GSGSB, INC. v. New York Yankees

• Decision Date: 28 September 1994
• Docket Number: No. 91 Civ. 1803 (SWK).,91 Civ. 1803 (SWK).
• Citation: 862 F. Supp. 1160
• Parties: GSGSB, INC., a Pennsylvania corporation, Plaintiff, v. NEW YORK YANKEES, an Ohio limited partnership, Defendant.
• Court: U.S. District Court — Southern District of New York

862 F. Supp. 1160

GSGSB, INC., a Pennsylvania corporation, Plaintiff, v. NEW YORK YANKEES, an Ohio limited partnership, Defendant.

No. 91 Civ. 1803 (SWK).

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

September 28, 1994.

COPYRIGHT MATERIAL OMITTED

Ferrara & Hantman, New York City by Robert J. Hantman, Raffi Momjian, for plaintiff.

Dorsey & Whitney, New York City by James M. Bergen, for defendant.

MEMORANDUM OPINION AND ORDER

KRAM, District Judge.

This is an action brought by the architectural firm of Gilboy, Stauffer, Giombetti, Skibinski and Bellante ("GSGSB")¹ against the twenty-two time World Series Champions, the New York Yankees Partnership (the "Yankees") for breach of a purported oral agreement. GSGSB now moves for summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure, on the grounds that there is no genuine issue of material fact as to Count II (quantum meruit) and Count IV (damages on account stated) of the complaint. The Yankees oppose the motion and cross-move for (1) summary judgment on Count I (breach of contract) and Count IV; (2) partial summary judgment as to Count II; and (3) to dismiss Count III (fraud), pursuant to Rule 9(b) of the Federal Rules of Civil Procedure. For the reasons set forth below, GSGSB's motions are denied. The Yankees' cross-motion for summary judgment is granted in part and denied in part. Specifically, the Yankees' motion with respect to Count I and Count IV is granted, and the Yankees' cross-motion for partial summary judgment with respect to Count II is denied. The Yankees' motion with respect to Count III is granted.

BACKGROUND²

The instant action arises, not from what occurred on the playing field, but rather, from what occurred in — and in regard to — Yankee Stadium. On August 7, 1984, Eugene McHale ("McHale"), then president of the Yankees, and John P. Gilboy, Jr. ("Gilboy"), a partner at GSGSB, met to discuss proposed improvements to Yankee Stadium (the "August 7th meeting"). The improvements were to include: (1) construction of thirty-six luxury suites ("superboxes") along the first and third base lines; (2) the creation of a glass-enclosed restaurant containing the Yankee Club; and (3) the expansion of the "Great Moments" banquet room (collectively, the "Project").

According to GSGSB, although no contract was ever signed, the Yankees directed GSGSB to prepare and deliver drawings and specifications on an expedited basis, as the Yankees hoped to complete the renovations by the 1985 season. Thereafter, purportedly in accordance with the Yankees' instructions but without a contract, GSGSB performed architectural and engineering services related to the Project, including preparation of construction drawings, design studies and document inventory. At the present time, however, no improvements have in fact been made to Yankee Stadium, nor has GSGSB received any remuneration for the work done in connection with the Project.

The Yankees dispute that GSGSB was ever hired to work on the Project, and instead contend that GSGSB performed its services on a "risk" or "contingent" basis, subject to a final written agreement between the parties. Specifically, the Yankees maintain that they told GSGSB both at the August 7th meeting and thereafter that the City of New York (the "City") owned Yankee Stadium and that, as outlined in the lease agreement between the City and the Yankees, City approval was necessary before any improvements or construction could commence. In addition, the Yankees claim that they told GSGSB that appropriate financing would have to be arranged with the City, and that GSGSB could not be paid for any work until such financing was approved. As the City's permission was necessary to make Stadium improvements, the Yankees maintain that they never intended, nor even had the authority to enter into a contract unless and until financing and approval were obtained from the City. In fact, although the Yankees engaged in protracted negotiations with the City over the course of numerous meetings, they were unable to obtain the necessary consent.

On March 15, 1991, GSGSB commenced the instant action, alleging causes of action for breach of contract (Count I), quantum meruit (Count II), fraud (Count III) and damages on account stated (Count IV). GSGSB now moves for summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure, as to Counts II and IV of the complaint. Specifically, GSGSB contends that there is no genuine issue of material fact regarding its entitlement to fees incurred in connection with the Project. According to GSGSB, the fee arrangement, while indisputably oral, is reflected in correspondence, draft contracts, representations made by the Yankees to both GSGSB and third parties, invoices documenting plaintiff's fees and expenses and amounts credited against the GSGSB account.

The Yankees oppose GSGSB's motion and cross-move for summary judgment, also pursuant to Rule 56, on the grounds that, as the City never approved financing of the Project, there is no issue of fact regarding the lack of an enforceable agreement between the parties. The Yankees claim further that plaintiff's own documents, the testimony of a former GSGSB principal and the correspondence between the parties demonstrate that summary judgment must be granted in its favor.

I. Correspondence Between the Parties

While both parties concede that no contract was ever executed, GSGSB contends that the terms of its employment were memorialized in several documents written by McHale, the Yankees' president. Specifically, GSGSB relies upon a memorandum dated September 26, 1984, wherein McHale advised Yankees general partner George Steinbrenner, III ("Steinbrenner") as to the "possible addition" of the superboxes and recommended that, "if we go forward with the project and assuming Gilboy's budget is in line ... we use Gilboy's firm to do the work." See memorandum from McHale to Steinbrenner of 9/26/84, annexed to the McHale Aff. as Exh. "C." Similarly, in a letter dated February 20, 1985 (the "February 20th letter"), McHale advised Henry J. Stern, the Commissioner of the New York City Department of Parks, that "the architectural firm of GSGSB was hired to do the design work on the addition of luxury suites at Yankee Stadium." See letter from McHale to Stern of 2/20/85, annexed to the Declaration of John Peter Barie, dated April 10, 1993 (the "Barie Dec."), as Exh. "28."

Although the Yankees admit that McHale authored the two documents, they dispute their relevance as proof that an agreement was reached between the parties. For example, the Yankees argue that the February 20th letter was unrelated to the Project and actually pertained to potential stadium renovations, uncovered during the course of GSGSB's work, that might be necessary to ensure public safety. The Yankees maintain that no safety measures were ultimately necessary or undertaken, and that the initial design calculation by GSGSB suggesting the need for such action was in fact wrong.

The Yankees argue further that GSGSB's own correspondence indicates that it understood from the outset that the Project was contingent upon approval and financing by the City. Specifically, the Yankees point to an August 8, 1984 letter from GSGSB partner Gilboy to McHale which states in part that "GSGSB is very excited about the luxury box project. If arrangements with the City can be completed to permit the Yankees to construct and finance the program, I believe we can use the boxes in the Spring of 1985." See letter from Gilboy to McHale of 8/8/94, annexed to the McHale Aff. as Exh. "A" (emphasis added).

II. The Unsigned Draft Agreements

GSGSB also claims that a contract arose between the parties on or about November 8, 1985 as a result of negotiations and revisions to a draft agreement. Following a number of meetings between GSGSB and the Yankees, GSGSB prepared a "Standard Form of Agreement Between Owner and Architect," dated October 29, 1984 and marked "Draft" (the "October 29th Draft"). The October 29th Draft was between the "New York Yankees Partnership" and "Gilboy, Stauffer, Giombetti, Skibinski, Bellante" for a project described as "New York Yankee Stadium Improvements — New main level suite entrance — luxury suite design." See the October 29th Draft, annexed to the Barie Dec. as Exh. "6." Sometime after October 29, 1984, McHale informed Steinbrenner about the October 29th Draft, who then forwarded it to the Yankees' counsel, James Frankel ("Frankel") of Shea & Gould.³ Frankel and McHale then negotiated the terms of the October 29th Draft and, on July 30 and August 7, 1985, Shea & Gould forwarded various new drafts to the Yankees (the "July 30th Draft" and the "August 7th Draft," respectively).⁴

Thereafter, by letter dated September 20, 1985, Ken Lazaruk, also of Shea & Gould, sent a revised draft to McHale and Dominic Provini ("Provini"), head of operations of GSGSB (the "September 20th Draft").⁵ On or about November 8, 1985, Lazaruk sent McHale another draft of the revised agreement (the "November 8th Draft").⁶ The transmittal letter of this final draft stated, in pertinent part, "enclosed is a revised draft agreement between owner and architect for this project." See letter from Lazaruk to McHale of 11/8/92, annexed to the Barie Dec. as Exh. "22."

Thus, in total, no less than five draft contracts were discussed by the parties between October 1984 and November 1985. GSGSB alleges, however, that none of these drafts indicated that GSGSB was working at "risk" or on a "contingency" basis. Rather, according to GSGSB, Frankel indicated that he understood the proposed fee arrangement between GSGSB and the Yankees, and that this fee arrangement was reflected in the various contract drafts. No contract was ever executed, however, and in fact, McHale claims that he never indicated that any draft of the contract was acceptable or that a contract could be executed without Steinbrenner's...