Opinion
# 2015-045-040 Claim No. 120486 Motion No. M-86590 Cross-Motion No. CM-86681
01-12-2016
THE FAIRCHILD CORPORATION, REPUBLIC THUNDERBOLT WEST, LLC, and DONALD E. MILLER, JERRY R. LIRETTE and PIERRE BENOIT, in their capacities as the Trustees of THE FAIRCHILD LIQUIDATING TRUST, a/k/a THE LIQUIDATING TRUST v. THE STATE OF NEW YORK
Law Office of Anton J. Borovina By: Anton J. Borovina, Esq. Hon. Eric T. Schneiderman, Attorney General By: Charles E. Gary, Assistant Attorney General
Synopsis
Claimants' motion for partial summary judgment and defendant's cross-motion for summary judgment. Breach of contract.
Case information
| UID: | 2015-045-040 |
| Claimant(s): | THE FAIRCHILD CORPORATION, REPUBLIC THUNDERBOLT WEST, LLC, and DONALD E. MILLER, JERRY R. LIRETTE and PIERRE BENOIT, in their capacities as the Trustees of THE FAIRCHILD LIQUIDATING TRUST, a/k/a THE LIQUIDATING TRUST |
| Claimant short name: | THE FAIRCHILD CORPORATION |
| Footnote (claimant name) : | |
| Defendant(s): | THE STATE OF NEW YORK |
| Footnote (defendant name) : | |
| Third-party claimant(s): | |
| Third-party defendant(s): | |
| Claim number(s): | 120486 |
| Motion number(s): | M-86590 |
| Cross-motion number(s): | CM-86681 |
| Judge: | GINA M. LOPEZ-SUMMA |
| Claimant's attorney: | Law Office of Anton J. Borovina By: Anton J. Borovina, Esq. |
| Defendant's attorney: | Hon. Eric T. Schneiderman, Attorney General By: Charles E. Gary, Assistant Attorney General |
| Third-party defendant's attorney: | |
| Signature date: | January 12, 2016 |
| City: | Hauppauge |
| Comments: | |
| Official citation: | |
| Appellate results: | |
| See also (multicaptioned case) |
Decision
The following papers were read and considered by the Court on this motion: Claimants' Notice of Motion, Affidavit of Donald E. Miller, Attorney's Affirmation with annexed Exhibits 1-52, Affidavit of Bruce Savik, P.E. with annexed Exhibits A-E, Claimants' Memorandum of Law in Support, Defendant's Notice of Cross Motion, Defendant's Affirmation in Opposition with annexed Exhibits A-H, Claimants' Reply Affirmation with annexed Exhibit A and Claimants' Reply Memorandum of Law.
Claimants, The Fairchild Corporation, Republic Thunderbolt West, LLC, and Donald E. Miller, Jerry R. Lirette and Pierre Benoit, in their capacities as the trustees of The Fairchild Liquidating Trust, a/k/a the Liquidating Trust, have brought this motion seeking an order granting them partial summary judgment pursuant to CPLR 3212 (e). Defendant, the State of New York, has brought a cross motion pursuant to CPLR 3212 seeking an order granting summary judgment in its favor and dismissing the claim.
Claimants served their claim upon the Office of the Attorney General on October 13, 2011. Claimants filed their claim on October 18, 2011 in which they alleged that claimant, The Fairchild Corporation, is the owner of a 19.26 acre vacant parcel of real property located in the Town of Babylon. The subject parcel is situated on the west side of Route 110, the south side of New York State Route 24 and the east side of East Carmans Road. Claimants explained that The Fairchild Corporation is the successor in interest to The Fairchild Hiller Corporation and Avilas Inc. Republic Thunderbolt West, LLC is a subsidiary of The Fairchild Corporation and a successor in interest to The Fairchild Hiller Corporation and Avilas Inc. The trustees of the Fairchild Liquidation Trust (Trust) brought this claim in their capacities as the trustees of the Trust. The Trust is the successor in interest to The Fairchild Corporation and Republic Thunderbolt West, LLC. Thus, claimants stated that the Trust is the owner of the subject property.
Mr. Donald E. Miller, a co-trustee of the Trust, submitted an affidavit in support of claimants' motion. He stated that he was also the Executive Vice President, Secretary, Chief Administrative Officer, Chief Restructuring Officer and General Counsel of The Fairchild Corporation and its wholly owned subsidiaries. He was also President of Republic Thunderbolt West, LLC. He referred to all of those entities collectively as Fairchild. He stated that his responsibilities at Fairchild included, among other things, directing and managing its affairs regarding ownership and use of two parcels of land located within the Route 110 corridor.
On April 8, 1974, defendant appropriated a strip of land, hereinafter referred to as Parcel 19, located within the subject property. On or about May 13, 2002, Avilas entered into a contract to sell the property to Stew Leonard's Farmingdale, LLC. The purchase agreement provided that Fairchild and Stew Leonard's would develop the property as a retail and office complex to include a farmer's market, garden store, other retail facilities, a petting zoo and an office building. The purchase agreement conditioned the sale of the property on Fairchild obtaining all required government approvals for the project so that it could be used and occupied for the proposed uses.
On December 3, 2002, Fairchild filed a Site Plan Review Application with the Town of Babylon Planning Board. Public hearings were held regarding the Site Plan at which defendant opposed the approval of the plan. Claimants alleged that defendant did not want to give Fairchild a right of access over Parcel 19.
On July 22, 2003, the Federal Aviation Administration issued a determination of no hazard based upon its finding that the project did not contemplate the siting of any structure that would encroach upon defendant's aviation easement or impermissibly penetrate the runway protection zone benefitting Republic Airport.
On August 18, 2003, the Planning Board approved the Site Plan. On August 21, 2003, the Town of Babylon Zoning Board of Appeals approved the variances and special use permits required for the project.
On September 15, 2003, the Long Island Business Aviation Association filed an Article 78 petition in the Supreme Court, Suffolk County seeking to overturn the FAA's determination. At some point the petition was dismissed.
On August 23, 2004, defendant filed a lawsuit against Avilas to recover possession of a vacant parcel within the subject property pursuant to a right of reverter. On May 16, 2006, the Appellate Division, Second Department, reversed the lower Court and dismissed the reverter action.
Meanwhile on February 3, 2003, Fairchild applied to defendant for a highway work permit enabling it to construct an entrance driveway from Route 110 on and over a portion of Parcel 19 and ultimately onto the subject property.
Mr. Miller explains that there was a "synergistic" relationship between the properties owned by Fairchild on the east and west side of Route 110. He details how it was his expectation up to May 5, 2003 that a highway work permit for a curb cut would be issued by defendant for the west side parcel. He similarly believed up to that time that defendant would grant Fairchild the right to use Parcel 19 as a drive through onto the west side property from Route 110.
On May 26, 2004, the requested permits were denied by defendant. In June 2004, defendant and Fairchild entered into negotiations for defendant to acquire certain tracts of land located on the east side of Route 110 lying adjacent to Republic Airport and owned by Fairchild. These tracts of land were also located within the boundaries of a certain RPZ commonly known as the Runway 19 Protection Zone that was created for the use and benefit of the public and for the safe and unobstructed passage of aircraft through the airspace at and above Runway 19. As part of the negotiations to sell its property located on the east side of Route 110, Fairchild requested an easement from defendant enabling Fairchild to have a right of access on and over Parcel 19, located on the west side of Route 110, as sought by the site plan and the application for a highway work permit. A copy of the site plan was provided to defendant.
In a written agreement (hereinafter referred to as the Agreement in Lieu of Condemnation), dated June 30, 2004, defendant and Fairchild entered into a contract of sale to sell the tract of land located on the east side of Route 110 adjacent to Runway 19 to defendant. Section 9 of the contract stated in pertinent part:
"As an additional inducement for the Seller to enter into this Agreement, [defendant] agrees to negotiate in good faith the exchange of easements on adjacent properties owned separately by the State of New York and Seller located on the west side of Route 110 (Broadhollow Road) in Farmingdale, NY. Unless prohibited by FAA Grant Assurances, said easements would, on the one hand, provide Seller and its successors in title with the right to construct and to use an entranceway with parking or other facilities on or across the land owned by the State of New York, and, on the other hand, would provide the State of New York the right to extend a buried electric line for lighting on or across a portion of the property owned by the Seller."
Mr. Miller views the language of Section 9 to constitute a commitment by defendant to give Fairchild the Parcel 19 easement as depicted in the site plan. He also refers to settlement discussions regarding the west side property, including one where defendant would acquire the entire west side property with the possible assistance of federal funds.
On November 25, 2008, the Appellate Division, Second Department, determined that defendant acted arbitrarily and capriciously in its May 2004 denial of the application by Fairchild and Stew Leonard's for a highway work permit (Matter of Fairchild Corp. v Boardman, 56 AD3d 778, 779 [2d Dept 2008]). Accordingly, the Appellate Division directed defendant to make a new determination of Fairchild's highway work permit application without regard to improper factors beyond the scope of Highway Law § 52 (id.).
Mr. Miller approved Fairchild's re-submission of the curb cut application with revised traffic studies in early 2009. Mr. Miller expressed his belief that as of October 26, 2009, defendant still intended to convey the Parcel 19 easement to Fairchild.
In a letter dated September 12, 2011, Fairchild demanded that defendant take all action on its part necessary to consummate the exchange of easements. The letter also states that on several occasions Fairchild had requested that the easements be exchanged, but defendant "ha[d] failed or refused to do so." Mr. Miller stated that after defendant refused to respond to the September 12, 2011 letter, he authorized the commencement of the present lawsuit. Mr. Miller did not mention the circumstances surrounding the commencement of the federal lawsuit by claimants in July 2010.
Mr. Bruce Savik, P.E., a professional engineer licensed by the State of New York, also submitted an affidavit in support of claimants' motion. He was retained by claimants to provide consulting engineer services regarding their intention to develop properties Fairchild owned within the Route 110 corridor. Mr. Savik drafted the site plans for the development of the aforementioned properties. In mid-June 2009, he had Dunn Engineering submit revised traffic studies to defendant as part of the re-submission of claimants' curb cut application. He believed that as of October 26, 2009, defendant was still going to allow Parcel 19 to be used as a driveway.
The party seeking summary judgment must make a prima facie showing of entitlement to judgment as a matter of law, by offering sufficient evidence to eliminate any material issues of fact from the case (Cox v Kingsboro Med. Group, 88 NY2d 904 [1996]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]; Zuckerman v City of New York, 49 NY2d 557 [1980]). Failure to make a prima facie showing requires denial of summary judgment, regardless of the sufficiency of the opposing papers (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]). Once the proponent of a summary judgment motion establishes a prima facie showing then the burden shifts to the opposing party to produce evidentiary proof in admissible form sufficient to demonstrate the existence of material issues of fact which require a trial of the action (Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). In determining a summary judgment motion, the Court must view the evidence in the light most favorable to the non-moving party (Gradwohl v Stop & Shop Supermarket Co., LLC, 70 AD3d 634, 636-637 [2d Dept 2010]).
Claimants argue that section 9 of the Agreement in Lieu of Condemnation committed defendant to convey the Parcel 19 easement. Claimants contend that section 9 contained all the essential terms required for the creation of the easement. Claimants continue that section 9 did not give defendant the good faith right to repudiate a conveyance of the parcel 19 easement. Claimants assert that the FAA grant assurances did not prohibit defendant's conveyance of the easement. Lastly, claimants state that defendant breached its section 9 obligations by failing to comply with claimants' demand.
This Court finds that claimants failed to make a prima facie showing of entitlement to judgment as a matter of law in this matter. "When an agreement is in writing, the best evidence of what the parties intended is what they said in that writing" (Willoughby Rehabilitation and Health Care Center, LLC, v Webster, 20 NYS3d 619 [2d Dept 2015] citing Greenfield v Philles Records, 98 NY2d 562 [2002]). "Thus, a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms" (id. at 569). The plain and unambiguous language of section 9 merely reflects the fact that an additional inducement for the seller to enter into the Agreement in Lieu of Condemnation was the agreement by defendant to negotiate in good faith the exchange of easements. The language of section 9 does not form a binding commitment on the part of defendant to convey the Parcel 19 easement. Claimants have also failed to sufficiently establish that defendant acted in bad faith in its negotiations for the exchange of easements.
Turning to defendant's cross motion, defendant states that claimants failed to demonstrate that it did not negotiate in good faith in accordance with Section 9 of the Agreement in Lieu of Condemnation. Defendant argues that the purpose of the Agreement in Lieu of Condemnation was for defendant to purchase certain land owned by claimants on the east side of Route 110 to insure the safety of people and property on the ground, as well as the airplanes using the airport. Defendant asserts that the language of Section 9 merely shows the parties' intent to negotiate further on the possible exchange of property rights for property located on the west side of Route 110. Defendant points out that the curb cut is not mentioned in Section 9 and that the application process still remains open. On or about August 2005, claimants were paid $9,800,000 exclusive of interest for the purchase of the east side land pursuant to the Agreement in Lieu of Condemnation.
Marie A. Corrado, the Director of the Major Projects Office of the New York State Department of Transportation (DOT), submitted an affidavit in opposition to claimants' motion and in support of defendant's cross motion. Between 1995 and January 2008, part of her duties included providing legal advice, counsel and other legal services to DOT managers with responsibility for the management and operation of Republic Airport. She describes Mr. Miller's affidavit as being, among other things, "self-serving and incorrect in every significant respect."
Ms. Corrado stated that her intention as drafter of the Agreement in Lieu of Condemnation, legal counsel and negotiator for DOT, was to assure Fairchild that the DOT would negotiate in good faith the exchange of easements. She believed that before any exchange of easements there would be legal issues that would have to be resolved as well as other details including obligations under FAA Grant Assurances before the parameters of an exchange could be agreed upon. She did not view the Section 9 language as constituting a commitment to convey the easements. She explained that an exchange of property between the State and any other party cannot be effectuated without, among other things, accurate and properly prepared maps acceptable to the New York State Attorney General's Office; approved appraisals of the fair market value of involved properties and/or an approved valuation of the transactions; the availability to the State of funds to compensate the private seller, if necessary; the express approval of the overall transaction by the New York State Attorney General's Office and the New York State Office of the State Comptroller, and in the case of property purchased with federal funds for airport purposes, the concurrence of the FAA.
The claim in this matter was served on defendant on October 13, 2011 and filed in the Court of Claims on October 18, 2011. Defendant again argues that claimants failed to comply with the requirements of the Court of Claims Act (CCA) since the claim was not served nor filed within six months of the accrual date as required by CCA § 10 (4).
Defendant previously raised this issue in two prior motions before this Court (see Fairchild Corp. v State of New York, 117 AD3d 780 [2d Dept 2014]).
CCA § 10 (4) provides that:
"[a] claim for breach of contract, express or implied, and any other claim not otherwise provided for by this section, over which jurisdiction has been conferred upon the court of claims, shall be filed and served upon the attorney general within six months after the accrual of such claim, unless the claimant shall within such time serve upon the attorney general a written notice of intention to file a claim therefor, in which event the claim shall be filed and served upon the attorney general within two years after such accrual."
Defendant argues that since claimants commenced an action in Federal Court alleging the identical cause of action for breach of contract on July 15, 2010, the claim accrued at that time. Defendant asserts that since a breach of contract cause of action in the Court of Claims accrues when damages are reasonably ascertainable, the damages in this case were, at the latest, ascertainable at the time claimants commenced the federal action. Consequently, defendant contends that the claim in the present action was not timely served and filed. In support of its position defendant submitted a copy of the federal court complaint. Claimants specifically alleged in the federal action that, "[b]y and through NYSDOT's bad-faith refusal to cooperate with Fairchild to facilitate the exchange of easements relating to the Project, NYSDOT has breached Section 9 of the Agreement . . ." (Def Exh G, ¶ 42).
This Court finds that there is a genuine issue of material fact as to when damages where readily ascertainable in this matter (Prisco v State of New York, 62 AD3d 978 [2d Dept 2009]).
Lastly, defendant argues that section 9 of the Agreement in Lieu of Condemnation was merely an agreement to agree in which material terms were left for future negotiations and as such is unenforceable.
"The essential elements of a cause of action to recover damages for breach of contract are the existence of a contract, the [claimants'] performance pursuant to the contract, the defendant's breach of its contractual obligations, and damages resulting from the breach" (PFM Packaging Mach. Corp. v ZMY Food Packing, Inc., 131 AD3d 1029, 1030 [2d Dept 2015]). "To create a binding contract, there must be a manifestation of mutual assent sufficiently definite to assure that the parties are truly in agreement with respect to all material terms" (Carione v Hickey, 133 AD3d 811 [2d Dept 2015][internal quotation marks omitted]). "[A] court cannot enforce a contract unless it is able to determine what in fact the parties have agreed to " (Matter of 166 Mamaroneck Ave. Corp. v 151 E. Post Rd. Corp., 78 NY2d 88, 91 [1991]). "If an agreement is not reasonably certain in its material terms, there can be no legally enforceable contract" (Cobble Hill Nursing Home v Henry & Warren Corp., 74 NY2d 475 [1989]).
The plain and unambiguous terms of Section 9 evince that it is merely a recitation of an additional inducement for Fairchild to enter into the Agreement in Lieu of Condemnation (Carione v Hickey, 133 AD3d 811 [2d Dept 2015]). Defendant's agreement to enter into future good faith negotiations does not create a complete agreement for the exchange of easements (Matter of 166 Mamaroneck Ave. Corp. v 151 E. Post Rd. Corp., 78 NY2d 88, 91 [1991]). The terms of Section 9 are insufficiently definite to be enforceable.
Therefore, for the foregoing reasons, claimants' motion for summary judgment is denied. Defendant's cross motion seeking summary judgment is granted and the claim is hereby dismissed.
January 12, 2016
Hauppauge, New York
GINA M. LOPEZ-SUMMA
Judge of the Court of Claims