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American Plastic Equipment Inc. v. CBS

decided: September 28, 1989.

AMERICAN PLASTIC EQUIPMENT, INC., PLAINTIFF-APPELLANT,
v.
CBS INC., DEFENDANT-APPELLEE



American Plastic Equipment appeals from the judgment of the United States District Court for the Southern District of New York (Duffy, J.), which granted the summary judgment motion of defendant CBS for breach of contract, fraud and wrongful interference. Reversed and remanded.

Lumbard, Feinberg, and Kearse, Circuit Judges.

Author: Lumbard

LUMBARD, Circuit Judge:

American Plastic Equipment, Inc. appeals from the judgment of the Southern District, which granted the summary judgment motion of the defendant CBS Inc. under Fed.R.Civ.P. 56 and dismissed American's complaint in its diversity suit against CBS for breach of contract, fraud and wrongful interference.

Judge Duffy found that American had not submitted evidence sufficient to show that American and CBS identified or agreed upon the specific property to be purchased by American. He also concluded, without giving the parties an opportunity to address the issue, that the alleged contract was unenforceable because of the absence of adequate writing under the Statute of Frauds. We believe that there were unresolved disputes concerning the, material issue of which goods were to be sold to America by CBS. In addition, the parties should have been accorded the opportunity to address the issue of the application of the Statute of Frauds. Accordingly, we reverse and remand.

I

Except where stated otherwise, the facts as they appear in depositions and affidavits submitted to the court are undisputed:

American is a Florida corporation based in Miami in the business of purchasing used molds and other tooling to lease and sell to plastic manufacturers. In early 1985, American learned that CBS was about to close its toy division. CBS had acquired a stable of toy products and had a large quantity of uniquely valuable molds.

After preliminary inquiries, in June 1985 Doug Sages, President of CBS Toys, told Jay Horowitz of American that CBS was interested in selling over 6,000 molds. Sages having left CBS, Bill Willenbrock took over the negotiations and invited Horowitz to visit the plant in Newark, New Jersey, which Horowitz did on several occasions in June, July and August. On the basis of a computer printout furnished by CBS that listed active and inactive molds, Horowitz made a bid on inactive molds. After further delay, Boyd Browne, the new President of CBS Toys, requested Horowitz to come to the CBS office in Secaucus, New Jersey.

Horowitz flew to Newark on November 22 and met in Secaucus with Browne, Vice-President Skip Marson and Arthur Taylor, a former CBS officer acting as a consultant for CBS. Browne offered Horowitz all of CBS's inactive molds for $300,000. Apparently no question was raised concerning what the parties meant by "active" and "inactive" molds, the classifications used in the computer printout. At that time, according to Willenbrock's deposition, CBS employees were using the terms as follows: "Active meant in the production line. Inactive meant it was not in the production line or was not scheduled to be in a production line." After settling rights in intellectual property, records, advertising material, samples and delivery, Browne and Horowitz haggled over price. Browne insisted on $300,000, and Horowitz finally accepted the terms. According to Horowitz, Browne asserted that a deal had been made, and the two then shook hands.

On November 27, Horowitz sent Browne a letter, dated November 25, by overnight express service confirming the terms of the agreement. The cover letter expressed satisfaction that the two had "agreed on a first deal" at the prior meeting and stated:

In accordance with our discussion, enclosed find a draft of what I believe to be the basis of our agreement. This was taken from my notes. Please review this against yours to see if it correspond with your notes. If so, kindly sign and return. If not kindly repair, sign and return.

In the cover letter, Horowitz also stated that he was enclosing a deposit and "a copy of 'Schedule A' as supplied to us by Bill Willembrock [sic]." Below the signature line, the cover letter listed as enclosures the draft agreement, Schedule A and the deposit, among other things. The enclosed draft agreement stated that the molds "subject of [sic] this agreement are listed in 'Schedule A' attached, and others."*fn1 Though the deposit of $10,000 was undisputedly enclosed, there is disagreement as to Schedule A: CBS asserts that American never sent Schedule A; American maintains that it did send Schedule A in the November 25 letter or shortly thereafter.*fn2

Browne never signed or returned Horowitz's draft. On December 6, Horowitz visited with Browne in Secaucus, and Browne orally promised to send Horowitz a writing clarifying which molds were active and which inactive. On December 12, Browne sent Horowitz a "letter of intent," which did not list active and inactive molds but which did state that CBS would not be bound without both agreement on a specific list of inactive molds and CBS corporate approval. The letter of intent also stated: "This letter will have no binding effort [sic--effect] upon either party unless or until on or before December 20, 1985, the parties mutually agree upon the specific items to be included in 'Schedule A'."

Horowitz called and spoke with Marson in Browne's absence. Horowitz asked why the letter of intent failed to list active and inactive molds and why the letter added additional conditions. Marson assured Horowitz that the letter was a formality, that the list would be sent soon and that the agreement still stood. Horowitz then noted spelling and grammatical changes. On December 18, Horowitz received the corrected version of the letter of intent, which now stated that Schedule A would "be supplied by CBS." Horowitz again called Browne to ask where the list of molds was. Browne assured Horowitz that the list would be forthcoming and that CBS would act as if the list had been included in the corrected version of the letter of intent. On December 18, Horowitz signed and returned the letter of intent with a cover letter addressed to Browne stating, "I have received your letter of intent, the contents of which agrees [sic] with our discussions." On December 20, Browne also signed the letter of intent and sent a copy to Horowitz.

CBS never sent the list. On January 8, 1986, Browne told Horowitz on the telephone that CBS would sell the molds in question to the View-Master concern, which was originally a defendant in this action but has since settled and is not involved in this appeal. At Horowitz's request, he and Browne met again in Secaucus on January 9. At that meeting, which Horowitz secretly tape-recorded, Horowitz told Browne:

We had a hand shake and we had a deal. We had the price and the terms of payment and an agreement. That which was not clear was a list of molds to be included and you had said to me, well you have a list--which has been provided to you by Bill Willenbrock, that is what we have been speaking about, . . . .

Later in the conversation, when Horowitz asked Browne if the Chairman of View-Master was aware of the American-CBS deal of November 22, Browne responded: "CBS told me he was[.] I made him aware of it." Browne added, ". . . I called [the Chairman of View-Master] yesterday and said I had an agreement with American. . . ." Shortly thereafter, the following exchange took place:

HOROWITZ: Yeah, and I certainly feel that we've cooperated in every respect and don't feel that we have been ...


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