Order of Ahepa v. Travel Consultants, Inc.
| Decision Date | 20 December 1976 |
| Docket Number | No. 9386.,9386. |
| Citation | 367 A.2d 119 |
| Parties | ORDER OF AHEPA, a/k/a American Hellenic Educational Progressive Association, Inc., Appellant, v. TRAVEL CONSULTANTS, INC., Appellee. |
| Court | D.C. Court of Appeals |
Joseph J. Lyman, Washington, D.C., for appellant.
John Ellsworth Stein, Washington, D.C., with whom Stuart D. Halpart, Washington, D.C., was on the brief, for appellee.
Before FICKLING, KERN and YEAGLEY, Associate Judges.
Travel Consultants, Inc. (TCI), appellee, sued the Order of American Hellenic Educational Progressive Association, Inc. (AHEPA), appellant, for breach of contract seeking $100,000 in liquidated damages. Following a jury determination of breach, the trial court entered judgment for the amount sought. We affirm.
Appellant, AHEPA, is a nonprofit, ethnic fraternal organization composed primarily of Americans of Greek descent, with a membership of approximately 22,000.
Appellee, TCI, is a travel agency engaged in the business of conducting travel services for various organizations holding conventions and other group affairs. Its principal office is in the District of Columbia and it employs approximately 100 persons. The agency charges no fee to the organizations it services but rather works on a commission basis, receiving commissions primarily from the various airlines and hotels used by its clients.
In late 1968, AHEPA contacted TCI regarding travel arrangements for the AHEPA convention to be held in Greece in 1970.
The initial arrangements between the two, for TCI to handle travel arrangements to the 1970 convention, were cancelled and another travel agency was selected. However, not long thereafter, in December 1969, AHEPA changed its mind and again called upon TCI to perform the travel services for its 1970 convention since the agency previously chosen was not performing satisfactorily. At TCI's insistence, AHEPA provided TCI with written authority to make the necessary travel arrangements. After TCI had begun to act on this authorization, AHEPA instructed TCI to cease any further efforts on its behalf. In 1970, TCI filed suit for breach of this agreement in the local federal district court.1
On August 4 and 5, 1972, Sam Nakis, the president of AHEPA, David Randall, the president of TCI, and Richard Kendall, counsel for TCI, met to negotiate a settlement of the 1970 lawsuit. These negotiations culminated in the contract in issue. The pertinent provisions of this contract are as follows:
(1) The contract specified that to become effective, it would have to be ratified by the Supreme Lodge of AHEPA.
(2) TCI agreed to dismiss its 1970 lawsuit pending against AHEPA within a reasonable time after ratification by the Supreme Lodge.
(3) AHEPA appointed TCI as its exclusive agent to arrange and provide all travel services for AHEPA and its members for a term of five years, from January 1, 1973 to December 31, 1978. The provision of travel services was to include the "creation" and "design" of travel programs by TCI. AHEPA also granted TCI the exclusive right to make the travel arrangements for any Supreme Convention to be held by AHEPA before December 31, 1980. AHEPA was bound to accept only such programs as its officers believed could be successfully marketed, but was barred from allowing any other person or organization to perform any travel services for AHEPA without the consent of TCI.
(4) TCI was permitted to advertise its programs by purchasing space in the AHEPA magazine periodically distributed to the membership. TCI agreed that it would pay the same rates charged other advertisers by AHEPA. The parties, however, set a ceiling on advertising billings of three per cent of the gross amount of airplane tickets purchased by the participants in the travel programs arranged by TCI.
(5) AHEPA agreed to assist TCI in "promoting and permitting the promotion" of travel programs created by TCI.
(6) In the event of a breach, TCI could recover $100,000 as liquidated damages.
On August 20, the contract was ratified by the Supreme Lodge. On September 8, the newly-elected president of AHEPA, Dr. M. N. Spirtos, sent the following letter to TCI instructing it not to act pursuant to the agreement on behalf of AHEPA:
Gentlemen:
You are hereby notified that the contract allegedly executed by Mr. Sam Nakis with your company regarding travel arrangements for and on behalf of the Order of Ahepa is being further examined by the attorney of our fraternity, as to whether or not same was executed with proper authority. Accordingly, you are not to act on behalf of the Order of Ahepa until further notice.
Very truly yours
/s/
M. N. SPIRTOS, M.D
Supreme President
Order of Ahepa
David Randall, TCI's president, responded by a letter dated September 15 in which he expressed surprise at AHEPA's action and noted that any impasse should be resolved soon in order to allow TCI adequate time to plan travel programs for the following year. Randall stated also that he already had made plans to go to Greece to begin work on a travel program for AHEPA's membership.
On September 25, Dr. Spirtos and other AHEPA leaders met with Mr. Randall at TCI's offices in Washington. At this meeting, Dr. Spirtos indicated his concern that Mr. Nakis, AHEPA's former president, did not have the authority to make a contract for more than one year.2 He advised TCI that it wanted a reduction in the term of the contract from five years to one year. There was also testimony that AHEPA's leaders pressed for alterations in the contract which would give the organization remuneration for travel advertisements in its magazine in an amount greater than that which it would receive under the contract.3 The parties failed to agree to any modification in the contract and AHEPA did not rescind its order directing TCI not to proceed further under the contract.
On November 3, TCI dismissed the 1970 lawsuit as required by the contract. Two weeks later, Mr. Randall sent a letter stating:
Dear Dr. Spirtos:
Following up your letter of September 8, on which you told me not to proceed with our contract signed by Mr. Nakis and other AHEPA officials, we have had several conversations including conversations between your attorney and ours.
As I explained to you during our personal meeting, the contract for the yearly business of AHEPA is becoming less and less valuable as each day goes by — in fact, at this point the value of it for this year has been almost eliminated, since we are virtually too late to organize an effective program for 1973.
As you know, we have dismissed our law suit in accordance with our contract, and thus we feel that we have performed in accordance with our contract with AHEPA. Thus, unless we have your full authority to proceed in accordance with the signed contract or an acceptable alternate in writing by December 11, 1972, we will have no choice but to consider that the contract has been breached by AHEPA and will have to proceed through whatever legal means are available to us to seek satisfaction.
Appellant admits in its brief that it did not respond to this letter.
On December 22, 1972, TCI filed this suit in the United States District Court for this jurisdiction for breach of contract. Pursuant to the provisions of the Court Reorganization Act,4 the case was certified to the Superior Court.5
The issue of whether or not AHEPA had breached the contract was tried before a jury. At the close of the appellee's evidence and again at the close of all the evidence, appellant moved for a directed verdict. Both motions were denied. Appellant also made a motion for leave to amend its answer to include the defense of illegality. This too was denied. The trial court determined as a matter of law that the contract was valid and submitted only one question of fact to the jury: whether the appellant breached the contract. The jury found that a breach had occurred. The court concluded as a matter of law that the liquidated damages clause was valid and entered a judgment for $100,000 with interest from January 1, 1973, for appellee. After the entry of judgment, appellant moved for judgment notwithstanding the verdict, or, in the alternative, for a new trial. Both motions were denied and this appeal followed.
Appellant presents the following issues for our consideration: (1) whether the trial court abused its discretion in denying appellant leave to file an amended answer to interpose a defense of illegality of the contract; (2) whether there was insufficient evidence of a breach to permit the question to go to the jury; (3) whether the agreement is invalid for lack of consideration; (4) whether appellee waived the alleged breach; and (5) whether the liquidated damages clause is valid and enforceable.
Appellant contends first that the trial court improperly denied its motion for leave to file a "Fourth Amended" answer under Rule 15 of the Civil Rules of the Superior Court in order to raise the defense that the contract was illegal as against public policy. The court previously had granted appellant three motions to amend. The challenged motion was first made orally at the close of the plaintiff-appellee's evidence. Appellant's defense, which Rule 8(c) requires to be pleaded affirmatively, is that the contract is tainted with illegality by paragraph 4(c) which provides that fees for advertising in AHEPA's magazine "shall be paid by TCI at the time it receives its commission payments for the travel program * * * up to three per cent (3%) of the gross amount of air transportation tickets paid for by participants in the travel programs * * *." Such payments, appellant urges, would constitute an illegal rebate of air transportation fares in violation of federal statutory provisions and regulations. Federal...
To continue reading
Request your trial
-
Systems Council Em-3 v. At & T, Civil Action No. 96-1117(GK).
...916 F.2d at 1049. See also Reiman v. International Hospitality Group, Ltd., 614 A.2d 925, 928 (D.C.1992); Order of AHEPA v. Travel Consultants, Inc., 367 A.2d 119, 125 (D.C.1976), cert. dismissed, 434 U.S. 802, 98 S.Ct. 30, 54 L.Ed.2d 60 (1977); Stanwood v. Welch, 922 F.Supp. 635, 642 (D.D.......
-
Ajisefinni v. KPMG LLP
...no legal obligation to do, or to refrain from doing something it has a legal right to do.” Id. ; see also Order of AHEPA v. Travel Consultants, Inc., 367 A.2d 119, 125 (D.C.1976). Under the principle of mutuality, KPMG's EEO Policy cannot constitute an enforceable contract. In promising to ......
-
Ceco Corp. v. Coleman
...are governed by the same standard. Gaither v. District of Columbia, D.C.App., 333 A.2d 57, 59 (1975). See Order of Ahepa v. Travel Consultants, Inc., D.C.App., 367 A.2d 119, 125 (1976), cert. dismissed, 434 U.S. 802, 98 S.Ct. 30, 54 L.Ed.2d 60 (1977). Where the evidence is such that reasona......
-
Hilgartner v. Yagi
...to constitute a penalty." Burns v. Hanover Ins. Co. , 454 A.2d 325, 327 (D.C. 1982) (citing Order of AHEPA v. Travel Consultants, Inc. , 367 A.2d 119 (D.C. 1976) ). While the deciding line between "enforceable liquidated damages provisions and unenforceable penalties" is not definitive, D.C......