Full opinion text
TAMM, District Judge. Identity of the Parties. The plaintiff Arlington Towers Land Corporation is a Virginia corporation formed for the purpose of acquiring title to a tract of land consisting of some 18 acres located in northern Virginia, adjacent to the District of Columbia. It was incorporated on October 15, 1953. Plaintiffs First Arlington Towers Corporation, incorporated on November 15, 1953, Second Arlington Towers Corporation, incorporated on March 3, 1954, Third Arlington Towers Corporation, incorporated on December 23, 1953, and Fourth Arlington Towers Corporation, incorporated on October 4, 1953, are Virginia corporations individually organized for the erection and operation of apartment and commercial buildings upon the tract of land held by the Arlington Towers Land Corporation. All of the issued and outstanding stock of the building corporations is owned by the Land Corporation, while the preferred stock of the building corporations is, or was at the time of the filing of this suit, owned by the Federal Housing Administration. The plaintiffs, Walter P. McFarland, Edward Johnson and John Loughran, are the owners of all of the issued and outstanding stock of the Land Corporation. The plaintiff William J. Kress is, or was at the time of the filing of this action, the secretary of the Land Corporation. The defendant John McShain, Inc. is a Delaware corporation engaged in the building and construction business. Defendant John McShain is the president and principal figure in John McShain, Inc. Defendant George F. Shea is an attorney in the District of Columbia who represented John McShain, Inc. as attorney during a part or all of the time involved in the transactions which are the subject of this suit. The defendant, the Pennsylvania Company for Banking and Trusts, although named as a defendant in the action, was not served in this case. Factual Background Leading to These Proceedings. In 1949, the O’Driscoll Construction Corporation assembled several parcels of land which ultimately became the 18 acre tract acquired by the Arlington Towers Land Corporation. These parcels were assembled by the O’Driscoll corporation to enable it to construct the apartment development known as the Arlington Towers project. The O’Driscoll Corporation took various steps in the interest of this development which led to the filing of applications for insured mortgages with the Federal Housing Administration in 1951. The O’Driscoll group attempted to secure from the Federal Housing Administration insured mortgages which would permit the construction of the project under section 608 of the National Housing Act, 12 U. S.C.A. § 1743. In the fall of 1951, the O’Driscoll group abandoned the Arlington Towers project because they were unable to arrange the financing necessary to the project and financing required by the Federal Housing Administration. Because of their accumulated investment in the project, the O’Driscoll group attempted unsuccessfully to sell the project, and in the course of these efforts attempted unsuccessfully to interest the McShain corporation in the project. In the summer of 1952, Mr. Paul Hauck, General Superintendent for the McShain corporation in the Washington area, talked to the plaintiff Walter P. McFarland about the Arlington Towers project, told him some of the background of the project, and suggested that McFarland attempt to interest some friends in undertaking the financing of the project which McShain might then build. McFarland, thereafter, consulted the architects who had designed the project for O’Driscoll, consulted the Federal Housing Administration, and initiated a long course of activities which ultimately resulted in the financing of the project. In order to assist in perfecting the financing arrangements, the McShain corporation through John McShain furnished McFarland with letters indicating that McShain had an agreement with McFarland to build the project for $18,-000,000. McShain agreed further to take other steps, discussed in more detail hereafter, to assist McFarland in acquiring the land from the O’Driscoll group, in securing the necessary financing, and guaranteeing the completion of the project. The negotiations, studies and planning for the project extended from the summer of 1952 — probably the latter part of June of that year — until December 17 or 18, 1953, at which time a contract was executed between the Arlington Towers Land Corporation and John McShain, Inc. A copy of this contract is attached hereto and identified as Court Exhibit No. 1. It was supplemented by a letter dated December 21,1953, also attached hereto and identified as Court Exhibit No. 2, and a further agreement dated December 18, 1953, copy of which is attached hereto and identified as Court Exhibit No. 3. As a result of the execution of the contract of December 18, 1953, the Federal Housing Administration issued final commitments for insured mortgages covering the construction of Arlington Towers units Four, Three and One. The Chemical Bank and Trust Company of New York issued “Over and Above Loan’’ commitments, the Teachers Insurance and Annuity Association of New York made commitments covering advances on a mortgage covering the ground involved in the project, and other formalities being completed, the McShain corporation undertook the construction of the buildings embraced in these three contracts. Some delay occurred in the completion of the formalities relating to the construction of that segment of the project embraced in the agreements relating to Second Arlington Towers Corporation, the reasons for the delay being one of the contested points in the case. The McShain group collaterally contended that a commercial building identified hereafter as commercial building “C” was not embraced in the Master Contract, or other agreements, between the parties. The plaintiff McFarland contends now that in the elimination of commercial building “C” he understood that he was to receive credit from Mc-Shain for the cost of the building. Commercial building “C” was not built, and its status in the agreements and understandings between the parties is one of the principal issues in the case. Ultimately, the plaintiff McFarland and the plaintiffs, Edward Johnson and John Loughran, executed a further document dated April 28,1954, which document was also executed by McShain, and which related to the construction of the Second Arlington Towers unit. A copy of this document is attached to this opinion and is identified as Court Exhibit No. 4. Thereafter, the Federal Housing Administration financing and other financing having been completed, the McShain Company undertook the building of the Second Arlington Towers unit with commercial building “C” eliminated. As the construction progressed, a series of disputes arose between the parties, which disputes insofar as they are pertinent to the case are identified hereafter and are treated individually. In general terms, these disputes related to the addition to or deletion from the buildings of items referred to in the basic plans and specifications; to the alleged failure of the workmanship and materials to meet the standards required by the plans and specifications; to delay in the completion of First Arlington Towers; to failure of McShain to complete the units within the time required by the agreements; to the failure of McShain to correct defective work enumerated in a series of “Punch Lists” drawn up by the plaintiffs, and to refusal on the part of McShain to pay certain sums growing out of mortgage discounts. After the present suit was filed, the parties selected an Arbitrator to determine the reasonable value of the additions and deletions; and upon the filing of the arbitration award, the plaintiffs moved to set the award aside on various grounds. In the meanwhile, the defendants had filed, on November 28, 1955, in the Eastern District of Virginia, an action seeking to recover the sum of $275,000 represented by a note made by the Land Corporation on April 29, 1954. This action was transferred from the Eastern District of Virginia and consolidated with the present case for the purpose of trial. During the course of the present trial, the Court, over defendants’ objections, permitted the plaintiffs to amend their complaint by adding thereto a claim against the defendant McShain in the amount of $154,439.71 representing an assignment to the plaintiffs of a balance due by McShain to E. C. Ernst, Inc. for electrical work installed by that corporation in the Arlington Towers project. Contentions of Parties in the Present Suit. The plaintiffs filed this action on June 25, 1955. The issues to be determined by the Court, as agreed to by counsel in a pretrial order filed on November 15, 1956, are as follows: 1. Have the four Federal Housing Administration projects been completed? 2. Was the Supplemental Agreement of April 28, 1954 valid, or is it void by reason of threats and coercion in its procurement, and lack of consideration? 3. Is the award of the Arbitrator allowing the Land Corporation net credit for changes made during construction to be vacated or modified, and are plaintiffs entitled to additional credit for incomplete work? 4. Is McShain liable as guarantor for the payment of financing fees in connection with the permanent mortgages of the building corporations? 5. Are plaintiffs entitled to set-off, or credit, for the nonconstruction of “C” building? 6. Are plaintiffs entitled to additional credit for incomplete work? 7. Do plaintiffs come into Court with unclean hands which disqualify them from equitable relief? 8. Have plaintiffs defaulted in any of their obligations, and if so, what is the nature of such default in relation to the scope and applicability of the escrow powers given to defendant McShain? Or, have plaintiffs fulfilled their obligations which affect their rights in the escrow powers, and if so, to what extent? 9. Have any of the individual plaintiffs improperly received loans, advances, payments, free or reduced rentals, or other benefits from any plaintiff corporation, or have they subjected any plaintiff corporation to waste or mismanagement? Plaintiffs challenge the right of defendant to bring this issue into the case. 10. Could plaintiffs validly have the Land Corporation give its note dated approximately May 22,1956 to the Chemical Corn Exchange Bank in the amount of $290,000; or has the Land Corporation given as collateral to this note other notes due it from the building corporations; or have all plaintiff corporations agreed that money due to the Land Corporation from the building corporations be paid directly by the building corporations to the Chemical Corn Exchange Bank on the $290,000 note? The plaintiffs again challenge the right of the defendants to bring this issue into the case. 11. Are plaintiffs obliged to reimburse McShain in the amount of $40,-213.73 for obligations of plaintiffs which they requested McShain to pay for them? 12. Are plaintiffs entitled to damages in the sum of $200,000 for delay? 13. Are plaintiffs entitled to money damage by reason of McShain’s failure to pay the $412,607.50 as mortgage points ? The plaintiffs request the following relief of the Court: 1. That it be adjudged and decreed that the only balance remaining to be paid to McShain under the Master Agreement is the sum of $70,571.47, payable three years after such date as the Court may declare to be the date of completion of the project. 2. That it be adjudged and decreed that the obligation of plaintiffs or any of them to pay McShain represented construction costs of $17 million is fully satisfied. 3. That it be adjudged and decreed that the common stock, minute books, seals and undated resignations of the officers and directors of plaintiff corporations are free and clear of any lien or encumbrance arising out of the obligation of plaintiffs or any of them to pay McShain represented construction costs of $17 million. 4. That plaintiff Land Corporation be ordered and directed to issue to McShain three year note in the sum of $412,607.-50. 5. That defendant George F. Shea be ordered and directed to return to plaintiffs minute books, seals and undated resignations of the officers and directors of plaintiff corporations. 6. That defendant George F. Shea be ordered and directed to deliver to such escrowee as the Court may designate the common stock of plaintiff corporations to be retained by such escrowee only so long as the said three year note remains unpaid. 7. Plaintiffs further pray that the promissory note in the amount of $275,-000 and the deed of trust referred to therein which are the subject of C.A. 1072-56 be cancelled, set aside and declared invalid. The defendants request the following relief from the Court: 1. Plaintiffs be ordered to deliver to defendant George F. Shea, as Escrow Agent, all minutes and all corporate seals of each plaintiff corporation which have not heretofore been delivered to defendant George F. Shea. 2. Defendant George F. Shea be authorized to deliver to defendant John Mc-Shain, Inc., and defendant John McShain, Inc. be authorized to receive: a. The certificates of stock endorsed in blank of all plaintiff corporations. b. The undated resignations of the officers and directors of all plaintiff corporations. c. The minutes and minute books of all plaintiff corporations. d. All seals of all plaintiff corporations. 3. Defendant John McShain, Inc., its agents, employees and representatives be authorized forthwith to take over and manage the affairs of plaintiff corporations, pursuant to the terms of the contracts attached to and made a part of the Complaint, as Exhibits A, B, and C. 4. The officers, directors and stockholders of plaintiff corporations, and their agents, servants, employees, attorneys, representatives and all other persons that act in active concert or participation with them, be ordered forthwith: a. To turn over to defendant John Mc-Shain, Inc. all records, books, documents, contracts and other assets of each plaintiff corporation and to perform whatever acts are necessary with banks and others to make possible the immediate management, control and the exercise of such other rights as exist under said Exhibits A, B and C, by defendant John McShain, Inc. b. To be restrained from interfering with the management and control by defendant John McShain, Inc. of plaintiff corporations and the exercise of such other rights as exist under said Exhibits A, B and C; and c. To be restrained from taking away, interfering with, disposing of, or secreting any assets of any of plaintiff corporations. In the event the relief prayed for in the foregoing paragraphs 1-4 inclusive be not granted, then defendants pray for judgment; 5. Requiring the individual plaintiffs and plaintiff Arlington Towers Land Corporation to pay forthwith to defendant John McShain, Inc. the sum of $529,308.-50, with interest from February 2, 1956. 6. Requiring plaintiff, Arlington Towers Land Corporation, to pay forthwith to defendant John McShain, Inc. the sum of $580,518.73, with interest from February 2, 1956. 7. Requiring plaintiff Arlington Towers Land Corporation to deliver forthwith to defendant John McShain, Inc. a 36 month note in the amount of $1,000,-000, dated February 2, 1956, which note shall be payable in equal installments and shall contain the following provisions: $166,666 payable seven months after date. $166,666 payable one year after date. $166,666 payable eighteen months after date. $166,666 payable two years after date. $166,666 payable thirty months after date. $166,670 payable three years after date. Interest shall begin to run at six percent (6%) when any installment is one (1) week past due. 8. Requiring plaintiff Arlington Towers Land Corporation to pay forthwith to defendant John McShain, Inc. on said 36 month note all principal sums due thereon from February 2, 1956 to the date of judgment, with interest from February 2, 1956. 9. Plaintiffs be ordered to deliver to defendant George F. Shea as Escrow Agent all minutes and all corporate seals of each plaintiff corporation which have not been delivered to defendant George F. Shea. 10. Defendant George F. Shea as an Escrow Agent, or such other person or party as defendant John McShain, Inc. may designate with this Court’s approval be authorized to hold : a. The certificates of stock of all plaintiff corporations. b. The undated resignations of the officers and directors of all plaintiff corporations ; c. The minutes and minute books of all plaintiff corporations; and d. The seals of all plaintiff corporations; all such items to be held by the Escrow Agent until such time as said 36 month note be fully paid, with interest if any; and when such payments be made, such Escrow Agent be authorized to deliver the items in a, b, c, and d above to plaintiff Arlington Towers Land Corporation. In any event, defendants pray for judgment: 11. Requiring the individual plaintiffs forthwith to pay back to plaintiff corporations all improper loans, payments and advances which were received by them and further requiring such individual plaintiffs who have occupied any of the premises owned by plaintiff corporations to pay to the respective plaintiff corporations from the beginning of their respective occupancy, a rental commensurate with the rental value of the premises so occupied. 12. Requiring :• a. Plaintiff Arlington Towers Land Corporation to secure the cancellation of its note to the Chemical Corn Exchange Bank in the amount of $290,000 the cancellation of the assignment of collateral therefor, and the return of said documents to said corporation; and b. The individual plaintiffs to reimburse the plaintiff corporations for any sums paid on said note and to pay to said bank the remaining balance due on said note. 13. Plaintiffs be ordered to pay to defendant John McShain, Inc. all costs, including reasonable attorneys’ fees, in the case of John McShain, Inc. v. Arlington Towers Land Corporation, U.S.D.C., Ed. Va., C.A. 1260 (U.S.D.C.D.C., No. 1072-56). 14. Plaintiffs be ordered to pay to defendant John McShain, Inc. its costs. 15. Defendants have such other and further relief as to this Court seems just and proper in the premises. Credibility of Witnesses. The Court, sitting without a jury in this case, is required in making its findings of facts to pass upon the credibility of all of the witnesses. There is substantial conflict upon material issues among the various witnesses. There are occasions when the testimony of a witness is at variance in greater or lesser degree with some of the documents in the case. The Court, in passing upon the credibility of the witnesses and documents, has placed substantial reliance upon documents, particularly those which were written at a time when the writers appeared to have no motive in mis-stating facts. It is impossible to reconcile the oral testimony of some of the witnesses. The Court, accordingly, has placed great credibility upon these witnesses whose demeanor upon the stand, manner of testifying, and other factors, resulted in the conclusion that the probability of truth upon a particular issue favored an individual witness. It is to be observed that the testimony of the witness Walter McFarland differed, substantially on individual points from the testimony of the witness William Russell. Similarly, McFarland’s testimony is at variance with the testimony of the witnesses, McShain, Hauck, Barringer, Dean, McCarthy, Shea, Wright and other witnesses. The testimony of McFarland was at variance with affidavits executed by him and filed with the pleadings in the present case. Some variation in testimony is also to be noted between the testimony of the witness John McShain and of the witness William Russell and the depositions made by them. The Court, in reaching its conclusions in the case, has taken into consideration all of the testimony in the case, together with all of the exhibits, and has afforded the testimony of each witness that degree of credibility which the Court felt was proper in the light of the over-all impact of the witness and the exhibits upon the Court. The Controversy Regarding “C” Building. The plaintiffs claim that they are entitled to receive from McShain credit in the amount of $450,000 because commercial building “C” was not constructed. It is the position of the defendants that the “C” building was not a part of the ultimate agreement between the parties and that the sum agreed upon for the completion of the project did not include the cost of the “C” building, and that the plaintiffs are, accordingly, not entitled to any credit for this item. There is no doubt but that the “C” building was a part of the O’Driscoll project or that the plans filed by O’Dris-coll with the Federal Housing Administration contained some drawings relating to the “C” building. Defense counsel has, as a matter of fact, stipulated that the “C” building was in the project until August or September of 1953. There appears to be no doubt but that various people favored the deletion from the project of the “C” building. In the summer of 1953, Dean of the Federal Housing Administration discussed with plaintiff McFarland the question of whether the “C” building was economically feasible in the light of its potential mortgage value. Some time later, the witness Russell Hauser states he directed that the Federal Housing Administration Commitment be issued without the inclusion of the “C” building. The witness Russell testified that he eliminated the “C” buildr ing during the course of his studies to reduce the cost of the project. The cost of the project, as originally estimated for the McShain company by the now deceased Tippet, was $21,586,200. (Defendants’ Exhibit No. 1). When Russell re-estimated the project in August or September of 1953, as indicated by Defendants’ Exhibit No. 7, he arrived at an estimated cost of the project of $17,600,-000. He testified that he thereafter made efforts to further reduce the cost of the project and that the plaintiff McFarland knew that efforts were being made to reduce the cost of the job to the $17,000,000 figure which Mr. McShain had established for the project. In this regard, Russell testified that McFarland participated in conferences with himself and with Hauck concerning the necessity for bringing the price of the job down to the $17,000,000 figure by the cheapening or elimination of various items, and Russell testified at some length concerning the elimination of bowling alleys and skating rink and other items, and said that he advised McFarland, during this period, that “C” building had been eliminated from the estimates and that McFarland’s instructions to him were, in effect, to eliminate anything that he, Russell, saw fit in order to get the cost of the project down to $17,000,000. Russell testified that he also told the witness Coates of the elimination of “C” building, although Coates denied having been advised of this fact at that time. John McShain testified that the understanding between himself and McFarland was that the project, as it was finally undertaken, did not include “G” building. There are hundreds of pages of testimony concerning conversations, conferences and exchanges of letters relating to the undertaking of the project and its financing in the period before the drawing of the Master Agreement, that is, December 18,1953. It should be noted, in connection with the Master Agreement, that although there are references therein to drawings and specifications which are incorporated into the contract, thése drawings and specifications, at least for the most part, were not even in existence when the Master Agreement was signed. There is, consequently, no positive documentation that establishes exactly what the parties had in mind on December 18, 1953 insofar as the “C” building is concerned. There is no doubt in the Court’s mind, from the testimony, that concerted efforts were made by McShain prior to the execution of the Master Agreement to bring the estimated cost of the project down to the $17,000,000 figure. There is no doubt but that eliminations and changes were made in order to reduce the several estimates to this $17,000,000. Collaterally, it is to be observed that in the early stages of the negotiations between McFarland and McShain, McFarland stated that the Federal Housing Administration insured mortgages would total or even exceed $17,000,000. The testimony establishes that McFarland had difficulty in securing financing in sufficient quantity to meet his over-all costs. Architects’ fees were incurred totaling some $200,000, due in substantial measure to the necessity for redesigning the apartment buildings in concrete instead of structural steel as contemplated by the original O’Driseoll plans. McFarland’s commitment for his “Over and Above Loan” necessitated his paying a substantial premium, and other collateral costs were high. The Chemical Bank and Trust Company, prior to the Master Agreement, was urging expedition of the closing of the contracts and mortgage commitments, and the Federal Housing Administration was likewise endeavoring to consummate or abandon its commitments. McShain endorsed a substantial note for McFarland at a Washington bank to permit the payment of certain pressing obligations. McShain, as indicated heretofore, had furnished McFarland with letters to assist him in securing his financing and had undertaken the execution of a substantial bond necessary to permit the Land Corporation to acquire the tract upon which the project was to be built. There is, therefore, substantial evidence in the record to indicate financial pressure upon McFarland, particularly through the latter part of 1953, to move forward or abandon his operations. The Court is convinced that McFarland agreed to various changes suggested for the purpose of reducing the cost of the project and concludes that he agreed to the deletion of the “C” building, which building — his testimony indicates — had been the subject of discussion as to its deletion for a year or more prior to the execution of the Master Agreement. The question still remains whether the plaintiffs are entitled to credit in the amount of $450,000 because the building was deleted. This question must be considered from two aspects: first, the testimony of the witnesses concerning an agreement, or lack of agreement, for credit for the “C” building; and second, the status and legality of the Supplemental Agreement, the document dated April 28, 1954 and heretofore referred to as Court Exhibit No. 4. The witness McFarland has testified that he expected to receive a credit for the deletion of “C” building. He testified, however, that the only person to whom he ever spoke about a credit for the deletion of “C” building prior to the execution of the Supplemental Agreement was William M. Russell, a McShain employee, and Russell emphatically and repeatedly denied that McFarland at any time discussed with him the awarding of a credit for the deletion of “C” building and, as set out heretofore, testified that he and McFarland discussed the elimination of “C” building as one of the items involved in reducing the cost of the project. The testimony of various witnesses establishes that for a period of more than a year prior to the execution of the Master Agreement McFarland was in day to day communication with Russell, Hauck and McCarthy of the McShain organization and from time to time with John McShain himself. At no time, however, does McFarland state that he asked for credit for the “C” building, with the exception of the discussions heretofore mentioned with Russell and which discussions Russell, of course, denies. In the correspondence, particularly of March and April, 1954, McFarland does not seek or claim credit for the deletion of “C” building but does on occasions attempt to convince the McShain group that the “C” building was in the contemplation of all parties in the earlier stages of the project. The Court concludes that by a very substantial preponderance of the evidence, there was no agreement whatsoever to credit the plaintiffs with the cost of the “C” building. The so-called Supplemental Agreement dated April 28, 1954, and heretofore identified as Court Exhibit No. 4 attached to this opinion, is challenged by the plaintiffs who contend that the agreement is void basically because it was obtained by duress. The plaintiffs’ challenge of the agreement is predicated upon their contention that the agreement was involuntary because of coercion exerted upon the plaintiffs to secure the execution of the document. The plaintiffs contend that when McFarland was confronted with this document on the evening of April 27, 1954, he was not afforded an opportunity to consult counsel and was delivered an ultimatum that unless he and his associates signed the document, there would be no Federal Housing Administration closing on the following day upon Second Arlington Towers and that plaintiffs and defendants knew that unless the Federal Housing Administration closing was consummated the following day, the financing and consummation of the Second Arlington Towers project would fail, with disastrous consequences to the entire project. The defendants maintain the legality of the Supplemental Agreement. The testimony establishes that the plaintiffs were under substantial pressure to consummate the Federal Housing Administration closing on the Second Arlington Towers project. The Chemical Bank and Trust Company had indicated its impatience at the delay in the closing, and McShain, as early as January, had advised McFarland of its desire to effect this closing within the following two weeks. The plaintiffs, through their representatives, applied to McShain in January for an extension of the time limit for the closing, which extension had been denied. The plaintiffs point out that John McShain was absent from his office during a period of January and February, 1954 and contend that an actual closing would have been impossible during this period. The testimony concerning a power of attorney executed by John Mc-Shain for a member of his staff is not conclusive as to whether there could or could not have been a closing during this period. Be that as it may, the evidence indicates that John McShain was available in March and April, 1954 for the closing. It is established by the evidence that McFarland was represented by New York and Washington attorneys in the years 1953 and 1954. The evidence discloses, however, that McFarland dealt at arms length on a day to day basis with the Mc-Shain organization and that most frequently his counsel were not present during these conferences. There is no showing that McFarland at any time prior to April, 1954, deferred consideration of action upon any matter for the purpose of consulting his counsel. When he was summoned to the office of the defendant Shea on the evening of April 27, 1954, a draft of the Supplemental Agreement was shown to him. This agreement was prepared basically by Joseph McCarthy, then an attorney representing John Mc-Shain, but now an officer of the plaintiff corporations. McFarland argued about certain of the provisions of the agreement, and according to his own testimony, claimed that it was unfair and did not represent his understanding with McShain. McFarland says that he was told that the agreement would be signed or there would be no closing on the following day on Second Arlington Towers. McFarland left the conference in Shea’s office with the original of the Supplemental Agreement in his possession. He did not sign it at the conference. Thereafter, and that same evening, he located his two associates in this project, Edward Johnson and John Loughran, obtained their signatures to the agreement, and signed it himself. He made no effort to reach his attorneys but returned the Supplemental Agreement on the following day to McShain representatives where it was in turn executed by them. The Federal Housing Administration closing on Second Arlington Towers took place on April 28, 1954, and the building of this unit moved forward. It was some time thereafter before McFarland raised the issue of whether he would receive a credit on the construction price for the omission of “C” building. Counsel have cited to the Court a variety of cases upon the general subject of business duress or coercion. This doctrine has not been established with any certainty in this jurisdiction, although its existence as a doctrine is recognized by casual reference in one or two reported cases. There is no doubt but that substantial law has been established in a number of jurisdictions holding that under some circumstances coercion or business pressure may invalidate a formal contract. The United States Supreme Court has recognized and approved this doctrine. The factors necessary to invoke the operation of the doctrine vary somewhat in various jurisdictions, but most jurisdictions place emphasis on the fact that the factual circumstances reacting to the plaintiffs’ economic disadvantage must have been created by the respondents’ actions. From the Court's review of cases cited by counsel, it appears that the majority of the recorded cases were decided fundamentally upon a factual basis, and opinions which appear conflicting in their conclusions are readily distinguishable upon this factual basis. The Court concludes the Supplemental Agreement is not void or invalid because of coercion. The plaintiff McFarland had known for a substantial period of time that the McShain group contended that the “C” building was not in the project as contemplated by the Master Agreement. He had known for a year or more that the Federal Housing Administration considered the “C” building economically unsound, and he knew early in March of 1954 that the Federal Housing Administration commitment which had been issued about the end of February, 1954, provided for an insured mortgage for Second Arlington Towers which did not include the “G” building. He knew that because of the elimination of the “C” building, the money to be advanced by the Chemical Bank and Trust Company and the Teachers Insurance Company had been decreased, and yet, he had made no request or demand for a credit for the deletion of this item from the McShain group, other than his disputed discussions with Russell. It is significant to the Court in this regard that McFarland did not, during this crucial period, make any written request of Mc-Shain for credit for the deletion of the “C” building, although he was in correspondence with McShain before and after the April, 1954 agreement with reference to various aspects of the construction and financing of the project. The plaintiffs in their claim of coercion rely upon the fact that McFarland was presented with the Supplemental Agreement on the day before the Federal Housing Administration closing was due to be held. The plaintiffs point out that the Chemical Bank and Trust Company and the Federal Housing Administration had indicated that no further extensions of the closing date would be granted and that, consequently, if the closing was not effected on April 28, 1954, the financing for this part of the project would have collapsed. It is not the Court’s responsibility to conjecture as to what would have happened if the closing had not been completed on April 28, but the testimony indicates that extensions had been granted on closing dates on earlier occasions. The Court concludes that McFarland, Loughran and Johnson executed the Supplemental Agreement deliberately because they wanted the Second Arlington Towers project completed, even without “C” building. The Court believes that these plaintiffs had ample opportunity to consult counsel if they desired to do so. There are legal questions ' suggested by the Master Agreement which might have been considered by plaintiffs, especially in asserting any rights existing under the Master Agreement, which might have required the defendants to construct the Second Arlington Towers project under obligations incurred in that Agreement, and without any reference to the Supplemental Agreement. The plaintiffs did not make any effort to consult their attorneys. They, out of the presence of the attorneys McCarthy and Shea, executed the Supplemental Agreement and returned it the next day. Thereafter, the provisions of the Supplemental Agreement were carried out on both sides, and the apartment building and commercial building “B” were constructed by the defendants. The plaintiffs have taken full advantage of the provisions of the Supplemental Agreement insofar as they resulted in the construction provided for therein, and since the completion of the buildings have collected the rents therefrom. The Court has considered other suggested grounds challenging the validity of the Supplemental Agreement but has concluded that the Agreement was a valid one, binding upon the parties, and the Court must accordingly rule against the plaintiffs upon this issue. It is the Court’s conclusion that the parties are bound by the terms of the Supplemental Agreement and that the plaintiffs are not entitled to a reduction of $450,000 from their contractual obligations to defendants. Date of Completion of Contracts. The Court is required to determine, as a basis for factual findings, the dates upon which the building of various units was completed and to determine the date of the completion of the entire contract. The testimony of the witnesses as to the length of time necessary to complete the individual buildings varies. At one point in the negotiations, the plaintiff McFarland quotes Hauck of the defendant corporation as stating that the defendants would require 8 months to complete each individual building. Later, however, McFarland quotes McShain as saying that the defendants would require from 10 to 12 months for the construction of each building. The Chemical Bank and Trust Company, in connection with its “Over and Above Loan” made provision for interest payments to cover a period of 18 months during construction. At another point in McFarland’s testimony, he stated that McShain took exception to Hauck’s estimate of 8 months for the completion of the individual buildings. There does not appear to be any conclusive oral testimony establishing a specific agreement as to the time to be required for the construction of each building. Turning to the documents admitted in evidence in the case, it is observed that the “Construction Contract — Lump Sum” provides under the heading, “Time of Completion,” that the work covered by the contract “shall be completed to the satisfaction of the architect and the owner within 14 months from the beginning.” Subsequent sentences in this section of the “lump sum contract” provide that in no event shall the work to be performed be considered to be completed until all items called for in the drawings and specifications have been fully completed and “the contract price paid in full.” There is in evidence a “Construction Contract — Lump Sum” for each of the building projects, the Court’s quotations above being taken from plaintiffs’ Exhibit No. 40-C. It being noted that plaintiffs and the defendants signed the lump sum contract, it would appear that the 14 months provision was binding upon them. Other documentary evidence, however, includes a set of specifications for each of the projects, which specifications, of course, are a part of the overall agreements between the parties. Incorporated in these specifications is a document entitled, “FHA Supplementary General Conditions,” of which paragraph 6 provides as follows: “The Contractor shall acceptably correct any defects due to faulty materials or workmanship which appear within a period of one year following substantial completion. The date of substantial completion is the date when the project has been acceptably completed in accordance with the drawings and specifications, when the entire project has been accepted for occupancy by the local authorities having jurisdiction and by the Lender and the FHA, and when the mortgage has been finally endorsed for insurance.” (Emphasis supplied.) This quotation is taken from plaintiffs’ Exhibit No. 40-B. There are other provisions in the documents having some reference to completion, but the Court is of the opinion that the project was completed for the purposes of this case when the mortgages were finally endorsed for insurance. Although defense counsel contend that all projects were completed on February 2,. 1956, because the Federal Housing Administration on that date certified the completion of the project, the Court is of the opinion that the project was completed on May 22, 1956, upon which date the mortgages were endorsed for completion. Delay in the Construction of First Arlington Towers. The plaintiffs contend that there was a delay of approximately 6 months in the construction of apartment building No. 1, which is covered by the First Arlington Towers Corporation contract. It is the contention of plaintiffs that this delay was due primarily to the attitude of the defendants in charging the plaintiffs an unacceptable figure for proposed changes in this building under circumstances which the plaintiffs say entitled them to substantial credit rather than to be assessed additional charges. The plaintiffs’ testimony is substantially that the figures proposed by the defendants were unacceptable to them and that their own counter figures were rejected by the defendants, with the result that an impasse was reached, resulting in the work in this building being at a standstill for some 6 months. The plaintiffs contend, of course, that this delay resulted in the incurring of additional interest charges on the project and also resulted in the loss of 6 months rental from this building. The defendants admit that delay occurred in the construction of this building. They say, however, that there were several causes for the delay, one of which ■was the defendants’ inability to determine specifically from the plaintiffs the changes that the plaintiffs wanted to make. Defendants’ witnesses testified that the delay was due in part to the inability of plaintiff McFarland to make up his mind as to the changes he desired, especially in the dining area and penthouses, and that consequently, the defendants could not proceed with the work pending this determination. The defendants’ witnesses further testified that there was some delay in obtaining the drawings for the proposed changes from the plaintiffs’ architect and that there was also a dispute, or disputes, concerning the costs and/or credits for the proposed changes which contributed in some degree to the delay. Ultimately the work was resumed and the building completed, apparently without final agreement being reached between the parties upon certain items of cost involved in the changes. Upon the basis of all of the evidence in the case, the Court does not feel that the plaintiffs have maintained the burden of proof and established by a preponderance of the evidence that the delay in the completion of First Arlington Towers building was due exclusively to the culpability of the defendants. The Court is of the opinion from the evidence that the plaintiffs have failed to establish any right to recover upon this item. It may be noted here that the date of completion of the contracts has no reference to the date upon which occupancy of the buildings began. According to the testimony of the witness, Harry H. Tegge, occupancy of Fourth Arlington Towers began on November 1, 1954; occupancy of Third Arlingtdn Towers began on December 14, 1955; occupancy of Second Arlington Towers began on March 1, 1955, and occupancy of First Arlington Towers began on April 1,1955. Work Inadequately or Improperly Done and Work Incompleted. This aspect of the case does not include work which was the subject of the Arbitration Agreement and which is treated separately hereafter. Basically, this aspect of the case relates to the claim of the plaintiffs that they are entitled to substantial credit from the defendants for work improperly or inadequately done and for cleaning and other correctional steps made necessary by defendants’ failure to fulfill their obligations in connection with the required building. The plaintiffs’ claims relate generally to their charges that the plastering work was improper and inadequate; that the painting work was of an inferior quality; that certain shelving was rough and unsanded; that there were insufficient hooks in clothes closets; that tile floors in bathrooms did not meet specifications; that tile in kitchens was soiled, as were window frames, and windows; that shower curtain chains, shower heads and door stops were missing; that refrigerators and stoves were not level when installed, and that a substantial amount of the required shrubbery was dead. This claim of plaintiffs also charges that apartments were dirty when turned over to the plaintiffs — that sandwich wrappers, milk containers, beer cans, etc. were found in the various apartments. Plaintiffs claim that it was necessary for them to expend more than $133,000 in cleaning and correcting these deficiencies, the figure representing both work that was done and work yet required to be done. The itemizations of the individual defects are in a large number of documents referred to as “Punch lists,” and many of these “Punch lists” have been admitted in evidence, the plaintiffs’ Exhibit 74-A through E being a typical list, introduced in connection with the testimony of plaintiffs’ witness, Harry H. Tegge. During the course of the building, it appears from the testimony that, in addition to the various punch lists prepared by plaintiffs representatives, other punch lists were prepared by representatives of the McShain organization, by representatives of the Federal Housing Administration, and by the architects of the project. There is wide disparity and point to point conflict between the testimony of the plaintiffs’ witnesses and the testimony of defendants’ witnesses as to the punch list items. The plaintiffs’ witnesses testified that during the first stages of the completion of individual apartment units, particularly in Fourth Arlington Towers, the defendants attempted to rectify defective or dirty conditions brought to defendants’ attention, but that shortly thereafter the defendants discontinued their efforts to correct these conditions and ignored them. In order to evaluate the evidence concerning the punch list items, it is essential to consider the time covered by the complaints upon this subject. The first apartments available for occupancy were in Fourth Arlington Towers and were rented approximately November 1, 1954. Occupancy was begun in Third Arlington Towers on or about December 14, 1955. Occupancy of Second Arlington Towers was begun on March 1, 1955 and occupancy of First Arlington Towers was begun on April 1, 1955. The practice with reference to the occupancy of apartments was to permit the plaintiffs to take over groups of apartment units as they became available. These groups, at least in the early stages of occupancy, embraced apartments on several floors and in various parts of a building. Later, the Federal Housing Administration caused a change to be made in this proceeding so that a group of apartments made available for rent was required to be on an individual floor or in an individual wing. The procedure followed, however, resulted in a situation in which certain apartments were being rented and occupied while construction work continued in adjoining or adjacent apartment units. The plaintiffs’ witness Harry II. Tegge was the General Manager of the project from July of 1954. He testified that after the McShain organization had made some small amount of effort to correct defective conditions, the defendants thereafter failed to do anything upon the punch lists. According to Mr. Tegge’s testimony, there was not a single apartment unit in the more than 1,600 units involved in the entire project which did not have improper or defective work, or require extensive cleaning before it was fit for occupancy. This witness identified a great number of punch lists which he said were turned over to the defendants either prior to or subsequent to the filing of this suit. Tegge testified that the defendants had to employ some 6 to 25 men to correct the conditions of improper work and to clean the apartments in order to bring them up to proper standards. The plaintiffs offered other witnesses as to these conditions and punch list items. The defendants answered that they corrected each and every defective item which was brought to their attention and claim that they did the required corrective work either of construction or cleaning, except in those instances in which the defective condition was the result of tenant damage to an apartment unit. The principal witness for the defendants upon this point is Edmund R. Wright, Jr., who was employed as an expediter and general supervisor upon the Arlington Towers project from January 15, 1954 until October, 1955, he being the last representative of the McShain organization to leave the job. This witness testified that he personally inspected each of the apartment units and other spaces in the project, claiming that he was in each apartment unit at least six times. He testified that he, too, made-punch lists which he delivered to the defendants’ sub-contractors and that he took steps to determine that the criticized items were corrected. He testified that whenever Mr. Tegge, or any other of the plaintiffs’ representatives, advised him of any defective condition in any part of the project, he took the steps necessary to correct it. He testified to the-receipt of punch lists from the plaintiffs’ representatives and detailed how he prepared other lists from plaintiffs’ punch lists which he passed on to the individual' subcontractors and further testified as to-the means employed by him to verify that defective or dirty conditions were corrected. This witness testified that he had from 18 to 20 men, either of the defendants’ employees or of sub-contractors-employees, working upon the punch list items and correcting them. There is a quantity of testimony relating to the means by which the keys of the apartments ready for occupancy were turned over to the plaintiffs’ representatives and some statements, especially of the witness Wright, that difficulties occurred because the rental program resulted in the occupancy of individual apartments in a locality where other apartments were unfinished and work was still being done thereupon. Without attempting to summarize the testimony of the witnesses of the plaintiffs and of the defendants upon these punch list items, it is observed that the plaintiffs, for practical purposes, say that none of the conditions about which they made complaints were corrected and the defendants’ witnesses testified that each condition about which complaint was made was corrected. There are two additional factors which the Court has considered in attempting to determine the true facts in this situation. The first factor is created by the testimony relating to inspections of the apartments by representatives of the Federal Housing Administration. The witness Ernest T. Reilly testified that as an employee of the Federal Housing Administration, he was the resident inspector upon the Arlington Towers project from January 20, 1954 to the middle of September, 1955. Reilly’s inspection began with the excavation and pouring of the concrete for the first building and continued through the execution by him of the so-called 100%' completion reports, which are defendants’ Exhibit 50 A and B and 60 A and B. Reilly testified that prior to the rental and occupancy of individual apartments, he personally inspected them to determine whether they met the requirements of the Federal Housing Administration insofar as it was concerned with the completion of the project. As Reilly made his apartment by apartment inspection, he, too, prepared punch lists of individual items with which he was dissatisfied and turned his punch lists over to the Mc-Shain organization. When McShain’s representatives advised him that the items upon these punch lists had been corrected, he again personally inspected the individual apartments to verify that the punch list items had in fact been corrected. This procedure was followed by him through all of the apartments in all four of the apartment buildings, and also in the other buildings, i. e., commercial buildings, garages, etc., which were embodied in the project. When Reilly was satisfied that the work had been completed in accord with Federal Housing Administration requirements, he reported this fact to Simpson, the chief architect of the Federal Housing Administration who then, accompanied by Reilly, made a complete inspection of all of the buildings. Simpson and Reilly started at the roof of each building and worked down through the building, during which time Reilly made up punch lists of items with which Simpson was dissatisfied. These punch lists were turned over to the McShain organization, and thereafter, Reilly rechecked these punch list items when McShain’s employees had informed him that the work had been done. Reilly, on the dates enumerated hereafter, executed reports on Federal Housing Administration forms certifying that the work was 100%' completed and met the requirements of the Federal Housing Administration with the exception of some small items covered by escrow withholdings which are of no significance here because of subsequent certification of the completion of these items. The Exhibit number and dates of Reilly’s 100%' completion reports are as follows: Plaintiffs’ Exhibit 59-A, First Arlington Towers, dated December 16, 1955; 59-B, Fourth Arlington Towers, dated July 15, 1955; 60A, Second Arlington Towers, dated July 26, 1955, and 60-B, Third Arlington Towers, dated July 15, 1955. Reilly testified that all of the work upon the Arlington Towers project was completed from his viewpoint in accordance with the plans and specifications. The second factor which the Court has seriously weighed in considering the testimony on the punch list items is represented by defendants’ Exhibit No.’s 58-A, B, and C. In weighing these items of evidence, it should first be noted that the plaintiff’s general manager, Tegge, had been residing in the project since July of 1954 and the first apartments were occupied by tenants about November 1, 1954, with the occupancy of the other buildings following in March and April of 1955. According to Tegge’s testimony, the defendants had failed to take any action whatsoever on the punch list items at any time from shortly after November, 1954, Despite this fact, Tegge, on May 29, 1955, wrote a letter (Defendants’ Exhibit 58-A) for the defendants’ employee Wright in which he stated: “Roddie Wright was employed in a supervisory capacity by John Mc-Shain Construction Company, the builders. Mr. Wright’s services and ability proved invaluable in the many problems arising in a job as large as ours. His ability to handle men and his untiring efforts to get things done in a hurry have contributed much to the completion and splendid job done by his organization.” The Court points out that this letter was written at a time when, according to the plaintiffs’ testimony, defendants had been consistently refusing to take any action whatsoever upon the items about which the plaintiffs’ witnesses say they had been complaining for months. In the same vein, the Court points to defendants’ Exhibit 58-C, which is a letter written by Mr. Tegge, on May 29, 1955, to Paul Hauck, the principal Washington officer of MeShain’s organization, in which letter he stated that: “ * * * it has always been a great satisfaction to call upon you and your fine organization for our many requests and adjustments which unavoidably come up on jobs the size of ours. “ * * * * It is only through the experience and drive of men like yourself, Ben Kauffman, Dick Bowers and especially Roddie Wright that the final end result and details of the finished product are achieved. “I speak particularly of Roddie Wright because of his ability to handle the men working with him in completing the many ‘punch items,’’ which are always done in a cheerful efficient manner. “ * * * It is our wish that we may continue where you leave off to carry on with the same success and satisfaction.” Again, it is difficult to reconcile this letter with the claims made by the plaintiffs in this suit which was filed less than one month after Tegge’s letter to Hauck. There is another exhibit in the case to-which the Court must direct attention, that exhibit being Defendants’ Exhibit No. 62, which is a letter of May 22, 1956, addressed to the Federal Housing Administration by the plaintiff Walter McFarland in behalf of First, Second, Third and Fourth Arlington Towers corporations. Defendants’ counsel made some effort to show that while the plaintiffs, through McFarland, were pretending to MeShain that they were attempting to have the balance of the Federal Housing Administration insured funds released to the defendants, they were, in fact, calling upon the Chemical Bank and the Federal Housing Administration to withhold the payment of these funds to the defendants. The Court sustained objection to a substantial part of this testimony, but in some documents admitted in evidence there are references to the fact that the plaintiffs desired to withhold all the remaining sums in order to insure the completion of unsatisfactory or incompleted work. Defendants’ Exhibit No. 62, dated May 22, 1956, becomes significant, then, because in it McFarland refers to paragraph 16 of the original complaint filed in this case which alleges the failure of the defendants to complete the project as provided, and states with reference thereto: “Complaint in question was prepared and filed in June, 1955. We hereby affirm it to you that the work in question has since been completed by John Mc-Shain, Inc., and no part thereof remains to be completed.” Upon the basis of all of the testimony in the case relating to the punch list items, the Court concludes that the plaintiffs have not established their claim by a preponderance of the evidence. The Court further concludes that the preponderance of the evidence favors the defendants’ contentions as to these items. The punch list items numerically total several thousand items which vary in size from a missing button upon a Venetian blind draw string to items alleging serious mechanical defects. A group of exhibits identified as Plaintiffs’ Exhibits No. 124 through 132, relate to defective concrete in garage areas. The photographs illustrate a condition which the Court feels is not in accord with the specifications in the contract, but the Court must qualify this conclusion because some testimony indicates that this space was originally designed to be dead storage space and was finished as such. This testimony makes it impossible for the Court to appraise the photographs and evaluate them with any degree of accuracy, nor is the Court able to determine the extent of the conditions, these conditions being described by one witness as existing “more or less throughout the garage area.” The Court does not believe that the plaintiffs have established this item with such specificity as to permit the Court to place a money value upon the work necessary to correct the condition. Plaintiffs’ Exhibits No. 133 through 139 relate to claims of improper shelving in clothes closets, and Plaintiffs’ “Exhibits No. 140 through 142 portray bathroom tile photographs. The te