issued a bid bond for this project, his bonding capacity was decreased and unspecified problems could arise if the contract failed to go through. The Court finds Mr. Bender's testimony in this regard unpersuasive and notes that the SB Construction Company bid did include a bid bond. Defendants' Exhibit 116. Once again, however, the Court must find that Mr. Bender's breach of the contract specifications constitutes an immaterial breach. Greyhound had the right to disapprove the construction contract and could have done so on this basis. Moreover, under the terms of the Exchange Agreement, Mr. Bender did not have to submit the performance and payment bond until April 29, 1982. Exchange Agreement, para. 5.3. None of these documents were submitted, however, because on March 31, 1982, Mr. Bender was told not to go forward with performance of the Exchange Agreement.
With regard to plaintiff's third allegation that Mr. Bender failed to furnish the "Construction Documents" required by section 5 of the Exchange Agreement, the Court notes at the outset that on March 31, 1982, Mr. Shew told Mr. Bender to "hold at this point in time." As a result, Mr. Bender did not submit the final total guaranteed project budget, which would have been due on April 29, 1982, i.e., 120 days after the final plans and specifications were deemed approved. Exchange Agreement, para. 5.3. Mr. Bender also did not submit a performance and payment bond which was to be submitted on April 29, 1982, as required by paragraph 5.3(c) of the Exchange Agreement and Article 9 of the construction contract specifications. See Plaintiff's Exhibit 411, p. 00100-3. Similarly, insurance certificates required under paragraph 5.3(d) of the Exchange Agreement were never submitted. Given the statement by Mr. Shew, however, the Court cannot find that Mr. Bender was in material breach of the Exchange Agreement because he failed to submit these Construction Documents to Greyhound by April 29, 1982.
Finally, Greyhound alleges that Mr. Bender submitted an overall budget that Greyhound could not approve and that the "preliminary budget" he submitted on March 8, 1982, was "grossly inflated." With regard to the construction costs, Greyhound argues that the three architects who were most familiar with the project, Messrs. Wening, Marggraf, and Fagan, believed that the terminal could be built for $5 million or less and that a contract estimate of $3.4 million was quoted in the Exchange Agreement.
Although a $3.4 million construction cost estimate was included in the Exchange Agreement, this was purely an estimate. Before the Exchange Agreement was signed, Greyhound expressly represented to Mr. Bender that he would not be bound by the $3.4 million construction cost estimate. Moreover, this estimate was based on preliminary plans for the new terminal as well as on square footage calculations. By the time the final plans and specifications were submitted in December 1981, the preliminary plans had undergone extensive changes which increased the scope and cost of the project. As Greyhound correctly argues, Mr. Marggraf indicated that when the new terminal project was ready to be bid in December 1981, he thought the bids would be about $4.5 million. Moreover, Mr. Wening, who was undoubtedly the most familiar with the final plans and specifications, indicated that he thought the project would be bid between $4.7 and $5.1 million. All of these figures are significantly above the $3.4 million estimate in the Exchange Agreement. Clearly, Greyhound's continuous focus on the $3.4 million estimate as a viable gauge in determining what the actual construction cost should be was unreasonable. Although Greyhound cites the estimates made by Messrs. Wening, Marggraf, and Fagan, the Court is cognizant of the fact that Greyhound's primary focus was on the $3.4 million estimate that was in the Exchange Agreement.
The Court also notes that the $5.9 million construction contract submitted by Mr. Bender represented the low bid on the project, although the Court recognizes that only two bids were received. The second bid was for $6,015,000.
Even assuming arguendo that Greyhound considered defendants' preliminary development budget to be unreasonable or grossly inflated when it was submitted on March 8, 1982, at that time, defendants could not have been considered to be in breach of the Exchange Agreement because the agreement gave defendants sixty days within which to cure Greyhound's objections. Paragraph 5.3 of the Exchange Agreement states in pertinent part: "If GLI notifies MAB of GLI's disapproval of any of the Construction Documents, MAB shall have sixty (60) days thereafter within which it shall cure GLI's objections to same." (Emphasis added.) Before the sixty days had run, however, not only had Greyhound decided to "undo the deal," see discussion infra, but also Mr. Bender had been told by Mr. Shew to "hold at this point in time," thus, effectively preventing him from curing or attempting to cure Greyhound's objections to any of the Construction Documents. Under these circumstances, the Court must reject plaintiff's allegations that defendants breached the Exchange Agreement by failing to submit the required Construction Documents, failing to submit an overall budget that Greyhound could approve, or submitting a preliminary budget that was "grossly inflated."
Greyhound also attacked defendants' total development budget, a preliminary version of which was submitted to it on March 8, 1982, contending that defendants were required to provide more in the way of "back up" material for these projected costs. The Court notes, however, that paragraph 5.3(a) merely provides that:
The total guaranteed project budget . . . shall include all costs and expenses to be incurred by MAB in connection with the acquisition, development and exchange of the MAB Property, for the purpose intended therefor, up through and including when title is taken by GLI of the MAB Property.
This provision does not require any more detail than what was supplied in the budget on March 8, 1982. Moreover, paragraph 5.3 of the Exchange Agreement, which provides that defendants shall have sixty days to cure any of Greyhound's objections to the Construction Documents, applies to the total guaranteed project budget. Mr. Bender was never given an opportunity to cure Greyhound's objections to this Construction Document.
In accordance with the above, the Court rejects all of plaintiff's allegations that defendants materially breached the Exchange Agreement. Although defendants breached a term of the Exchange Agreement when Mr. Bender signed the construction contract with Edmar, this action does not constitute a material breach.
2. Defendants' Claims
In its amended counterclaim, defendants allege that Greyhound arbitrarily, wrongfully, and maliciously denied that it had approved final plans and specifications and that Greyhound arbitrarily, wrongfully, and maliciously refused to approve the Construction Documents that defendants submitted in full and good faith compliance with the Exchange Agreement.
Aside from these allegations, the Court finds that Greyhound's decision to "undo the deal," first discussed at the internal meeting on March 1, 1982, and confirmed as of March 11, 1982, was tantamount to repudiating the Exchange Agreement. "For a repudiation of a contract by one party to be sufficient to give the other party the right to recover for breach, the repudiating party must have communicated, by word or conduct, unequivocally and positively its intention not to perform." Order of Ahepa v. Travel Consultants, Inc., 367 A.2d 119, 125 (D.C. 1976), cert. dismissed, 434 U.S. 802, 98 S. Ct. 30, 54 L. Ed. 2d 60 (1977).
The Exchange Agreement called for Mr. Bender to construct the new terminal and then exchange it with Greyhound for its old terminal. As of no later than March 11, 1982,
however, Greyhound had decided to "undo" or "restructure" the deal. All of Greyhound's proposals to this end contemplated that Mr. Bender would have nothing to do with the development of the new terminal as was provided for in the Exchange Agreement. Instead, Greyhound would take over the construction project and Mr. Bender's sole involvement would be to buy the old terminal for $21 million. Although Mr. Ervanian characterized these proposals as a means of "restructuring" the deal, "undoing" the deal is a much more appropriate term. Clearly, the predominant terms of the Exchange Agreement would not be carried out under these proposals.
On March 1, 1982, before Mr. Bender had submitted his preliminary budget and before Greyhound had even met with him, Greyhound officials met privately and discussed the benefits of GLI's developing the new terminal, rather than Mr. Bender. See Defendants' Exhibit 128. At a subsequent meeting on March 10, 1982, a consensus of opinion was reached by Greyhound that if it could undo the Bender deal and settle with him, it would be better off to do the project itself. Greyhound's self-described "clout" was that it owned the property that Mr. Bender wanted. Defendants' Exhibit 146. In early March 1982, Greyhound realized that given the preliminary budget figures quoted by Mr. Bender, Greyhound would not receive the $5 million boot it had anticipated and that in fact it might have to pay money to Mr. Bender if the cost of the new terminal exceeded $21 million. See Defendants' Exhibit 59. As a result, Greyhound considered the money it could save on interest, legal fees, and insurance costs if it handled the project itself and also considered rebidding the project to get a lower construction cost. Finally, Greyhound took into account that it was no longer as advantageous to have a tax-free exchange given the change in the tax laws regarding depreciation.
Although Mr. Ervanian denied that there was a meeting on March 1, 1982, he testified that as of March 11, 1982, he had determined that Mr. Bender would not do the development because Greyhound had decided that it could develop the new terminal site more cheaply itself. In addition, on March 31, 1982, Mr. Shew had told Mr. Bender "to hold at this point in time." Defendants' Exhibit 165. It is clear to the Court that Greyhound not only had decided in March 1982 that Mr. Bender would not construct the new terminal property but had also communicated this fact to Mr. Bender, thus repudiating the Exchange Agreement. See Ahepa v. Travel Consultants, Inc., 367 A.2d at 125.
The Court also notes that Greyhound refused to consider any proposals for "restructuring" or "undoing" the Exchange Agreement that involved Mr. Bender in the development of the new terminal and that did not require Mr. Bender to pay $21 million for the old terminal, with the exception of one proposal Greyhound suggested whereby they would "accept the present value of the $21 million purchase price, discounted at 14% over 18 months, in the sum of $17 million." Plaintiff's Exhibit 377. Greyhound indicated, however, that "because the reduced price is simply the present value of $21 million, received now instead of 18 months from now, this really is no concession off the contract price." Id. Although Greyhound had decided that it could no longer go through with the Exchange Agreement, and that Mr. Bender was no longer acceptable to it as the developer, it expected Mr. Bender to go through with that part of the Exchange Agreement that called for Mr. Bender to buy the old terminal property for $21 million.
The Court also notes that although the Exchange Agreement gives Greyhound the right to disapprove the final plans and specifications and Construction Documents, in the event of disapproval, the Exchange Agreement also requires that defendants be given sixty days notice thereof within which to cure the objections stated in Greyhound's notice of its disapproval. Exchange Agreement, paras. 5.2, 5.3. The Exchange Agreement does not contain a clause whereby Greyhound can decide to "undo the deal" merely because it determines that this would be financially beneficial. The only right of actual termination afforded to Greyhound is found in paragraph 18.1 of the Exchange Agreement. It states in pertinent part:
GLI, at GLI's sole election, may terminate this Agreement, by prompt notice to MAB, and this Agreement shall be null and void, if any one or more of the following conditions or state of facts shall exist at the time of Closing :
* * * *