Opinion ID: 1865218
Heading Depth: 1
Heading Rank: 7

Heading: The Oberammergau Problem.

Text: Hagen commenced planning the 1980 tours to Bavaria in late 1977. The primary feature of the tours was to be the Oberammergau Passion Play. From Terramar, his German contact for accommodations, he learned in October 1978 that all arrangements ordered before October 1, 1979 required 50 Deutschemark (DM) deposit per play ticket plus 5 DM for postal expenses with payment of the balance before October 1, 1979. Oberammergau confirmed reservations only upon receipt of the down payment. The Oberammergau tours were to be run in a back-to-back sequence from June through September 1980. Each airplane had a capacity of 252 passengers. Dittmann offered two separate tours. One was the Inzell tour which landed in Munich where participants were provided with a rental car and private accommodations in Inzell. Participants had no set itinerary, but were to be provided with a ticket and bus transportation to the Passion Play in Oberammergau. The second tour was a bus tour where the participants landed in Munich and then embarked on an escorted motor coach itinerary. The itinerary included an overnight stay in Oberammergau and a ticket to the Passion Play. Each charter was strictly divided into 126 Inzell participants and 126 bus participants. Tickets to the Passion Play were integral to the success of the planned tours. When negotiating the sale to Monson, Dittmann had 20 airplanes under contract, and had firm plans for 16 plane loads. The bus tours were to have accommodations in Oberammergau. Those tourists on the Inzell-car package were to be provided with the least expensive accommodations in Oberammergau as a throw away to obtain Passion Play tickets should tickets without accommodations be unobtainable. In May 1979, Terramar agreed to prepay a 103,000 DM down payment for the Oberammergau bus tour arrangements, with Dittmann to pay 26,000 DM in May, June, July, and August, 1979. Hagen made only one of the two payments due prior to the sale. An additional 103,000 DM deposit for the Inzell tours was required no later than September 1, 1979. Thus, before consummation of the sale to Monson, Hagen knew of these deposit requirements. Hagen also knew that payments for all Oberammergau arrangements were due in full by October 1, 1979. Based on sixteen charters, each having one-half Inzell participants and one-half bus tour participants, Hagen knew by mid-May, 1979 that a total of 835,592 DM was due for Oberammergau by October. At an exchange rate of $.535/DM, Hagen knew that Dittmann would have to pay $444,366.72 by October 1, 1979. Hagen was not asked and did not disclose to Monson by July 9, 1979, the existence of the down payment schedule, that all tickets had to be fully paid by October 1, 1979, or that the Oberammergau tickets had not been confirmed. All this information, however, was in Dittmann's files to which Monson and his accountant had access prior to closing. Eventually Monson learned from Terramar that unless the payments were timely made, the orders would be cancelled. Thus a payment in excess of $490,000 was required approximately eight months before the departure of the first tour and at least six months before tour participants' payments could be used in accordance with CAB escrow regulations. Dittmann borrowed $525,000 to meet these obligations and incurred interest expenses in excess of $140,000. In February 1980, Terramar advised Dittmann of its lack of success in obtaining tickets. Failure in timely making the deposits, plus the failure of Terramar to transmit payments made by Dittmann to Oberammergau was apparently the cause of Terramar's failure to complete arrangements for the Inzell tours. Dittmann subsequently obtained additional arrangements for the Inzell tours on the black market through Matterhorn Travel Agency (Matterhorn). In order to obtain the necessary tickets, Dittmann was required to buy all land arrangements for the Inzell tours from Matterhorn. Matterhorn provided these arrangements at a greater expense than would have been charged by Terramar. The total out-of-pocket cost to Dittmann for securing these arrangements was $159,693. Terramar ultimately returned all payments made by Dittmann for the tickets it was unable to secure. Under a settlement agreement releasing Terramar from all liability, Terramar paid an additional $13,751. Eventually Dittmann ran 14 Oberammergau tours in a back-to-back series. Due to a large increase in price, a reshuffling of many flights, and a strike in the airline business, there were approximately 1,500 cancellations. Between August 1979 and March 1980, Dittmann borrowed $810,000 because of cash flow problems, caused in part by the new CAB escrow regulations, and the $490,000 Oberammergau payments.