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Olympic Junior Inc. v. David Crystal Inc.

decided: June 22, 1972.

OLYMPIC JUNIOR, INC., APPELLANT IN NO. 71-1440, ET AL.
v.
DAVID CRYSTAL, INC., ET AL. APPEAL OF EDWARD DEFABIO, IN NO. 71-1441. APPEAL OF PAUL D'ALESSANDRO, IN NO. 71-1442



Seitz, Chief Judge, Hunter, Circuit Judge, and McCune, District Judge.

Author: Hunter

Opinion OF THE COURT

JAMES HUNTER, III, Circuit Judge.

This is a contract action brought by appellants Edward DeFabio and Paul D'Alessandro, and their corporation, Olympic Juniors, Inc. ("Olympic"), against appellees David Crystal, Inc. ("Crystal"), and Philip E. Crystal. After the action was commenced, Crystal was acquired by appellee General Mills, Inc., which was thereupon joined as a party defendant.*fn1

Count 2 of the amended complaint avers that an agreement existed among Olympic and the defendants that if Crystal were sold, Olympic would be included in the sale. Counts 3 and 4 aver that an agreement existed among DeFabio, D'Alessandro, and the defendants that DeFabio and D'Alessandro would be given five-year employment contracts in the event that Crystal were sold. Both these agreements are alleged to have been breached. After considering affidavits, depositions, briefs, and oral argument, the District Court granted partial summary judgment for the defendants on the three counts mentioned.*fn2 This appeal followed. We agree with the District Court that summary judgment was proper as to Counts 3 and 4 (the employment-contract counts), but we disagree that summary judgment was proper as to Count 2 (the sale count).

I. THE FACTS

In the early 1950's DeFabio and D'Alessandro, with the encouragement and financial support of Crystal, formed Olympic, the great majority of whose business was to make suits for Crystal. Apparently it is customary in the clothing industry for a "contractor," such as Olympic, to deal exclusively or almost exclusively with one "manufacturer," who supplies designs and materials and promotes the sale of garments that are actually tailored by the contractor.

During the years after formation of Olympic, relations with Crystal were beneficial to both corporations. But in late 1964 and early 1965, the owners of Crystal began negotiations to sell that company, and Olympic's owners felt that their security was threatened. To calm those fears, and perhaps to dissuade Olympic from seeking a merger partner, Crystal is alleged by the plaintiffs to have entered into an agreement with DeFabio and D'Alessandro, representing Olympic, whereby Crystal agreed that "if and when [Crystal] would be sold that [Olympic] would be part and parcel of that sale." (Complaint, Count 2, para. 2). Crystal is also alleged to have agreed with DeFabio and D'Alessandro that "if and when [Crystal] would be sold, [DeFabio and D'Alessandro] would be employed by [Crystal] for a period of five years after the sale takes place." (Complaint, Counts 3, 4, para. 2). No writing or other memorandum of the alleged agreement was made, however, except for the following letter:

"January 7, 1965

"Mr. Paul Dallesandro [sic]

Olympic Juniors

221 Bergen Street

Newark, New ...


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