Court Opinion

ID: 5875062
Source: CourtListenerOpinion
Date Created: 2022-01-13 01:57:08.267324+00
Date Added: 2024-06-11T08:44:49.590545
License: Public Domain

Kassal, J.
(dissenting in part). I dissent in part and would affirm for the reasons stated in the opinion of Justice Allen Murray Myers.
This appeal raises the issue of when may a party, otherwise entitled to specific performance, be denied such relief on a claim *280of “hardship” or “windfall” as a result of a significant increase in the value of the asset?
The majority has concluded that specific performance will result in unreasonable hardship or injustice and, therefore, is an inappropriate remedy. By implication, it holds there would be a penalty or forfeiture if this equitable relief is granted. In my view, the contrary is the case — there is no resulting hardship in directing the parties to perform exactly in accordance with the terms of their express agreement. Considering all the circumstances of the case and the relative positions of the parties, I believe a damage award will be inequitable and a most inadequate remedy here.
It is undisputed on this record that Concert Radio, Inc., has a long commitment to preserving a classical music format for the operation of WNCN as an FM radio station in the New York City metropolitan area. This was the central purpose underlying its formation and its vigorous opposition before the Federal Communication Commission in 1975, when that agency was considering a license renewal application by Starr Broadcasting Group, Inc., the then owner of WNCN. It was at that time that GAF Corp. acquired the station after persuading listeners’ groups that it would maintain WNCN as a classical station. The parties then entered into the option agreement at issue here, which provided that GAF intended to operate the station for a period of “at least five years primarily as a classical music station” and granted Concert Radio a five-year option to acquire the station should GAF decide to sell it or transfer control to someone other than a subsidiary or affiliate.
On December 29,1980, by a formal resolution of GAF’s board of directors, a business decision was made to sell or discontinue eight unprofitable GAF operations, one of which was WNCN. This was well publicized by a press release, issued December 30, 1980, the very next day, confirming that, as a matter of business judgment, GAF had determined, as part of “a major restructuring plan”, to rid itself of the station because it was unprofitable. The press release reported that GAF had bought the station in 1975, “when prior owners switched from classical to rock music. ‘It was a cultural asset that had to be saved and improved * * * We believe this is the time to pass the baton to some other enterprise that will cherish this independent, tax-paying, non-subsidized cultural institution.’ ”
Under the circumstances, I fail to perceive the basis for the majority’s conclusion that the decision to sell, which clearly triggered the exercise of the option by Concert Radio under their agreement, was merely a mistake or constituted a “hardship”. *281While it is true that if GAF had waited five additional months, the option would have expired, it did not do so. In my view, the record does not support the conclusion that GAF “misconstrued the technical provisions of their contract,” as found by the majority. Rather, GAF, a multinational conglomerate, with assets in the hundreds of millions of dollars, knew exactly what it was doing. It proceeded according to a calculated plan of divestiture. It is incomprehensible that such a critical business decision was made and publicized without extensive consultation with its counsel and financial advisors and after a thorough discussion by its board of directors. As noted, from the press release, this was not a casual off-handed statement but one involving 8 or 9 different operations. It was but one segment in an intricate business decision reached in conjunction with “a major restructuring plan to improve its [GAF’s] return on investment and reduce debt.”
While the majority alludes to the fact that Concert Radio had assumed no risk and invested no money in connection with the option, the view overlooks the significant facts that the option was issued for fair and substantial consideration in connection with the transfer to GAF of the application for the license to operate the station. Furthermore, GAF made a deliberate business judgment to sell the station’s assets or discontinue its operation. Although the central thrust of the majority’s conclusion is that specific performance will result in an unjustified windfall to the plaintiff, in my judgment, the conclusion reached by my colleagues in essence grants an unwarranted windfall to the multimillion dollar conglomerate, at the point where GAF had elected to rid itself of what it then considered to be an unprofitable or possibly even a valueless enterprise. Viewed in that context, the wrong to be redressed is the plaintiff’s right to proceed in accordance with the terms of the clearly agreed upon option, which the majority concedes was properly exercised.
Essentially, the majority has concluded that it may relieve GAF from performance under the explicit terms of the option on a finding that, by reason of subsequent events, the agreement has proved to be unprofitable or too costly. To the contrary, it has been repeatedly held that the fact that a contract subsequently proves to be unprofitable or onerous does not furnish an adequate excuse or justification for nonperformance (CameronHawn Realty Co. v City of Albany, 207 NY 377, 381-382; City of New York v Interborough Rapid Tr. Co., 136 Misc 569, 578, affd 232 App Div 233, affd 257 NY 20; Schmidt v C.P. Bldrs., 36 AD2d 731; Lowe v Feldman, 11 Misc 2d 8, 17, affd 6 AD2d 684; *282Rosenfeld Realty Co. v Cadence Indus. Corp., 75 Misc 2d 634, 637; see also, 55 NY Jur, Specific Performance, § 7, p 439). In the absence of extraordinary circumstances which are not present here, the enforceability of a contract is to be judged at the time it was entered into and, if fair when made, subsequent events which render the agreement substantially more onerous or costly than originally anticipated do not preclude specific performance as an available remedy.
In terms of Concert Radio’s desire to maintain a classical format, damages will afford it no real remedy. Plaintiff’s interest is in ensuring future classical programming in the operation of the station and not the receipt of sums representing the difference in the market value at the time the option was exercised. Trial Term concluded that “Concert’s primary motive in exercising its option is to be assured that the classical music lovers will continue to be served” and “WNCN has a peculiar and special value to Concert.” The conclusion that the station “is a unique establishment which could not be duplicated on the open market” impels a finding that money damages are inadequate and specific performance most appropriate.
Gordon v Mazur (284 App Div 289, affd 308 NY 861), relied upon by the majority to illustrate the concept of “hardship”, is clearly distinguishable. GAF, the multifaceted conglomerate, is hardly in the same position as Mrs. Mazur, who transferred her interest in certain real property to her attorneys, as trustees for her infant son, overlooking the fact that some years before, she had entered into an agreement with plaintiff (who owned the property with her as tenants in common) that neither would sell, transfer or assign his or her interest without first offering it to the other at cost. Under those circumstances, we permitted equity to intervene to correct the mistake by directing the trustees to reconvey the interest in the property, thus restoring Mrs. Mazur to her former status as a co-owner, a result which, it was found, would avoid “an uncontemplated opportunity to gather in a windfall” (284 App Div, at p 293). Contrary to the suggestion by the majority, no “hardship” results where the party seeking specific performance realizes the benefit of a very good bargain by subsequent events. Were we to deny the remedy of specific performance here, GAF would obtain a real windfall by paying damages and retaining a greatly enhanced asset, all in violation of their unambiguous agreement.
Unlike the majority, I do not sympathize with the plight of GAF — this savvy and well-counseled world-wide business operation, which, as a result of the exercise of the option, was *283compelled, pursuant to their agreement, to transfer to the plaintiff what GAF had already decided to sell or terminate without compensation if a sale proved not to be viable. To conclude that the decision of the board of directors of GAF in this regard was merely a “mistake or misunderstanding regarding the interpretation of the contract language,” is pure sophistry, speculation and ignores business reality. Specific performance, under the facts of this case, is a most meaningful and critical remedy and gives full effect to the clear and unmistakable terms of the option agreement between the parties.
Sandler, J. P., and Bloom, J., concur with Asch, J.; Kassal, J., dissents in part, in an opinion.
Judgment, Supreme Court, New York County, entered on October 15, 1984, modified, on the law and the facts, and in the exercise of discretion, to vacate the direction for specific performance, grant judgment for plaintiff as to liability upon the second cause of action of the complaint, remand for an inquest as to damages, and otherwise affirmed, without costs and without disbursements.