Cable Science Corp. v. Rochdale Village, Inc.
| Decision Date | 29 November 1990 |
| Docket Number | No. 69,D,69 |
| Citation | 920 F.2d 147 |
| Parties | CABLE SCIENCE CORPORATION, Plaintiff-Appellant, v. ROCHDALE VILLAGE, INC., Defendant-Appellee. ocket 90-7283. |
| Court | U.S. Court of Appeals — Second Circuit |
Jeffrey Craig Miller (Miller & Korzenik, New York City, of counsel), for plaintiff-appellant.
Kevin J. McGill (Carlyle M. Dunaway, Jr., Suzanne B. Seiden, Clifton Budd & DeMaria, New York City, of counsel), for defendant-appellee.
Before FEINBERG and CARDAMONE, Circuit Judges, and CABRANES, District Judge. *
The issue raised on this appeal from a grant of summary judgment is whether the district court in construing a contract, by ascertaining the intent of the parties, resolved disputed issues instead of determining under Rule 56(c) whether they existed.
What was said and what was done by the parties is not in dispute, but the inferences that may reasonably be drawn from those actions is far from clear. It is of course the parties' intent that governs what the parties meant. But in this case the district court, under the guise of interpreting the meaning to be ascribed to the parties' words and deeds, determined what was intended. Where reasonable minds could differ as to inferences to be drawn regarding intent, material fact questions are presented precluding summary judgment.
Rochdale Village, a limited profit housing cooperative incorporated under Article II of the Private Housing Finance Law of New York, operates a housing cooperative in Queens, New York consisting of 5,860 apartments. On July 20, 1988 it entered into a written contract with Cable Science Corporation of Florida to obtain cable television service to all of the apartments. The contract provided that "[a]s compensation for the provision of BASIC SERVICE ... to all dwelling units in Rochdale Village, ROCHDALE agrees to pay CABLE SCIENCE $40,961.40 as a monthly service fee (based upon 5,680 apartment units at $6.99 per unit)." Attachment B1 specified that "the individual cooperators of Rochdale Village shall not be charged for the installation or Basic service under this contract," but that they could purchase additional services.
Monthly bills for the basic service were to be sent to Rochdale, and Cable Science agreed to pay Rochdale 75 cents per month for each Rochdale household signing up for additional or premium services. The contract stated that the agreement was "subject to the approval of the Commissioner of the New York State Division of Housing and Community Renewal and shall be deemed executory until the date of such approval." The contract further stated that "[t]his Agreement constitutes the entire understanding between the parties with respect to the subject matter herein, and shall not be modified except by written instrument, signed by the parties hereto." Rochdale warranted it had the legal right and authority to enter into the agreement.
Rochdale Village is regulated by the Commissioner of the New York State Division of Housing and Community Renewal (Commissioner or State Division) and is governed by a Board of Directors. New York housing regulations require State Division approval of all expenditures by Rochdale in excess of $10,000. N.Y. Hous. & Comm. Renewal Regs. Secs. 1728-1.3, 1728-4.1. Rochdale submitted the subject contract to the Commissioner, stating it would pass the monthly $6.99 charge on to each tenant. On September 19, 1988 the Commissioner disapproved the contract, primarily because the additional $6.99 charge would be an increase in the tenants' carrying costs, but made suggestions for amendments to the contract that would make it acceptable to the State Division.
On October 11, 1988 Cable Science and the President of Rochdale's Board signed a written modification of the contract addressing all of the State Division's suggested modifications. Those modifications slightly lowered the amount Rochdale agreed to pay, but did not otherwise change the language in the paragraph governing charges and subscriber rates. The modifications did not address, for example, whether Rochdale was to pass on the monthly charge to the tenants or pay the monthly charge from its cooperative coffers. The contract was resubmitted to the State Division with the understanding, as evidenced by the affidavit of Rochdale's current president, that Rochdale would pay the $40,000 monthly charges itself. On November 1 the State Division approved the July 20, 1988 contract, which included the amendments dated October 11, 1988. The approval was subject to two amendments to be made to the contract as well as to Rochdale's amendment of its budget "to reflect the $480,000 expenditure increase in accordance with the 1987 Workout Agreement and Rochdale's policies and procedures."
Rochdale's Board of Directors had previously entered into the 1987 Workout Agreement with the State of New York In mid-November a new president took office on the Rochdale Board and wrote the State Division on November 28 seeking clarification of the agency's November 1 approval. On December 19 the Rochdale Board voted to reject the Cable Science contract, and it also voted not to appropriate the $480,000 per year called for under the contract. On December 27--eight days after the Board voted to reject the contract--the State Division replied to the Board's November 28 letter seeking clarification as follows:
and the State Housing Finance Agency--holder of a large mortgage on the Rochdale property--because Rochdale had fallen $35 million in arrears on its mortgage payments. The Workout Agreement committed Rochdale to strict budget limits, required that all signatories approve significant new, unbudgeted items, and that Rochdale have sufficient surplus income for those items. On November 2, 1988 Rochdale sent Cable Science the State Division's approval of the contract and Cable Science prepared an additional amendment to the agreement addressing the first two State Division conditions set forth in its November 1 letter. Rochdale never signed this additional amendment.
The 1987 Workout Agreement and [the State Division] regulations require expenditures of this magnitude to be included in Rochdale's budget. Rochdale's long standing policies and procedures require Board approval of expenditures over $10,000. It is our position that approval of this expenditure must be made by the Rochdale Board. The Board's original approval of the contract, did not authorize the expenditure nor amend the budget and therefore consideration by the Board is required.
The Board has the duty and responsibility to determine if this is an appropriate housing company expenditure and, more importantly, if funds are available to cover this significant expense. The Board could of course determine that funds are not available.
The contract cannot be considered approved by [the State Division] until the necessary budget modification is passed and submitted to [it].
On January 27, 1989 Cable Science sued Rochdale Village for breach of contract. Rochdale moved for summary judgment. Cable Science cross-moved for the same relief and opposed Rochdale's motion with a statement of material facts in dispute. The district court granted Rochdale's motion for summary judgment, stating that
Admittedly, the State Division has not approved the Amended Agreement.
Of course, where the cooperation of a promisee is necessary to satisfy a condition precedent to performance of a contract, such as obtaining a third party's approval, there is an implied obligation to give reasonable cooperation ... No doubt Rochdale would have been required to amend the budget had that been a mere ministerial act ... But the State Division did not so regard it. Nor does this court.
The State Division made clear that it would not approve the Amended Agreement unless the Rochdale Board of Directors, which had never approved payment of the charges by Rochdale itself, focused on whether such payment was wise and allocated funds accordingly. The Board then fulfilled its duty to consider the matter and decided not to amend the budget."
....
While Cable Science says that Rochdale had ample funds to pay $480,000, this court may not substitute its judgment for that of the Board. [citations omitted].
On October 12, 1989 Cable Science filed a Fed.R.Civ.P. 59(e) motion for reconsideration and vacatur of the October 2 grant of summary judgment in favor of Rochdale alleging that it had discovered new evidence and that the Rochdale Board never made a finding that it did not have enough funds to fulfill the Cable Science contract. The district court refused to vacate its October 2 order, and in its opinion denying the vacatur stated Cable Science interprets the court's memorandum and opinion as resting on a conclusion of fact that the Rochdale Board, when first approving the contract with Cable Science, did so only on the understanding that the monies for payment would come...
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