Perma Research & Development Company v. Singer Company

• Citation: 308 F. Supp. 743
• Decision Date: 27 January 1970
• Docket Number: No. 66 Civ. 665.,66 Civ. 665.
• Parties: PERMA RESEARCH & DEVELOPMENT COMPANY, Plaintiff, v. The SINGER COMPANY, Defendant.
• Court: U.S. District Court — Southern District of New York

308 F. Supp. 743

PERMA RESEARCH & DEVELOPMENT COMPANY, Plaintiff, v. The SINGER COMPANY, Defendant.

No. 66 Civ. 665.

United States District Court, S. D. New York.

January 27, 1970.

Poletti, Freidin, Prashker, Feldman & Gartner, New York City, for plaintiff; Paul R. Grand, New York City, of counsel.

Winthrop, Stimson, Putnam & Roberts, New York City, for defendant; William C. Chanler and James T. Boorsch, New York City, of counsel.

OPINION

MacMAHON, District Judge.

This is a motion by defendant, The Singer Company ("Singer"), for summary judgment dismissing the complaint, pursuant to Rule 56, Fed.R.Civ.P. Plaintiff, Perma Research & Development Company ("Perma"), contends that the motion should be denied both because of the doctrine of "law of the case" and because there are many issues of material fact in dispute.

The complaint, far from a model of clarity, asserts three claims. The first seeks damages of $41,000,000 for breach of a June 1964 contract between the parties, alleging that substantial numbers of an automobile anti-skid braking device invented by Frank A. Perrino, the president of Perma, and assembled by Singer under the contract were "defective as a result of inadequate quality control." The second seeks to set aside a superseding contract made in December 1964 and to recover damages of $41,000,000 for fraud in the inducement. Both of these counts were dismissed by this court (Bryan, J.) and summary judgment granted in favor of Singer. The Court of Appeals affirmed. 410 F. 2d 572 (2d Cir.1969).

We are concerned here with the third claim, which is buried in the "WHEREFORE" clause of the complaint under the prayer for other relief. It alleges in the alternative that "if it be determined that the contract of December 21, 1964 be valid, Plaintiff demands judgment upon this contract for breach and nonperformance thereunder in the amount of 41 million dollars."

There was extensive discovery, but neither party sought evidence concerning this alternative claim. Rather, it was either overlooked or intentionally ignored. Not surprisingly, therefore, on the earlier motion for summary judgment, Singer did not address itself directly to the alternative claim, nor did Perma. Despite this, it did not escape the notice of Judge Bryan, who, after noting the neglect of the parties, held that "in the present posture of this action and on the papers before me Singer has not demonstrated that there are no material issues of fact as to this claim which require trial and summary judgment on the claim must therefore be denied."

Had the matter stopped there, we would not feel constrained to follow Judge Bryan, for it is plain that because of the parties' neglect the court lacked sufficient information in proper form to consider the merits of the alternative claim and in such circumstances the doctrine of law of the case is not a strait jacket.¹ However, the matter did not stop there. Instead, Singer moved successfully for reargument asserting that "this claim of breach must be dismissed because as a matter of law the contract provided the exclusive remedy of termination for any alleged inadequacy of performance (Point I), or, alternatively, because on the basis of undisputed facts now before the Court, there has been no breach (Point II)."

Singer then made the precise argument, cited the same authorities and presented the identical facts now urged on this second attempt for summary judgment in its favor. There is no suggestion that there are any newly discovered facts or that there has been a change in the applicable law. In short, the very points now made were all made and rejected by this court when Judge Bryan granted reargument and adhered to his original decision. This squarely raises the question of whether this motion is barred by the doctrine of law of the case.

As Judge Learned Hand said, "the `law of the case' does not readily bind a court to its former decisions, but is only addressed to its good sense."² Since the doctrine is addressed to the court's "good sense," it ought not be imposed on a mechanical basis.³ Rather, its applicability turns upon a number of considerations.⁴ One is judicial economy and another is the unseemliness of a court's altering a legal ruling as to the same litigants. A decision in a given case is, therefore, said to be the law of the case, and no question previously decided will be decided again unless there is some compelling reason.⁵

The balance of considerations here argues strongly against overruling Judge Bryan, for, although we are not compelled to follow his decision, in all "good sense" we are unable to find any convincing reason for refusing to do so.⁶ We rest on his opinion both because it is the law of the case and because we are satisfied with it.⁷

Singer contends that the alternative claim for breach of the December agreement must be dismissed because as a matter of law Singer was not required under the contract to do anything until January 1966 and because the contract provides the exclusive remedy of termination for any alleged inadequacy of performance. Singer's contentions are based on paragraph 10 of the contract, which, in pertinent part, provides:

"Reversion Right. In the event * * * Singer does not incur direct and indirect costs of at least $100,000 for marketing, promoting and advertising the Product * * * in any calendar year between January 1, 1966 and the December 31st preceding the time of expiration of * * * Singer's duty to pay royalties hereunder * * * Perma upon written notice * * * may notify * * * Singer of its exercise of its rights * * * to reversion of its patents, tools, etc.."

It was further provided that upon receipt of such notice, Singer "shall assign and convey to * * * Perma the patents and patent application assigned and conveyed hereunder" in consideration of Perma's payment to Singer of all its debts, plus $50,000 in cash, whereupon the December agreement would terminate.

Relying on the above provision and its tender of the patents and waiver of the $50,000 cash payment, Singer argues that paragraph 10 defines not only the sole measure of the performance required of Singer, but also specifies Perma's exclusive remedy for breach. We think, however, that paragraph 10 simply gives Perma an option to recover its patents and terminate the contract upon specified conditions. The option rests not with Singer but with Perma.

An option to terminate is not an exclusive remedy, and a party is not obligated to exercise such an option but may stand on his rights.⁸ There is, thus, no basis in the agreement for Singer's contention that "under any conceivable version of the facts, as a matter of law Perma's sole remedy would be to reacquire its patents." Nor do we find support in the cases urged by Singer⁹ for all of them, as Singer concedes, are predicated on the fact that patents were assigned without an express agreement by the assignee to pay any specified amount or to perform any particular act. That premise is absent here. It is not supplied by reiteration of the complaint's erroneous conclusion that the contract is illusory because Singer "was not bound to perform any covenants or agreements." That construction of the agreement is frivolous, and it was expressly and correctly rejected by both Judge Bryan and the Court of Appeals.

Nor is the premise found in paragraph 13 of the contract, which, under the heading "Marketing," states that the "Buyer in its absolute discretion shall determine the method of manufacturing, exploiting and marketing the Product." We think it perfectly plain that paragraph 13 merely specifies that control of the means and methods of performance rests in Singer's discretion. The clause cannot be stretched to give Singer an absolute right unilaterally to abandon the contract or to terminate it at will.

Nor do we find merit in Singer's contention that as a matter of law Perma is limited to a claim for rescission. The Neenan, Crowe and Matzka cases¹⁰ each involved suits by a licensor seeking not damages but rescission. None holds that the plaintiff may not recover damages but simply ground equity jurisdiction on the proposition that the legal remedy was inadequate because damages were of a speculative nature. Indeed, the Crowe case specifically recognized the right of the plaintiff "first to hold the contract rescinded or second to sue on the breach for damages." Our rejection of these authorities should not be understood as a holding either that the fact of, or the amount of, plaintiff's damages, if any, is certain. It may well be that there are no damages or that, if there are, they are of a speculative nature.¹¹ We simply hold that that question cannot be determined on the record before us but must await developments at the trial.

Equally without merit is Perma's contention that Singer breached the December agreement by not shipping the product at once and throughout 1965. Perma claims support for this contention in the fact that Singer assumed five contracts previously made by Perma with various distributors which called for delivery of the product either in 1964 or in 1965. It is apparent, however, that the product never was perfected during 1965. Concededly, the parties were engaged in joint efforts to correct the defects at least until the end of July, and the product is still not fail-safe. Perrino admitted on his deposition that a malfunction will lead to a complete loss of braking power even today. Yet, in promotional material shown to Singer before the June agreement, Perma represented that the device had "a fail-safe feature which will automatically revert to the standard braking system in case of failure." Thus, the device was not fail-safe as that term is defined in impartial dictionaries¹² and by Perma before there was any motive to create an issue of fact. We think that in view of these immutable admissions by plaintiff there can be no genuine issue that the device was not fail-safe...