Green v. Interstate United Management Services Corp.
| Citation | 748 F.2d 827 |
| Decision Date | 21 December 1984 |
| Docket Number | Nos. 84-3124,84-3136,s. 84-3124 |
| Parties | William GREEN Jr.; A. Wesley Wyatt and Herbert C. Davis, individuals t/d/b/a Ice Plant Hill Associates, a general partnership v. INTERSTATE UNITED MANAGEMENT SERVICES CORPORATION, a Massachusetts corporation. William GREEN Jr.; A. Wesley Wyatt and Herbert C. Davis, individuals t/d/b/a Ice Plant Hill Associates, a general partnership v. INTERSTATE UNITED CORPORATION, a Delaware corporation and Inunco Corp., a Delaware corporation, and Hanson Industries Inc., a Delaware corporation. Appeal of William GREEN, Jr.; A. Wesley Wyatt, and Herbert C. Davis, individuals, trading and doing business as Ice Plant Hill Associates, a general partnership, in 84-3124. Appeal of INTERSTATE UNITED MANAGEMENT SERVICES CORPORATION, Interstate United Corporation and Hanson Industries, Inc., in 84-3136. |
| Court | United States Courts of Appeals. United States Court of Appeals (3rd Circuit) |
Jeffrey P. Ward (argued), Robert S. Grigsby, Grigsby, Gaca & Davies, P.C., Pittsburgh, Pa., for William Green, Jr., et al.
Joseph F. McDonough (argued), Mary L. Silverberg, Manion, Alder & Cohen, P.C., Pittsburgh, Pa., for Interstate United Management Services Corp., et al.
Before ALDISERT, Chief Judge, and HUNTER, and WEIS, Circuit Judges.
This is an appeal from the judgment of the United States District Court for the Western District of Pennsylvania in consolidated diversity actions brought by William Green, Jr., A. Wesley Wyatt, and Herbert C. Davis, against Interstate United Management Services Corporation ("I.U.M."), Interstate United Corporation ("Interstate"), and Hanson Industries, Inc. ("Hanson"). All parties involved take issue with rulings made at trial by the district court. We will affirm in part and reverse in part.
The events giving rise to this case began in 1977, when representatives of I.U.M. 1 entered into negotiations with Green, the general partner of Wyatt and Davis in a real estate development business, for the construction and lease of an industrial food preparation facility in suburban Pittsburgh. In the spring of 1978, at I.U.M.'s behest, Green presented a proposal for construction and lease of the facility on a site in the Turtle Creek Redevelopment Area. Albert Costley, I.U.M.'s regional vice-president, signed a letter of intent indicating that the proposal would be accepted if a satisfactory lease could be negotiated. However, negotiations fell through after the site proved to be too small to accommodate a facility that would meet I.U.M.'s specifications.
In January 1979, Green made a proposal for construction of the facility on an alternative site in North Versailles Township. Allegedly pursuant to authorization by Costley, Green, and his partners purchased on option to buy this site. In a letter dated March 16, 1969, Costley indicated that I.U.M. would accept Green's proposal for construction and lease of the facility on the alternative site, and directed Green to "pursue acquisition" of the site. App at 917. The letter continued:
It is our intention to enter into a fifteen year lease at an annual rent of 80,028.00, net, net, net, with two five year options. This agreement contingent on a lease satisfactory to both parties.
Please forward lease for approval.
On the strength of this letter, Green made arrangements to purchase the site and to finance the project. Green alleges that in August 1979 representatives of I.U.M. orally approved the written lease form he submitted. It is undisputed that at this time I.U.M. sought Interstate's and Hanson's approval of the proposed lease. After an independent appraisal of the proposed project, Interstate and Hanson concluded that the lease was unacceptable and refused to approve it. I.U.M. then declined to sign the lease.
Green and his partners then brought suit against I.U.M., Interstate, and Hanson for breach of contract, promissory and equitable estoppel, and misrepresentation. Green and his partners also sued Interstate and Hanson for interference with actual and prospective contractual relations and conspiracy to interfere with contractual relations. The district court limited Green to reliance damages on the breach of contract claim, ruling that there was no writing to satisfy Pennsylvania's Statute of Frauds for leases, Pa.Stat.Ann. tit. 68, 250.202, 250.203 (Purdon 1965). Again relying on the Statute of Frauds, the district court instructed the jury that it could award only reliance damages on Green's claims against Interstate and Hanson for interference with contractual relations. The district court also limited recovery on Green's promissory estoppel claims to reliance damages, and denied Interstate's and Hanson's motion for a directed verdict or judgment notwithstanding the verdict on the tortious interference and conspiracy claims.
The jury found I.U.M. liable for breach of an oral lease contract, promissory estoppel, and fraudulent misrepresentation. It found Interstate and Hanson liable for interference with contractual relations and conspiracy to interfere with contractual relations. As the parties had agreed at pretrial conference, the jury was given special interrogatories that required assesment of damages on each claim, standing alone, for which the defendants were found liable. The jury assessed damages as follows:
The district court, again acting pursuant to the parties' pre-trial agreement, molded the assessment of damages, and entered judgment for Green, Wyatt and Henderson for $50,000.00, for which all three defendants were held jointly and severally liable, and for an additional $5,000.00 in compensatory damages and $10,000.00 in punitive damages against I.U.M. alone.
In this appeal, Green contends that the district court erred in limiting recovery on the contract claim to reliance damages, arguing that Costley's letter of intent was a writing sufficient to satisfy the Statute of Frauds. We disagree. The letter of intent was clearly insufficient to make out a written lease. Under Pennsylvania law, "writings which show that the parties are still in the process of negotiation, ... which look toward some future contract, ... do not satisfy the writing requirement of the statute of frauds." Conaway v. 20th Century Corp., 491 Pa. 189, 201, 420 A.2d 405, 411 (1980).
Moreover, we must also reject Green's contention that the letter of intent itself constituted a fully enforceable agreement to enter into a lease. The letter, if an agreement at all, was by its terms contingent upon negotiation of a satisfactory lease. Green contends that the written lease tendered to I.U.M. satisfied this condition, but concedes that oral testimony would be necessary to tie these documents together. Under Pennsylvania law, if writings must be linked or supplemented by oral testimony in order to make out a contract, the contract is considered an oral one for Statute of Frauds purposes. See, e.g., United States v. 29.16 Acres of Land, 496 F.Supp. 924, 928 (E.D.Pa.1980); Haines v. Minnock Constr. Corp., 289 Pa.Super. 209, 215-16, 433 A.2d 30, 33 (1981). We agree with the district court that to award expected profits on an oral lease, based on an oral agreement to enter into that lease, would contravene the purposes of the Statute of Frauds for leases. For that reason, we will affirm the district court's ruling that recovery on the contract claim here was limited to reliance damages.
Green and his associates also contend that the district court erred in limiting their recovery on their promissory estoppel claim to reliance damages. Pennsylvania has adopted the theory of promissory estoppel established by section 90 of the Restatement (Second) of Contracts. See Murphy v. Burke, 454 Pa. 391, 398, 311 A.2d 904, 908 (1973). Under this section, a promise that induces reasonable reliance on the part of the promisee may be binding "if injustice can be avoided only by enforcement of the promise." Restatement (Second) of Contracts, Sec. 90(1) (1981)....
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