Fontainebleau Hotel Corp. v. Crossman

• Decision Date: 07 March 1961
• Docket Number: No. 18339.,18339.
• Citation: 286 F.2d 926
• Parties: FONTAINEBLEAU HOTEL CORP., Appellant, v. Florence Lustig CROSSMAN, a/k/a Florence Lustig, Trading and doing business as Florence Lustig, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

286 F.2d 926 (1961)

FONTAINEBLEAU HOTEL CORP., Appellant, v. Florence Lustig CROSSMAN, a/k/a Florence Lustig, Trading and doing business as Florence Lustig, Appellee.

No. 18339.

United States Court of Appeals Fifth Circuit.

February 3, 1961.

Rehearing Denied March 7, 1961.

Richard P. Kenney, Miami, Fla., Williams, Salomon, Kenney & Lindzon, Miami, Fla., for appellant.

Robert C. Ward, Miami, Fla., Ward & Ward, Miami, Fla., for appellee.

Before TUTTLE, Chief Judge, and RIVES and WISDOM, Circuit Judges.

WISDOM, Circuit Judge.

This case is before us for the second time. The plaintiff-appellee, Mrs. Florence Lustig Crossman, doing business as Florence Lustig, operates women's dress shops in Miami Beach, Palm Beach, and Bal Harbour, Florida, in New York City, and elsewhere. The defendant-appellant is the Fontainebleau Hotel Corporation of Miami Beach, Florida. In 1959 Mrs. Crossman sued Fontainebleau to restrain the defendant from evicting her and to obtain specific performance of a lease with an option to renew for five years. The lease was unsigned but, according to the complaint, was reduced to writing and represented the agreement of the parties. Fontainebleau moved to dismiss the suit on the ground that the lease did not comply with the Florida statute of frauds. Answering the motion, Mrs. Crossman argued that her possession of the premises, payment of the rent, and expenditure of more than $50,000 for improvements took the contract out of the statute of frauds. The district court granted Fontainebleau's motion to dismiss for failure to state a claim entitling the plaintiff to relief. On appeal, this Court reversed the district court and remanded the case, holding that the acts on which Mrs. Crossman relied in the complaint were sufficient to state a cause of action. Crossman v. Fontainebleau Hotel Corp., 5 Cir., 1959, 273 F.2d 720. On remand, the district court found that the equities were with the plaintiff and that she had "sustained the burden of proof * * * under the law of the case established in this Court's earlier opinion." Fontainebleau appeals from the judgment granting specific performance. We affirm.

I.

Fontainebleau argues that the district court erroneously applied as "the law of the case" this Court's holding on the first appeal. The error, so appellant urges, permeated the conduct of the trial and the findings; the trial judge assumed that the first opinion "settled everything".

"The rule of the law of the case is a rule of practice, based upon sound policy that when an issue is once litigated and decided, that should be the end of the matter." United States of America and Interstate Commerce Commission v. United States Smelting, Refining & Mining Co., 1950, 339 U.S. 186, 70 S.Ct. 537, 544, 94 L.Ed. 750. Moore states it: "When therefore, a federal court enunciates a rule of law to be applied in the case at bar * * * it establishes the law, which other courts owing obedience to it must, and which it itself will, normally apply to the same issues in subsequent proceedings in that case." 1 Moore, Federal Practice, ¶0.404 1. When an appellate court reverses and remands a case, it is the duty of the trial judge to follow the court's mandate in the light of the principles of law the court decided on the appeal. Ex parte Sibbald v. United States, 1838, 12 Pet. 488, 9 L.Ed. 1167; Munro v. Post, 2 Cir., 1939, 102 F.2d 686; 1 Moore Federal Practice, ¶0.40410. That is about as much as "the law of the case" means.

On the first appeal, we dealt with allegations in the complaint and a motion to dismiss. But we did not deal with them in a vacuum. In determining the sufficiency of the complaint we found it necessary to define the applicable legal principles and to weigh the complaint against those principles. The whole dispute then before us was legal: whether part performance, in the context of the complaint, was sufficient to take the lease out of the Florida Statute of Frauds. F.S.A. § 725.01 et seq. Deciding that it was, we remanded the case to give Mrs. Crossman her day in court. We made no factual determination, and could not, but we answered the legal questions to the best of our ability and they should be considered as settled — for purposes of the trial on remand. Eastern Cherokees v. United States, 1911, 225 U.S. 572, 582, 32 S.Ct. 707, 56 L.Ed. 1212; Roth v. Hyer, 5 Cir., 1944, 142 F.2d 227, certiorari denied 323 U.S. 712, 65 S.Ct. 38, 89 L.Ed. 573; see 3 Am.Jur., Appeal and Error, § 1240.

It is undoubtedly true that the law of the case does not include the determination of all questions that might arise within the issues. But, as will be seen in the discussion of the factual issues, we find nothing in the record to indicate that the trial judge, trapped in the toils of a verbal formula, misunderstood "the law of the case" or incorrectly applied it to settle questions developed during the trial that were not within the reach of the first Crossman-Fontainebleau opinion.

II.

The appellant's other arguments present, basically, the question: does substantial evidence support the trial judge's holding?

A. First, Fontainebleau argues strenuously that there was no meeting of the minds on the terms of the original lease and therefore no complete contract. The facts point in the other direction.

In January 1955 Ben Jaffe, an officer and stockholder of the Fontainebleau Hotel, got in touch with Mr. and Mrs. Crossman for the purpose of interesting her in opening a dress shop in the hotel lobby. Jaffe was the hotel officer authorized to negotiate leases for store space in the hotel. They reached a tentative oral agreement on the terms of a lease. Fontainebleau's attorney then prepared a written lease and submitted it to Mrs. Crossman. The Crossmans went over this lease, making notations in pencil to conform the written lease to the oral agreement, and met with Jaffe several times to discuss the pencilled changes. After the entire lease was discussed fully, including the notations in pencil, Jaffe wrote "OK" on the marked copy of the lease and asked the Crossmans if that was the agreement they wanted and would abide by. On their answering affirmatively that it was, Jaffe requested Mrs. Crossman to let him know the name in which she would take the lease; Mrs. Crossman operates her several stores under different names. Mrs. Crossman also okayed the lease. This instrument is Plaintiff's "Exhibit A". It was taken in the name of "Florence Lustig of New York, Inc." Jaffe then advised the Crossmans that he would have his attorneys draw up what the parties termed a "clean lease". The trial judge found it was to be retyped only for the purpose of eliminating the pencilled notations and the unsightly appearance of the marked copy. Jaffe testified, however, that he approved some of the changes but did not approve others which required the approval of his lawyers.

The clean lease differed in two important respects from Exhibit A. (1) The clean lease provided that $5,000 Mrs. Crossman deposited with the hotel in January 1955 as security should be returned November 1, 1957; Exhibit A required the deposit to be returned November 1, 1956. (2) The clean lease did not grant Mrs. Crossman the exclusive right to sell all of the same items listed in Exhibit A. These and several other matters were the subject of correspondence between the attorneys for Mrs. Crossman and the attorneys for the hotel. Fontainebleau asserts that this correspondence shows there was no complete contract.

The testimony is undisputed that the parties agreed orally, agreed in the lease marked "Exhibit A", and finally agreed in the clean copy on the essential...