Ratner v. MRC Partnership

• Decision Date: 29 November 1993
• Citation: 156 F.3d 1244
• Parties: 98 CJ C.A.R. 4688 NOTICE: Although citation of unpublished opinions remains unfavored, unpublished opinions may now be cited if the opinion has persuasive value on a material issue, and a copy is attached to the citing document or, if cited in oral argument, copies are furnished to the Court and all parties. See General Order of
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1244

156 F.3d 1244

98 CJ C.A.R. 4688

NOTICE: Although citation of unpublished opinions remains unfavored, unpublished opinions may now be cited if the opinion has persuasive value on a material issue, and a copy is attached to the citing document or, if cited in oral argument, copies are furnished to the Court and all parties. See General Order of November 29, 1993, suspending 10th Cir. Rule 36.3 until December 31, 1995, or further order.

Marvin RATNER, Trustee for Albuquerque Motor Inn

Enterprises, Involuntary Plaintiff,

and

Park & Shuttle, Inc., Plaintiff-Appellee, Southwest Realty Investment, Inc., Plaintiff-Counter-Defendant-Appellee, v. MRC PARTNERSHIP, a general partnership; Joyce T. Battaglia and John J. Battaglia, successors to Mark

Battaglia, deceased,

Defendants-Counterclaimants-

Third Party

Plaintiffs-

Appellants, and Ricardo Chaves, individually and as a partner, Defendant-Counterclaimant-Third Party Plaintiff, v. John Lorentzen, Third Party Defendant-Appellee.

No. 97-2001.

United States Court of Appeals, Tenth Circuit.

Sept. 3, 1998.

Before TACHA, BRORBY, and EBEL, Circuit Judges.

ORDER AND JUDGMENT ^*

DAVID M. EBEL, Circuit Judge.

Plaintiffs-appellees alleged that defendants-appellants had breached a valid, written contract to sublease an airport parking lot. The document was lost or destroyed through no fault of plaintiffs. As a result, plaintiffs introduced parol evidence during a bench trial to prove the contents of the missing agreement. The district court found that a valid agreement to sublease had been formed, ruled that defendants had breached the contract, and awarded $336,096 in compensatory damages to plaintiffs. Defendants now appeal. We affirm in part and reverse in part.

BACKGROUND

In August of 1992, defendant-appellant MRC Partnership ("MRC") entered into an agreement (the "Ratner Lease") with Marvin Ratner ("Ratner"), Trustee for Albuquerque Motor Inn Enterprises, to lease property at the intersection of Yale Boulevard and Gibson Street in Albuquerque, New Mexico, located near the Albuquerque Airport (the "Yale-Gibson lot"). ¹ The Yale-Gibson lot is an airport parking lot containing 1,000 parking spaces (Yale Boulevard is a main thoroughfare to the airport). The Ratner Lease included an initial one-year term beginning on October 1, 1992, with the option of four annual lease term renewals, and provided for a rental rate of $240,000 per year. Importantly, MRC could exercise the option to renew the Ratner Lease at its own discretion and no approval by Ratner was required for the exercise of the option to renew. The Ratner Lease also allowed MRC to sublease the property to third parties, provided that Ratner gave his prior consent to the sublease. Ratner's consent did not need to be in writing. Defendant Ricardo (Richard) Chaves ("Ricardo Chaves"), a.k.a. Richard Chavez, Sr., acting as a disclosed agent for MRC, negotiated and executed the Ratner Lease. Ricardo Chaves is defendant Mark Battaglia's uncle. Ricardo Chaves is also the father of Richard Chaves, Jr., who, with Mark Battaglia, was a partner of MRC at the time--making Richard Chaves, Jr., and Mark Battaglia cousins. ²

Ricardo Chaves has five siblings of note: Frank Chavez, Ben Chavez, Sr., ³ Eloy Chavez, Manuel Chavez, ⁴ and Avelina Battaglia (her married name), all of whom reside in Albuquerque. Avelina Battaglia is the mother of Mark Battaglia. Manuel Chavez is the principal of plaintiff-appellee Chavez Properties, which owns and operates the Airport Fast Park parking lot, also located on Yale Boulevard.

In September of 1992, following the execution of the Ratner Lease for the Yale-Gibson lot but before the lease term commenced on October 1, 1992, Ricardo Chaves began a series of conversations with the principals of two competing airport parking lots on Yale Boulevard. The two principals were Manuel Chavez of Chavez Properties and John Lorentzen ("Lorentzen"), the owner-operator of both plaintiffs-appellees Southwest Realty Investment, Inc. ("Southwest Realty"), and Park & Shuttle, Inc. ("Park & Shuttle"). ⁵ Southwest Realty operates the Park & Shuttle airport parking lot. Both defendant-appellant MRC and plaintiffs-appellees Southwest Realty and Park & Shuttle (the "plaintiffs") hotly dispute the substance of these discussions, and the trial centered on the question of whether the conversations resulted in the execution of a sublease for the Yale-Gibson lot.

Both Lorentzen and Manuel Chavez were interested in keeping MRC from competing with their respective companies in the airport parking lot business. As a result, Manuel Chavez and Lorentzen discussed with Ricardo Chaves the possibility of either entering into a non-compete agreement whereby MRC would be paid not to operate an airport parking lot or entering into a sublease agreement whereby Lorentzen and Manuel Chavez would sublease the Yale-Gibson lot from MRC. During the course of the negotiations, Lorentzen informed all of the parties involved, including the Chavez siblings, that an agreement not to compete would be unenforceable under New Mexico law. Also during the negotiations, Ricardo Chaves delivered to Lorentzen's attorney a copy of the Ratner Lease.

Because the parties believed that legally they could not enter into a valid non-compete contract, attention focused on negotiating a sublease for the Yale-Gibson lot. Throughout the negotiations, Lorentzen and Manuel Chavez believed that Ricardo Chaves had the authority to bind MRC to any agreement reached. The parties agreed that MRC could make a profit of $300,000 over five years simply by subleasing the Yale-Gibson lot to the plaintiffs. Manuel Chavez's and Ricardo Chaves' siblings agreed with Manuel Chavez that the two brothers should not compete with each other and held a meeting to resolve the situation on September 13, 1992 (the "September meeting"). Lorentzen was not present at the September meeting.

At one point during the September meeting, the Chavez siblings asked Manuel and Ricardo to leave the room. After discussing possible solutions, the siblings recalled the brothers to the room. Avelina, their sister, then read aloud the family's recommendation on resolving the situation which had been handwritten on a piece of paper. Both Manuel and Richard signed this written memorandum (the "original memorandum") at the September meeting reflecting the material terms of the agreement to sublease the Yale-Gibson lot. Specifically, the memorandum noted that (1) the agreement involved a sublease; (2) Southwest Realty and Chavez Properties would pay MRC $25,000 a month in rent; (3) the property covered by the sublease was the parking lot located at the corner of Yale Boulevard and Gibson Street; and (4) the sublease covered the entire five-year term of the Ratner Lease including the renewal options. At trial, none of the parties could produce the original memorandum, which had been kept by Avelina Battaglia. The parties also signed a second, confirmatory memorandum (the "second memorandum") at the meeting which memorialized the material terms of the original memorandum. ⁶

The district court found that when Manuel Chavez and Ricardo Chaves signed the original memorandum at the September meeting, Ricardo Chaves agreed to sublease the premises jointly to both Chavez Properties and Southwest Realty even though Lorentzen was not present. The record reveals that Lorentzen and Manuel Chavez had agreed that any arrangement consummated with MRC by either Lorentzen or Manuel Chavez would be split between Park & Shuttle and Chavez Properties with 40 percent for Park & Shuttle and 60 percent for Chavez Properties. The district court also found that Ricardo Chaves knew that he was negotiating with both Manuel Chavez and Lorentzen to sublease the property. Specifically, in its May 10, 1996 order, the district court found that:

John Lorentzen, Southwest Realty Investment and Park & Shuttle were parties to the missing agreement of September 13, 1992. Richard Chaves, Sr. met with John Lorentzen several times to negotiate the sublease of the lot which indicates that Defendants knew Southwest Realty and Park & Shuttle were parties to the contract and further that the parties intended for Park & Shuttle to use the lot to expand its business. The evidence supports a finding that Defendants were well aware that Chaves [sic] Properties and John Lorentzen, acting on behalf of Southwest Realty and Park & Shuttle, were involved in a joint venture to sublease the Yale/Gibson lot. I also find that Manuel Chaves had the authority to execute the September 13, 1992 Agreement on behalf of Southwest Realty and Park & Shuttle. Alternatively, I find that Park & Shuttle was a third party beneficiary to the contract in question.

(emphasis added). The district court also found that Ratner indicated his consent to the sublease.

Following the meeting, the plaintiffs paid MRC $20,000 in September of 1992 as consideration for the sublease. Lorentzen delivered a cashier's check for $8,000 made out to MRC, reflecting its 40 percent share of $20,000. The check included a typewritten indication on its face that read: "Yale & Gibson Rent-Sept.1992." Chavez Properties also delivered a cashier's check for $12,000 to MRC equal to 60 percent of $20,000, but the check did not bear any notation. MRC received and accepted both checks.

Lorentzen's attorney also mailed to Ricardo Chaves a typewritten sublease agreement, complete with standard commercial lease provisions. Ricardo Chaves refused to sign this typewritten agreement and refused to honor the agreement to sublease, and in December of 1992, MRC began operating its own airport parking lot at the Yale-Gibson lot. On December 15, 1992, Chavez Properties and Southwest Realty brought suit for breach of contract against MRC and against Richard Chavez and Mark Battaglia, both in their individual capacities and in their putative roles as partners of MRC. The suit was filed in the United States...