The opinion of the court was delivered by: PRATT
JOHN H. PRATT, UNITED STATES DISTRICT JUDGE
Plaintiff Nofziger Communications, Inc. ("NCI") brings this breach of contract action against defendant Frederick P. Birks in his capacity as trustee of the Wynmark Trust (defendant is hereinafter referred to as "Wynmark Trust"). Before the Court are NCI's motion for summary judgment, Wynmark Trust's motion for summary judgment, and their respective replies.
The parties do not dispute the following facts. In 1983, Mark Griffin and Richard Naing formed two limited partnerships, 1640 Wisconsin Avenue Associates ("1640") and 514 Tenth Street Associates ("514"), under two virtually identical limited partnership agreements. See 1640 Wisconsin Avenue Associates Limited Partnership Agreement ("1640 Agreement"); 514 Tenth Street Associates, A District of Columbia Limited Partnership Limited Partnership Agreement ("514 Agreement"). By the end of 1984, Wynmark Development Corporation ("Wynmark Development") was the sole general partner of each limited partnership. Mark G. Griffin Deposition Exhibit No. 17 at para. 3.05 ("Deposition Exhibit"); Agreement of August 27, 1984 at para. 3.05.
On August 27, 1984, NCI purchased a 40% limited partnership interest in 1640. Agreement of August 27, 1984. On December 6, 1984, NCI purchased a 66% limited partnership interest in 514. Deposition Exhibit No. 17. In both instances, Wynmark Development signed the agreement on behalf of the limited partnership. At all times, Wynmark Development retained a 1% interest in each limited partnership. Deposition Exhibits 11, 12, 14, 15; Deposition of Mark G. Griffin ("Griffin Deposition") at 46.
On or about April 29, 1987, NCI entered into two Option Agreements with the Wynmark Development under which Wynmark Development could repurchase NCI's interests in the two limited partnerships.
Each agreement contained an "Investment Recapture" provision under which Wynmark Development agreed to pay NCI "any tax liability incurred by [NCI] . . . caused by [Wynmark Development's] exercise" of the Options. Option Agreements para. 5. The agreements also provided that they would be "binding upon, and shall inure to the benefit of and be enforceable by, the respective personal representatives, heirs, successors and assigns of the parties hereto." Option Agreements para. 8(a).
On or about the same date (April 29, 1987) that the Option Agreements were signed with NCI, Wynmark Development signed an Assignment and Escrow Agreement under which Wynmark Development assigned "all of its right, title and interest" under the Option Agreements to the Wynmark Trust, Griffin, and Naing. Deposition Exhibit No. 22 at 3. NCI was also a signatory to this agreement. Id. at 6.
Slightly over one year later, on August 30, 1988, Griffin, in a letter to NCI which he explicitly stated was written in his capacity as Executive Vice President of Wynmark Development, exercised the Option to purchase the interest in 1640. Deposition Exhibit No. 24. On September 22, 1988, the 514 Option was similarly exercised. Deposition Exhibit No. 26.
During most, if not all, of this critical time period when the Options were exercised, Griffin was also acting as the trustee of the Wynmark Trust. While the record before us includes a letter dated August 26, 1988 (i.e., before the first Option was exercised) from Griffin resigning as trustee of the Wynmark Trust, Deposition Exhibit No. 8, Mr. Griffin stated (in uncontradicted testimony) at his deposition that this letter was prepared for his signature and signed by him undated. Griffin Deposition at 30. Mr. Griffin said that he actually did not cease performing his duties as trustee until late September or early October, 1988. Id. at 31. Frederick Birks confirmed his acceptance of the trusteeship of the Wynmark Trust in a letter dated September 26, 1988 (i.e., after the second Option was exercised). Deposition Exhibit 10.
Defendant has not contested that as a result of the exercise of these Options, plaintiff NCI incurred additional tax liabilities in the amount of $ 165,634. Deposition Exhibit No. 23; Griffin Deposition at 64-66. NCI subsequently made numerous demands for reimbursement from the assignees of the Options. Deposition Exhibit Nos. 29, 30, 32, 33, and 35. Defendant Wynmark Trust denies that it is liable and has refused to pay.
Plaintiff NCI thus brought this suit seeking reimbursement.
We now consider plaintiff's and defendant's motions for summary judgment.
Pursuant to FRCP 56(c), summary judgment must be granted "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact." Because the material facts are undisputed, summary judgment may be rendered on the cross-motions.
The first step in resolving this question, i.e. whether NCI is entitled to reimbursement from the Wynmark Trust for its tax liability incurred as a result of the exercise of the Option Agreements, is to determine in what capacity Mark Griffin was acting when he exercised the Options. If Griffin exercised the Options on behalf of the Wynmark Trust, the Trust would be liable for the reimbursement of the recaptured investment tax credits per the Option Agreements. However, if Griffin merely exercised the Options on behalf of Wynmark Development and no one else, the Trust may not be held liable for NCI's mistaken decision to allow the ...