City of Yonkers v. Otis Elevator Co.

The City of Yonkers (plaintiff), with the Yonkers Community Development Agency, entered into several agreements with the Otis Elevator Company (defendant). The agreements required Yonkers to acquire land adjoining an existing manufacturing facility operated by Otis and transfer that land to Otis. In exchange, Otis agreed to expand and upgrade its manufacturing facility. Otis and Yonkers first entered into a letter of intent in 1972, which stated goals of retaining the Otis factory in Yonkers and upgrading the facility. The parties then entered into additional agreements, eventually transferring the land to Otis. None of the agreements required Otis to continue operating the factory for any set time. In 1976, the land had been transferred, and Otis had completed its obligations of upgrading the facility. Yonkers and Otis then entered into a termination agreement. By 1982, technology had advanced, and two out of the three mechanical components built in the factory had been replaced with electric components. Otis’s other factories were able to supply the third component. As a result, Otis determined there was no business justification for continuing to operate the Yonkers factory and closed it. Yonkers sued Otis, alleging a breach of contract and other claims. Yonkers alleged that Otis was obligated to stay in Yonkers for a reasonable time. The district court granted summary judgment to Otis, and Yonkers appealed.