498 (S.D.N.Y. 1987)). The reason for the failure of the negotiations

is “immaterial absent the threshold finding of whether there was

any sort of binding obligation,” Ogden, 734 F. Supp. at 1071.

New York law still adheres to the common law doctrine of

caveat emptor in real estate negotiations, London v. Courduff, 141

A.D.2d 803, 529 N. Y.S.2d 874, 875 (2d Dep’t 1988). The lack of a

duty to bargain in good faith has been considered part of the

definition of freedom of contract:

In a _ business transaction both sides

presumably try to get the best of the deal. This

is the essence of bargaining and the free

market. And in the context of this case, no legal

rule bounds the mun of business interest. So one

cannot characterize self-interest as bad faith.

No particular demand in negotiations could be

termed dishonest, even if it seemed outrageous

to the other party. The proper recourse is to

walk away from the bargaining table, not to sue

for “bad faith” in negotiations.

Feldman vy. Allegheny Int’l, Inc., 850 F.2d 1217, 1223 (7th Cir.

1988). Contract and compulsion, in this view, are antithetical

lla

Appendix C

notions, for there can be no obligation to contract except on the

terms agreed upon. Freedom of contract has its corollary in the

“policy of certainty,” or definiteness, under which the terms of an

agreement to be enforceable should be so certain that parties know

precisely what to rely on and courts can determine when

performance of breach has occurred and what the precise remedy

should be. See generally Friedrich Kessler and Edith Fine, Culpa

in Contrahend,. Bargaining in Good Faith, and Freedom of

Contract: A Comparative Study, 77 Harv. L. Rev. 401, 409 (1964)

(comparing common law contract to contracts under the civil law).

The Law of Real Estate Brokers in New York

“(I]t is a well-settled rule in this State that in the absence of an

agreement to the contrary, a real estate broker will be deemed to

have earned his commission when he produces a buyer who is

ready, willing and able to purchase at the terms set by the seller,”

Lane-The Real Estate Department Store, Inc. v. Lawlet Corp., 28

N.Y.2d 36, 42; 268 N.E.2d 635; 319 N.Y.S.2d 836, 840 (1971);

Kalmon Dolgin Affiliates, Inc. v. Estate of Nutman, 172 A.D.2d

917, 568 N.Y.S.2d 204 (3d Dep’t 1991). Lane speaks of a “ready,

willing, and able buyer” because the broker is typically employed

by the seller. It is undisputed that all parties interested in the 72nd

Street Transaction contemplated that Broadway-72 would pay

Parke-Hayden’s commission, as memorialized in each draft of the

proposed lease agreement. However, provided the parties to the

underlying contract close the transaction, the courts have allowed

the broker to recover his fee from the buyer even if he was

originally employed by the seller. In Gronich & Co. v. 649

Broadway Equities Co., 169 A.D.2d 600, 565 N.Y.S.2d 18 (ist

Dep’t 1991), the lessee was held to the broker’s commission when

the lease was executed and the lessor would not pay:

12a

Appendix C

[I]t cannot be assumed that a broker works

gratuitously and the lessor and lessee are held

to such knowledge when they accept the result

of the broker’s services . ... when the seller

and buyer have agreed upon terms and execute

a lease agreement, the broker’s work is done

and he has earned a commission.

Gronich at 601. See also Hecht v. Meller, 23 N.Y.2d 301, 244

N.E.2d 77, 296 N. Y.S.2d 561 (1968) (either seller or buyer must be

liable for broker’s fee after contract of sale is executed despite

buyer’s justified later recession due to destruction of property).

This fee-shifting of the broker’s commission has occurred

only in cases where the transaction actually closed, however; if the

transaction does not close for whatever reason, the broker can

recover only from the party which employed him.

The question of law is reduced to this

proposition: Is a prospective purchaser liable

for commissions to a broker employed by the

owner when the prospective purchaser fails to

Carry out an oral acceptance of an offer made

by that broker? There can be no such liability

unless the prospect employed the broker. . . If

the broker is not employed, he takes his

chances in respect to a consummation of

pending negotiations and unless he definitely

brings the parties together to such an extent

that the prospective purchaser is bound, his

services are rendered without right to

compensation. Otherwise, every conditional

offer or tentative acceptance by a prospect

would result in a contract of employment.

13a

Appendix C

Grossman v. Herman, 266 N.Y. 249, 253, 194 N.E. 694 (1935). If

the buyer employs the broker, the law of New York provides for a

buyer who breaches a written contract of sale to pay the broker

even in acontract where the seller was responsible for the broker’s

compensation.

It is the general rule that a prospective

purchaser of real estate is not liable for failure

to accept an offer unless it appears that the

broker was employed by the purchaser. Niesen

v. Galewski, 211 App. Div. 858, 207 N.Y.S.

885, aff’d 240 N.Y. 652, 148 N.E. 744)....

However, where there is a contract of

employment between the purchaser and

broker, the breach thereof on the part of the

purchaser results in the latter’s liability for

damages. (Parker v. Simon, 231 N.Y. 503, 507-

08, 132 N.E. 404, 405).

Duross Co. v. Evans, 22 A.D.2d 573, 257 N.Y.S.2d 674, 676 (Ist

Dep’t 1965).

Absent express exclusion of the broker’s

rights, where a buyer employs a broker who

procures an agreement which the buyer fails or

refuses to perform, the buyer is liable for the

commission the broker would have earned if

the agreement had been executed.

Schaechter v. Regency Properties Inc., 115 A.D.2d 981, 497 4

N.Y.S.2d 793, 794 (4th Dep’t 1985) (citations omitted). 4

We start with the proposition that where there

14a

Appendix C

is a contract of employment between the

purchaser and the broker which does not

expressly exclude the broker’s right to

commission unless the purchaser actually

enters into a contract of sale, the purchaser’s

refusal to contract with the seller willing to

contract on the purchaser’s terms makes the

purchaser liable to the broker for the

commission the broker would have received

from the seller.

Tulp v. Padula, 70 Misc. 2d 306, 333 N. Y.S.2d 3, 6 (Civ. Ct., Bronx

Cty., 1972) (citations omitted).

Employment by the buyer is required for the broker to recover

from the buyer. However, employment by the seller does not

prevent the broker from being employed by the buyer as well. The

mere fact that Parke-Hayden was to receive its commission from

and thus was employed by Broadway-72, does not prevent it from

also being employed by Loews. See Grossman, 266 N.Y. at 251-52

(1935); Long Island Bus. Exch., Inc. v. DeLuca, 58 A.D.2d 594,

594, 395 N.Y.S.2d 244, 246 (2d Dep’t 1977); Simon v. Allied Chem.

Corp., 35 A.D.2d 273, 275, 278 N.E.2d 340, 315 N.Y.S.2d 919, 922

(Ist Dep’t 1970), aff’d, 29 N.Y.2d 861, 328 N.Y.S.2d 169 (1971);

Pease & Elliman, 216 A.D. 421, 423, 215 N.Y.S. 346 (Ist Dep’t

1926) (quoting McKnight, 117 Misc. 306, 308, 191 N.Y.S. 323).

The question is whether the facts may be held as matter of law to

justify an inference of double employment, Grossman, 266 N.Y. at

252, especially when either or both such contracts of employment

may be express or implied.

There are three types of contract at common law: express,

implied-in-fact, and quantum meruit or implied-in-law. An express

15a

Appendix C

contract requires the classic “meeting of the minds”: the parties

must have reached a fundamental agreement on every substantive

term, and the terms must be sufficiently definite and certain to be

enforceable. An implied-in-fact contract is one where the parties

have assented to the contract, but the assent is inferred from their

course of dealing, not from any explicit statement; the parties’

intentions are implied from the facts of the case. Quantum meruit,

by contrast, is a form of quasi-contract claim where payment for

services is sought in the absence of any contract or understanding

between the parties.

Express Contract

A buyer may be liable to a broker under an express contract

even if that contract depend upon an unfilled condition. In Nuvest,

S.A. v. Gulf & Western Ind. Inc., 649 F.2d 943 (2d Cir. 1981), Gulf

and Western executed a finder’s fee contract for a coal company

with a broker, Nuvest, under which Nuvest would not be paid

unless Gulf and Western actually acquired the type of interest

specified in the contract. Although Gulf and Western never

acquired such an interest, the court found that Gulf and Western

had deliberately prevented an acquisition and therefore awarded

Nuvest five percent of the price (as provided in Nuvest’s contract)

which the buyer and seller would have agreed upon in their final

transaction. According to the express terms of the Gulf & Western-

Nuvest contract, Gulf & Western owed Nuvest nothing until the

deal was closed, but the existence of an express contract with the

buyer created a duty either to bargain with the seller in good faith or

to pay the broker. This is in accordance with New York law, and

represents nothing more than the proposition that a party cannot

prevent liability under a contract by refusing to perform because of

an unfilled condition whose fulfillment rests entirely in the power

of that party:

16a

Appendix C

It should be observed, however, that even

where the broker and seller expressly provide

that there shall be no right to a commission

unless some condition is fulfilled, and the

condition is not performed, the seller will

nevertheless be liable if he is responsible for

the failure to perform the condition.

Nuvest, 649 F.2d at 947, quoting Lane, 28 N.Y. at 43,319 N.Y.S.2d

at 841.

However, a buyer may not be liable to a broker under an

express contract if the contract between the buyer and the broker

actually fails for want of an essential term:

If an agreement is not reasonably certain in

its material terms, there can be no legally

enforceable contract... The doctrine of

definiteness serves two related purposes.

First, unless a court can determine what the

agreement is, it cannot know whether the

contract has been breached, and it cannot

fashion a proper remedy .... Second, the

requirement of definiteness assures that courts

will not impose contractual obligations when

the parties did not intend to conclude a binding

agreement.

~

Cobble Hill Nursing Home, Inc. v. Henry & Warren Corp., 74

N.Y.2d 475, 482, 548 N.Y.S.2d 203, 923 (1989) (citations

omitted), cert. denied 498 U.S. 816, 111 S.Ct. 58, 112 L.Ed.2d 33

(1990). Parke-Hayden’s express contract of employment by Loews

17a

Appendix C

failed here because at least one essential term was indefinite. At

trial, Parke-Hayden failed to establish that Loews and Parke-

Hayden had agreed upon any terms of compensation:

As price is an essential ingredient of every

contract for the rendering of services, an

agreement must be definite as_ to

compensation. ...Where no fee is stated, courts

may not calculate a fee without custom and

usage evidence to establish an extrinsic

standard which is “fixed and invariable” in the

industry in question. . . . As no objective

method or formula was provided for

determining a commission .. . [the agreement]

was unenforceable.

Cooper Square Realty, Inc. v. A.R.S. Management, Ltd., 181

A.D.2d 551, 581 N.Y.S.2d 50, 51 (Ist Dep’t 1992) (real estate

broker’s alleged brokerage agreement insufficient for want of rate

of compensation). Under New York law, custom and usage

evidence must establish that the omitted term is “fixed and

invariable” in the industry in question, Hutner v. Greene, 734 F.2d

896, 898 (2d Cir. 1984) (plaintiff’s evidence that Lehman formula

was only frequently, not invariably, used for calculating

compensation made finder’s agreement insufficient).

Testimony at trial indicated that Parke-Hayden had never

agreed on the amount of its fee with Loews and that there was no

fixed and invariable rate scale in New York city for real estate

transactions of this type. Absent a definite agreement on Parke-

Hayden’s commission, there was no express contract.

18a

Appendix C

Implied-in-fact Contract

Any implied-in-fact contract also fails on the same ground.

Although brokers have recovered under implied contracts, Parke-

Hayden has not alleged a course of dealing sufficient to infer an

implied contract sufficiently definite as a matter of law. In

Schaechter, the buyer breached a contract to purchase real property

and was held liable for a fee to his broker:

[W]here a buyer employs a broker who

procures an agreement which the buyer fails or

refuses to perform, the buyer is liable for the

commissions the broker would have earned if

the agreement had been executed . . . . This is

true even where the contract or the usual

practice contemplates that the seller will pay

the commissions. . . and where there is only an

implied contract of employment between the

buyer and the broker and the buyer has not

expressly undertaken to pay commissions.

Schaechter, 497 N.Y.S.2d at 794.

This tbhecry of a broker’s ‘implied’

employnic.ut was recognized by the Court of

Appeals as early as 1881, when in Sibbald v.

Bethlehem Jron Co. (83 N.Y. 378, 380-381) it

stated: ‘the contract of employment may be

established ... by facts showing, in the

absence of [an] express agreement, a conscious

appropriation of the labors of the broker.’

Gronich, 169 A.2d at 602, 20. “Although the assent of a person to

19a

Appendix C

be charged under an implied contract is necessary, a person may

conduct himself in such a manner that his assent may fairly be

inferred.” Gurney, Becker & Bourne v. Benderson Dev. Co. 62

A.D.2d 1165, 404 N.Y.S.2d 203, 204 (4th dep’t 1978), rev’d on

other grounds, 47 N.Y.2d 995, 394 N.E.2d 282, 420 N.Y.2d 212

(1979) (error to submit issue of account stated to jury); Miller v.

Schloss, 218 N.Y. 400, 113 N.E. 337 (1916).

It is clearly settled that before a broker can

collect his commissions, he must have been

employed by his principal. Such employment

may be express or implied. If express, it may be

either written or oral. If implied, the facts

surrounding employment must establish that

the broker was indeed employed to perform the

services performed. . . . Brokers who rely upon

verbal or implied contracts of employment do

so at their own peril.

Black v. Vaeth, 55 Misc. 2d 502, 504; 285 N.Y.S.2d 557, 561 (City

Ct. Utica Cty. 1967).

The one class [of implied contract] consists of

those contract which are evidenced by the acts

of the parties and not by their verbal or written

words — true contracts which rest upon an

implied promise in fact. . .. Acontract cannot

be implied in fact where the facts are

inconsistent with its existence; or against the

declaration of the party to be charged; or where

there is an express contract covering the

subject matter involved; or against the

intention or understanding of the parties,

20a

Appendix C

Miller, at 406-07, 113 N.E. at 339. The failure of the parties to

establish the amount of Parke-Hayden’s compensation to be paid

by Loews can be considered to be a fact inconsistent with the

existence of an implied contract. Implied-in-facts contracts are

“true contracts” which must be at least definite enough to be

enforceable. Such liability lies in contract, and therefore if the

court is unable to ascertain the terms of the contract, it cannot

enforce an inferred contract for the reasons stated in Cobble Hill,

supra. At least one case indicates that an implied promise must be

as definite on the essential term of compensation as an explicit

promise. See Towers v. Doroshaw, 5 Misc. 2d 241, 159 N.Y.S.2d

367, 378 (Sup. Ct. Onondaga Cty. 1957). Although courts will

often use a standard of reasonableness in implying these terms, the

absence of a fixed and definite term of compensation here makes it

unreasonable to imply a brokerage fee.

Even if that is not the case, however, Parke-Hayden did not

allege at trial a course of dealing from which terms of an

employment contract with Loews could be inferred. All drafts of

the lease contemplated that the broker would be paid by the seller.

In Julien J. Studley, Inc. v. New York News Inc., 122 A.D.2d 633,

505 N.Y.S.2d 419, 421 (ist Dep’t 1986), aff’d, 518 N.Y.S.2d 749

(1987), the court held that where the parties agreed in writing that

the purchaser, as opposed to the defendant seller, was to pay the

plaintiff’s commission, “[t]he legal effect of this documentary

evidence is to negate any implication of employment” between the

plaintiff and the defendant. Although there was no agreement in

writing in this case, evidence that the draft lease indicated the

lessor was to pay the fee is also a fact inconsistent with the implied

contract.

An implied contract of employment by the buyer may exist

where the seller will pay the fee, as it did in Schaechter. However,

2la

Appendix C

in that case the general course of dealing between the parties made

it clear that the broker was working for the buyer. Here, there was

no such indications. Although Loews requested Parke-Hayden to

locate properties in which It might be interested, Loews never

requested that Parke-Hayden act as its broker in connection with

the potential lease transactions. Acceptance of terms

communicated by the broker does not automatically lead to the

inference that both sides employed the broker. See Grossman v.

Herman, 266 N.Y. at 253.

Quantum Meruit

Parke-Hayden has also asserted a separate claim under the

second type of implied contract, which is referred to as a contract

implied-by-law or quantum meruit. “There are two classes of

implied contracts, those implied in fact as a result of the acts of the

parties ... and quasi or constructive contracts resting upon

equitable principles.” Adams & Co. Real Estate, Inc. v. E. & B.

Super Markets, Inc., 26 A.D.2d 365, 366, 274 N.Y.S.2d 776, 778

(Ist Dep’t 1966). “This procedural term ... is sometimes used

inexactly as a synonym for the more general term quasi-contract,

which refers to any money claim for the redress of unjust

enrichment.” Alan Farnsworth, Contracts § 2.20 (1982). Because

payment is sought for services rendered in the absence of any

contract, a benefit conferred on the other party, or unjust

enrichment, is an essential element of a quantum meruit of other

quasi-contract claim. Sven Salen AB v. Jacq. Pierot Jr. & Sons Inc.,

559 F. Supp. 503, 506 (S.D.N.Y. 1983), aff’d, 738 F.2d 419 (1984).

A quasi or constructive contract rests upon the

equitable principle that a person shall not be

allowed to enrich himself unjustly at the

expense of another. In truth, it is not a contract

22a

Appendix C

or promise at all. It is an obligation which the

law creates, in the absence of any agreement,

when and because the acts of the parties or

others have placed in the possession of one

person money, or its equivalent, under such

circumstances that in equity and good

conscience he ought not to retain.

Miller, 218 N.Y. at 407, 113 N.E. at 339. A benefit must be

conferred upon the defendant under circumstances where allowing

the defendant to retain the benefit was unjust. Reprosystem B.V. v.

SCM Corp., 727 F.2d at 263; Indyk v. Habib Bank, Ltd., 694 F.2d

54, 57 (2d Cir. 1982); Marcraft Recreation Corp. v. Frances Devlin

Co., 459 F. Supp. 195, 197 (S.D.N.Y. 1978); Bradkin v. Leverton,

26 N.Y.2d 192, 257 N.E.2d 643, 309 N.Y.S.2d 192, 196 (1970).

Here, even the fact that the broker may have worked diligently

for a two-year period is not relevant unless Loews received a

benefit from such work. Because a benefit in a real estate

transaction can only be incurred when the property is bought or

leased, a broker’s claim for quantum meruit becomes cognizable

only when and if a lease arises. Jn re C.H. Stuart Inc., 16 B.R. 296,

297-98 (W.D.N.Y. 1981). In general, where a party provides

services seeking to achieve a specific result to benefit another, the

party cannot recover unless those services bring about that

particular result. See Martin H. Bauman Assoc., Inc. v. H. & M Int'l

Transport, Inc., 171 A.D.2d 479, 567 N.Y.S.2d 404 (Ist Dep’t

1991) (failure to recruit candidates who were hired resulted in no

benefit conferred); Reisner v. Recco Temporary Services, Inc., 136

A.D.2d 686, 524 N.Y.S.2d 102 (2d Dep’t 1988) (failure to generate

new business); Adams & Co. Real Estate, Inc. v. E&B Super

Markets Inc., 26 A.D.2d 365, 274 N.Y.S.2d 776 (ist Dep’t 1966)

(failure of leasing efforts); Towers, 159 N.Y.S.2d at 379 (same): cf.

23a

Appendix C

Gronich, 169 A.D.2d at 602 (real estate broker entitled to fee from

purchaser absent employment agreement where lease was

executed).

In short, in every case in which liability has been established

against a party in favor of a broker, the broker was employed by the

party from whom it was seeking compensation. The plaintiff’s case

here does not match, on its facts, any of the cases cited above where

the broker has collected from the buyer. United States v. Burger,

717 F. Supp. 245, 251 (S.D.N.Y. 1989) (JNOV motion grented in

civil tax case where court was “unable to find a single case” finding

the defendant liable under factual circumstances similar to those

established at trial). For this reason, defendant’s motion is granted.

Conclusion

Loews’ motion for judgment as a matter of law is granted and

the complaint of Parke-Hayden is dismissed. In the event Parke-

Hayden appeals from this decision and is successful, a new trial is

warranted, and therefore Loews’ motions for a new trial pursuant

to Rule 59, Fed. R. Civ. P., and for a stay of the enforcement of the

judgment pursuant to Rule 62(b), Fed. R. Civ. P. will be granted for

the reasons given above. See Carvel Corp. v. Diversified

Management Group, Inc., 930 F.2d 228, 232 (2d Cir. 1991) (new

trial warranted when trial court issues jury instructions that give

jury misleading impression or inadequate understanding of law).

It is so ordered.

New York, N. Y. s/ Robert W. Sweet

July 24 , 1993 Robert W. Sweet

U.S.D.J.

24a

APPENDIX D — OPINION OF THE UNITED STATES

DISTRICT COURT FOR THE SOUTHERN DISTRICT OF

NEW YORK DATED JULY 27, 1992

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

91 Civ.0215 (RWS)

PARKE-HAYDEN, INC.,

Plaintiff,

- against -

LOEWS THEATRE MANAGEMENT CORP.,

Defendant.

APPEARANCES:

DAVIS & GILBERT

Attorney for Plaintiff

1740 Broadway

New York, New York 10019

By: BRUCE GINSBERG, ESQ.

Of Counsel

MARKS & MURASE

Attorney for Defendant

399 Park Avenue

New York, New York 10022

By: LANCE GOTTHOFFER, ESQ.

GLENN T. IKEDA, ESQ.

Of Counsel

atlas

25a

Appendix D

OPINION

Sweet, D. J.

Defendant Loews Theatre Management Corp. (“Loews”) has

moved by order to show cause for an order pursuant to DR 5-

102(B) of the Disciplinary Rules of the Code of Professional q

Responsibility (“DR 5-102(B)”), 22 N.Y.C.R.R. § 1200.21, ;

disqualifying the firm of Davis & Gilbert from representing 4

plaintiff Parke-Hayden, Inc. (“Parke-Hayden”).

The facts of this case have been discussed in detail in a prior

opinion of this court, familiarity with which is assumed. See

Parke-Hayden, Inc. v. Loews Theatre Mgt. Corp., __ F. Supp. __

No. 91 Civ. 0215 (S.D.N.Y. Apr. 20, 1992) (the “Opinion”).

On June 1, 1992, Loews moved by order to show cause for an

order, among other things compelling the deposition of Robert P.

Reichman (“Reichman”). Reichman is an attorney at Davis &

Gilbert who provided legal services to Broadway-72 Associate’

(the Owner), prior to becoming associated with Davis & Gilbert. In

a bench ruling on June 9, 1992, this court granted Loews’s

application to the extent of ordering Reichman’s deposition. After

conducting Reichman’s deposition, Loews brought the present

motion by order to show cause on July 15, 1992. The motion was

made returnable on July 21, 1992, at which time oral argument was

heard and the motion considered fully submitted.

By this action, Parke-Hayden seeks to obtain from Loews a

brokerage commission relating to a proposed lease between Loews

and the Owner on the grounds that it was impliedly employed by

Loews to procure the lease. At the time the proposed lease was

being negotiated, Reichman, then a member of the firm of Dreyer

26a

Appendix D

& Traub, represented the Owner in the negotiations. Although

Loews has characterized Reichman as the Owner’s “principal

negotiator” the prominence of his role has not been established by

fact. It uncontested, however, that Reichman was privy to

conversations between Loews and the Owner and had many

conversations himself with Loews representatives regarding the

proposed lease. In response to interrogatories, Parke-Hayden has

identified Reichman as one of four people having knowledge of

facts material to this case.

Sometime after the events at issue in this litigation, Reichman

left Dreyer & Traub and joined Davis & Gilbert.

Referring to the Opinion, Loews characterizes the “case

dispositive issues at trial” to include (1) the terms of the lease to

which Loews supposedly agreed; (2) whether the Owner was

ready, willing and able to meet Loews’s terms; and (3) whether

Loews had the right to perform physical tests on the Property, as

defined in the opinion, to assure no adverse rock or asbestos

condition existed prior to obligating itself to the lease. Loews

maintains that, as “chief negotiator” for the Owner in connection

with the transaction, Reichman is the only non-party witness who

can testify as to facts relevant to these issues. Moreover, based on

Reichman’s deposition and various documents submitted as

exhibits to Loews’s motion, Loews maintains that his testimony

may be prejudicial'to Parke-Hayden.

Loews’s motion to disqualify Davis & Gilbert is based on DR

5-102(B), which provides that:

If, after undertaking employment in

contemplated or pending litigation, a lawyer

learns or it is obvious that the lawyer or a

27a

Appendix D

lawyer in his firm may be called as a witness

other than on behalf of the client, the lawyer

may continue the representation until it is

apparent that the testimony is or may be

prejudicial to the client at which point the

lawyer and the firm must withdraw from acting

as an advocate before the tribunal.

Loews argues that this rule mandates Davis & Gilbert’s withdrawal

because Reichman, a lawyer in the firm of Davis & Gilbert, “may”

be called as a defense witness and because his testimony “is or may

be prejudicial” to Parke-Hayden.

In view of the potential for use as a tactical device, motions to

disqualify are subject to “fairly strict scrutiny, particularly motions

under subdivision (B) [of DR 5-102].” Lamborn v. Dittmer, 873

F.2d 522, 531 (2d Cir. 1989). Although a literal reading of DR 5-

102(B) mandates disqualification merely on the showing that the

potential testimony of a witness-advocate may be prejudicial to the

party his firm represents, under New York law the party seeking

disqualification must demonstrate that it is likely that the

“ ‘testimony to be given by the witness is necessary’ ” and that it is

substantially likely to be prejudicial to the party represented by his

firm. Luk Lamellen U. Kupplungsbau GmbH v. Lerner, 167 A.D.2d

451, 452-53, 562 N.Y.S.2d 134 (2d Dep’t 1990) (quoting S & S

Hotel Ventures Ltd. Partnership v. 777 S. H. Corp., 69 N.Y.2d 437,

515 N.Y.S.2d 735 (1987)), see also, e.g., Plotkin v. Interco Dev.

Corp., 137 A.D.2d 671, 524 N.Y.S.2d 763 (2d Dep’t 1988); In re

Estate of Bartoli, 137 Misc.2d 499, 521 N.Y.S.2d 392 (Surr. Ct.

Nassau County 1987), aff’d, 143 A.D.2d 830, 533 N.Y.S.2d 324

(2d Dep’t 1988); L-S Plate & Wire Corp. v. Federal Ins. Co., N. 88

Civ. 0706, slip op. at 4 (S.D.N.Y. Mar. 28, 1989) (movant must

demonstrate genuine necessity for testimony and substantial

28a

Appendix D

prejudice); Rice v. Baron, 456 F. Supp. 1361, 1371 (S.D.N.Y. 1978)

(movant bears burden of establishing existence of factors

warranting disqualification).

In determining the “necessity” of the testimony, a court should

consider such factors as the significance of the matter, the weight

of the testimony and the availability of other evidence. S & S Hotel

Ventures Ltd. Partnership, 69 N.Y.2d at 446. For testimony to be

“prejudicial” under the rule,

the “projected testimony of a lawyer or firm

member must be sufficiently adverse to the

factual assertions or account of events offered

on behalf of the client such that the bar or the

client might have an interest in the lawyer’s

independence in discrediting that testimony.”

Furthermore, the moving party “bears the

burden of demonstrating specifically how and

as to what issues in the case the prejudice may

occur and that the likelihood of prejudice

occurring is substantial.”

Rice, 456 F. Supp. at 1371 (citations amen quoted in Lamborn,

873 F.2d at 531.

Loews first maintains that Reichman’s testimony as to certain

consents from the Owner’s mortgagee and limited partners may be

prejudicial to Parke-Hayden because it will demonstrate that the

owner was not “ready, willing and able” to enter into the lease as of

April 17, 1990. According to Loews, these consents were

necessary to allow the Owner to enter into the lease. Reichman

testified that it was his understanding that, absent these consents:

29a

Appendix D

[t]here would be no transaction I presume. And

the reason I say I presume is because I think

there was also a possibility that, and I don’t

recall the general partners getting into this fact,

the consent was not required but they

determined to go ahead and get the consent

anyway.

Reichman further testified that, as of April 17, 1990, the consents

were not obtained.

Reichman also testified about the substance of a proposed

escrow agreement between the Owner and Loews. According to

4 5 of that agreement, the effect of a failure to obtain the consents

by May 31, 1991 was to render the lease of no further force and

effect. See Danzig Aff. Ex. C. { 5. The escrow agreement also

states that:

WHEREAS, as of the date hereof, Landlord

has not yet obtained the consent of [the

Mortgagee] . . . and the consent of the Limited

Partners and, as a result, Landlord may not at

this time convey a leasehold interest in the

Premises to [Loews]... .

See id.

Although Reichman’s testimony relates toa material element

of Parke-Hayden’s case, namely, whether the Owner was “able” to

convey a leasehold interest to Loews, there is insufficient

information before the court at this time to determine whether the

testimony is likely to prejudice Parke-Hayden and whether it is

“necessary” for purposes of disqualification. It is unclear, for

30a

Appendix D

instance, whether the Owner’s failure to obtain consents from its

mortgagee and limited partners would actually impair its power of

alienation or whether it would simply put Loews into default under

agreements with those parties. Moreover, the magical quality of

the date April 17, 1990 has not been established. The escrow

agreement plainly states the operative date to be May 31, 1990.

Finally, any inconsistency between Reichman’s testimony and

Teich’s testimony that consents had been obtained is not

“sufficiently adverse to the factual assertions or account of events

offered on behalf of the client such that the bar or the client might

have an interest in the lawyer’s independence in discrediting that

testimony.” Assuming that Teich is an appropriate witness on this

subject in the first place, he testified that he did not know what date

the approvals were obtained and that he was unaware if the

approvals were written or oral. Teich’s testimony suggests that his

understanding of consents was a mere oral sign-off and that he was

not commenting on contractual formalities. See Danzig Aff. Ex. D

at 136-37 (“He [Pilevsky] got in touch . . . with all his limited

partners and it was agreed.”).

Furthermore, Loews has not demonstrated that Reichman’s

testimony is “necessary” for purposes of disqualification under

DR 5-102(B). First, Reichman’s testimony as to the substance of

the escrow agreement is unnecessary because “other evidence” is

available, not the least of which is the agreement itself. See

Kirshon, Shron, Cornell & Teitelbaum P.C. v. Savarese, 581

N.Y.S.2d 487 (App. Div. 3d Dep’t 1992) (testimony not

“necessary” where cumulative of other evidence); see also

Lamborn, 873 F.2d at 532 (not disturbing district court finding that

testimony on certain issue would have been cumulative and

therefore not grounds for disqualification). Second, Loews has not

established that Reichman is the sole witness capable of testifying

as to when the consents were or were not obtained. Presumably, the

3la

Appendix D

Owner’s principals involved in the transaction would have this

knowledge at their disposal. However, Loews brought this motion

prior to the scheduled depositions of those individuals, thus

rendering it impossible to determine the necessity of Reichman’s

testimony. Because Reichman’s testimony as to the consents issue

may prove to be merely cumulative, it is not appropriate to

disqualify Davis & Gilbert on this basis at this time. See id.

(disqualification premature where discovery has not been had).

Loews next argues that Reichman’s testimony will be

prejudicial to Parke-Hayden because it indicates Parke-Hayden’s

awareness that favorable rock and asbestos test results were a

condition precedent to Loews entering into the lease. Loews’s

assertion is unsupported by any of its factual submissions on this

motion. These submissions establish nothing more than that Parke-

Hayden was aware that Loews was interested in conducting tests at

the Premises before the commencement of the term of the lease.

However, neither Reichman’s deposition testimony or the

documentary exhibits to Loews’s papers evidence an awareness

that these tests were a condition to Loews entering into the lease.

The evidence simply does not support Loews’s conclusory

assertion that “Mr. Reichman knew full well that Loews needed to

determine whether there was a rock problem before it could agree

to sign a lease.” Loews Memo. at 13.

Finally, Loews argues that Reichman’s testimony will be

prejudicial because it conflicts with Teich’s testimony as to his

awareness (or lack thereof) of the projected cost of asbestos and

rock removal and as to his discussions (or lack thereof) of

conversations regarding the rock issue after April 20, 1992.

However, given the questionable materiality of the underlying

evidence, any such contradictions have not been shown to be

sufficiently adverse to the Owner at this time to warrant

disqualification.

32a

Appendix D

For the foregoing reasons, Loews motion to disqualify Davis

& Gilbert from representing Parke-Hayden is denied.

It is so ordered.

s/ Robert W. Sweet

ROBERT W. SWEET

U.S.D.J.

New York, N.Y.

July 27, 1992

. oa

”

33a

APPENDIX E — OPINION OF THE UNITED STATES

DISTRICT COURT FOR THE SOUTHERN DISRICT OF

NEW YORK DATED APRIL 20, 1992

United States District Court,

S.D. New York.

April 20, 1992

No. 91 Civ. 0215 (RWS)

PARKE-HAYDEN, INC.,

Plaintiff,

LOEWS THEATRE MANAGEMENT CORP.,

Defendant.

Davis & Gilbert, New York City (Bruce Ginsberg, of counsel),

for plaintiff.

Marks Murase & White, New York City (Douglas J. Danzig,

of counsel), for defendant.

34a

Appendix E

OPINION

SWEET, District Judge.

Plaintiff Parke-Hayden, Inc. (“Parke-Hayden”) has moved

pursuant to Fed. R.Civ.P. 56 for an order granting summary

judgment in its favor on the First Claim contained in the complaint.

Defendant Loews Theatre Management Corp. (“Loews”) has also

moved for partial summary judgment in its favor dismissing the

Third and Fourth Claims of the complaint as well as Parke-

Hayden’s request for punitive damages in connection with the First

and Third Claims. For the following reasons, Parke-Hayden’s

motion is denied; Loews’s motion is granted.

The Parties

Parke-Hayder is a licensed real estate brokerage firm which is

a New York corporation with its principal place of business at 98

Cutter Mill Road in Great Neck, New York.

Loews is a Delaware corporation with its principal place of

business at 400 Plaza Drive in Secaucus, New Jersey. Through its

subsidiary and affiliated corporations, Loews engages in the

operation and management of movie theaters throughout the

United States.

The Facts

This lawsuit arises out of two unconsummated real estate

transactions to which Loews was a party and in which Parke-

Hayden acted as broker. With regard to both transactions, Parke-

Hayden seeks to recover brokerage commissions, as well as

punitive damages, from Loews.

35a

Appendix E

The 72nd Street Property

The First Claim of the Complaint, on which Parke-Hayden

seeks summary judginent, involves property located at 72nd Street

and Broadway in New York City (the “72nd Street Property”) and

negotiations by Loews to lease the 72nd Street Property and

construct and operate a partially below-grade movie theater

complex (the “72nd Street Transaction”).

Sometime in early 1988, Hy Teich (“Teich”), the president of

Parke-Hayden, brought the 72nd Street Property to the attention of

Loews’s employee, Gil Littman (“Littman”), Teich Dep. at 32, who

had been hired by Loews in December 1987 to locate potential

theater sites for Loews. Littman had started searching for a theater

site in the neighborhood of West 72nd Street in early 1988. It is

unclear which of the men approached the other: Littman testified

that he asked Teich, a longtime friend, to find potential sites for

Loews in that area, Littman Dep. at 20; Teich, on the other hand,

testified that he “made someone aware ... that we had this

outrageous corner. Teich Dep. at 32. In any event, Teich showed

Littman the Beacon Theater and the 72nd Street Property. Jd. at 22.

According to Littman’s testimony, when Teich showed him

the 72nd Street Property, Littman said “Teich, we want the deal.”

Id. at 26. Lou Korman (“Korman”), who was at all relevant times

chairman of Loews’s parent, Columbia Pictures Entertainment,

Inc. (“Columbia”), told Littman to make the deal, and Littman

called Teich and said “hey, we want the deal. Let’s go.” Littman

Dep. at 27; see also Teich Dep. at 32 (Korman told Teich directly

that “I’d like to get that property”). Teich conveyed Loews’s

interest to Philip Pilevsky (“Pilevsky”), a general partner of

Broadway-72 Associates (the “Owner”), the owner of the 72nd

Street Property. Teich reported back to Littman that Pilevsky was

4

ed

:

=

36a

Appendix E

not interested in a transaction with Loews for that property Littman

insisted that Teich continue trying to get the 72nd Street Property.

When Littman informed Korman that Pilevsky would not do the

deal, Korman said that he did not care “what it takes. Make the

deal. Get 72nd Street. Get Teich and make the deal.” Jd. at 27, 30.

Littman thereafter had “Teich continue to work for [Loews] to get

the deal” by calling him at all hours of the day and night “to make

sure he understood that I wanted it.” Jd; see also Teich Dep. at 34

(Littman told Teich to “try to get it. Try to get it.”).

In his affidavit, Pilevsky states that he never asked Teich to

seek a lessee for the 72nd Street Property and did not have the

property listed with any broker, Pilevsky Aff. { 3, and that when

Teich approached him, he told Teich that he did not want to lease

the property to Loews. Jd. Subsequently, according to Pilevsky,

Teich repeatedly asked him to agree to Loews’s proposal. Finally,

Teich persuaded Pilevsky to enter into negotiations with Loews.

Id. F4.

Negotiations took place over approximately the next two

years. During the negotiations, according to Pilevsky, Teich would

often ask him to agree to points desired by Loews, and, “as a result

of his efforts, agreements were reached.” Jd. J 5. Indeed, Teich’s

role in this regard is confirmed by former Loews President and

Chief Operating Officer, Jerry Esbin (“Esbin’”). Esbin testified that

“fhje [Teich] would convey various things that I [Esbin] wanted to

Mr. Pilevsky.” Esbin Dep. at 26. The purpose of his conveying such

information was “to allow [Loews] to ultimately get the deal that

[Loews] wanted.” Jd. at 28. According to Littman’s deposition

testimony, if anything came up with respect to the 72nd Street

Transaction Esbin would say “get to Teich. Let’s say some business

point came up that bothered Jerry, or something. He said, get Teich

and have him take care of this with Phil [Pilevsky].” Littman Dep.

37a

Appendix E

at 32. At the same time, Esbin’s testimony clearly establishes that

he regarded and understood Teich to be acting as broker for the

Owner. See, e.g, Esbin Dep. at 27.

By about March 1990, Loews and the Owner reached

agreement on term, rent, taxes, construction of the theater, options

for additional years, air rights, changes in zoning and mortgages.

Esbin Dep. at 31. Esbin testified that at that point he told Mr. Teich

that there would be a deal based on everything negotiated to that

point, namely, the “economic points.” Esbin Dep. at 55. Esbin

testified that at the time the economic points were negotiated,

Loews did not take into consideration the possible results of

asbestos tests or rock borings. Jd. at 58.

After negotiations and many drafts of a lease, a “final lease”

was prepared and agreed to by both parties, which, according to

Parke-Hayden, was ready for execution. Pilevsky Aff. 4 9, Ex. A.

This lease agreement, like the drafts before it, provided that Parke-

Hayden was the sole broker or finder and that the Owner would pay

Parke-Hayden its brokerage commission for the lease transaction.

Pilevsky Aff. Ex. AJ 35.01. After they worked out the rent, Esbin

told Teich that “with respect tc those points that we have discussed

the economic points, up to that point, ... everything was

satisfactory to me and there would be a deal based on everything at

that point.” Esbin Dep. at 55.

Nevertheless, as Esbin testified, all of the points had not yet

been negotiated at that time. Esbin Dep. at 54-55. Because the

theater complex was to be partially below-grade, demolition of the

existing building and construction of a new facility would be

necessary. Loews contends that it had always conditioned its

signing of the lease upon satisfactory results from soil and

environmental tests at the 72nd Street Property. Thus, according to

38a

Appendix E

Loews, as of April 1990, the “critical point concerning the expense

of excavating bedrock and removing asbestos from the property

had yet to be negotiated.” Loews Memo. in Opp. at 7. Loews

claims that this condition was known to both Teich and the Owner

as early as January 1990 when the parties began negotiating a

formal agreement for Loews to conduct the tests (the “Access

Agreement”). Teich, on the other hand, testified that it was his

understanding that the test results had no bearing on the parties’

obligation to go forward on the deal that Teich Dep. at 118-19.

The physical due diligence revealed the presence of rock and

asbestos. The estimated cost of excavation would increase the cost

of the project by $800,000 to $1,000,000. Esbin informed Pilevsky

that he was concerned about bearing the one-million dollar cost of

excavation and asbestos removal and img@eired about possible

concessions from the Owner. According to Pilevsky, he

“immediately agreed to work that out with him. . . . The possible

cost of the rock excavation was not a stumbling block and would

not have hindered our closing this deal.” Pilevsky Aff. { 16; see

also Esbin Dep. at 96. However, according to Loews, it determined

that it could not accept the risk and expense involved in blasting the

rock at the 72nd Street Property and decided not to go through with

the transaction. See Benjamin 1/6/92 Aff. { 3.

Meanwhile, in or about September 1989, Columbia had been

taken over by Sony Corp., at which time Korman exited as

Columbia’s chief executive officer and Peter Guber (“Guber’’) and

Jon Peters (“Peters”) took the helm. Sometime in the end of April

or beginning of May 1990, Guber and Peters replaced Bernie

Myerson with Alan Friedberg (“Friedberg”) as Loews’s Chairman.

Esbin was relieved of his position in May 1990. It is undisputed

that Loews’s new management terminated the 72nd Street

Transaction and made no attempt to close a lease with the Owner.

39a

Appendix E

The Danbury Transaction

The Third and Fourth Claims of the Complaint, which Loews

seeks to have dismissed on summary judgment, relate to a

proposed joint venture agreement between Loews and real estate

developers Pilevsky and David Lavipour (“Lavipour”), who

formed an entity known as PL Danbury Cinemas Associates (“PL

Associates”). The purpose of the proposed joint venture was to

construct and operate a motion picture cinema at a site in Danbury,

Connecticut (the “Danbury Transaction”). According to Parke-

Hayden, Tech was retained by the proposed joint venture as a

broker to facilitate the transaction. This assertion is not disputed on

this motion.

Negotiations took place beginning in the spring of 1989.

Loews was, and in fact continues to be, subject to a 1952 consent

judgment (the “Consent Judgment”) under which it is enjoined

“from acquiring or continuing to own any beneficial interest in any

motion picture theatre in conjunction with an actual or potential

independent exhibitor.” Smith 12/6/91 Aff. Ex. B, art. III, { 5(b).

Each draft of the proposed partnership agreement contained a

clause referring to the Consent Judgment and providing that the

proposed partners would not do anything to cause Loews to be in

violation of the Consent Judgment. See, e.g., id. Ex. C, at 22-23,

44-45, 46-47.

In early 1990, Loews learned that Lavipour and Pilevsky had

interests in other motion picture theaters, whereupon Loews

informed all of the parties that it needed to obtain Department of

Justice (“DOJ”) approval for the proposed transaction. In February

1990, Loews contacted its antitrust counsel, Allen Kezsbom of

Fried, Frank, Harris, Shriver & Jacobson to request that he obtain

an opinion from the DOJ that the Danbury Transaction would not

40a

Appendix E

constitute a violation of the Consent Judgment. On March 6, 1990,

Kezbom sent a letter to Frederick Haynes of the Antitrust Division

of the DOJ outlining why the proposed Danbury Transaction did

not violate the Consent Judgment. Kezbom subsequently

forwarded to the DOJ the proposed partnership agreement and the

agreements documenting the theater interests of Lavipour and

Pilevsky. On April 26,1990, Kezbom sent Haynes another letter

summarizing relevant case law.

Nevertheless, Seymour Smith, who at all relevant times was

Executive Vice President and General Counsel for Loews, affirms

that in late September 1990, Haynes informed him and Kezsbom at

a meeting at the DOJ that the DOJ would consider the

consummation of the Danbury Transaction a violation of the

Consent Judgment. Smith 12/6/92 Aff. 1128. On October 9, 1990,

Kezsbom confirmed that Haynes had repeated this view to him. /d.

Ex. F. Loews informed the other parties of the DOJ determination

in early October 1990. Loews contends that, in view of this

determination, it abandoned the Danbury Transaction. Parke-

Hayden argues, on the other hand, that Loews had terminated the

deal long before the DOJ determination for reasons other than any

prohibitions imposed by the Consent Judgment.

Discussion

I. Standard for Summary Judgment

The standard for summary judgment is well-known. As the

Second Circuit has recently written:

Summary judgment may be granted only when

there is no genuine issue of material fact

remaining for trial and the moving party is

4la

Appendix E

entitled to judgment as a matter of law.

Fed.R.Civ.P. 56(c). “As a general rule, all

ambiguities and inferences to be drawn from

the underlying facts should be resolved in favor

of the party opposing the motion, and all

doubts as to the existence of a genuine issue for

trial should be resolved against the moving

party.”

Bay v. Times Mirror Magazines, Inc., 936 F.2d 112, 116 (2d

Cir.1991) (citations omitted). The court will find that there is no

genuine issue of material fact and may therefore grant summary

judgment where, “[v]iewing the evidence produced in the light

most favorable to the nonmovant, . . . a rational trier could not find

for the nonmovant.” Binder v. Long Island Lighting Co., 933 F.2d

187, 191 (2d Cir.1991); see also Bay, 936 F.2d at 116.

II. Parke Hayden’s Motion for Summary Judgment

The First Claim of the Complaint, on which Parke-Hayden

moves for summary judgment, relates to the 72nd Street

Transaction. Parke-Hayden alleges that Loews employed Parke-

Hayden to procure a lease of the 72nd Street Property on its behalf,

that Loews wrongfully refused to enter into the lease procured by

Parke-Hayden, and that Loews is liable to Parke-Hayden in the

amount of the brokerage commission Parke-Hayden would have

received from the owner if not for Loews’s wrongful conduct.

Loews challenges Parke-Hayden’s characterization of its

relationship with Loews, contending that at no time did it employ

Parke-Hayden as broker, that Parke Hayden was employed as

Pilevsky’s broker and that Loews regarded Teich as a “conduit”

who was “nothing more than Pilevsky’s agent and Loews’

‘contact’ with Pilevsky and his organization.” Smith 1/6/92 Aff.

TI 12-14.

42a

Appendix E

It is undisputed that all parties interested in the 72nd Street

Transaction contem plated that the Owner would pay Parke-

Hayden’s commission, as memorialized in each draft of the

proposed lease agreement, see, e.g., Smith 12/6/91 Aff. Ex. A,

{ 35.01. Moreover, Parke-Hayden concedes that it has never

alleged or sought to prove any agreement by Loews to pay

commission to Parke-Hayden in connection with the 72nd Street

Transaction. Parke-Hayden Reply Memo. at 9.

Under New York law,

Where there is a contract of employment

between the purchaser and the broker which

does not expressly exclude the broker’s right to

commission unless the purchaser actually

enters into a contract of sale, the purchaser’s

refusal to contract with a seller willing to

contract on the purchaser’s terms makes the

purchaser liable to the broker for the

commission the broker would have received

from the seller.

This liability is predicated upon the

proposition that when the prospective

purchaser knows that the broker will earn a

commission from the seller, the law will imply

a promise on the part of the prospective

purchaser to complete the transaction, and if he

fails or refuses to do so without a valid reason,

the prospective purchaser becomes liable to the

broker for breach of an implied promise, with

damages chargeable to him measured by the

amount of commission the broker would have

earned.

43a

Appendix E

Tulp v. Padula, 70 Misc.2d 306, 308, 333 N.Y.S.2d 3, 6

(Civ.Ct.1972); see Westhill Exports, Ltd. v. Pope, 12 N.Y.2d 491,

496, 240 N.Y.S.2d 961, 964, 191 N.E.2d 447, 449 (1963);

Schaecter v. Regency Props, Inc, 115 A.D.2d 981, 981, 497

N.Y.S.2d 793, 794 (4th Dep’t 1985); Duross Co. v. Evans, 22

A.D.2d 573, 574, 257 N.Y.S.24 674, 676 (1st Dep’t 1965); Pease

& Elliman, Inc. v. Gladwin Realty Co., 216 A.D. 421, 424, 215

N.Y.S. 346 (1st Dep’t 1926); McKnight v. McGuire, 117 Misc. 306,

308, 191 N.Y.S. 323 (Sup.Ct.1921).

In New York, absent an agreement to the contrary, a real estate

broker earns his commission when he procures a buyer who is

ready, willing and able to purchase at the terms set by the seller.

Lane—Real Estate Dep't Store, Inc. v. Lawlet Corp., 28 N.Y.2d 36,

42, 319 N.Y.S.2d 836, 840, 268 N.E.2d 635, 638 (1971); Kalmon

Dolgin Affiliates, inc. v. Estate of Nutman, 172 A.D.2d 917, 568

N.Y.S.2d 204 (3d Dep’t 1991).

For the broker to prevail therefore, it must be shown that the

purchaser employed the broker, that the broker procured a seller

who was ready willing and able to enter the proposed transaction,

and that the failure to complete the transaction was due to the fault

of the purchaser. The burden of proof is borne by the broker, in this

case Parke-Hayden. Tulp, 70 Misc.2d at 308, 333 N.Y.S.2d at 6

(citing cases).

The mere fact that Parke-Hayden was to receive its

commission from, and thus was employed by, the Owner, does not

prevent it from also being employed by Loews. See Grossman v.

Herman, 266 N.Y. 249, 251-52, 194 N.E. 694 (1935); Long Island

Bus. Exch., Inc. v. De Luca, 58 A.D.2d 594, 594, 395 N.Y.S.2d 244,

246 (2d Dep’t 1977); Simon v. Allied Chem. Corp., 35 A.D.2d 273,

275, 315 N.Y.S.2d 919, 922 (1st Dep’t 1970), aff'd, 29 N.Y.2d 861,

d4a

Appendix E

328 N.Y.S.2d 169, 278 N.E.2d 340 (1971); Pease & Elliman, 216

A.D. at 423, 215 N.Y.S. at 423 (quoting McKnight, 117 Misc. at

308, 191 N.Y.S. 323).

Rather, the question is whether the facts may be held as matter

of law to justify an inference of a double employment. Grossman,

266 N.Y. at 252, 194 N.E. 694. There must be a contract between

Loews and Parke-Hayden which Loews has broken with resulting

liability for damages. Jd.

“(T]he contract of employment may be

established ... by facts showing, in the

absence of an express agreement, a conscious

appropriation of the labors of the broker. . . in

some cases ‘by the mere acceptance of the

labors of the broker.’ ”

Gronich v. 649 Broadway Equities Co., 169 A.D.2d 600, 565

N.Y.S.2d 18 (1st Dep’t 1991) (quoting Sibbald v. Bethlehem Iron

Co., 83 N.Y. 378, 380-81 (1881)).

The affidavits and deposition testimony cited above leave no

doubt that, under relevant New York law, Loews employed Teich to

procure a lease of the 72nd Street Property by soliciting and

accepting his services on Loews’s behalf.' See Tulp, 70 Misc.2d at

309, 333 N.Y.S.2d at 7 (plaintiff-broker was “employed” by

1. The record contains evidence additional to that reviewed in the discussion of

facts that establish that Teich was performing services on behalf of Loews in the 72nd

Street Transaction. See, e.g., Esbin Dep. at 25-28 (Teich was “performing services for

Loews in this regard [helping Loews get the site from Pilevsky]” and Esbin

understood Teich to be working for him “to the extent that he would convey what I

needed to Mr. Pilevsky” for the purpose of getting the deal Loews wanted).

45a

Appendix E

defendants prospective purchasers of a one-family home — who

had “requested” that plaintiff show them one-family houses in a

certain price range in a certain area).

The problem on this motion for summary judgment, however,

is that the record is bare of evidence of the terms of that

employment other than Teich’s testimony that “[m]y obligation

was to try to bring — my obligation was to try to have Phil Pilevsky

and his partners lease that parcel of property. My obligation to

Loews was to negotiate a palatable deal once the plans were

acceptable to both parties.” Jd. at 52-53 (emphasis added). This

description of the terms is simply too indeterminate to form a basis

upon which to conclude on a motion for summary judgment that

Loews breached the purported agreement or “contract” with

Parke-Hayden.”

Moreover, questions of fact exist as to whether Parke-Hayden

procured a “ready, willing and able lessor” on the terms proposed

by the Loews. Very specifically, the factual submissions raise a

question as to whether a favorable result from the rock and

2. This case should be contrasted to McKnight v. McGuire, 117 Misc. 306, 191

N.Y.S. 323 (Sup.Ct. 1921), in which the court held the lessee liable to the broker for

breaching his agreement with the broker to enter into a lease agreement. In that case,

the lessee had employed the broker to submit an offer to the owner of the premises, had

agreed to lease the premises if the broker could obtain specific terms (which the

broker ultimately did), and knew. that the broker anticipated receiving acommission

from the owner. Id. at 307-09, 191 N.Y.S.323; see also Westhill Exports, 12N.Y .2dat

494, 240 N.Y.S.2d at 962-63, 191 N.E.2d at 448 (broker authorized to negotiate for

paper supply contract; price, term, quantity and quality terms of desired contract

specified); Julien J. Studley, Inc. v. New York News, Inc., 122 A.D.2d 633, 635, 505

N.Y.S.2d 419, 420 (1st Dep’t 1986) (no implied-in-fact contract where defendant-

seller never specified asking price), aff'd, 70 N.Y.2d 628, 518 N.Y.S.2d 779, 512

N.E.2d 300 (1987).

46a

Appendix E

asbestos tests was a condition to Loews concluding the 72nd Street

Transaction which the Owner failed to meet.

Loews maintains that it had always made clear, both to Teich

and Pilevsky, that favorable results from soil and environmental

tests were a condition to Loews signing a final lease, while Teich

testified that this was not his understanding.’ The bulk of Loews’s

“evidence” of this condition or of the other parties’ awareness

thereof is either conclusory,‘ or fails to speak to whether the Owner

or Teich were aware that these tests and/or favorable results were a

condition to be met or a term to be negotiated before Loews would

sign a lease.°

Of a more substantial nature, is Smith’s affirmation regarding

a January 11, 1990 meeting at Pilevsky’s office at which the 72nd

Street Transaction was discussed. Among those present were

Smith, Pilevsky, Esbin and Teich. According to Smith, Loews’s

need for asbestos and subsoil testing was discussed along with

other lease terms and “Pilevsky promised that before any

documents would be signed, he would furnish Loews with a copy

3. Teich testified that rent and air rights were a topic of hot negotiation. Teich

Dep. at 44-46. Unfortunately, the pages of the Teich deposition transcript which

presumably contain Teich’s response when asked what other issues were subject to

negotiation have been omitted. Parke-Hayden Notice of Motion, Teich Dep. at 46-7.

4. See, e.g., Smith 1/6/92 Aff. Ff 16-19 (“This fact [that favorable results was a

condition] was no secret to Pilevsky or Teich. In fact, Loews’ intentions in this regard

were made known to Pilevsky and Teich as early as January of 1990. . . .”); id. at21

(“As both Pilevsky and plaintiff were well aware, that [determining whether Loews

shouldenter into the lease) was the precise purpose of conducting these due diligence

environmental tests before Loews would sign the lease.” (emphasis in original)).

5. See, e.g., Smith 1/6/92 Aff. { 19, stating merely that “the importance of the

soil and environmental tests was continuously reiterated.” (emphasis added).

a

47a

Appendix E

of an asbestos report he had prepared.” Smith 1/6/92 Aff. { 16

(emphasis in original). Furthermore, in a March 23, 1990 letter to

Pilevsky’s attorney, David Badain, Deputy General Counsel to

Loews, requested execution of the Letter of Agreement for Loews

to conduct its physical due diligence “as soon as possible so that we

can commence our physical due diligence and facilitate the

execution of the Lease.” Danzig 1/6/92 Aff. Ex. G (emphasis

added). Finally, Esbin testified that Loews’s lawyers conveyed to

the landlord’s lawyers that Loews wanted to do the asbestos test

and the rock boring, Esbin Dep. at 58, that there were discussions

“amongst ourselves only at Loews” that the “economic points”

upon which all had agreed were contingent on the results of the

asbestos and boring tests, and that he was “not sure” whether he

told Teich that the results of the tests were a contingency to

entering into the lease. Esbin Dep. at 78-79.

Drawing all inferences and resolving all ambiguities in favor

of Loews, there is a material factual dispute as to whether a

favorable result from the environmental tests was a term Or

condition unsatisfied by the Owner and thus as to whether Parke-

Hayden procured for Loews a ready, willing and able lessor. See

Tulp, 70 Misc.2d at 310, 333 N.Y.S.2d at 8 (plaintiff not entitled to

commission where failed to prove he had procured seller ready,

willing and able to sell on defendants’ terms); cf. Sanders A. Kahn,

Assocs. v. Maidman, 69 Misc.2d 90, 93, 329 N.Y.S.2d 121,124

(Sup. 1971) (“Where the owner merely specifies the purchase price

of property, without fixing the other terms of sale, commissions are

not earned until and unless the person produced by the broker

reaches an agreement with the owner not only as to price but also as

to the terms upon which the sale is to be made.”), aff'd, 38 A.D.2d

798, 329 N.Y.S.2d 318 (1st Dep’t), aff’d, 30 N.Y.2d 831, 335

N.Y.S.2d 77, 286 N.E.2d 462 (1972).

48a

Appendix E

Parke-Hayden contends, nevertheless, that Loews is liable for

its commission regardless of any unfulfilled condition because the

failure of the condition was due to the bad faith repudiation of the

deal as part of a house-cleaning by the Loews management team

that took over in the late spring of 1990. Under New York law,

regardless of unfulfilled terms or conditions, the party who

employs the broker will be liable for the commission if he is

responsible for the failure to perform the condition. Nuvest, S.A. v.

Gulf & Western Indus., Inc., 649 F.2d 943 (2d Cir.1981) (citing

Lane, 28 N.Y.2d at 43, 319 N.Y.S.2d at 841, 268 N.E.2d at 639);

Collins Tuttle & Co. v. Ausnit, 95 A.D.2d 668, 669, 463 N.Y.S.2d

219 (1st Dep’t 1983) (“ ‘a defendant who is sued for a commission

cannot be heard to complain where it was her own act which

prevented the natural progress of the transaction’ ” (quoting

Trylon Realty Corp. v. Di Martini, 40 A.D.2d 1029, 1030, 338

N.Y.S.2d 945 (2d Dep’t 1972), aff'd, 34 N. Y.2d 899, 359 N. Y.S.2d

284, 316 N.E.2d 718 (1974)). In other words, if the sale is not

consummated due to the bad faith, wrongful or arbitrary conduct

by the party who retained the broker, that party may not avoid his

liability to the broker under their agreement.®

While Parke-Hayden has presented evidence suggesting that

the demise of the 72nd Street Transaction may have been due to the

mere unwillingness of the new management team to proceed even

on the terms to which all of the parties had already agreed,’ there

6. Loews contests the availability of this theory to Parke-Hayden in the first

instance, claiming that it applies only where the party allegedly acting in bad faith

employed the broker. As discussed above, Parke-Hayden was employed by Loews.

7. Esbin and Pilevsky both testified that when Esbin approached Pilevsky

about the potential added cost of the asbestos and rock excavation, Pilevsky indicated

a willingness to negotiate concessions, stating that they would “work something out.”

Esbin Dep. at 95; Pilevsky Aff. ¥{ 16-17 Nevertheless, this possibility was never

(Cont'd)

49a

Appendix E

are questions of fact as to whether the cost of the rock and asbestos

removal was a genuine deal-stopper.* There is no proof, for

instance, that Pilevsky indeed would have “worked out” issues

regarding the cost of the removal within the terms undisputedly

satisfactory to Loews. Because factual questions exist as to these

issues, Parke-Hayden’s motion for summary judgment on the First

Claim is denied.

Ill. Loews’s Motion for Partial Summary Judgment

A. Motion to Dismiss Third and Fourth Claims Based on the

Danbury Transaction

The first half of Loews’s motion for summary judgment seeks

dismissal of the Third and Fourth Claims, in which Parke-Hayden

claims lost brokerage commissions relating to the Danbury

Transaction. Unlike the dispute relating to the 72nd Street

Property, Loews does not contest Parke-Hayden’s allegation that it

was acting as Loews’s broker in the Danbury Transaction. Rather,

Loews contends that because the Consent Judgment prohibited the

joint venture between Loews and PL Associates, Parke-Hayden

did not secure ready, willing and able partners for the proposed

joint venture. As such, Loews argues that Parke-Hayden is not

(Cont'd)

pursued by Loews’s new management, and the record establishes that it opted not to

proceed with the deal because it was “financially unsound.” Friedberg Aff. {f 2, 5-6.

Thus, there is “testimony from which the jury could. . . conclude{ } that [the Owner]

might have met [Loews’s] price term” if Loews had negotiated the concessions

further. Nuvest, 649 F.2d at 949.

8. Kenneth Benjamin, a Vice President of Loews since May 1989, states in his

affirmation that, as of April 1990, the discovery of rock posed a “major problem in

going forward with the proposed transaction.” Benjamin Aff. {3.

50a

Appendix E

entitled to a commission as a matter of New York law. See, e.g.,

Lane, 28 N.Y.2d at 42, 319 N.Y.S.2d at 840, 268 N.E.2d at 639.

Parke-Hayden opposes Loews’s motion contending first that

Loews cannot raise the Consent Judgment as a shield because it

was within Loews’s power to have the prohibition lifted, enabling

it to consummate the Danbury Transaction. Secondiy, Parke-

Hayden contends that the Consent Judgment was not the real

reason for Loews’s decision to back out of the deal.

There is no dispute concerning the awareness of the parties

that compliance with the Consent Order was a term of the

transaction. Each draft of the proposed partnership agreement

contained provisions stating that PL Associates had been alerted to

the existence of the Consent Judgment, had been advised that it

prohibited Loews “from acquiring or continuing to own any

beneficial interest in any motion picture theatre in conjunction

with an actual or potential independent exhibitor,” and had agreed

“not to do or perform any act... which would cause Loews... to

be in violation of said provision. . . .” See Smith 12/6/91 Aff. Ex.

C, at 45-46. There is also no dispute that Loews sought an opinion

from the DOJ as to whether the Danbury Transaction would violate

the Consent Order and that the DOJ advised Loews in September

1990 that it would view the transaction as violative. Nevertheless,

Parke-Hayden argues that Loews’s motion should be denied,

asserting that Loews could have had the Consent Judgment lifted

but failed to take any steps to do so. See Parke-Hayden Memo. in

Opp. at 5 (“Loews had but to ask the Department of Justice that it

consent to the elimination of the decree.”’).

Parke-Hayden’s assertion that the Consent Judgment would

have been lifted had Loews made the effort is not supported by

facts. Concededly, the DOJ did submit a memorandum in support

Sla

Appendix E

of Loews October 1990 motion to lift the decree. Nevertheless,

even to this date, no evidence has been presented that that motion

was successful. Thus, even if Loews had taken action during the

pendency of negotiations with PL Associates, there is no factual

basis for Parke-Hayden’s facile contention that Loews would have

been freed of the constraints imposed by the Consent Judgment. As

things stood at the time of the negotiations, and indeed, as they still

stand today, Loews was subject to the Consent Judgment which,

according to the DOJ, prohibits a joint venture with PL Associates.

Moreover, even assuming that Loews could have had the

Consent Judgment eradicated by merely lifting its finger, this is not

material to the inquiry as to whether Parke-Hayden procured ready,

willing and able partners under the terms of the proposed

partnership. Loews never agreed, nor was it a condition of any

agreement with PL Associates or Parke-Hayden, that Loews would

make any efforts to have the Consent Judgment lifted. To the

contrary, the proposed partnership agreements clearly

contemplated the existence and survival of the Consent Judgment.

Thus, this case is distinguishable fiom Long Island Bus. Exch. v.

De Luca, 58 A.D.2d 594, 395 N.Y.S.2d 244 (2d Dep’t 1977),

invoked by Parke-Hayden. In that case, a condition of the proposed

agreement was that the defendant would obtain a liquor license

within eight weeks. Because the defendant allegedly failed to

apply timely for the license, the court held that the plaintiff had

stated a cause of action for its commission because the defendant

allegedly acted deliberately to cause the transaction to founder. /d.

at 594, 395 N.Y.S.2d at 245.

Parke-Hayden also claims that the Consent Judgment had

nothing to do with the failure of the transaction because Loews

terminated the transaction long before it received the DOJ’s

opinion in September 1990. Even assuming the truth of the

52a

Appendix E

assertion that the Consent Judgment was not the primary reason for

Loews’s decision to terminate the transaction, the fact remains that

the Consent Judgment existed at all times and legally prevented

Loews from being “able” to participate in this joint venture.

Because the undisputed facts establish that Parke-Hayden

failed to procure ready, willing and able partners for the Danbury

joint venture, Loews’s motion for summary judgment dismissing

the Third and Fourth Claims is granted.

B. Motion to Dismiss Parke-Hayden’s Claim for Punitive

Damages

Loews also has moved for summary judgment dismissing

Parke-Hayden’s claim for punitive damages on the First and Third

Claims.

As a preliminary matter, it bears noting that, even assuming

Loews’s bad faith, these claims sound in contract, not tort. Pittston

Warehouse Corp. v. American Motorists Ins. Co., 715 F.Supp.

1221, 1227 (S.D.N. Y.1989) (“tort of bad faith breach of contract”

except in the insurance context), aff’d 954 F.2d 62 (2d Cir.1992).

Under New York law, punitive damages generally are not available

for a simple breach of contract. Smith v. Lightning Bolt Prods., Inc.,

861 F.2d 363, 371 (2d Cir.1988) (citing New York cases). New

York courts, the Second Circuit and courts within this district are

virtually unanimous that punitive damages may not be awarded in

breach of contract cases, unless the wrong is aimed at the public

generally. Durham Indus., Inc. v. North River Ins. Co.,673 F.2d 37,

41 (2d Cir.), cert. denied, 459 U.S. 827, 103 S.Ct. 61, 74 L.Ed.2d

64 (1982); Airlines Reporting Corp. v. Aero Voyagers, Inc., 721

F.Supp. 579, 585 (S.D.N. Y.1989) (punitive damages available in

breach of contract actions where “fraud ‘aimed at the public

53a

Appendix E

generally,’ evincing a ‘high degree of moral turpitude,’ and

demonstrating ‘such wanton dishonesty as to imply a criminal

indifference to civil obligations.’ ” (citation omitted; emphasis

added)); Morse/Diesel, Inc. v. Fidelity & Deposit Co., 716 F.Supp.

578 (S.D.N.Y. 1989) (punitive damages based on a contractual

action cannot be sought absent some allegation of wrong against

public generally); Purdy v. Consumers Distrib. Co., 648 F.Supp.

980, 983 (S.D.N.Y.1986) (“[P]unitive damages are not available

unless the plaintiff can show that the conduct complained of was

not an isolated private wrong, but rather a morally culpable course

of conduct aimed at injuring the public generally.” (emphasis

added)); Jacobson v. New York Prop. Ins. Underwriting Assoc.,

120 A.D.2d 433, 501 N.Y.S.2d 882 (1st Dep’t 1986) (to state cause

of action for punitive damages, pleader must assert “ ‘not an

isolated transaction incident to an otherwise legitimate business,

but a gross and wanton fraud upon the public.’ ” (emphasis added;

quoting Walker v. Sheldon, 10 N.Y.2d 401, 406, 223 N. Y.S.2d 488,

179 N.E.2d 497 (1961)); Samovar of Russia Jewelry Antique Corp.

v. Generali, 102 A.D.2d 279, 281, 476 N.Y.S.2d 869, 871 (1st

Dep’t 1984) (must be “morally reprehensible conduct directed at

the general public” (emphasis added)).

Citing a handful of cases, Parke-Hayden argues that a wrong

against the general public is not a required element of a claim for

punitive damages in breach of contract actions in New York.

However, the two cases that are arguably on point, Williamson,

Picket, Gross, Inc. v. Hirschfeld, 92 A.D.2d 289, 460 N.Y.S.2d 36

(1st Dep’t 1983) and AML Int’! Ltd. v. Orion Pictures Corp., No. 89

Civ. 2048 (KMW), 1991 WL 120323, 1991 U.S.Dist.Lexis 842

(S.D.N.Y. June 21, 1991), run decidedly against the grain of

prevailing New York law.°

9. The other cases cited by Parke-Hayden are distinguishable in that they did

not involve simple breaches of contract. See Gordon v. Nationwide Mut. Ins. Co., 30

(Cont'd)

Bie

sx.

54a

Appendix E

In Williamson, Picket, an action for breach of a brokerage

agreement, the First Department held that punitive damages may

be awarded where — the defendant’s conduct involves “that

degree of bad faith evincing a ‘disingenuous or dishonest failure to

Carry out a contract.’ ” 92 A.D.2d at 295, 460 N.Y.S.2d at 41

(quoting Gordon v. Nationwide Mut. Ins. Co., 30 N.Y.2d 427, 437,

334 N.Y.S.2d 601, 285 N.E.2d 849 (1972)). However, the First

Department appears to have abandoned the holding of Williamson,

Picket. In Jacobson v. New York Property Ins. Underwriting

Ass’n., 120 A.D.2d 433, 501 N.Y.S.2d 882 (1986), the same court

explicitly held three years later that punitive damages are available

in breach of contract actions only if the allegations support a

conclusion that a fraud “upon the public” is involved. Jd. at 435,

501 N.Y.S.2d at 884. And, after engaging in a detailed analysis of

New York law on this topic, a court within this district rejected the

rule in Williamson, Picket as an “aberration” in the otherwise

uniform law of New York. Purdy, 648 F.Supp. at 982-83; cf. Morse/

Diesel, 715 F.Supp. at 588 (breach of contract action; rejecting

application of Greenspan v. Commercial Ins. Co., 57 A.D.2d 387,

395 N.Y.S.2d 519 (1977), which held that Walker is no longer valid

in New York). Indeed, the Williamson, Picket court itself

acknowledged the prevailing New York rule that “ ‘punitive

damages are not available for mere breach of contract, for in such a

case only a private wrong, and not a public right, is involved.’ ” 92

A.D.2d at 294, 460 N.Y.S.2d at 40 (quoting Garrity v. Lyle Stuart,

Inc., 40 N.Y.2d 354, 358, 386 N. Y.S.2d 831, 833, 353 N.E.2d 793,

795 (1976)).

(Cont'd)

N.Y.2d 427, 334 N.Y.S.2d 601, 285 N.E.2d 849 (1972) (insurance contract), cert.

denied, 410U.S.931,93S.Ct. 1374, 35 L.Ed.2d 593 (1973); MinjakCo. v. Randolph,

140 A.D.2d 245, 528 N.Y.S.2d 554 (1st Dep’t 1988) (breach of warranty of

habitability).

ye nsdn adie eae eee

55a

Appendix E

In the second case, AML International, Judge Wood recently

denied a motion for summary judgment to strike plaintiff’s

demand for punitive damages in a breach of contract action. The

court stated that “[u]nder New York law, punitive damages will be

available only where defendant’s conduct constitutes ‘gross,

wanton, or willful fraud or other morally culpable conduct.’ ” 1991

WL 120323 at 4, 1991 U.S.Dist.Lexis at 11 (quoting Smith, 861

F.2d at 371-72; Borkowski v. Borkowski, 39 N.Y.2d 982, 387

N.Y.S.2d 233, 355 N.E.2d 287 (1976)). Nevertheless, this

definition of New York law must be read before the backdrop of

Judge Wood’s prior opinion in the same case in which she wrote:

According to the law of New York, ...

“ ‘punitive damages are not available for mere

breach of contract’ ... even if the breach

results from a deliberate br,each of good faith.”

To award punitive damages, “[t]here must be

fraud ‘aimed at the public generally, ’evincing

a ‘high degree of moral turpitude,’ and

demonstrating ‘such wanton dishonesty as to

imply a criminal indifference to civil

obligations.’ ”

AML Int’! Ltd. v. Orion Pictures Corp., No. 89 Civ. 2048 (KMW)

1990 WL 364469, slip op. at 2 (emphasis added). AML is further

distinguishable in that it involved an allegation of a pattern of

breached contracts against various parties.

Following prevailing New York law, therefore, Parke-Hayden

may not claim punitive damages for Loews’s alleged breach of

contract in the 72nd Street and Danbury Transactions. Loews’s

motion for summary judgment dismissing such claims is granted.

56a

Appendix E

Conclusion

For the foregoing reasons, Parke-Hayden’s motion for an

order granting summary judgment in its favor on the First Claim is

denied. Loews’s motion for summary judgment dismissing the

Third and Fourth Claims, as well as Parke-Hayden’s claim for

punitive damages on the First and Third Claims is granted.

It is so ordered.

57a

APPENDIX F — SPECIAL VERDICT FORM

Special Verdict Form

Parke-Hayden v. Loews

Did Parke-Hayden, Inc. (“Parke-Hayden”) have an

agreement with Broadway 72 Associates to be paid a

brokerage commission by Broadway 72 Associates in

connection with the execution of a lease to Loews Theater

Management Corp. (“Loews”) of a portion of the property

owned by Broadway 72 Associates at Broadway and 72nd

Street (the Lease)?

If your answer is “YES,” please go to

question 2. If your answer is “NO,”

please go to the STOP instruction at the

end of this form.

Was Broadway 72 Associates ready, willing, and able to enter

into the Lease at the time of its execution?

YES ¥ NO___

If your answer is “YES,” please go onto

question 3. If your answer is “NO,”

please go to the STOP instruction at the

end of this form.

Did Loews have a valid reason not to proceed with the

execution of the Lease?

YES NO_ Vv

58a

Appendix F

If your answer is “YES,” please go onto

the STOP instruction at the end of this

form. If your answer is “NO,” please go

to question 4.

4. Did Loews act in bad faith, wrongfully or arbitrarily in not

proceeding with the negotiation of the Lease?

yEs_Y NO

If your answer is “YES,” please go onto

question 5. If your answer is “NO,”

please go to the STOP instruction at the

end of this form.

5. What are the damages, if any, to which Parke-Hayden is

entitled as a result of the conduct of Loews?

$

STOP

Please have the foreperson sign the Special Verdict form and

advise the Marshall that you have reached a verdict.

s/ Peter Gobbey

FOREPERSON