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January 28, 1982

Otto LOMBARDO, d/b/a AFI Leasing, Inc., Defendant

The opinion of the court was delivered by: WEBER

The purpose of language is to provide man with a medium for the communication of ideas. Unfortunately, however, in practice our language frequently lacks precision and clarity. Because the meaning of the words we use is often-times elusive, language in many instances serves to confuse rather than clarify. The instant case presents an excellent example of this principle. In this case the parties, two knowledgeable and intelligent businessmen, conducted extensive contract negotiations over a period of three months. As a result of these negotiations written proposals were submitted; documents were signed; and some $ 15,000 changed hands. Yet it is apparent that, throughout these negotiations, the meaning these parties attached to their words differed significantly. In short, it is clear that these parties never really agreed to anything at all.

At the non-jury trial of this case the testimony of two witnesses was presented. These witnesses-Mr. Vincent Worster and Mr. Otto Lombardo-are the principals in this lawsuit. They are also the individuals who negotiated the transactions that led to this lawsuit.

 Not surprisingly the testimony of these individuals conflicts in several important respects. We believe that both of these witnesses are honest and credible individuals. The discrepancies in their testimony we attribute to mutual misunderstandings, not to any deliberate attempt to conceal or falsify. Because we ascribe these conflicts in testimony to mutual misunderstandings by the parties we will not try to reconcile the differing versions of events presented by Worster and Lombardo. Rather will simply note those differences when appropriate.

 Generally the testimony received at trial revealed the following facts: In the fall of 1979 the plaintiff became interested in purchasing an aircraft. In order to obtain the long-term financing necessary for such a purchase the plaintiff contacted Security Peoples Bank & Trust Company. Security Peoples was unable to provide the plaintiff with the long-term financing he sought. It did, however, arrange to have the defendant Mr. Lombardo contact the plaintiff.

 In the meantime the plaintiff arranged interim financing through the First National Bank of Erie, Pennsylvania. Under this interim arrangement the plaintiff received $ 400,000. This interim financing was scheduled to expire March 31, 1980. Armed with this interim loan commitment Worster purchased the aircraft he sought.

 In the latter part of December 1979, the defendant, Mr. Lombardo contacted Worster to see if he could assist Worster in arranging long-term financing for this aircraft. At this time Mr. Lombardo was working as a leasing consultant with Security Peoples.

 There is some dispute as to precisely what occurred at this first contact between Worster and Lombardo. In his testimony Mr. Worster indicated that he informed Lombardo that he was seeking financing through other lenders, including Westinghouse Credit Corporation. In fact, at this time Worster had received a firm commitment from Westinghouse to provide long-term financing for this deal. Worster stated that he was unaware of any agreement or custom preventing him from obtaining firm commitments from several lenders. In addition, at trial, Worster denied making any agreement to deal exclusively with Lombardo in arranging financing for this deal.

 In his testimony Lombardo acknowledged that he was aware that Worster had been quoted interest rates by other lenders. Lombardo denied, however, that he had been expressly informed that Worster had already received a firm commitment from another lender. According to Lombardo had he known this he would not have pursued further dealings with Worster. In fact, it was Lombardo's understanding that Worster was going to deal exclusively through him in arranging this long-term financing. According to Lombardo such exclusive arrangements were common in this business.

 Worster reviewed this proposal; signed it; and forwarded the proposal along with a check for the commitment fee to Lombardo.

 Again, however, the testimony of the parties reflects serious misunderstandings regarding the essentials of the agreement entered into. According to his testimony Worster was concerned regarding the expiration of his interim financing. He expressed this concern to Lombardo, essentially informing him that time was of the essence in this agreement. Because of the importance of closing this deal in a timely manner, Worster understood the February 15 projected delivery date to be a firm deadline. Worster also understood that his commitment fee was refundable if this agreement was not consummated or if he obtained funding from some other lender.

 In his testimony Lombardo admits that he was aware of Worster's interim financing. He denies, however, that the parties ever agreed that time was of the essence in this deal. Because Lombardo did not view the timing of this deal to be critical, he regarded the February 15 delivery date as nothing more than a projection. In addition, consistent with his understanding that he was Worster's exclusive agent, Lombardo regarded the commitment fee as good faith money. He did not, therefore, feel that that fee was automatically refundable to Worster.

 Subsequently the parties agreed that this lease arrangement was not satisfactory. Accordingly the parties agreed to restructure the agreement as a loan rather than as a lease. *fn1"

 Lombardo then set about to obtain a loan commitment for Worster from some third party lender. As a result of Lombardo's efforts, a loan proposal was submitted to Worster by Wells-Fargo Leasing Company on January 30, 1980. The terms of this proposal were more favorable to Worster than those he had independently received from Westinghouse Credit Corporation. The Wells-Fargo proposal was subject, however, to approval by Wells-Fargo's Investment Committee. The proposal was ...

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