Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co.

Facts

In 1986, P. moved to the World Financial Center in Manhattan, a building constructed by Olympia & York Company (O & Y). P had three years remaining on its existing lease for the 33rd floor of the building known as One New York Plaza. O & Y agreed to make the rental payments due under P's rental agreement in the event P was unable to sublease its prior space in One New York Plaza. In December 1986, a conditional letter agreement to sublease the 33rd floor. D already leased space on the 29th floor and was seeking to expand its operations. The proposed sublease between the parties was attached to the letter agreement. The sublease would be executed only upon the satisfaction of certain conditions. P was required to obtain 'the Prime Landlord's written notice of confirmation, substantially to the effect that D is a subtenant of the Premises reasonably acceptable to Prime Landlord.' If such written notice of confirmation were not obtained 'on or before December 30, 1986, then this letter agreement and the Sublease ... shall be deemed null and void and of no further force and effect and neither party shall have any rights against nor obligations to the other.' Assuming satisfaction of the condition set forth in paragraph 1 (a), D was required to submit to P, on or before January 2, 1987, its plans for 'tenant work' involving construction of a telephone communication linkage system between the 29th and 33rd floors. Paragraph 4 (c) of the letter agreement then obligated P to obtain the prime landlord's 'written consent' to the proposed 'tenant work' and deliver such consent D on or before January 30, 1987. If D had not received the prime landlord's written consent by the agreed date, both the agreement and the sublease were to be deemed 'null and void and of no further force and effect,' and neither party was to have 'any rights against nor obligations to the other.' Paragraph 4 (d) additionally provided that, notwithstanding satisfaction of the condition set forth in paragraph 1 (a), the parties 'agree not to execute and exchange the Sublease unless and until ... the conditions set forth in paragraph (c) above are timely satisfied.' They extended the letter agreement's deadlines in writing and P timely satisfied the first condition set forth in paragraph 1 (a). P never delivered the prime landlord's written consent to the proposed tenant work on or before the modified final deadline of February 25, 1987. P's attorney telephoned D's attorney on February 25 and informed D that the prime landlord's consent had been secured. On February 26, D informed P that the letter agreement and sublease were invalid for failure to timely deliver the prime landlord's written consent and that it would not agree to an extension of the deadline. The document embodying the prime landlord's written consent was eventually received by plaintiff on March 20, 1987, 23 days after expiration of paragraph 4 (c)'s modified final deadline. P sued for breach of contract, asserting that D waived and/or was estopped by virtue of its conduct from insisting on physical delivery of the prime landlord's written consent by the February 25 deadline. P alleged substantial performance. The court issued an order in limine barring any reference to substantial performance of the terms of the letter agreement. During the trial, the issue was presented substantial performance, and the court charged the jury concerning substantial performance. Special interrogatories were submitted. The jury found that D had properly complied with the terms of the letter agreement, and answered in the negative the questions whether D failed to perform its obligations under the letter agreement concerning submission of plans for tenant work, whether D by its conduct waived the February 25 deadline for delivery by P of the landlord's written consent to tenant work, and whether D by its conduct was equitably estopped from requiring P's strict adherence to the February 25 deadline. The jury answered in the affirmative the question, 'Did plaintiff substantially perform the conditions set forth in the Letter Agreement?' P got damages of $1.2 million. D moved for judgment notwithstanding the verdict. Supreme Court granted the motion, ruling as a matter of law that 'the doctrine of substantial performance has no application to this dispute, where the Letter Agreement is free of all ambiguity in setting the deadline that P concededly did not honor.' The Appellate Division reversed the judgment on the law and facts and reinstated the jury verdict. The Court concluded that the question of substantial compliance was properly submitted to the jury and that the verdict should be reinstated because P's failure to deliver the prime landlord's written consent was inconsequential. D appealed.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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