Sunday, July 22, 2012
Kevin Costner, Usual Suspect of ContractsProf Blog, Beats Actual Usual Suspect, Stephen Baldwin, in Contract Suit
Earlier this month, a federal district court rejected Stephen Baldwin's request for a new trial in his dispute with Kevin Costner. In the suit (amended complaint here), Baldwin and another party claimed that agreements they entered into with Costner and others were invalid due to fraud, misrepresentation, and/or mistake. It appears that Baldwin, Costner, et al. once held varying levels of interest in a closely-held company, Ocean Therapy Solutions, that had developed a special oil cleanup technology. As part of some internal restructuring, cash infusions, and other maneuvering, Baldwin sold his interest in the company to Costner's group for a mere half million in a Transfer Agreement. Shortly thereafter, Ocean Therapy Solutions announced a $52 million dollar deal with BP. Baldwin sought to have the Transfer Agreement-as well as the associated release--declared uneforceable due to fraud.
In an order rejecting an earlier motion for summary judgment by Costner, the district court stated as follows:
"The plaintiffs assert that the defendants' alleged misrepresentations in the days leading up to the sale of their shares in OTS constitute the kind of fraud that, if proved, is sufficient to vitiate the release agreements. The Court agrees. The plaintiffs have maintained since the beginning of this lawsuit, that had they known about the completed deal with BP...they would not have sold their interests. This is not to say, of course, that plaintiffs have met their burden on these questions, but, rather, to suggest that summary relief is not appropriate on this record."
That opinion also contains a nice discussion of how a release agreement may be innvalidated due to fraud under Louisiana law, the civil law system oft-neglected by law professors outside of Louisiana (see pages 11-15). Athough Baldwin survived summary judgment, his side later lost at trial, and, as noted above, also lost a bid for a new trial.
[Heidi R. Anderson]