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KING OF PRUSSIA ENTERPRISES v. GREYHOUND LINES

June 27, 1978

KING OF PRUSSIA ENTERPRISES, INC. t/a Valley Forge Hilton Hotel,
v.
GREYHOUND LINES, INC. and Loyal Travel, a division of Greyhound Lines, Inc.



The opinion of the court was delivered by: DITTER

MEMORANDUM

This suit was brought to recover damages for hotel rooms engaged but not occupied. The matter is presently before the court on Loyal Travel's motion for a new trial and for judgment notwithstanding the verdict.

 Plaintiff's Valley Forge Hilton Hotel is located near Philadelphia. In 1976, it was expected that 48 million visitors might come to the Philadelphia area in celebration of the nation's bicentennial. In addition, the Forty-first International Eucharistic Congress was planned for July 31 to August 8, 1976, and it alone was expected to attract more than a million visitors. As a result of a bid submitted to the Chicago Archdiocese, Loyal was designated as the exclusive agent to provide travel services for those from the Chicago area who would be attending the Congress. The Congress also created a housing bureau to refer hotel and motel rooms to the various travel agencies which would be dealing directly with the general public. Both plaintiff and defendant knew of the housing bureau, had agreed to work through it, and were aware that the housing bureau had suggested a payment schedule for any rooms committed. At no time was it intended that the housing bureau contract with any hotel, motel, or travel agent, impose any terms on anyone, or interfere with the right of a hotel and travel agent to reach whatever agreement might be mutually satisfactory.

 Hoping to obtain better rooms through direct contact than it had been allocated by the Eucharistic Congress' housing bureau, Loyal sent its area manager, Jose C. Ros, to the Philadelphia area in February, 1976. He visited several hotels or motels seeking the commitment of rooms for Loyal's clients. On February 11, 1976, he came to plaintiff's hotel and talked with Louis Serafine, director of sales, and Milos Hamza, plaintiff's general manager. At trial Hamza testified that Ros wanted to engage all of plaintiff's available rooms, 200 in number, for the period from July 27 to August 9, agreeing to pay $ 12.50 per person with the understanding that four persons would occupy each room. Hamza also said that he agreed to commit all 200 rooms to Loyal, which he knew to be a subsidiary of Greyhound, only if there would be a ten percent, non-refundable deposit with the balance to be paid 60 days prior to the arrival of the guests. However, up to the 60-day deadline, the rooms could be cancelled and only the ten percent deposit forfeited. In addition, Hamza said that he told Ros that there were two-bedroom apartments at a nearby Hilton building and that additional apartments were available at the Presidential Apartment complex in Philadelphia. Ros was interested in all of these accommodations. As a result of their conversation, Hamza testified he dictated a letter to Ros setting forth the offer of the rooms as outlined in their conversation. Ros took the letter with him and returned to Chicago. By check dated February 27, 1976, Loyal sent $ 10,000. to plaintiff marking the attached voucher, "Deposit for 200 Rms. at $ 50. each, four persons max., arrival 7/31/76-8-09/76, Euchararistic Congress." Similar deposits were sent to plaintiff for the two-bedroom Hilton Apartments and the Presidential Apartments. Hamza accepted and deposited all three checks. In view of the change of expected arrival time from that originally discussed, July 27, to that shown on the voucher accompanying the checks, July 31, Hamza expected the balances of payments on May 31. In mid-May he talked with Ros on the telephone and was assured that arrangements were proceeding in a satisfactory way. Not having received a further payment on May 31, Hamza called Ros on June 4 and was assured by Ros that checks for the balances due, a total of $ 116,800., were in the mail. Hamza called again on June 10 or June 11 and was told by Ros that the checks were not being forwarded from Chicago but from Phoenix and were therefore taking longer than he had expected to reach Hamza. A week later Hamza called again and Ros said that with a big corporation like Loyal and Greyhound, the forwarding of checks took time but that Hamza should not worry about the matter. On June 21, 1976, Hamza received a letter signed by Ros dated June 10 and postmarked June 18 stating that Loyal was cancelling all of its reservations and asking for a refund of all deposits made.

 Ros testified that he only had a momentary conversation with Hamza and that all of his arrangements had been made with Serafine. Ros denied he had agreed that the rooms would not be subject to cancellation, denied that he had agreed to pay for any rooms not used, and denied he had agreed the ten percent deposit was to be non-refundable. He described his extensive experience in the travel industry and said that he had never made an arrangement with any hotel on the basis of which the right to cancel a reservation had been surrendered or that he had ever agreed to pay for a room not utilized. He also said that the custom in the travel industry is to reserve rooms on the basis of a ten percent deposit with an additional 40 percent within a certain time and the remaining 50 percent 30 days before rooms are to be used. He had never heard of any travel agency which had lost more than its initial deposit of ten percent, and then only if the reservations were not cancelled within the time for the payment of the remaining balance. Ros also said that he was aware of guidelines stated by the Eucharistic Congress, working through its housing bureau, which required a ten percent deposit to secure the commitment of rooms by the hotel, an additional 40 percent 60 days before arrival, and the balance 30 days before arrival. He said the arrangements with plaintiff were cancelled because Loyal's attempts to interest Chicagoans in the Eucharistic Congress were a complete failure.

 Two other witnesses appeared for the defendant, Raymond J. O'Brien, a representative of the Eucharistic Congress housing authority, and Richard Lupinacci, the head of a large Philadelphia travel agency. O'Brien testified as to the organization of the housing bureau and its publication of guidelines for the travel and hotel industry. Lupinacci testified as to his experiences in booking tours, reserving hotel rooms, and the practices of the travel industry and its customs. Both O'Brien and Lupinacci said that there were estimates in early 1976 that as many as 48 million people might visit Philadelphia that year and that highly unusual conditions and circumstances then prevailed.

 By separate interrogatories submitted to it, the jury concluded there had been a contract between plaintiff and defendant which defendant had breached and that plaintiff was entitled to $ 58,900. for direct damages. No award was made for consequential damages and no award was made for any loss which the plaintiff may have suffered from defendant's failure to pay for the Hilton two-bedroom apartments. *fn1" Defendant's motions seeking a new trial and judgment notwithstanding verdict must be refused for the following reasons:

 1. There was sufficient testimony to prove the existence of a contract: from Hamza's testimony the jury could have found he offered 200 hotel rooms to Ros on the basis of a non-refundable deposit of ten percent to secure commitment of the rooms (but without additional liability if the rooms were cancelled 60 days prior to the start of the Eucharistic Congress); that this offer was set forth in writing (Exhibit 1); and that the mailing of Loyal's check dated February 27, 1976, constituted a counter-offer, which was accepted by plaintiff's deposit of said check.

 Plaintiff's evidence through its witness John Dailey and its daily logs (Exhibits 17A through I) provided sufficient basis for the jury's finding that the damages it awarded were:

 
(a) such as would naturally and ordinarily follow from the breach of contract;
 
(b) reasonably foreseeable and within the contemplation of the parties at the time the contract was entered into;

 3. There was no error in admitting Exhibits 19 and 20 and refusing to admit Exhibit 18. The authenticity of Exhibits 19 and 20 was undenied, their use was limited, and they were not permitted to go to the jury. Defendant had provided testimony that the custom in the travel industry and the guidelines published by the Eucharistic Congress were the same, rooms could Always be cancelled and a refund obtained. The portions of Exhibits 19 and 20 which may have refuted this contention were not hearsay. Unlike Exhibits 19 and 20, Exhibit 18 was not relevant in that it was directed to a hotel other than plaintiff's hotel; there was no showing that a similar letter was ever sent to plaintiff's hotel; it was not shown that if it had been sent to plaintiff's hotel, it would have any binding or limiting effect on the decisions made by plaintiff's management; or was it suggested that plaintiff agreed to be bound by its terms. Defendant's witness, O'Brien, specifically stated that hotels and motels were free to strike their own deals and that the housing bureau made no attempt to impose any terms on anyone. In addition, Exhibit 18 was merely cumulative to other evidence already received and thus properly excludable under Federal Rule of Evidence No. 403. Insofar as it may have been error to admit Exhibits 19 and 20 even for a limited purpose and to refuse the admission of exhibit 18 for any purpose, these rulings did not affect a substantial right of the defendant. See Federal Rule of Evidence No. 103.

 4. The interrogatories submitted to the jury did not suggest that if a breach of contract was found the jury had to make a monetary award. In fact, the jury made no award for consequential damages and no award as to the Hilton two-bedroom apartments. The damage award is not prejudicially ambiguous because there was testimony from both the plaintiff and the defendant that plaintiff had retained all moneys paid to it on account, ($ 13,200.) and the jury's award, in the context of the testimony, arguments of counsel, and the charge of the court is abundantly clear. Moreover, these interrogatories were discussed with counsel in advance of the court's charge and although counsel suggested different interrogatories, there was no suggestion that the interrogatories submitted mandated an award of damages or that the interrogatories would result in any ambiguity. To ...


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