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Rivas Paniagua, Inc. v. World Airways, Inc.

United States District Court for the Southern District of New York

November 30, 1987, Decided ; November 30, 1987, Filed

No. 87 CIV. 0055 (PKL)


 [*709]  LEISURE, District Judge:

This is an action for breach of contract and damages. Plaintiff claims that defendant breached a Letter of Agreement signed by the parties in August 1985, pursuant to the terms of which plaintiff agreed to publish defendant's official airline flight magazine.

This Court, pursuant to Fed. R. Civ. P. 42(b), bifurcated trial. A non-jury trial on liability for breach of the August 1985 Letter of Agreement was held on November 16, 1987. The findings of fact and conclusions of law herein, made pursuant to Fed. R. Civ. P. 52(a), address only the issue of liability. 1


Plaintiff Rivas Paniagua, Inc. ("Paniagua, Inc."), is a New York Corporation, whose president and sole stockholder is Ralph Paniagua,  [**2]  a publishing consultant. Since 1980, Paniagua, Inc.'s business activities have included the publishing and preparation of magazines and advertising brochures for distribution on airline flights.

Defendant, World Airways Inc. ("World Airways"), is a California Corporation, with its principal place of business in Oakland, California. During the period from January 1985 to September 15, 1986, World Airways operated regularly scheduled and chartered commercial passenger airline flights to various destinations in the United States and abroad. Since September 15, 1986, however, World Airways has provided flight service only for United States military personnel, and has ceased all commercial passenger flights.

In early 1985, World Airways marketing and advertising executives decided to seek a new publisher for the airline's passenger flight magazine. In February or March of 1985, Aimee Johnson, a World Airways Vice President, indicated this interest to Robert Grossman, a business affiliate of World Airways. Mr. Grossman suggested that Ms. Johnson consider Paniagua, Inc., as the new publisher. Mr. Grossman then suggested to Mr. Paniagua that he communicate directly with Ms. Johnson. Soon  [**3]  after, Mr. Paniagua did contact Ms. Johnson, who suggested that Mr. Paniagua contact Michael Henderson, World Airways' director of Advertising and Public Relations at the time. During initial conversations, both Mr. Paniagua and Mr. Henderson expressed an interest in a publishing contract between the parties.

Mr. Henderson delegated to Kathryn Carlson, a member of his department, the responsibility for arranging the change of publishers for the airline flight magazine. From April 1985 through the summer of that year, Mr. Paniagua worked with Ms. Carlson and Mr. Henderson to establish the terms of an agreement between the parties. Ms. Carlson testified at trial that Paniagua, Inc., was the only publisher willing to prepare the magazine without requiring World Airways to pay a fee -- all of Paniagua, Inc.'s earnings would come from the sale of magazine advertisements. Such an arrangement was highly attractive to World Airways.

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673 F. Supp. 708 *; 1987 U.S. Dist. LEXIS 11024 **

Rivas Paniagua, Inc., Plaintiff, v. World Airways, Inc., Defendant


flight, magazine, cancel, termination, hotel, days notice, notice, damages, passenger, parties, garage, airline, circumstances, conversations, impossibility, advertising, distributed, publisher, frustration of purpose, unanticipated, deliver

Contracts Law, Standards of Performance, Impossibility of Performance, General Overview, Breach, Excuse & Repudiation, Acceptance of Goods, Excuse From Performance, Business & Corporate Compliance, Frustration of Purpose