The (Not So Great) Gatsby

On September 17, 2014, the Supreme Court, Appellate Division, Second Department decided the case entitled Patsis v. Nicolia, 120 A.D.3d 1326 (2nd Dept. 2014), requiring the defendant to pay the plaintiff $210,000 due to a breach of contract.

According to the court’s decision, the parties had entered into an agreement whereby the Plaintiff assigned his 50% interest in an entity known as Gatsby Dining, LLC (“Gatsby”), which owned a restaurant simply called “Gatsby” to the defendant. Under paragraph 1(a) of the assignment agreement, the Defendant was required to pay Plaintiff the balance of the purchase price for his 50% interest in Gatsby from the gross profits of the restaurant. However, under paragraph 1(c), the defendant’s obligation to pay the entire remaining balance of the purchase price was triggered if he “sold, transferred, or conveyed” his interest in Gatsby.  It was undisputed that the defendant never paid off the purchase price.  Following a failed attempt to sell the restaurant, the defendant sold all of Gatsby’s assets and the Plaintiff sued to recover damages for breach of contract.

The Court recited the relevant rules of law as follows: When the terms of a written contract are clear and unambiguous, the intent of the parties must be found within the four corners of the contract, giving practical interpretation to the language employed and the parties’ reasonable expectations.  Thus, a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms. Furthermore, interpretation of an unambiguous contract provision is a function for the court. When interpreting a contract, the court should arrive at a construction which will give fair meaning to all of the language employed by the parties to reach a practical interpretation of the expressions of the parties so that their reasonable expectations will be realized.

In this case, the Court found that the Defendant’s payment obligations were triggered by selling all of Gatsby’s assets.  Any other interpretation would render the contract meaningless.  The Court also held that Defendant’s contradictory testimony was insufficient to survive a motion for summary judgment.  Therefore, the Court affirmed the lower court’s award of $210,000 to Plaintiff.

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