IBM CREDIT FINANCING CORPORATION v. MAZDA MOTOR MANUFACTURING USA CORPORATION (1997)

Order and judgment (one paper), Supreme Court, New York County (Edward Greenfield, J.), entered June 3, 1996, which, after a nonjury trial, dismissed the complaint and awarded defendant the principal sum of $5,450,000 on its counterclaim for breach of contract, unanimously affirmed, with costs.

We agree with the trial court's finding that plaintiff had clearly repudiated the parties' sale and lease back agreement by advancing an untenable interpretation based upon a foreseeable tax factor that had been consistently absent from the pre-contractual negotiations and the governing documents while other tax assumptions were an express part of the understanding of the parties.   Plaintiff's proffered view of the transaction would have made no economic sense for defendant and would have frustrated defendant's explicit central purpose in entering into the transaction (see, Westbury Post Ave. Assocs. v. Great Atl. & Pac. Tea Co., 46 A.D.2d 860, 361 N.Y.S.2d 377, affd. 38 N.Y.2d 890, 382 N.Y.S.2d 747, 346 N.E.2d 548;  Ronnen v. Ajax Elec. Motor Corp., 88 N.Y.2d 582, 589, 648 N.Y.S.2d 422, 671 N.E.2d 534).   Moreover, basing defendant's rental adjustments for the long-term lease on plaintiff's end of year income would have rendered meaningless the contractual provision for notifying defendant of changes in tax law that would affect its rental adjustments, such that that construction should be avoided (id.).

We have considered plaintiff's contentions regarding the award of damages on defendant's counterclaim and find them to be without merit.

MEMORANDUM DECISION.