Towers Co. v. Trinidad and Tobago, 93 Civ. 0922 (BN).

Decision Date12 October 1995
Docket NumberNo. 93 Civ. 0922 (BN).,93 Civ. 0922 (BN).
PartiesC.E. TOWERS CO., Plaintiff, v. TRINIDAD AND TOBAGO (BWIA INTERNATIONAL) AIRWAYS CORPORATION, d/b/a BWIA International, Defendant.
CourtU.S. District Court — Southern District of New York

COPYRIGHT MATERIAL OMITTED

Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, New York City, Charlotte M. Fischman, Geoffrey Potter, of counsel, for plaintiff.

Kirschenbaum & Kirschenbaum, P.C., Garden City, NY, Samuel Kirschenbaum, Ira Levine, of counsel, for defendant.

OPINION, FINDINGS OF FACT, AND CONCLUSIONS OF LAW

NEWMAN, Senior District Judge:1

C.E. Towers Co. (hereinafter "Towers"), a general partnership and owner of a seventeen story building located in Forrest Hills, brings this diversity action against Trinidad and Tobago (BWIA International) Airways Corp. (hereinafter "BWIA"), a company involved in the airline industry. Towers seeks $1,276,562.78 in damages for its claim that BWIA breached a lease it had entered into with Towers. BWIA asks that the complaint be dismissed; and each party seeks attorney fees.

This matter arises under the court's diversity jurisdiction, in conformity with 28 U.S.C. § 1332(a), and the case was tried to the court in a two day bench trial. Pursuant to F.R.C.P. Rule 52(a), the following constitutes the court's findings of fact and conclusions of law.

THE RECORD

In its direct case, Towers presented two witnesses: Stanley Markowitz, senior vice-president of Towers and Shilla Patel, in charge of accounts receivable. BWIA presented two witnesses: Timothy Cook, Senior Vice President of General Marketing in North America and Chandra Baldeo, a former secretary for BWIA. Testifying for Towers in its rebuttal case were John Busch, director of management; Harold Reichert, superintendent at the Towers building; John Bolen, in charge of commercial leasing; and Terry Getchell, who was a receptionist in 1993 for Towers. In addition, pursuant to F.R.C.P. Rule 32(a)(3)(E), the depositions of Keith Chong, former director of finance for BWIA, Horace Blake, former senior vice-president in charge of North America, and Bert Rivero, former director of sales and operations for Northern USA, were admitted into evidence with the consent of both parties.2 The parties moved 147 exhibits into evidence.

CONTENTIONS OF THE PARTIES

Towers contends that BWIA's abandonment of the premises and failure to pay rent since October 1992 breaches the lease it signed with BWIA in 1982. In its favor, Towers points to the 1982 lease entered into with BWIA and subsequent "lease extension" which was signed in August 1987, providing that Towers would lease office space in its building to BWIA for the agreed upon rent until August 31, 1997. Towers maintains that it was notified by BWIA in July 1992 that BWIA was terminating the agreement and leaving the building by October 10, 1992. Despite the repeated insistence by Towers that BWIA honor the agreement, on October 10, 1992 BWIA employees left the office, taking the furniture and disconnecting the phone. Accordingly, Towers asserts that it is entitled to recover the outstanding rent, reimbursement for out-of-pocket expenses to re-let the building, and attorneys' fees.

BWIA responds that Towers orally agreed to excuse the leasehold obligations in exchange for $150,000, which BWIA offered to pay Towers, but was refused. Moreover, BWIA argues that the lease extension which Towers relies upon, cannot be enforced because the individual who signed the lease, purportedly on behalf of BWIA, did not have the authority to do so. Additionally, BWIA alleges that because on October 23, 1992 Towers changed the locks to the offices, BWIA was evicted and under New York law, does not have any further rent obligations to Towers. Finally, in addition to seeking its own attorney's fees, BWIA argues that the figure submitted by Towers for their attorneys' fees is unreasonable.

FINDINGS OF FACT

Towers, a New York general partnership controlled by the Muss family, owns a seventeen-story building situated at 118-35 Forest Hills, New York, and is located in a highly traveled commercial area. The partnership owns several properties and is in the business of leasing commercial office space. Towers' managing partner is Joshua Muss.

BWIA is a business incorporated under the laws of the Republic of Trinidad and Tobago. Since 1964, BWIA has been authorized to do business in the state of New York. BWIA operates international air transport services in several countries including the United States.

Towers and BWIA entered into the lease agreement on June 2, 1982 as landlord and tenant, respectively. The five year lease, expiring on August 31, 1987, provided that BWIA would occupy the seventeenth floor of the Forest Hills building as its North American headquarters. Subsequently, the lease was modified on two occasions: in September 1983, BWIA gave up some of the space it had rented, and in October 1983 the notice provisions of the lease were amended in favor of the mortgagee of the premises. Each modification was made in writing and signed on behalf of BWIA by Keith Chong and Peter Lookhong, the manager in charge of North American Operations.

From January to July 1987, Towers and BWIA negotiated to extend the lease. The following individuals negotiated the extension on behalf of BWIA: Horace Blake, vice-president of North American Operations; Thomas J. Hill, Regional Manager of North Eastern United States; Keith Chong and Peter Lookhong. A written agreement extending the lease effective September 1, 1987 was executed on August 11, 1987. The extension was signed by Joshua Muss, representing Towers and sent to BWIA, who returned two copies of the extension bearing the signature of Blake, Vice-President in charge of North American Operations dated August 11, 1987. Thereafter, on August 24, 1987 Towers sent the fully signed lease extension to BWIA.

The extension was to run for a ten year term expiring on August 31, 1994 and consisted of a two page document incorporating the terms, conditions and covenants of the original lease dated June 2, 1982. Further, the extension modified the duration and rental obligations. Specifically, in addition to extending the lease ten years beyond its original termination date, the extension set forth the base rents, schedule of additional rents, and money due for submetered electric service to the premise. From September 1, 1987 until October 31, 1992, BWIA was normally billed and without incident paid the rent to Towers. On May 30, 1990, a tenant Estoppel Certificate signed by Horace Blake was filed with the New York State Comptroller stating that the lease and the extension were in full force.

In September 1991, BWIA considered relocating its New York offices to Florida for business and economic reasons. Moreover in September 1991, representatives of BWIA began to discuss with Towers the feasibility of extricating itself from the lease. Several representatives of BWIA including Chong, Lewis, and Cook met with Stanley Markowitz, senior vice-president at Towers. Markowitz' responsibilities included "the planning, marketing, negotiating and leasing of commercial office space, rental space, and industrial space" (R. 29). The parties agree that talks took place between Markowitz and BWIA concerning such matters as cost reduction and release from the lease. Several ideas were discussed, including the possibility of BWIA subletting the space, moving to another building owned by Towers, and buying out the lease.

BWIA maintains that in several meetings beginning in November 1991, Cook and Chong were told by Markowitz "that it would be $150,000 if we BWIA broke the lease" (R. 141). Cook and Chong both state that Markowitz unequivocally and repeatedly said that $150,000 would be the price to "break the lease" (R. 141; Exh. 95 p. 43). Beyond the testimony of the two individuals, BWIA offered the following note written by Markowitz stating:

Here is the present balance difference between the BWIA lease and a new market rate lease for the same space (not including any fix-up work or any brokerage commission) $150,000.

(Exh. 23). BWIA finally contends that these discussion culminated in a June 2, 1992 meeting when Markowitz once again stated that the lease could be broken for $150,000. (R. 180; Exh. 43). BWIA maintains that this representation by Markowitz was an oral agreement between the parties which it relied upon when it signed the Florida lease.

Towers flatly denies that any oral agreement was ever made. Testifying for Towers, Markowitz stated that he had general discussions with representatives from BWIA including Cook and Chong. Among the topics discussed were rent reduction, the ability of BWIA to find a subtenant, relocation, and the difference between the present value of the lease and another market rate lease which came to approximately $150,000 (R. 40). Explaining that these meetings were informal and many different scenarios were discussed, Markowitz testified he never agreed that BWIA could be excused from the lease for $150,000 (R. 94). Significantly, he stated that although BWIA representatives had on several occasions asked for a writing documenting that the lease would be excused for $150,000, he had repeatedly told the representatives that he "was not authorized to provide such a writing, and that there was no such agreement that if they BWIA paid $150,000 or thereabouts that they would be released form their obligations of the lease" (R.54).

Resolving this factual dispute, the court credits the testimony of Markowitz and finds that no oral agreement existed. In addition to finding Markowitz forthright and credible, the court looks to several other factors which support its conclusion. While it is clear that a figure approximating $150,000 was brought up in the discussion between Towers and BWIA, the evidence simply does not support BWIA's claim that there was a concrete agreement between the two parties....

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