Arcadian Phosphates, Inc. v. Arcadian Corp., No. 1282

CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)
Writing for the CourtBefore OAKES, Chief Judge, VAN GRAAFEILAND and PRATT; OAKES
Citation884 F.2d 69
PartiesARCADIAN PHOSPHATES, INC., Judas Azuelos, and Eli Sivan, Appellants, v. ARCADIAN CORPORATION, Appellee. ocket 89-7277.
Docket NumberNo. 1282,D
Decision Date01 September 1989

Page 69

884 F.2d 69
ARCADIAN PHOSPHATES, INC., Judas Azuelos, and Eli Sivan, Appellants,
v.
ARCADIAN CORPORATION, Appellee.
No. 1282, Docket 89-7277.
United States Court of Appeals,
Second Circuit.
Argued June 16, 1989.
Decided Sept. 1, 1989.

Edwin B. Mishkin, Cleary, Gottlieb, Steen & Hamilton, New York City (Judith A. Ripps, Jessica Sporn Tavakoli, Frances V. Bouchoux, of counsel), for appellants.

Peter J. Gartland, Donovan Leisure Newton & Irvine, New York City (Stephen D. Houck, Cloyd Laporte III, of counsel), for appellee.

Before OAKES, Chief Judge, VAN GRAAFEILAND and PRATT, Circuit Judges.

Page 70

OAKES, Chief Judge:

This appeal is from a judgment in a diversity suit involving claims for breach of contract and promissory estoppel. The claims are based on a memorandum which described the sale of a fertilizer company's phosphate fertilizer business to a joint venture. The appellants--the potential purchasers, consisting of the joint venture and two individuals involved in its formation--claim that the memorandum was a binding contract. The appellee--the potential seller, the fertilizer company--argues that the memorandum was an unenforceable "argument to agree." The United States District Court for the Southern District of New York, Kevin Thomas Duffy, Judge, granted summary judgment to the fertilizer company. Arcadian Phosphates, Inc. v. Arcadian Corp., No. 87 Civ. 2353 (S.D.N.Y. Feb 27, 1989) (memorandum endorsement). We affirm on appellants' breach of contract claims. Because summary judgment was, however, inappropriate on appellants' promissory estoppel claim, we reverse and remand for further consideration of that claim.

I. FACTS

Appellee Arcadian Corporation ("Arcadian") is a New York corporation that manufactures and sells fertilizer. Appellant Arcadian Phosphates, Inc. ("API") is a Delaware corporation incorporated in 1986 by appellants Judas Azuelos and Eli Sivan as a vehicle for the purchase of Arcadian's phosphate fertilizer business. Azuelos, a citizen and resident of France, represents the Office Togolais Des Phosphates ("OTP"), the governmental entity in Togo that mines, markets, and exports phosphate rock. Sivan, a citizen of Israel and resident of the United Kingdom, was a businessman engaged in buying and selling Togolese phosphate rock on the world market, and is now the president, treasurer, and one of the directors of API.

In 1986, OTP became Arcadian's chief supplier of phosphate. At the same time Arcadian, allegedly motivated by a sharp drop in the price of fertilizer, began negotiating the sale of its phosphate fertilizer facility in Geismar, Louisiana to API. In June 1986, the parties signed a four-page memorandum of understanding outlining areas of agreement concerning the assets to be purchased, the purchase price, and an option for Arcadian to purchase up to 20% of API. The memorandum also set deadlines for further action, all subject to the approval of Arcadian's board and appellants' ability to obtain financing. After such board approval and appellants' successful but unconsummated search and after further negotiations, the parties signed a one-and-a-half page memorandum on November 6, 1986, that incorporated the June memorandum. It is this November 6 memorandum that appellants claim was a binding contract for the sale of Arcadian's phosphate fertilizer business.

The November 6 memorandum, together with the June memorandum that was incorporated by reference, was termed an "agreement" though subject to approval by the boards of both OTP and Arcadian. It specified the purchase price, the timing and amounts of the payments, the fixed assets to be purchased, and a closing date of not later than May 31, 1987. It also outlined a framework of negotiation for the purchase of Arcadian's finished product inventory at closing at a "mutually agreeable market value," with phosphate stores to be purchased at closing at Arcadian's book value. Other provisions were less definite: for example, the memorandum referred to part of the payment as "a note secured to Arcadian's satisfaction" and to additional equity participants in the proposed joint venture as "subject to mutual agreement." The November 6 memorandum provided that if negotiations for the sale failed, Arcadian would repay any capital expenditures agreed to thereafter and made by API, and if the negotiations failed through no fault of API, Arcadian would refund API's deposit. The November 6 memorandum also stated that "the service and supply agreement will be negotiated and agreed to by December 31, 1986" and [a] binding sales agreement will be completed by December 31, 1986." Finally, both parties agreed to the memorandum "to cooperate fully and work judiciously in order to expedite the

Page 71

closing date and consummate the sale of the business."

By November 14, 1986, the Arcadian board unanimously approved what Arcadian's CEO then called the "proposed agreement"--though the CEO now says that the board only approved of his proceeding with negotiations. The November 6 memorandum was also approved by OTP. The parties then confirmed by Telex their respective approvals and took steps to consummate the transaction. According to the appellants, these included establishment of API offices at Arcadian headquarters; Arcadian's obtaining lenders' consents after informing them of the "agreed upon" sale with a "signed agreement"; introduction of Azuelos and Sivan to one supplier as "new owners"; and beginning the negotiation of supply contracts for API.

On November 26, API tendered a cash deposit of $687,500 as required. Arcadian executed an escrow agreement for the deposit, referring to the parties' "agreement" and pursuant to which the deposit was to be non-refundable except "because of force majeure or Sellers' default." The minutes of an Arcadian directors' meeting on December 11, 1986, reflect the deposit payment and say that "[f]inal negotiations are continuing to work out the necessary service and marketing agreements," with a closing date of the "venture" to be "no later than May 31, 1987."

On December 17, 1986, Arcadian agreed in writing that its option for 20% minority participation in API could be reduced by API to as low as 5% to enable API to secure financing. API also incurred, it is alleged, expenses of over $100,000 to install "fenders" at Arcadian docking facilities in Geismar, Louisiana, in order to permit the discharge of Togolese rock. API also obtained a bank commitment for the $7 million required for its cash payment toward the $13.75 million purchase price and allegedly entered into a long-term rock supply contract with OTP. According to appellants, Arcadian did not...

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251 practice notes
  • Aquilio v. Police Benev. Ass'n of NY State Troopers, No. 91-CV-325.
    • United States
    • United States District Courts. 2nd Circuit. United States District Court of Northern District of New York
    • June 15, 1994
    ...an injury sustained by the party asserting the estoppel by reason of his reliance.''" Arcadian Phosphates, Inc. v. Arcadian Corp., 884 F.2d 69, 73 (2d Cir.1989)15 (quoting Esquire Radio & Electronics, Inc. v. Montgomery Ward & Co., 804 F.2d 787, 793 (2d Cir.1986) (quoting in tu......
  • Schwanbeck v. Federal-Mogul Corp., FEDERAL-MOGUL
    • United States
    • Appeals Court of Massachusetts
    • October 29, 1991
    ...Feldman v. Allegheny Intl., Inc., [31 Mass.App.Ct. 398] 850 F.2d at 1223-1224. Compare Arcadian Phosphates, Inc. v. Arcadian Corp., 884 F.2d 69, 71-73 (2d Cir.1989); Teachers Ins. & Annuity Assn. of America v. Tribune Co., 670 F.Supp. 491, 497-498 (S.D.N.Y.1987); 1 Corbin, Contracts § 9......
  • Nungesser v. Columbia Univ., 1:15-cv-3216-GHW
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • March 11, 2016
    ...” Cyberchron Corp. v. Calldata Sys. Dev., Inc. , 47 F.3d 39, 44 (2d Cir.1995) (quoting Arcadian Phosphates, Inc. v. Arcadian Corp ., 884 F.2d 69, 73 (2d Cir.1989) ). Nungesser alleges that Columbia's “various policies constitute representations and promises” that he relied upon. AC ¶¶ 269-7......
  • Aventis Environmental Science Usa Lp v. Scotts Co., No. 99 Civ. 4015(LAP)(THK).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • January 13, 2005
    ...regarding pyrethroids on a demonstration of efficacy. Thus, similar to the situation in Arcadian Phosphates, Inc. v. Arcadian Corp., 884 F.2d 69, 72 (2d Cir.1989), this is not a situation in which the parties must merely work out a few details or formalize an agreement on essential terms af......
  • Request a trial to view additional results
251 cases
  • Aquilio v. Police Benev. Ass'n of NY State Troopers, No. 91-CV-325.
    • United States
    • United States District Courts. 2nd Circuit. United States District Court of Northern District of New York
    • June 15, 1994
    ...an injury sustained by the party asserting the estoppel by reason of his reliance.''" Arcadian Phosphates, Inc. v. Arcadian Corp., 884 F.2d 69, 73 (2d Cir.1989)15 (quoting Esquire Radio & Electronics, Inc. v. Montgomery Ward & Co., 804 F.2d 787, 793 (2d Cir.1986) (quoting in tu......
  • Schwanbeck v. Federal-Mogul Corp., FEDERAL-MOGUL
    • United States
    • Appeals Court of Massachusetts
    • October 29, 1991
    ...Feldman v. Allegheny Intl., Inc., [31 Mass.App.Ct. 398] 850 F.2d at 1223-1224. Compare Arcadian Phosphates, Inc. v. Arcadian Corp., 884 F.2d 69, 71-73 (2d Cir.1989); Teachers Ins. & Annuity Assn. of America v. Tribune Co., 670 F.Supp. 491, 497-498 (S.D.N.Y.1987); 1 Corbin, Contracts § 9......
  • Nungesser v. Columbia Univ., 1:15-cv-3216-GHW
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • March 11, 2016
    ...” Cyberchron Corp. v. Calldata Sys. Dev., Inc. , 47 F.3d 39, 44 (2d Cir.1995) (quoting Arcadian Phosphates, Inc. v. Arcadian Corp ., 884 F.2d 69, 73 (2d Cir.1989) ). Nungesser alleges that Columbia's “various policies constitute representations and promises” that he relied upon. AC ¶¶ 269-7......
  • Aventis Environmental Science Usa Lp v. Scotts Co., No. 99 Civ. 4015(LAP)(THK).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • January 13, 2005
    ...regarding pyrethroids on a demonstration of efficacy. Thus, similar to the situation in Arcadian Phosphates, Inc. v. Arcadian Corp., 884 F.2d 69, 72 (2d Cir.1989), this is not a situation in which the parties must merely work out a few details or formalize an agreement on essential terms af......
  • Request a trial to view additional results

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