Ideal Structures Corp. v. Levine Huntsville Develop. Corp.

• Citation: 396 F.2d 917
• Decision Date: 19 June 1968
• Docket Number: No. 23668.,23668.
• Parties: IDEAL STRUCTURES CORPORATION, Appellant, v. LEVINE HUNTSVILLE DEVELOPMENT CORPORATION et al., Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

396 F.2d 917 (1968)

IDEAL STRUCTURES CORPORATION, Appellant, v. LEVINE HUNTSVILLE DEVELOPMENT CORPORATION et al., Appellees.

No. 23668.

United States Court of Appeals Fifth Circuit.

June 19, 1968.

J. Robert Miller, Culver & Miller, Huntsville, Ala., for appellant.

Ernest L. Potter, Jr., Bell, Richardson, Cleary, McLain & Tucker, Huntsville, Ala., for appellees.

Before RIVES, GOLDBERG and DYER, Circuit Judges.

GOLDBERG, Circuit Judge:

This is a diversity case involving the statute of frauds. The district court, sitting as an Alabama court, adumbrated changes and predicted law to come in Alabama vis-a-vis its choice of law. The court thus rejected the application of the New York statute of frauds and applied the Alabama statute of frauds. Envisioning no escape from the strictures of the Alabama statute, the district court granted a summary judgment. Ideal Structures Corp. v. Levine Huntsville Development Corp., N.D.Ala.1966, 251 F. Supp. 3. Although we can only laud the district court for its perceptive, sensitive, and scholarly analysis in the complex conundrums of conflicts of law, our bondage to Erie does not permit us to by-pass a channel whose riverbed spans nigh unto a century. We, therefore, must apply the New York statute of frauds and reverse.

(a) Application of Rule 60(b)

Before delineating the factual prelude to litigation, we pause to consider what facts are before us. On February 16, 1966, the district court granted partial summary judgment for the defendant, Levine Huntsville, on the statute of frauds issue. (Ideal had sued for quantum meruit as well as for breach of contract.) Treating the judgment as one concerning "a controlling question of law as to which there is substantial ground for difference of opinion," the court then certified the order for an immediate appeal under 28 U.S.C. § 1292(b). Ideal filed its notice of appeal on March 18, 1966. Five months later Ideal filed a Motion for Vacating Partial Summary Judgment, accompanied by an unsigned but extensive written agreement between Ideal and Levine Huntsville. Also included were affidavits which attested to the validity of the agreement and which sought to obtain the redemptive grace of Rule 60(b).¹ The district court carefully considered the motion and supporting documents and concluded that "on the merits such motion is due to be denied." (Emphasis added.) The court added: "The court is aware that, notwithstanding the pendency of the appeal, it has jurisdiction to pass upon the merits of such motion." Ideal filed notice of appeal on the latter action and filed a motion to consolidate the two proceedings, which motion was granted by this Court.

We view the district court's denial of Ideal's motion to vacate "on the merits" as incorporating a decision to expand the record through Rule 60(b). Compare In re Casco Chemical Co., 5 Cir. 1964, 335 F.2d 645, 650-652. Though we interpret the record differently than did the district court, we commend that court's refusal to be niggardly in the quest of facts. As was stated in In re Casco Chemical Co., supra:

"In the process of this exploration, it should be kept in mind that rule 60(b) is to be given liberal construction. United States v. Gould, 5 Cir. 1962, 301 F.2d 353; Michigan Surety Co. v. Service Machinery Corp., 5 Cir., 1960, 277 F.2d 531; Serio v. Badger Mut. Ins. Co., 5 Cir. 1959, 266 F.2d 418; cert. denied, 361 U.S. 832, 80 S.Ct. 81, 4 L.Ed.2d 73; 3 Barron & Holtzoff § 1332 n. 9 (Wright Supp.1963)." 335 F.2d at 651 (at fn. 18), quoted at American Employers Ins. Co. v. Sybil Realty, Inc., E.D.La.1967, 270 F.Supp. 566, 569-70.

We, therefore, view this appeal as encompassing the entire record from both district court actions. Our standard for review, as in all summary judgments, is whether there is any "genuine issue as to any material fact and * * * whether the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c).

(b) Facts

For purposes of this appeal we accept as true the facts according to Ideal. Moreover, our recitation of each party's actions will be only a sketch of the facts reported by the district court and supplemented by Ideal's Motion to Vacate.

Ideal, a Delaware corporation, is a subsidiary of Transcontinental Investing Corporation (TIC), a company which has extensive experience in the financing and building of real estate projects. Both Ideal and TIC have their principal places of business in New York City. Levine Huntsville is an Alabama corporation which, beginning in 1965, was involved mainly in building and developing a shopping center in Huntsville, Alabama. At the time of the events which led to the present litigation, Levine Huntsville's president and principal stockholder was Lawrence Levine. Lawrence and his father, Louis Levine, also a Levine Huntsville stockholder, were both residents of New York City, and the corporation had an office in New York City.

In February, 1965, Lawrence Levine approached officers of Ideal seeking financial assistance. Levine Huntsville's plan for a shopping center had developed only to the point that it had obtained long-term ground leases for forty acres of land and an option to acquire fee title to an adjacent four-acre tract. Having exhausted its own financial resources, Levine Huntsville was in arrears on the rents due under the ground leases, and it was unable to exercise its purchase option or to begin construction. Ideal negotiated an oral agreement with Levine Huntsville in which Ideal would finance the remaining steps to the construction of the shopping center, would perform certain services necessary to preserve the project, and would eventually share the proceeds from the completed shopping center. The joint venture signifying this agreement was to be named "Huntsville Associates."

Without belaboring the specifics, suffice it to say that through Ideal's efforts and financial support the project was kept alive until May 27, 1965, when the now-successful joint venture was to be sanctified and solidified by solemn writing. On that day Ideal's president, vice president, and counsel arrived at the prescribed time at the office of Levine Huntsville's counsel. Four other persons who had roles to play at the closing were present: Louis Levine, Levine Huntsville's counsel, a title company representative, and the architect for the shopping center. However, the chair set out for Lawrence Levine remained empty, and forty-five minutes after all parties had arrived, Levine telephoned to cancel the agreement. Evidently, he had obtained a better deal elsewhere.

We have sifted the various comings, goings, and negotiations for all written evidence of an agreement prior to May 27.

(1) On May 13 Ideal supplied $81,924.54 to Levine Huntsville to purchase the four-acre tract mentioned above. Title was conveyed to Levine Huntsville by delivery of a deed dated April 30, 1964. At the same time (on May 13) Levine Huntsville, through Lawrence Levine, drafted a letter to Ideal, which was signed as "accepted and agreed" by Ideal\'s president. The letter related that Ideal would hold the deed, with Levine Huntsville\'s having the right to repurchase after forty-five days. Neither party could encumber the property during the forty-five day period. The letter concluded:

"It is further understood and agreed that you and we are negotiating a joint venture agreement whereunder we would own the subject property as tenants-in-common. If such agreement is executed within the aforementioned forty-five (45) day period, then title to the subject property shall be conveyed to you and us as tenants-in-common for the sum of Ten ($10.00) Dollars, and in such event the sum of $81,924.54 advanced pursuant to this agreement shall be considered part of the $300,000.00 initial loan you are to make or cause to be made to the venture."

(2) On May 4 the Israel Discount Bank (IDB), having been contacted by Ideal, drafted a commitment letter for a loan in the amount of $2,000,000. The letter, addressed to "Huntsville Associates," provided in part:

"1. The Borrower shall be Huntsville Associates, a joint venture for the construction and development of Madison Mall Shopping Center in Huntsville, Alabama, the joint venture to consist of Levine Huntsville Development Corporation (`Levine\'), an Alabama corporation, having an office at 10 East 43rd Street, New York, N. Y. and Ideal Structures Corp. (`Ideal\'), a Delaware corporation, being a wholly owned subsidiary of Transcontinental Investment Corporation (`TIC\'), having an office at 200 East 42nd Street, New York, N. Y."

Lawrence Levine and Ideal's president signed the letter as "accepted" on May 14, 1965. At Levine's insistence the letter was amended to limit the Borrower's liability to counsel fees and disbursements of counsel to $5,000 in case the commitment failed to close.

(3) About the same time, Ideal and Levine Huntsville opened a bank account in The Chase Manhattan Bank under the name of "Huntsville Associates." The persons authorized to sign the account were Lawrence Levine and three officers of Ideal. All four persons, besides signing the signature authorization card, also signed a letter addressed to The Chase Manhattan Bank, which letter began as follows:

"The undersigned severally represent and agree as follows:

The undersigned are co-venturers in a joint venture for the purpose of development of a shopping center and as such co-venturers are conducting business under the name and style of Huntsville Associates. In connection with the operation of such joint venture, the undersigned desire to open a checking account with you." (Emphasis added.)

Neither the signature authorization card nor the letter is dated.

(4) In March, 1965, Ideal and Levine Huntsville began drawing up a formal joint venture instrument. On May 5 Levine Huntsville\'s counsel delivered to Ideal\'s president a "final draft" of the instrument. Changes were made at the May 7 meeting with IDB. At the May

...