January 26, 2012
A $16 Million Dollar Typo [File this in: Whoops!]
Yesterday’s NYLJ reported on a NY trial court decision ordering a condo developer to return a total of $16 million in down payments to 40 condo purchasers.
The offering plan and purchasing agreement for The Rushmore, a luxury Upper West Side condo, contained a September 1, 2008 rescission date. More specifically, the offering plan allowed purchasers to get back their deposits if closings did not occur by September 1, 2008. When the closings did not happen, the purchasers sought return of their down payments. The developer argued that the date should have been September 1, 2009 – an alleged scrivener’s error by the developer’s attorney.
The trial court (Singh, J.) held that the developer did not meet “its heavy burden to show that the alleged ‘scrivener’s error’ was contrary to the intention of the parties and had not provided evidence that the parties intended a September 1, 2009 date.” In particular, the court distinguished previous cases by noting that the date in the offering plan was consistent with other documents and rescission of the contracts did not result in a windfall to the purchasers.
Ouch! Actually, that has to be more than a $16 million mistake given the change in the real estate market since the purchase agreements were signed...
CRP/Extell Parcel I, L.P. v. Cuomo (NY Sup. Ct. 113914/2010 Jan. 19, 2012). (Procedurally, the proceeding was commenced to review an Attorney General determination in favor of the purchasers).
[Meredith R. Miller]
Garth Brooks wins breach of contract case and punitive damages
Country singer Garth Brooks recently won a breach of contract case against an Oklahoma hospital that the jury found promised to build a women's center in honor of the singer's mother in exchange for $500,000. The jury concluded that Brooks had been defrauded by the hospital. As contracts profs know, fraud it not an easy thing to prove especially where the case involved an oral agreement. The hospital has to return the original $500,000 and also has to pay $500,000 in punitive damages. Punitive damages are not an easy thing to win in breach of contract cases so congrats to Brooks and to his lawyers.
January 25, 2012
New in Print
Amanda Harmon Cooley, A Contractual Deterrence Strategy for User-Generated Copyright Infringement and Subsequent Service Provider Litigation, 64 SMU L. Rev. 691 (2011).
Stefan J. Padfield, The Dodd-Frank Corporation: More than a Nexus-of-Contracts, 114 W. Va. L. Rev. 209 (2011)
January 24, 2012
Weekly Top Tens from the Social Science Research Network
U.S. Supreme Court Takes on Contracts in Salazar v. Raman Navajo Chapter
On January 6th, the U.S. Supreme Court granted the petition for certiorari in Salazar v. Ramah Navajo Chapter. SCOTUSblog provides a summary of the issues here and provides links to key documents in the case here. The Petition for Certiorari, filed by Ken Salazar, Secreatry of the Interior (pictured), articulates the issue in the case as follows:
Whether the government is required to pay all of the contract support costs incurred by a tribal contractor under the Indian Self-Determination and Education As- sistance Act, 25 U.S.C. 450 et seq., where Congress has imposed an express statutory cap on the appropriations available to pay such costs and the Secretary cannot pay all such costs for all tribal contractors without exceeding the statutory cap.
SCOTUSblog's Lyle Denniston provides the following summary of the issues:
The Indian case, a petition by the federal Interior Department, involves a 1975 federal law that Congress passed to give Indian tribes a greater role in running government programs for the benefit of tribal members. The law, the Indian Self-Determination and Education Assistance Act, allows Indian tribes to contract with the Interior Department to take over operation of a federal program or service, with Interior to put up the money that the government would have spent itself on that activity. In 1988, Congress also provided that Interior must also provide funds to pay the administrative costs that the tribe incurs in operating the program, such as audit or reporting duties, and general overhead.
That separate funding provision, however, is made contingent upon Congress providing the necessary appropriations to pay for it. And, in 1999, Congress provided that there would be caps on the amount of contract support costs that Interior would cover for a tribe. Congress has imposed such caps for each of the past 15 years.
The issue in the newly granted case, Salazar v. Ramah Navajo Chapter (11-551), is whether the government must pay everything that it has promised in such a contract with a tribe, including support costs, without regard to whether that goes beyond a cap imposed by Congress — provided that the government can find the money elsewhere in the government. The Interior Department’s petition urged the Court to take the case and rule that Interior cannot be required to pay tribes beyond what the cap allows because that intrudes upon Congress’s constitutional authority to decide when and how to spend federal money.
In the programs at issue specifically in the case, the Ramah Navajo Chapter, the Oglala Sioux Tribe, and the Pueblo of Zuni had a contract with Interior to operate for tribal members a series of federal programs: for law enforcement, court operation, education assistance, land management, probate assistance, natural resource services, employment aid, child welfare assistance, operation of emergency youth centers, and juvenile detention services. The tribes sued over unpaid direct contract support costs for the fiscal years 1994 through 2001, in which congressional caps were in place.
We look forward to following this case. If anybody out there among our readers is knowledgeable about the case and would like to guest post, please get in touch, as none of us on the blog is an expert in this area.
January 23, 2012
Lady Duff Gordon Redux
NEW YORK — Macy’s Inc. has sued Martha Stewart Living Omnimedia Inc. in a bid to block a licensing deal between the housewares company and J.C. Penney Co.
The lawsuit was filed Monday in New York State Supreme Court. Macy’s claims Martha Stewart Living’s deal with J.C. Penney violates the terms of an exclusive pact Macy’s has to sell Martha Stewart Living products at its stores, according to reports in The Wall Street Journal and other publications.
The complaint comes after Plano, Tex.-based J.C. Penney acquired a 16.6 percent stake in Martha Stewart Living and announced plans last month to open mini-Martha Stewart shops inside most of its stores, beginning next year. The deal announced last month was seen as part of J.C. Penney’s efforts to re-image itself under its new CEO Ron Johnson, a former Apple Inc. executive.
Cincinnati-based Macy’s has asked the court for a preliminary injunction to block the deal.
Martha Stewart Living said it does not comment on legal matters, but issued a statement saying that it received a notification from Macy’s that it intends to renew and extend its commercial agreement with Martha Stewart Living to feature and promote the Martha Stewart Collection in Macy’s stores.
Waiter, bring us some more Bacardi, we'll order now what they ordered then:
[Meredith R. Miller]
News flash: Fine print gets smaller and wordier
Forget the Republican primaries, the real news this week is fine print. As Jeremy Telman blogged, there are some troubling contract issues relating to the Costa Concordia disaster. The Wall Street Journal noted the prevalence of fine print everywhere, and the vast amounts of it. Finally, yesterday's New York Times had plastered on the front page of the Sunday Review this article about the mess of disclosure requirements that often leave consumers more confused and overwhelmed than enlightened.
More on the Blood Contract
A few years ago, the story of a "blood contract" between two Korean businessmen caught the attention of contracts profs. In that case, one of the men made a promise to the other to repay money -- and made the promise on a cocktail napkin in blood. The court ruled the promise was unenforceable because it lacked consideration. I wrote about the case for the Wake Forest Law review here and last year, the Wake Forest Law Review Online posted responses by Professor Scott Burnham here and Professor David Epstein here. I recently posted a reply to those responses here. Deborah Post, Associate Dean for Academic Affairs and Faculty Development and Professor of Law at Touro Law, has now added her thoughtful perspective to the discussion here.
Contracts Issues in Big Love, Season 5
At the end of Season 4 of Big Love, protagonist Bill Henrickson wins election to the state senate and decides that this is the time to reveal his plural marriage (depicted at right). What could possibly go wrong? Tune in next season to find out.
And so we have, now that Season 5 is out on Netflix, and part of what goes wrong relates to contracts. First, Bill's third wife, Margene, gets fired from her job, hawking jewelry on a shopping network. When she inquires about her severance, she is told that she is not entitled to any, because she has breached her morals clause by lying about her marital status. It's a pathetic scene, both because Margene's sense of her own self-worth has come to derive from her success through this television gig, and also because Margene seems unaware that one can challenge the applicability of a morals clause. Could there really be that much case law out there on the applicability of morals clauses to undisclosed plural marriages? As usual, Bill who always has a lawyer at the ready when he gets himself into a pickle, is nowhere to be found when his decisions ruin other people's lives.
Episode 1 of Season 5 also mentions that the Native American tribe with which the Henricksons had built a casino has now severed all ties with the family. That's the kind of contractual breach that gets Bill's attention, but we'll see how much of the last season is dedicated to sorting out that sort of stuff.