Hotel Del Coronado Corp. v. Foodservice Equipment Distributors Ass'n

• Decision Date: 03 March 1986
• Docket Number: No. 85-5674,85-5674
• Parties: HOTEL DEL CORONADO CORPORATION, Plaintiff-Appellant, v. FOODSERVICE EQUIPMENT DISTRIBUTORS ASSOCIATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1323

783 F.2d 1323

HOTEL DEL CORONADO CORPORATION, Plaintiff-Appellant, v. FOODSERVICE EQUIPMENT DISTRIBUTORS ASSOCIATION, Defendant-Appellee.

No. 85-5674.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Nov. 7, 1985.

Decided Jan. 10, 1986.

Designated for Publication March 3, 1986.

A.J. Zafis, Coronado, Cal., for plaintiff-appellant.

Michael T. Reid, Halpenny, Hahn & Roche, Chicago, Ill., for defendant-appellee.

Appeal from the United States District Court for the Southern District of California.

Before BROWNING, Chief Judge, WIGGINS and BRUNETTI, Circuit Judges.

PER CURIAM:

The Hotel del Coronado appeals the district court's grant of summary judgment to the Foodservice Equipment Distributors Association ("FEDA") on the Hotel's claim for breach of contract arising from FEDA's cancellation of convention reservations at the Hotel. We reverse for trial.

The basis for the contract claim is a "proposal letter" sent by Gayne Kinsey, the Hotel's sales representative, to William Englehaupt, the executive director of FEDA, on July 12, 1979. The letter confirmed the reservation by the Hotel of 240 guest rooms for March 2 through 8, 1984 for FEDA's convention. It listed current rates but stated firm rates would be quoted one year before the meeting. It concluded:

If your plans are firm and the foregoing meets with your approval, we ask that you sign the enclosed copy of this letter in the space provided and return it to the undersigned. This will serve as notice to the Hotel del Coronado of your approval of the arrangements, terms and provisions set forth herein and your agreement to have your meeting here. Until such time, these arrangements are tentative only.

On July 20, 1979, Mr. Englehaupt signed the copy on behalf of FEDA and returned it to the Hotel. On July 31, 1979, Mr. Kinsey wrote, "All arrangements previously acknowledged have now been seen [sic] aside on a definite basis to accommodate your meeting."

Three and a half years later, in mid-February 1983, the executive committee of FEDA approved a change in site of the March 1984 meeting to Maui, Hawaii. On March 1, 1983, a year and a day before FEDA's scheduled stay at the Hotel, Mr. Englehaupt advised the Hotel of FEDA's cancellation.

The Hotel filed this diversity action alleging breach of contract, intentional misrepresentation, promise made without intent to perform, breach of implied covenant of good faith and fair dealing, and negligent misrepresentation. The trial court granted summary judgment for FEDA on all claims. ¹ The Hotel appeals the judgment only as to the contract claim. As to this claim the district court held that because the signed proposal letter did not establish price or terms and method of payment, it should be interpreted only as an agreement to agree in the future and therefore unenforceable.

If an essential element of a promise is reserved for future agreement by both parties there is no legal obligation until such future agreement is made. Coleman Engineering Co. v. North American Aviation, Inc., 65 Cal.2d 396, 405, 420 P.2d 713, 719, 55 Cal.Rptr. 1, 7 (1966). However, if the term awaiting future agreement is not essential, " 'each party will be forced to accept a reasonable determination of the unsettled point or if possible the unsettled point may be left unperformed and the remainder of the contract be enforced.' " Id., 420 P.2d at 720, 55 Cal.Rptr. at 8 (quoting City of Los Angeles v. Superior Court, 51 Cal.2d 423, 433, 333 P.2d 745, 750 (1959) ).

FEDA contends that because the room rates were reserved for future agreement, as a matter of law the proposal letter is only an agreement to agree. We disagree, for two reasons.

First, we cannot conclude that the price term was essential to the agreement as a matter of law. Whether a term is essential " 'depends upon the relative importance and the severability of the matter left to the future; it is a question of degree ....' " Id. 65 Cal.2d at 417, 420 P.2d at 727, 55 Cal. Rptr. at 15. (quoting City of Los Angeles v. Superior Court, 51 Cal.2d 423, 433, 333 P.2d 745, 750 (1959) ). The importance of a term may depend in part on the intentions of the parties. Id., 65 Cal.2d at 417, 420 P.2d at 727, 55 Cal.Rptr. at 15 (Traynor, C.J., dissenting). FEDA's selection of a...