HOLLAND INDUSTRIES v. Adamar of New Jersey, Inc.

• Decision Date: 15 November 1982
• Docket Number: No. 82 Civ. 2261(MEL).,82 Civ. 2261(MEL).
• Citation: 550 F. Supp. 646
• Parties: HOLLAND INDUSTRIES, INC., Plaintiff, v. ADAMAR OF NEW JERSEY, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

550 F. Supp. 646

HOLLAND INDUSTRIES, INC., Plaintiff, v. ADAMAR OF NEW JERSEY, INC., Defendant.

No. 82 Civ. 2261(MEL).

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

November 15, 1982.

Wagner, McNiff & DiMaio, New York City, for plaintiff; Arthur Wagner, New York City, of counsel.

Skadden, Arps, Slate, Meagher & Flom, New York City, Snell & Wilmer, Phoenix, Ariz., for defendant; Barry Garfinkel, New York City, of counsel.

LASKER, District Judge.

Holland Industries, Inc. ("Holland") filed this diversity action for breach of contract against Adamar of New Jersey, Inc. ("Adamar") in March 1982. Adamar moves for summary judgment on the ground that Holland's failure to satisfy a condition precedent entitles Adamar to judgment as a matter of law.

The instrument upon which Holland sues is a letter dated June 24, 1980 ("Letter") from Adamar's president to Holland's chairman, which confirmed a "memorandum of understanding" between the parties. Under the terms of the Letter, the parties agreed that Holland would provide bus transportation services to Adamar, which operates and does business as the Tropicana Hotel/Casino in Atlantic City, New Jersey. The Letter further states, in paragraph 8:

"HOLLAND understands that any service agreement with ADAMAR must be approved by the New Jersey Casino Control Commission and further, that Holland must apply for a New Jersey Casino Service Industry License. In the event of a denial of the above application, the agreement is terminated immediately at no cost or liability to ADAMAR."

The bus transportation services contemplated by the Letter were never put into operation. Adamar's vice president for marketing, in a letter to Holland's chairman dated January 16, 1981, informed Holland that Adamar had reevaluated the advisability of entering into the agreement set out in the Letter, and took the position that the Letter had been only a letter of intent establishing no obligations. Adamar adheres to that position in this action, but argues that Holland's failure to obtain a casino service industry license entitles Adamar to summary judgment even if the Letter is assumed to comprise an enforceable contract.

It is undisputed that Holland has not obtained a casino service industry license. Holland nevertheless opposes the summary judgment motion both on the ground that genuine issues of material fact exist, that Holland is exempt from license requirements under New Jersey law and that the Letter as properly interpreted does not require Holland to obtain a license if one is legally unnecessary.

Holland has misconceived the nature of the showing necessary to demonstrate that a matter is not ripe for summary judgment. Holland's "Statement of Material Facts" presents only a list of legal questions relating to contract and statutory interpretation — e.g., "whether an exemption was not automatic or at the very least ministerial in light of Plaintiff's status as an ICC carrier" (Plaintiff's 3(g) Statement, ¶ 4). These issues of interpretation are indeed in dispute, but since the dispute is legal and not factual, it presents nothing for trial and is appropriately resolved on a motion for summary judgment.¹ See F.R. Civ.Pr. 56.

If Holland has failed to comply with a condition precedent to the alleged contract, recovery for breach of contract is barred. Coletti v. Knox Hat Co., 252 N.Y. 468, 169 N.E. 648 (1930); Duff v. Trenton Beverage Company, 4 N.J. 595, 73 A.2d 578 (1950); See Byrnes v. Faulkner, Dawkins & Sullivan, 413 F.Supp. 453 (S.D.N.Y.1976) aff'd, 550 F.2d 1303 (2d Cir.1977).² Holland contends, however, that it has not failed to comply with a condition precedent. Its argument runs as follows: paragraph 8 of the Letter relieves Adamar of liability only if Holland is denied a casino service industry license; because it has not been denied a license, Holland is not in default on its obligation to obtain a license. The argument is without merit. According to Holland's theory, Holland could forever avoid the contractual consequences of being denied a license simply by refraining from applying for one. We agree with Adamar that under the plain meaning of ¶ 8 of the Letter, Holland was obligated to obtain a casino service industry license as a condition precedent to Adamar's contractual liability.

As a second line of defense, Holland contends that ICC-authorized carriers such as Holland are exempt from licensing requirements under the New Jersey Administrative Code (N.J.A.C.). In effect, Holland argues that the provisions of ¶ 8 of the Letter were intended to apply only if a license was in fact necessary under New Jersey law; the contract, Holland contends, cannot reasonably be interpreted to require a license for its own sake if such a license would have been legally superfluous. Even assuming that Holland's interpretation of ¶ 8 is correct, however, the argument fails because Holland's contention that it is exempt from license requirements under New Jersey law is incorrect.

New Jersey Stat.Ann. 5:12-92 (1982 Supp.) requires the licensing of casino service industries. Under N.J.S.A. 5:12-92(c), the New Jersey Casino Control Commission ("Commission") is authorized to exempt a "field of commerce" from licensing requirements if it is regulated by another public agency and the Commission determines that licensing is not necessary to protect the public interest or to accomplish the purposes of the Casino Control Act. Holland relies on the "travel industry exemption," described in a Commission staff memorandum dated July 7, 1978 ("Staff Memorandum") to establish that it is exempt from licensing requirements. However, two basic provisions must be satisfied by entities claiming the benefit of this exemption, only one of which even arguably applies to Holland.

The travel industry exemption covers travel enterprises which (1) "are engaged in routine transactions covered by a standard rate schedule submitted by a casino hotel and approved by the Commission" and (2) "are licensed or...