Telemundo Group, Inc. v. Alden Press, Inc. ( 1992 )

— Order and judgment, Supreme Court, New York County (Myriam Altman, J.), entered April 26, 1991 and June 18, 1991, respectively, which, inter alia, granted summary judgment dismissing the complaint to defendants, reversed, on the law, and the complaint reinstated, without costs.

This is an action for breach of contract, conversion, and unjust enrichment, which arises from a May 1986 stock purchase agreement between plaintiff, Telemundo Group, Inc. ("Telemundo”), then known as John Blair & Company, and defendant Alden Holdings, Inc. ("AHI”). Under the terms of the agreement, AHI purchased all of the common stock of Telemundo’s wholly-owned subsidiary, Alden Press, Inc. ("API”), for a price reached through a complex formula set forth in Sections 1 (A) and 1 (C). At issue on appeal is whether Telemundo is entitled to a tax refund which API received from the State of Illinois after the transfer of ownership to AHI.

In pertinent part, Section 1 (A) of the agreement provided that AHI would pay a price comprised of the "Adjusted Book Value” plus $11.45 million. The "Adjusted Book Value” is defined in Section 1 (C) as follows:

"[T]he book value of [API]

"(i) minus the book value of all receivables owed to [API] by [Telemundo] * * *

"(ii) plus the book value of all payables owed by [API] to [Telemundo] * * *

"(iii) plus Federal and state (other than deferred state income taxes) income taxes reflected on the Balance Sheet as payable by [API],

"(iv) minus Federal and state (other than deferred state income taxes) income taxes reflected as owed to or to be received by [API],

"(v) plus all amounts on the Balance Sheet accrued with respect to [certain employee compensation programs].”

In July 1987, API received an anticipated $723,417 tax refund from Illinois, which falls within the category of assets listed in Section 1 (C) (iv) of the agreement. AHI’s purchase price had been reduced by this amount, and Telemundo claims that this was agreed to because the refund was to be turned over to Telemundo upon receipt. It is the defendants’ position that the omission in the contract of any such obligation on their part permits their retention of the tax overpayment concededly made by Telemundo. The IAS part agreed, and granted defendants summary judgment dismissing the complaint. We reverse.

In interpreting contractual language, a court must accord the words of the agreement a " 'fair and reasonable meaning’ ”, which includes consideration of "not merely literal language, but whatever may be reasonably implied therefrom” (Sutton v East Riv. Sav. Bank, 55 NY2d 550, 555). Because summary judgment is a " 'drastic remedy’ ” not to be granted where there is any doubt as to the existence of a triable issue (Rotuba Extruders v Ceppos, 46 NY2d 223, 231), care must be taken before such relief is granted, particularly where, as here, the interpretation sought by the moving party would produce an unreasonable result (see, Mandelblatt v Devon Stores, 132 AD2d 162, 167; Nassau Ch., Civ. Serv. Employees Assn. v County of Nassau, 77 AD2d 563, 564, affd 54 NY2d 925).

The interpretation proffered by defendants would give AHI the benefit of a reduction in purchase price for the amount of the estimated taxes paid by Telemundo, and then double this benefit by permitting AHI to retain the refund. We cannot agree that the intention of the parties with respect to this provision is so clear and unambiguous that it may be determined as a matter of law (see, Mandelblatt v Devon Stores, supra, at 166).

Nor do we accept the argument that the standard integration clause contained in the contract precludes further inquiry. Extrinsic or parol evidence is admissible notwithstanding such a clause where it "would not modify or contradict the terms of the contract, but would explain ambiguities in the contract.” (Word Mgt. Corp. v. AT&T Information Sys., 135 AD2d 317, 319.) Concur — Murphy, P. J., Rosenberger and Kassal, JJ.