Full opinion text
MEMORANDUM OPINION JUNE L. GREEN, District Judge. This is an action by Greyhound Lines, Inc. (“Greyhound” or “GLI”), against Morton A. Bender (“Bender” or “MAB”), individually and doing business as Michael Murray Associates, Michael Murray, doing business as Michael Murray Associates, and Julian Scheer, doing business as Michael Murray Associates, for breach of contract and fraudulent misrepresentation. Greyhound seeks compensatory damages for breach of contract and fraudulent misrepresentation, restitution, and punitive damages for fraudulent misrepresentation. Defendants have asserted affirmative defenses and counterclaims for breach of contract, fraud in the inducement, and misrepresentation. Defendants seek rescission and reimbursement, as well as compensatory and punitive damages. Originally, both parties also sought specific performance but they withdrew these claims at the pretrial conference, shortly before trial. In a thirteen-day trial to the Court, the Court heard testimony from the following witnesses: Armen Ervanian, Vice President of Real Estate at the Greyhound Corporation; Earl E. Shew, Executive Vice President for GLI until he retired, effective November 1982; John P. Kyle, a salesman for Coldwell Banker; John T. Nygren, Assistant General Counsel at the Greyhound Corporation; Susan Mann, an attorney in the Greyhound Corporation Law Department; Robert W. Wening, Jr., an architect in the firm of Mills, Clagett & Wening; Warren C. Marggraf, Vice President of the Architectural Engineering and Property Department at GLI; William T. Duncan, Senior Vice President for Real Estate at the American Security Bank; Frank L. Nageotte, Chief Executive Officer and President of Greyhound Corporation and Chairman of the Board of GLI; James B. Fagan, Director of Property in the Architectural Engineering and Property Department at GLI; William J. Hallinan, Executive Director of Taxes at Greyhound Corporation; Richard L. Patch of R.L. Patch, Inc., a construction cost engineer who estimates cost of construction; Marvin Stein, general contractor and President of Edmar Construction Company, Inc. (“Edmar”); William Benson, Vice President in charge of new construction at Edmar; Michael Murray, partner with Morton Bender and Julian Scheer in Michael Murray Associates who brought the principals in this transaction together; Victor Samuel Schneibolk of SB Construction Company; Donald Urquhart, real estate appraiser; Leon Weiner, builder and developer; Richard H. Rubin, real estate developer; and Morton Bender, developer and general contractor. Deposition testimony also was introduced of the following individuals: F. Edward Lake, Vice President and Treasurer of Greyhound Corporation; James Mizes, Financial Analyst at Greyhound Corporation; Richard C. Stephan, Vice President and Controller at Greyhound Corporation; Bruce Thomas, Vice President of Greyhound Corporation; William F. Tritton, Vice President and Controller at GLI; Frederick P. Dunikoski, President and Chief Operation Officer of GLI; Robert O. Lowe, Vice President and Assistant Controller at Greyhound Corporation; John G. Keller, Director of Tax Administration and Planning at Greyhound Corporation; Carroll Bumpers, Vice President and Financial Advisor to the Chief Executive Officer of the Greyhound Corporation; as well as Susan Mann; Armen Ervanian; and James B. Fagan. FINDINGS OF FACT Plaintiff GLI is a subsidiary of the Greyhound Corporation. It is a corporation organized under the laws of the State of California and has its principal place of business in Phoenix, Arizona. Defendant Bender is a resident of the District of Columbia and a citizen of the United States. Defendant Michael Murray (“Murray”) is a resident of the State of Maryland and a citizen of the United States. Defendant Julian Scheer (“Scheer”) is a resident of the Commonwealth of Virginia and is a citizen of the United States. All three defendants transact business in the District of Columbia. Michael Murray Associates is a general partnership organized and doing business in the District of Columbia. Mr. Bender holds a ninety percent interest in Michael Murray Associates and defendants Murray and Scheer each hold a five percent interest in the partnership. Greyhound currently owns and operates a bus terminal at 1110 New York Avenue, N.W., Washington, D.C. (“the old terminal”). The value of this property had been rising for a number of years as a result of an increased demand for office space, as well as the proposed construction of the D.C. Convention Center across the street. To take advantage of the increase in real estate values, Greyhound decided to sell the old terminal and build a modern facility. During 1980 and early 1981, Greyhound looked at possible sites for the new terminal. On February 5,1981, the Greyhound Corporation approved “Project Concept 81-5” which authorized, inter alia, the expenditure of $75,000 to obtain an option to purchase land at 90 K Street, N.E., near Union Station in Washington, D.C., at a price of $8,310,240. Armen Ervanian, Vice President for Real Estate at the Greyhound Corporation, suggested that this project concept be approved. He handles real estate matters for all of the subsidiary companies of Greyhound Corporation, including GLI, and was the Greyhound official who was in charge of the new terminal project. On February 17, 1981, Greyhound purchased an option for this land which would be the site of Greyhound’s new terminal (“the new terminal site”). The option was to expire on June 17, 1981. As contemplated by Greyhound, a developer would purchase this property, pursuant to the option Greyhound had obtained, and would build a new terminal to Greyhound’s specifications. In a “tax-free exchange,” Greyhound would then trade the old terminal to the developer in exchange for the new terminal property and cash representing any difference between the value of the old terminal and the cost of developing the new terminal. In January 1981, defendant Murray learned that Mr. Bender was interested in purchasing the old terminal property on New York Avenue. He told Mr. Ervanian about Mr. Bender’s interest and Mr. Ervanian asked that Mr. Bender write to him. On January 26, 1981, Mr. Bender wrote to Mr. Ervanian expressing his interest in this property. On March 4, 1981, they met and discussed Greyhound’s proposal for a tax-free exchange, the price of the old terminal and development of the new terminal site. Between March 4, 1981, and March 30, 1981, the parties negotiated the price at which the old and new properties would be exchanged. The parties eventually agreed to a price of $21 million, or about $650 per square foot, for the old terminal property. On April 2, 1981, Mr. Ervanian sent a draft of the proposed exchange agreement to Mr. Bender. On April 16 and 17, 1981, Mr. Bender met in Phoenix, Arizona, with Mr. Ervanian and other members of the Greyhound staff. At this time, Mr. Ervanian informed Mr. Bender that a completed agreement had to be signed by April 17, 1981, to enable Mr. Ervanian to submit the contract to Greyhound Corporation’s Board of Directors for approval before the option to buy the new terminal property expired. On April 17, 1981, Greyhound and Mr. Bender executed the “Greyhound-Bender Agreement for Exchange of Real Properties” (the “Exchange Agreement”). See Appendix A attached hereto. Under the terms of the Exchange Agreement, Greyhound assigned to Mr. Bender the option it held to purchase the tract of land located at 90 K Street, N.E., in the District of Columbia, for the sum of $8,310,240. Exchange Agreement, 11111.03, 2.1, 3.1. Bender agreed to exercise the option, purchase the K Street property, and construct upon it a new bus terminal. On or about October 14, 1981, Mr. Bender was to submit to Greyhound for its review and approval or disapproval, final plans and specifications prepared by the architectural firm of Mills, Clagett & Wening, A.I.A. [American Institute of Architects]. Id. at H 5.1. Greyhound then had twenty days to approve or disapprove the plans and specifications. Id. at II 5.2. If Greyhound failed to do either, it would be deemed to have approved the plans and specifications. Id. Within 120 days of Greyhound’s approval, Mr. Bender was to submit the “Construction Documents” to Greyhound for its review and approval or disapproval, including the total guaranteed project budget, a “guaranteed cost” construction contract, a performance and payment bond, documents evidencing specified insurance coverage, and an architect’s contract. Id. at ¶ 5.3. Upon Greyhound’s approval of these Construction Documents, Mr. Bender was to obtain the requisite building permits, variances, or similar authorizations, and complete construction of the terminal within eighteen months from the issuance of the building permits. Id. at ¶ 5.4. The estimated cost of construction of the terminal building was $3,400,000. Id. at ¶ 5.1. Upon completion of the new terminal, Mr. Bender was to exchange the new terminal for Greyhound’s existing terminal located at New York Avenue and 11th Street, N.W., in the District of Columbia. The exchange price of the old terminal site was to be $21 million, and the exchange price of the new terminal site acquired by Mr. Bender (“the Bender property”) was to be the sum of the actual purchase price of $8,310,240 paid by Mr. Bender, less GLI’s option cost plus the actual direct costs and expenses paid by Mr. Bender in connection with the acquisition, development, and exchange of the Bender property. Id. at ¶ 7.1. Mr. Bender agreed to maintain accurate books and records sufficient to substantiate such costs and expenses. Id. The agreement further provided: If the exchange price of the GLI Property [old terminal] is less than the exchange price of the MAB Property [new terminal], GLI shall pay the difference between the two exchange prices to MAB on the day of closing____ If the exchange price of the MAB Property is less than the exchange price of the GLI Property, MAB shall pay the difference between the two exchange prices to GLI on the Closing. Id. See also id. at 1113.1 (“[A]ny difference in the exchange price of the [Bender] Property and the GLI Property shall be paid by the applicable party.”) For the Exchange Agreement to be effective, approval by Greyhound’s Board of Directors was needed by May 13, 1981. Greyhound had a formal in-house procedure for the approval of capital expenditures such as were contemplated by the Exchange Agreement. A formal “Investment Proposal”, defining the scope and financial consideration of the proposed transaction, had to be submitted to the Greyhound “Investment Committee” which would then review it and make recommendations for approval or disapproval to the Board of Directors. On April 17, 1981, the same day the Exchange Agreement was signed by Frank Nageotte, Chief Executive Officer and President of Greyhound Corporation and Chairman of the Board of GLI, and Mr. Bender, Mr. Ervanian gave Mr. Nageotte a memorandum requesting authorization to enter into the Exchange Agreement. See Defendants’ Exhibit 59 (beginning at 14th page of Exhibit). This memorandum requested authorization to enter into a tax-free exchange agreement with Mr. Bender, “generally in accordance with the following terms:” 1. Morton Bender (MB) will build a new terminal to GLI’s specifications on the 103,878 sq.ft, parcel [at 90 K St., N.E.]____ 2. The total cost of the new facility should not exceed $16 million____ 3. Upon its completion, MB will exchange the new terminal for the existing GLI terminal ... containing 32,788 sq.ft, for a value of $21 million or $640.48/sq.ft. 4. Upon completion of the exchange transaction, GLI will receive the $5 million “boot” difference from MB in cash____ Id. Mr. Ervanian also indicated that “full cooperation will be extended to MB in an effort to have him complete the exchange facility in less than two years and for less than the $16 million maximum figure.” Id. at 16th page of Exhibit (emphasis added). The Court notes that contrary to Mr. Ervanian’s representations in this memorandum to Mr. Nageotte, the Exchange Agreement does not indicate that “[t]he total cost of the new facility should not exceed $16 million” or that GLI would “receive the $5 million ‘boot difference’ from MB in cash” when the transaction was completed. Id. at 14th page of Exhibit. An Investment Proposal to enter into the tax-free exchange agreement with Mr. Bender was then submitted on April 24, 1981. It states in pertinent part: The difference between the proposed exchange facility and land cost estimated to be $16 million and the $21 million sale price, or approximately $5 million depending on an actual final cost of exchange facility, will be paid to Greyhound Lines, Inc. in the form of a cash “boot”. * * * * * * Authorization is also requested to consider receiving the estimated $5 million cash “boot” over a three year period on an installment basis at an interest rate equal to the interim financing rate charged on development of the exchange facility, provided the note is satisfactorily secured. Id. at 9th page of Exhibit. The Investment Committee recommended approval of the Investment Proposal on May 1, 1981. Id. at 5th page of Exhibit. Greyhound’s Board of Directors approved the agreement on May 12, 1981. The Court notes that if the actual cost of the project exceeded the Investment Proposal estimate by more than ten percent, approval of the increased cost would have to be sought from the Board of Directors. Mr. Bender was not aware of this corporate policy nor was he aware of the estimates quoted in the Investment Proposal. Mr. Bender was informed in a letter from Mr. Ervanian, dated May 12, 1981, that the Exchange Agreement had been approved by the Board. Defendants’ Exhibit 55. After the Exchange Agreement was signed, Mr. Bender assigned his rights under the Exchange Agreement to Michael Murray Associates. See discussion supra p. 1212. On June 15, 1981, Greyhound approved assignment and delegation of Mr. Bender’s rights and duties under the Exchange Agreement to Michael Murray Associates. Defendants’ Exhibit'69. In April 1981, at Greyhound’s direction, Mr. Bender hired the architectural firm of Mills, Clagett & Wening to begin preparation of the construction plans and specifications for the new terminal. Greyhound had already interviewed Robert Wening of that firm and told Mr. Bender that it wanted Mr. Wening to be retained as the architect on the project. Messrs. Bender and Wening agreed upon a fee of $210,000 for all architectural and engineering services that were to be performed pursuant to the Exchange Agreement. See Plaintiffs Exhibit 176. In May 1981, Mr. Bender spoke to W. Thomas Duncan of the American Security Bank to arrange financing for the development of the new terminal. He submitted to the bank an estimated development budget of $21 million. On June 15, 1981, Mr. Bender executed a promissory note to the American Security Bank for a $10 million loan, which was enough to cover his purchase of the new terminal property at K Street, as well as the architects’ costs and carrying charges. The promissory note provided that Mr. Bender would pay interest at the rate of two percentage points above the prime rate. On June 15, 1981, Mr. Bender exercised the option which had been assigned to him by GLI and, in accordance with the Exchange Agreement, bought the land for the new terminal, at a price of $8,310,240. Shortly after Mr. Wening and his firm were retained, they began to work closely with Greyhound’s architects assigned to this project, Warren C. Marggraf and James B. Fagan. During the next seven months, numerous and substantial changes to the design and specifications for the new terminal were made, at the request of Greyhound. See Defendants’ Exhibit 104. These changes included increasing the width of the waiting area by ten feet, relocating the restaurant/gift shop, the HVAC [heating, ventilation, and air conditioning] units, dump zones, and stairs to the mezzanine, increasing the number of ticket booths, enlarging the terminal manager’s office, reducing the size of the operations office, and providing a sound insulated wall between the drivers’ room and the office and locker areas. Id. Preliminary drawings and specifications were sent to Greyhound on November 11, 1981. Defendants’ Exhibit 106. Final drawings, specifications, and proposed letters to bidders were sent to Greyhound on December 7, 1981. Id. These documents were received by GLI on or about December 9, 1981. The bid letter indicated that the bids would be opened in private and that a bid bond in the amount of five percent of the base bid was required. The letter also indicated that the owner, i.e., Mr. Bender, reserved the right not only to waive irregularities in bids and bidding but also to reject any or all bids. Id. Mr. Bender reserved the right to waive irregularities such as a bidder’s failure to fill out the bid form completely. An Addendum to Specifications and Drawings was sent to GLI on December 21, 1981. Defendants’ Exhibit 113A. A Second Addendum was dated January 5, 1982, and received by GLI on January 11, 1982. Defendants’ Exhibit 114. The Second Addendum contained the following liquidated damages clause: The Owner will suffer financial loss if the Project is not Substantially Completed within the time specified on the Bid Form. The Contractor (the Contractor’s Surety) shall be liable for and pay to the Owner the sums hereinafter stipulated and fixed, agreed and liquidated damages for each calendar day of delay until the Work is Substantially Completed: Fifteen Thousand Dollars ($15,000.00). Id. at Addendum to Specifications. The Exchange Agreement called for completion of construction within eighteen months of issuance of the building permit. Exchange Agreement, ¶ 5.4. The amount of the liquidated damages was equal to Mr. Bender’s projected interest carrying costs, per day, on the project. All of the drawings, specifications, and addenda were received without comment by Greyhound. Therefore, pursuant to paragraph 5.2 of the Exchange Agreement, the plans and specifications were deemed approved by Greyhound on or about December 29, 1981, i.e., twenty days after Greyhound received the plans and specifications. Exchange Agreement, 11 5.2. The plans and specifications, as amended, were let out for bids in late December 1981 and early January 1982. Bids were due on January 12, 1982.. Messrs. Bender and Wening had selected eight contractors as potential bidders on this project. See Plaintiff’s Exhibit 223. Of these eight, only two submitted bids, S.B. Construction Company and Edmar. Mr. Wening testified that after the second addendum was issued, which included the $15,000 per day liquidated damages clause, most of the bidders lost interest in bidding on the Greyhound project. Mr. Wening also testified that this liquidated damages clause was very high. Before the close of the bid on January 12, 1982, Mr. Wening told Mr. Bender that many of the bidders had decided not to bid on the project. Mr. Bender indicated, however, that receipt of two or three bids on the project would be enough. On January 12, 1982, Mr. Bender opened the bids privately. Edmar’s bid of $5,990,-000 was the lowest. S.B. Construction Company submitted a bid of $6,015,000. Defendants’ Exhibit 116. Although the specifications required that bids be accompanied by a bid bond, Edmar failed to provide one. Marvin Stein, President of Ed-mar, testified that he never applied for a performance bond on the Greyhound project because Greyhound had not approved the contract. The Court notes that S.B. Construction Company’s bid does contain a bid bond. Id. During the week following January 12, 1982, Mr. Bender notified Messrs. Marggraf and Ervanian that Edmar was the successful bidder and that the amount of the bid was $5,990,000. When he informed them of the amounts of the bids, neither had any noticeable reaction. A few weeks later, however, in February 1982, Mr. Ervanian did voice an objection, indicating that he thought the bids were too high by about $1 million. On February 18, 1982, Mr. Wening applied for a building permit which was expected to take from three to six months to issue. See Defendants’ Exhibit 184. On March 1, 1982, Greyhound officials met to discuss alternatives to Greyhound’s performing the Exchange Agreement. This meeting is significant because it took place before Greyhound had even received Mr. Bender’s preliminary development budget of $26.4 million, which was sent on March 8, 1982. See Defendants’ Exhibit 137. Although Mr. Ervanian denied that there was a meeting on March 1, 1982, and Mr. Fagan “just [drew] a blank” as to whether there was a meeting, after examining all of the evidence in this case, the Court finds than an internal Greyhound meeting did take place on March 1, 1982. Most significantly, Mr. Marggraf admitted that he attended a meeting with Mr. Ervanian on March 1, 1982. During the trial, the following colloquy occurred between Mr. Marggraf and plaintiff’s counsel: Q: Mr. Marggraf, after the bid price was made known to you, do you recall whether you had any discussions at Greyhound with respect to rebidding the project? A: Yes, I had a meeting with Mr. Ervanian and I believe Mr. Fagan was present and we ... Q (by Court): When was this, if you can tell us? A: It was March 1, as I recall. Trial Transcript at pp. 19-20 (Nov. 8, 1983). Moreover, Mr. Fagan took notes of a meeting dated March 1, 1982. These notes list the names “E.E. Shew, W. Tritton, WCM, Debra, Jack, J.F., Ervanian, Jack, and Bill Hallinan.” Defendants’ Exhibits 128, 128A. “E.E. Shew” refers to Earl E. Shew, Executive Vice President for GLI at that time. “W. Tritton” refers to William F. Tritton, Vice President and Controller at GLI. “WCM” refers to Warren C. Marggraf, Mr. Fagan’s superior, who admitted that he attended this meeting on March 1, 1982. “Debra” refers to Debra Livermore, an assistant in Greyhound Corporation’s real estate department. The two “Jacks” refer to the only two persons named “Jack” who were working on the project, Jack Nygren, a Greyhound Corporation lawyer, and Jack Keller, a Greyhound Corporation tax accountant. “J.F.” refers to Mr. Fagan and “Bill Hallinan” refers to William J. Hallinan, a tax attorney and Executive Director of Taxes at Greyhound Corporation. Although Mr. Fagan did not deny that these notes were his or that they were dated March 1,1982, he did deny any recollection of this meeting. This lack of recollection is in sharp contrast to Mr. Fagan’s ability to recall the March 10, 17, and 31, 1982 meetings. Three of the individuals listed in Mr. Fagan’s notes also have notes dated either March 1, 1982, or bearing computations identical to those in Mr. Fagan’s notes. Mr. Marggraf identified his notes which are dated “3/1/82” and contain the same figures which appear in Mr. Fagan’s March 1, 1982 notes. At his deposition, Mr. Keller also identified his notes. Although these notes are undated, they contain the same computations as those of Messrs. Fagan and Marggraf. Defendants’ Exhibit 270e. Mr. Keller, however, was unable to recall anything about the March 1, 1982 meeting or even that it took place. Finally, Mr. Hallinan also has a set of notes dated March 1, 1982. Defendants’ Exhibits 284, 285. Although Mr. Hallinan does not recall the meeting, he did recall attending a meeting where “undoing the deal” was discussed. His notes of March 1, 1982, clearly state that “Armen [Ervanian] is thinking about ‘undoing’ exchange contract.” Defendants’ Exhibit 284. Moreover, Mr. Hallinan admitted that, although he was not completely sure of the dates of the meetings he attended in early March 1982, he was sure that Mr. Marggraf was at the meetings he attended. As indicated above, Mr. Marggraf attended the meeting on March 1, 1982, but did not attend the meeting on March 10, 1982. Mr. Fagan attended thé March 10, 1982 meeting in place of Mr. Marggraf. Throughout his testimony, Mr. Ervanian denied that a meeting took place on March I, 1982, and denied that a meeting took place before March 10,1982. On March 10, 1982, however, prior to the meeting concerning this project, he sent a confidential memo to the following six individuals, all of whom were listed in Mr. Fagan’s March 1, 1982 notes as attending the March 1, 1982 meeting: W.J. Hallinan; W.C. Marggraf; J. T. Nygren: E.E. Shew; R.C. Stephan; and W.F. Tritton. Defendants’ Exhibit 144. The memo states in pertinent part: In accordance with our recent meeting on the subject of Washington, D. C., Morton Bender will be in here on Thursday afternoon, March 11th, and Friday as well. * * * * * * Between the bid, architect fees and demolition being $2.4 million over the IP [Investment Proposal] amount and “soft costs” mounting very rapidly, I would like to suggest that we promptly undertake an analysis to consider the effects of Greyhound Lines doing a taxable transaction vs. a tax-free exchange, which would require “undoing” the exchange agreement. Id. (emphasis added). When asked at trial what “recent meeting” he was referring to in his memo, Mr. Ervanian stated that, “I was wrong, there was no ‘recent meeting’.” The Court does not find this response credible. Moreover, in contrast to Mr. Ervanian, Mr. Stephan, Vice President and Controller of Greyhound Corporation, testified at his deposition that he was sure that there were two meetings in early March 1982. Deposition of Richard Stephan at 33. Mr. Marggraf’s testimony, the notes of Messrs. Fagan, Marggraf, Keller, and Hallman, Mr. Stephan’s deposition testimony, and Mr. Ervanian’s confidential memo of March 10, 1982, referring to a “recent meeting” about the Washington, D.C. project, confirm to the Court that a meeting did take place on March 1, 1982. It was at this meeting that Greyhound first began seriously to consider “undoing” the Exchange Agreement, and, instead, began to consider doing the project itself. See Defendants’ Exhibits 128, 128A, 284. As of mid-January 1982, Greyhound knew that the low construction bid was $5.9 million. In his confidential March 10, 1982 memo, Mr. Ervanian also indicated that: With the November, 1981 change in tax laws allowing 15-year straight line depreciation and the likelihood of excess tax credits against a potentially large capital gain in the event of a taxable transaction, we may be better served to do the project ourselves. This would also permit Greyhound Lines to consider rebidding the project or entering into a negotiated price contract in view of the $5,990,-000 low bid. Defendants’ Exhibit 144 (emphasis added). The fact that Greyhound was seriously considering “undoing” the agreement also is reinforced by Mr. Wening’s testimony that, on March 3, 1982, Mr. Marggraf called and inquired about the contract being rebid, with Greyhound as owner. Meanwhile, on March 1, 1982, in Washington, D.C., Mr. Bender signed a construction contract with Edmar, the lower bidder, without first obtaining approval from GLI. Plaintiff’s Exhibit 234; see Exchange Agreement, 11 5.3(b) (“The General Contractor must be acceptable to GLI.”). Mr. Wening testified that the construction contract was prepared in his office on or about March 1, 1982. His recollection was that “we were getting very close to the termination of the bid guarantee period, so it was done to beat that deadline.” Trial Transcript at p. 53 (Nov. 7, 1983). After his office prepared the construction contract, copies were sent to Mr. Bender. Id. at p. 54. On March 8, 1982, Mr. Bender sent Greyhound “preliminary budget figures for the new Greyhound facility” in the amount of $26,440,000. Defendants’ Exhibit .137. Greyhound received this budget on March 9 or 10, 1982. It contained the costs of the land, financing, taxes, demolition, borings, permits, construction of the building and related costs, as well as a $1,000,000 “construction fee” for Mr. Bender. Id. Upon receipt of Mr. Bender’s budget, another internal Greyhound meeting was held on March 10, 1982. Those present included Messrs. Ervanian, Stephan, Nygren, Hallinan, Keller, Tritton, Shew, and Fagan, who attended in place of Mr. Marggraf. Defendants’ Exhibit 142. Mr. Ervanian’s notes of this meeting indicate that: 1. Consensus was that with current excess tax credits, “undoing the exchange” and handling as a GLI construction project (taxable) was still probably more economical than the exchange. 2. Their [sic] were many items on the Budget that Greyhound would not incur, or would be less, if we were going direct; i.e., higher interest rates + points, insurance title costs + transfer taxes. Id. This consensus was reiterated in notes taken of the same meeting by Mr. Fagan: Meeting 3/10/82 Washington, D.C. Consensus of opinion! If we can undue [sic] Bender Deal & Settle w/ him we would be better off to Do Project ourselves! (*undue Exchange) Clout: We own the property that he wants. Defendants’ Exhibit 146 (emphasis in original). On March 11-12,1982, Mr. Bender met in Phoenix with Greyhound to discuss the preliminary budget. During these meetings, Mr. Bender advised Greyhound that he had signed a construction contract with Edmar. In the afternoon of March 11, 1982, Mr. Bender met with Messrs. Ervanian and Nygren and other Greyhound officials. Messrs. Ervanian and Nygren questioned Mr. Bender’s inclusion of a $1 million construction fee but otherwise appeared to accept Mr. Bender’s explanations of specific items on the preliminary budget, although they did indicate that they thought the total budget price was too high. When they met again on March 12, 1982, Mr. Ervanian informed Mr. Bender that Greyhound had decided that it would be better if they “undid” or “restructured” the “deal” because Greyhound had determined that it could build the new terminal more cheaply than Mr. Bender, even without the benefits of a tax-free exchange. As part of this “restructuring,” Mr. Ervanian wanted Mr. Bender to pay $21 million to Greyhound for the old terminal. Greyhound would then take over development of the new terminal. Messrs. Ervanian and Nygren told Mr. Bender that Greyhound could not approve his proposed budget because the construction cost component exceeded the $3.4 million “estimate” in the Exchange Agreement. Although Messrs. Ervanian and Nygren continued to rely on this $3.4 million estimate, at trial Mr. Marggraf indicated that when the new terminal project went out for bids, he estimated that the bid price would be $4.5 million. Moreover, Mr. Wening’s “guesstimate” on the bid price as of December 1981 was $4.7 to $5.1 million. Messrs. Ervanian and Nygren also told Mr. Bender that his proposed budget could not be approved because the budget lacked certain “back-up” documentation, and Mr. Bender had signed a contract with Edmar, without first seeking Greyhound’s approval. Mr. Bender told Greyhound he could not agree to a restructuring of the deal in this manner because Greyhound was “letting itself off the hook.” Under the proposed restructuring, Mr. Bender would not be allowed to develop the new terminal site but would still be held to the obligation in the Exchange Agreement to purchase the old terminal property for $21 million; Greyhound then could develop the project itself. After March 11, 1982, Greyhound continued to propose various ways to “restructure” the agreement but all of them required that Mr. Bender pay Greyhound $21 million for the old terminal. At trial, Mr. Ervanian was asked specifically whether every proposal he made to Mr. Bender since March 1982 contemplated holding firm to the $21 million price for the old terminal, except to the extent he was willing to discount it for early payment, and having Greyhound take over the project rather than continuing to have Mr. Bender build the new terminal. He indicated that he believed that was substantially correct. Trial Transcript at p. 20 (Nov. 1, 1983). F. Edward Lake, Vice President and Treasurer of Greyhound Corporation, also indicated that all of Greyhound’s proposals contemplated abrogation of the Exchange Agreement. Although Mr. Ervanian testified that he had determined that Mr. Bender would not develop and build the new Greyhound bus terminal as of March 11,1982, he continued to insist that Mr. Bender provide further “back-up” material for his projected budget. Greyhound officials went to Washington, D.C., on March 17 and 31, 1982, to meet with Mr. Wening and officials of Edmar in order to review the Edmar construction contract. On March 17, 1982, Messrs. Fagan and Wening met with William Benson, Vice President in charge of new construction at Edmar, and the individual who actually prepared the bid for the Greyhound terminal project. Mr. Benson discussed each item of the bid with Mr. Fagan and' Mr. Fagan took notes indicating possible savings that could be made on the Edmar bid. Defendants’ Exhibit 155. At the end of the meeting, Mr. Fagan asked Mr. Benson to compile a list of items on the contract that could be reduced in price. On March 22, 1982, Mr. Shew wrote to Mr. Bender confirming a meeting to be held in Washington, D.C., during the week of March 29, 1982: to discuss the unacceptable high bid price of the new terminal and amicably resolve how to reduce it or make other arrangements ____ With respect to the tentative, pro forma cost estimate and other papers received from you, in order that there shall be no misunderstanding, this is to advise that Greyhound Lines does not deem them your submission of Construction Documents; and, therefore, no approval nor disapproval is given nor required by Greyhound Lines. Plaintiff’s Exhibit 335. Mr. Bender responded to this letter on March 30, 1982, setting up a meeting with Greyhound officials on March 31, 1982. His letter stated in pertinent part: With regard to the preliminary submission of construction documents which the writer furnished to Mr. Ervanian, it was just what it indicated — preliminary. We knew that the figures therein would vary from what was indicated. As was pointed out to Mr. Ervanian by the writer, the figures contained in our submission were in several instances too low. The purpose of the meeting was to give both your firm and ours an opportunity to review them together so that a proper budget could be agreed to. In conclusion, we would like to remind you that the “estimate” for the construction contained in our agreement was just that an “estimate” suggested by your representatives and not a figure that we agreed with. The size of the project, if you will review your records, incrased [sic] by 20% in physical dimensions, and the quality of the design was indicated by your firm to be nothing but first class. If as a result of our following your instructions and directions the construction figures are unacceptable and beyond that which you put into our agreement, then you have no one to blame but yourselves. We would further point out that the prices we received for construction were made known to your firm at the time we received them. Though various people from your firm expressed surprise to the writer about the figures, no one indicated that they were unacceptable. In fact in discussions with your representatives, they indicated that they did not want to downgrade any of the design to save any money. Plaintiffs’ Exhibit 337. At the meeting on March 31, 1982, Ed-mar suggested that the construction costs could be reduced by approximately $300,000 if Greyhound would accept the substitution of alternate but “equal” construction materials rather than use those materials originally specified. Greyhound rejected this suggestion. At the conclusion of the March 31, 1982 meeting, Mr. Fagan’s contemporaneous notes indicate that Mr. Shew, Executive Vice President at GLI, told “Morton Bender to hold at this [p]oint in time[;]” i.e., Mr. Bender was not to do anything further. Defendants’ Exhibit 165. As a result, Mr. Bender did not submit to Greyhound the Construction Documents that were called for under paragraph 5.3 of the Exchange Agreement. These documents would have been due on April 29, 1982, i.e., 120 days from the December 29, 1981 approval date of the plans and specifications. Exchange Agreement, ¶ 5.3. During a telephone conversation in May 1982, Mr. Nygren admittedly told Mr. Bender that Greyhound would probably not approve any budget he submitted if it exceeded $17 million. Mr. Ervanian also admitted that the original Investment Proposal contained a mathematical error of approximately $1.5 million in the calculation of the projected interest expense on the new terminal project. Despite the fact that Mr. Bender had been told to “hold” as of March 31, 1982, on June 28, 1982, Greyhound sent a letter to Michael Murray Associates, c/o Mr. Bender, charging that Mr. Bender was in material breach or anticipatory breach of the Exchange Agreement on the following grounds: 1. Bender has not furnished all the required Construction Documents in accordance with the terms of Section 5.3; 2. Bender has entered into a construction contract without the approval of Greyhound Lines, Inc. which is a violation of Section 5.3; 3. Bender has not furnished a Budget which GLI can approve. Defendants’ Exhibit 217. The letter also stated that: GLI further advises that it shall hold Bender liable for all damages GLI suffers or has suffered as a result of such breaches of the Exchange Agreement. The Exchange Agreement was made because GLI desired to have a new terminal in Washington, D.C., on the new “K” Street site ... and desired not to have more than $17 million invested in that facility at the conclusion of the project. Id. Also, on June 28, 1982, an in-house confidential memorandum was sent from Mr. Ervanian to Mr. Nageotte and L.G. Lemon, an attorney and Greyhound official, requesting that the original Investment Proposal be modified. The memorandum stated in pertinent part: CURRENT MARKET AND VALUE OF OLD TERMINAL In discussions with both MB and the bank, it is obvious that the underlying reason for the problem in trying to restructure a “workout” of this matter is the drastic decline in the office leasing market and downtown land values in Washington, D.C. When I completed negotiations with MB in April, 1981, our old terminal property had been appraised by a Washington, D.C. MAI appraiser, only 2 months earlier, at $15,330,000 or $467.50 per sq. ft. At our negotiated price of $21 million or $640 per sq.ft., it was reportedly a record price. I have recently made inquiries through the Washington, D.C. office of Coldwell Banker on current land values and their opinion is that our old terminal has a current maximum value of $500 per sq.ft, or $16.4 million for our 32,788 sq.ft, parcel. MB’s bank is very concerned over their outstanding loan balance of $11 million based on their opinion that its value is only $365 per sq.ft, or $12 million. EFFECT OF DELAY Jim Fagan of Mr. Marggraf s staff advised us on 5/19/82 that Architect Wening filed for a building permit on February 19,1982 and that it usually takes 3 to 6 months to complete a check of detailed plans and drawings before the city issues a building permit. Although it should be issued momentarily, one had not been issued as of last week. Therefore, we are pressing to resolve this matter in the interest of staying on schedule as much as possible with a proposed new terminal. ELIMINATION OF ANTICIPATED CASH “BOOT” TO GLI 1. IP 81-5A estimated architect fees and construction at $4 million while the low bid of $5,990,000 and architect fees to date of $353,257 (includes $60,000 for project supervision during construction), for a difference of $2,343,-257. The terminal is also larger than originally estimated, including features not originally anticipated such as a more expensive fueling system and more instation HVAC systems. 2. The IP understated project interest costs and points which are $2,190,882 to date while the total project estimate for interest was only $2,035,843 including the construction period. SUMMARY Recommend authorization to modify IP 81-5A as outlined on page 1 herein, (a) Also, because we should be in a position to submit approved proposals in our default notice, and neither alternative has yet been accepted by MB, recommend authority to go as high as a 15% discount rate, or $16,792,000 if all other terms are satisfactory to GLI. Because the reduced price is simply the present value of $21 million, received now instead of 18 months from now, this really is no concession off the contract price. It is not our intent to instigate litigation but, instead, to protect our rights due to MB’s default by signing a construction contract and failing to submit a project budget in an amount which we could approve. Hopefully, this will bring matters “to a head”. And if he cannot resolve this matter, then we should litigate to enforce our $21 million purchase price. While Architect Wening advises that the project could probably be rebid for $5 million, and Mr. Marggraf concurs, I recommend accepting $5.5 million if MB can renegotiate to that level because: (a) there is no guaranty of $5 million on rebidding and (b) rebidding will cause an estimated two month delay. I believe every reasonable effort should be made to resolve this matter because GLI likes the present design, our old terminal sale price is well over market and the new location would be difficult to improve upon. If the alternative one present value formula could be accomplished, GLI could “book” an approximate $15 million pretax gain in 1982. Plaintiff's Exhibit 377. On July 23, 1982, Greyhound filed the instant action for specific performance, restitution and damages for breach of contract. Defendants filed a counterclaim for specific performance, and damages for breach of contract, rescission and quantum meruit. Both parties withdrew their claims for specific performance before trial and both the complaint and counterclaim were amended subsequently. Plaintiff amended its complaint to add claims of fraudulent misrepresentation. Plaintiff seeks not only compensatory damages for breach of contract and compensatory and punitive damages for fraudulent misrepresentation but also “restitution by the defendants to Greyhound of the New-Terminal Property, free and clear of all liens and encumbrances, in return for the Option price of $8,310,240 to be paid by Greyhound to defendants.” Amended Complaint at pp. 17, 18. Defendants amended their answer and counterclaim to add claims of fraudulent inducement to contract and misrepresentation. In connection with their claims for breach of contract, fraud, and misrepresentation, defendants seek rescission or cancellation of the entire Exchange Agreement, restitution, compensatory damages and quantum meruit, including: (1) transfer in fee simple of the New Terminal Property from defendants to plaintiff in return for the option price of ($8,310,240) less a deposit of ($35,000) made by Greyhound, to be paid by plaintiff to defendants^] (2) reimbursement for all costs and indemnifications for all obligations incurred by defendants in performing their obligations under the Agreement to date, including but not limited to interest, (3) compensation for the value of defendants’ personal services rendered while performing their obligations under the Agreement, and (4) compensation for all costs and indemnification for all obligations incurred by defendants in connection with the development of the Greyhound Property[.] Amended Counterclaim at H 41. Defendants also seek compensatory and punitive damages for fraud in the inducement. Essentially, in addition to punitive damages, defendants seek to be made whole, and to recover the money they have expended and the value of the services they have performed in reliance on the agreement. CONCLUSIONS OF LAW [1] In its amended complaint, Greyhound alleges that defendants are liable for breach of contract and fraudulent misrepresentation. See Counts II, III of Amended Complaint. In their amended counterclaim, defendants allege that Greyhound is liable for material breach and anticipatory breach of the contract, fraud in the inducement, and misrepresentation, and seek rescission and restitution. See Counts I, III, IV of Amended Counterclaim. At the outset, the Court notes that the Exchange Agreement is governed by the laws of the District of Columbia. Exchange Agreement, ¶ 27.1. Therefore, the Court will apply District of Columbia law to the instant dispute. A threshold issue facing the Court is whether there was a meeting of the minds between the contracting parties. “[T]o establish a contract the minds of the parties must be in agreement as to its terms____ The failure to agree on or even discuss an essential term of a contract may indicate that the mutual assent required to make or modify a contract is lacking.”' Owen v. Owen, 427 A.2d 933, 937 (D.C.1981) (case citations omitted). “To be final, contract negotiations must include all of the terms which the parties intended to resolve; material terms cannot be left to future settlement.” Edmund J. Flynn Co. v. LaVay, 431 A.2d 543, 547 (D.C.1981). Moreover, “[i]n order to form a binding agreement, both parties must have the distinct intention to be bound; without such intent, there can be no assent and therefore no contract.” Id. In the instant case, the parties had numerous discussions about the terms of the Exchange Agreement, culminating in two days of negotiations in Phoenix, Arizona, on April 16 and 17, 1981. All of the material terms of the contract were discussed and agreed upon before the Exchange Agreement was executed on April 17, 1981. The fact that the parties signed a written contract clearly evidences their intention to be bound by its terms. Cf. Anderco, Inc. v. Buildex Design, Inc., 538 F.Supp. 1139, 1141 (D.D.C.1982) (no contract formed where parties never came to meeting of minds on essential terms); Edmund J. Flynn Co. v. LaVay, 431 A.2d at 547 (no evidence of meeting of the minds: “Both parties agree that no formal sales commission agreement was signed. Since either party was at liberty to stop negotiations and not to complete the bargain, no contract existed.”). The Court also notes, however, that: a contract in form may be avoided by a showing that assent was obtained by fraud or even misrepresentation falling short of fraud. ... If it is shown that the minds of the parties did not meet “honestly and fairly, without mistake or mutual misunderstanding, upon all the essential points involved,” there is no contract. Hollywood Credit Clothing Co. v. Gibson, 188 A.2d 348, 349 (D.C.1963) (citations omitted); see also Bob Wilson, Inc. v. Swann, 168 A.2d 198, 200 (D.C.1961). The facts and circumstances of the instant case do not warrant a finding by the Court that assent to the Exchange Agreement was obtained by fraud or misrepresentation by either party. See discussion infra, pp. 1230-1234. In this regard, it is important to note that the principal actors involved in the Exchange Agreement were knowledgeable and experienced businessmen. This is not a situation where one party unfairly took advantage of the other. Both parties entered into the Exchange Agreement freely. Cf. Bob Wilson, Inc. v. Swann, 168 A.2d at 200 (used car dealership guilty of fraud in selling used car to Swann). Therefore, the Court finds that there was a meeting of the minds between the parties to the Exchange Agreement, as well as mutual assent to the essential terms of the Agreement and an intention by both parties to be bound by the Agreement. Having determined the validity of the Exchange Agreement, the Court must examine the parties’ specific allegations. A. Breach of Contract Claims Each party alleges that the other party materially breached the Exchange Agreement. To determine whether a breach is material, the following factors are significant: (a) the extent to which the injured party will be deprived of the benefit which he reasonably expected; (b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived; (c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture; (d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances; (e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing. Restatement (Second) of Contracts § 241 (1981). The Court also may consider: 1) to what extent, if any, the contract has been performed at the time of the breach. The earlier the breach the more likely it will be regarded as material. 2) A willful breach is more likely to be regarded as material than ... a breach caused by negligence or by extraneous circumstances. 3) A quantitatively serious breach is more likely to be considered material. J. Calamari & J. Perillo, Contracts § 11-22 (2d ed.1977) (footnotes omitted). A breach which actually prevents further performance of the contract or provides a valid defense for a party’s failure to continue performance would be considered material. 1. Plaintiffs Claims Greyhound alleges that the following acts of defendants constituted material breaches of the Exchange Agreement: (1) failing to submit final plans and specifications for the new terminal to Greyhound for approval; (2) entering into a binding construction contract with Edmar without notification or prior approval of Greyhound; (8) failing to furnish the “Construction Documents” required by section 5 of the Exchange Agreement; and (4) submitting an overall budget that Greyhound could not approve, and submitting a “preliminary budget” which was “grossly inflated.” The Court finds that plaintiffs first allegation, that defendants failed to submit final plans and specifications for the new terminal to Greyhound for approval, is without merit. Defendants submitted final construction plans and specifications for the new terminal to Greyhound on December 7, 1981. These plans and specifications were received by Greyhound on December 9, 1981. Defendants submitted two addenda modifying the plans and specifications shortly thereafter. These plans and specifications had been prepared by defendants’ architect, Mr. Wening, over a seven-month period. Although Greyhound never approved these plans and specifications, paragraph 5.2 of the Exchange Agreement explicitly states that “GLI shall notify MAB within twenty (20) days after GLI receives the Plans and Specs of GLI’s approval or disapproval thereof. If GLI fails to do either, it shall be deemed to have approved the Plans and Specs.” (Emphasis added.) Mr. Marggraf testified that with the exception of the liquidated damages clause which was added to the plans in the second addenda, he “would have approved” the plans and specifications. He also testified that he did not notify either Mr. Wening or Mr. Bender within twenty days of receipt of these plans that he disapproved of them. Failing to approve or disapprove the plans and specifications within twenty days of their receipt, Greyhound was deemed to have approved them, pursuant to paragraph 5.2 of the Exchange Agreement. With regard to plaintiff’s second allegation that defendants entered into a binding construction contract with Edmar without notification or prior approval of Greyhound, the Court is faced with a more difficult situation. Defendants argue that the execution of this contract without Greyhound’s prior approval does not constitute a material breach of the Exchange Agreement. Defendants argue that because Greyhound is not a party to this contract, it cannot be bound by it. Greyhound, however, argues that this does constitute a material breach and cites paragraph 5.3(b) of the Exchange Agreement which provides that one of the “Construction Documents” defendants are to provide is “[a] ‘guaranteed cost’ construction contract ... in the latest AIA form executed by the General Contractor to be entered into with MAB, as owner ...” and that “[t]he General Contractor must be acceptable to GLI.” (Emphasis added.) Greyhound also argues that the Edmar construction contract is legally insufficient because the Edmar bid was not accompanied by a bid bond as required by the specifications. The letter to bidders stated that “Bid bond in the amount of 5 percent of the Base Bid is required.” Plaintiff’s Exhibit 411. The Court finds that the Edmar construction contract is in violation of paragraph 5.3(b) of the Exchange Agreement because it was executed by Mr. Bender before it was approved by Greyhound. The Exchange Agreement specifically states that Mr. Bender is to submit to Greyhound a construction contract “to be entered into” with Mr. Bender. Mr. Bender did not have the right, under the Exchange Agreement, to enter into the contract prior to submitting the contract to Greyhound. This would negate the provision in the Exchange Agreement which states that “[t]he General Contractor must be acceptable to GLI.” Because plaintiff did not have an opportunity to indicate whether Edmar would be an acceptable contractor, paragraph 5.3 of the Exchange Agreement was breached by Mr. Bender when he entered into the contract with Edmar on March 1, 1982. Having found that Mr. Bender breached the Exchange Agreement, the Court must determine whether this breach was material. Mr. Bender testified that he executed the Edmar construction contract because the life of the bid was about to expire and the bid price would not be guaranteed beyond the expiration date. Mr. Wening prepared the construction contract in his office and sent it to Mr. Bender on March 1, 1982. Mr. Bender also testified that because Greyhound was not a signatory to the construction contract, it could not claim to be damaged by his signing the agreement. When Greyhound inquired what it would take to get Edmar to forget the whole deal, however, Mr. Bender indicated that Edmar wanted $200,000 to $250,000. Although Mr. Bender testified that the parties did not discuss who would pay this money to “buy out” Edmar, Mr. Bender did indicate that he was not willing to pay $200,000 or $250,000 because he felt that the Edmar contract was satisfactory. Mr. Bender did concede, however, that he might have had to pay money to Edmar to void the contract. It is clear, moreover, that Mr. Bender considered himself, as well as Greyhound, to be at least morally bound by this contract. In a letter dated May 21, 1982, Mr. Bender told Mr. Ervanian that to “rebid the project ... would be a waste of time” and “as I have advised you in numerous conversations, we not only have a signed contract with Edmar Construction Company, but a moral obligation as well for their constructing the project.” Plaintiff’s Exhibit 355. Mr. Bender concluded his letter by indicating that Greyhound’s proposal to redo the plans and specifications and rebid the project, which would impact on the signed contract with Edmar, was one of “two great stumbling blocks” to resolving this matter. Id. The Court also notes that Mr. Bender indicated in a discussion with Mr. Duncan of the American Security Bank on June 15, 1982, that one of the problems he had was that a contract was “let for construction.” Plaintiff’s Exhibit 99. Clearly, Mr. Bender considered the Edmar contract to be binding on all the parties. The Court cannot find, however, that Mr. Bender’s signing of the contract constituted a material breach of the Exchange Agreement. Although Greyhound is correct in indicating that Mr. Bender entered into a binding contract with Edmar, this contract was not binding on Greyhound. Greyhound was not a party to the contract, thus could not be bound by it. As a result, Greyhound still had the ability and the right to review and approve or disapprove both the contract and the contractor. At most, Mr. Bender’s action constituted a technical breach of the Exchange Agreement because he would not have been able to provide, in its proper form, one of the Construction Documents called for in the Exchange Agreement, specifically, a “ ‘guaranteed cost’ construction contract ... to be entered into with MAB.” Exchange Agreement, ¶ 5.3(b) (emphasis added). However, Greyhound’s rights of approval or disapproval of this Construction Document would not have been affected by Mr. Bender’s action. Greyhound still had the right to disapprove the contract, as long as its disapproval was not arbitrary. Exchange Agreement, ¶ 5.3. Plaintiff also argues that acceptance of Edmar as the successful bidder without a bid bond is a direct violation of the contract specifications and cannot be waived without its approval. In addition to the contract specifications which require a bid bond, one of the “Construction Documents” called for under the Exchange Agreement is “[a] performance and payment bond (the “Bond”) in the customary statutory form for the District of Columbia and issued by a bonding company reasonably acceptable to GLI, which Bond shall guarantee the performance of and payment by the General Contractor under the Construction Contract.” Exchange Agreement, ¶ 5.3(c). Mr. Bender testified that no bid bond would be issued until the contract was approved. He stated that if Mr. Stein issued a bid bond for this project, his bonding capacity was decreased and unspecified problems could arise if the contract failed to go through. The Court finds Mr. Bender’s testimony in this regard unpersuasive and notes that the SB Construction Company bid did include a bid bond. Defendants’ Exhibit 116. Once again, however, the Court must find that Mr. Bender’s breach of the contract specifications constitutes an immaterial breach. Greyhound had the right to disapprove the construction contract and could have done so on this basis. Moreover, under the terms of the Exchange Agreement, Mr. Bender did not have to submit the performance and payment bond until April 29, 1982. Exchange Agreement, 115.3. None of these documents were submitted, however, because on March 31,1982, Mr. Bender was told not to go forward with performance of the Exchange Agreement. With regard to plaintiff’s third allegation that Mr. Bender failed to furnish the “Construction Documents” required by section 5 of the Exchange Agreement, the Court notes at the outset that on March 31, 1982, Mr. Shew told Mr. Bender to “hold at this point in time.” As a result, Mr. Bender did not submit the final total guaranteed project budget, which would have been due on April 29, 1982, i.e., 120 days after the final plans and specifications were deemed approved. Exchange Agreement, 115.3. Mr. Bender also did not submit a performance and payment bond which was to be submitted on April 29, 1982, as required by paragraph 5.3(c) of the Exchange Agreement and Article 9 of the construction contract specifications. See Plaintiff’s Exhibit 411, p. 00100-3. Similarly, insurance certificates required under paragraph 5.3(d) of the Exchange Agreement were never submitted. Given the statement by Mr. Shew, however, the Court cannot find that Mr. Bender was in material breach of the Exchange Agreement because he failed to submit these Construction Documents to Greyhound by April 29, 1982. Finally, Greyhound alleges that Mr. Bender submitted an overall budget that Greyhound could not approve and that the “preliminary budget” he submitted on March 8, 1982, was “grossly inflated.” With regard to the construction costs, Greyhound argues that the three architects who were most familiar with the project, Messrs. Wening, Marggraf, and Fagan, believed that the terminal could be built for $5 million or less and that a contract estimate of $3.4 million was quoted in the Exchange Agreement. Although a $3.4 million construction cost estimate was inclu