ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Saturday, January 7, 2017

When the Break-Up of a Marriage Is Also a Breach of Contract

HGTV

Photo Source: hgtv.com

The main reason I have cable these days, honestly, is because of my HGTV addiction. I like that the shows are so predictable and formulaic, which makes them low-stress. It's a habit I started years ago as a stressed-out lawyer in a law firm, when I needed to come home and watch something that didn't require thought, and it's kept me company as I transitioned into academia. And I'm apparently not alone in using it as comfort television

I use HGTV a lot in my Contracts class as the foundation of hypotheticals (so much that I'm contributing a chapter to a book detailing how I use it) and so I'm always interested when there is a real-life HGTV contract problem...such as is happening right now with "Flip or Flop." 

You might not be anxiously following HGTV shows, so let me tell you that the world was recently rocked (well, a small corner of the world) by the revelation that Christina and Tarek, the married couple with two young children at the center of the house-flipping show "Flip or Flop," were separated and/or getting divorced. And now come reports that HGTV has threatened them with a breach of contract action if their ongoing marital problems affect the filming of the show.

This is an example of the interesting issues that arise when your personal life becomes the equivalent of your contractually obligated professional life. Christina and Tarek no longer want to be married to each other, apparently, which is a stressful enough situation, without adding in the fact that their marriage is also the source of their livelihood. HGTV has a point that the show is less successful when you know that their personal life is a mess. The network was running a commercial pretty steadily through the holiday season where Christina and Tarek talked about their family Christmas, and every time I saw it I thought it was so weird and that they should pull the commercial. But that was clearly the advertising campaign HGTV had long planned for the show and it was probably costly for HGTV to change it at that point.

I am curious to see what the resolution of this is. I'm unclear how much longer Christina and Tarek were under contract for. They probably hoped to keep their separation quiet for as long as they could (they had, after all, kept it quiet for several months). But now that it's out in the open, we'll have to see how the parties recalibrate not just their personal but also their contractual relationships with each other. There is always a lot of talk about how "real" the shows on HGTV is. This situation is testing where our boundaries on "real" vs. "fake" actually lie. 

January 7, 2017 in Celebrity Contracts, Commentary, Current Affairs, In the News, Labor Contracts, Teaching, Television, True Contracts | Permalink | Comments (1)

Wednesday, January 4, 2017

Non-Compete Earns a Preliminary Injunction in Case Involving a Community Publication

I started reading this case because the first party's name was "Our Town" and I have fondness for that play...but it turned out to be a really interesting dispute over a non-compete provision that resulted in a preliminary injunction.

The plaintiff in the case out of Pennsylvania, Our Town v. Rousseau, No. 3:16-CV-2484 (behind paywall), operates a community publication called "Our Town." The defendants in the case entered into a contract to franchise the "Our Town" brand in a county in New Jersey. The franchise contract contained a non-compete provision prohibiting the defendants from operating any similar business within fifty miles of the franchise location or other "Our Town" publications for a period of three years. 

After a series of political editorials, the defendants decided to terminate the franchise relationship, alleging that "Our Town" was no longer viable in the franchise location and they wished to launch a more "family friendly publication." On the day that defendants notified the plaintiff they were terminating the agreement, the plaintiff learned that the defendants were operating a similar publication called "Home Town" in the franchise location. The plaintiff, alleging that this was a violation of the non-compete, sought a preliminary injunction. 

The court granted the injunction. The court found that the plaintiff was likely to succeed on the merits of the case. The parties behaved as if they were bound by the franchise agreement, and the non-compete in the agreement was enforceable. The court found it was supported by valid consideration, that fifty miles has been found to be a reasonable geographic restriction, and that three years have been found to be a reasonable time period. Plus, the court found that the non-compete protected the plaintiff's legitimate business interests and so the plaintiff would be irreparably harmed without the injunction. 

The defendants tried to argue that the injunction would harm them because they would be unable to make a living if the non-compete was enforced. The court noted, however, that this harm was of the defendants' own making. 

January 4, 2017 in Recent Cases, True Contracts | Permalink | Comments (0)

Wednesday, December 28, 2016

Contractual Brouhaha in the Fashion World

There is major drama happening in the world of high fashion, and it all revolves around an alleged non-compete. Carolina Herrera has sued Oscar de la Renta to keep Laura Kim from working for the rival company. According to CH, Kim signed a non-compete with CH which gave it the option of paying Kim fifty percent of her salary and health benefits in exchange for Kim not competing against it for six months. The six months seems like a suitably short period of time in the fast-moving fashion industry, especially as it has important impacts on New York Fashion Week in February. 

The judge ordered a TRO which has since been lifted pending a preliminary injunction hearing in the new year. In the meantime, you should go to this article for all of the juicy details on what exactly went down between Kim and CH. 

December 28, 2016 in Current Affairs, In the News, True Contracts | Permalink | Comments (1)

Friday, December 23, 2016

Faculty Handbook as Contract

Just a quick entry in advance of a weekend that is a holiday for many, but this post on Inside Higher Ed caught my eye, discussing an in-progress case against NYU. An appellate court allowed two professors' complaint to survive a motion to dismiss based on sufficient allegations that the faculty handbook was a formal binding contract. One to keep an eye on in the new year. 

However you plan to spend this upcoming weekend, I hope it's full of peace and joy. 

December 23, 2016 in Current Affairs, In the News, Teaching, True Contracts | Permalink | Comments (0)

Monday, December 19, 2016

The Continuing Impact of Confidentiality Provisions

Confidentiality provisions are everywhere these days, especially in all of those arbitrations most contracts now require. I've blogged about them in connection with Donald Trump, and now they are playing a starring role in the very messy divorce between Johnny Depp and Amber Heard, in which Depp is allegedly refusing to provide Heard's divorce settlement because he alleges she breached their agreement's confidentiality provision when she spoke out publicly against domestic violence. 

It's unclear to me what the wording of the confidentiality provision was and whether Heard's behavior really did violate it. What is clear to me is that the confidentiality provision is being used to prevent communications of encouragement and support to people who are victims of domestic violence. There is a dual tragedy here: Not only are words of encouragement being muffled, but victims of domestic violence are now receiving the message that those words of encouragement could lead to punishing consequences. 

Confidentiality provisions can make sense, and there are definitely situations where they are vital to a deal getting done. But there are also situations where they seem to be operating against public policy. 

December 19, 2016 in Commentary, In the News, True Contracts | Permalink | Comments (1)

Thursday, December 15, 2016

Reminder: Moral Obligations Do Not Equal Legal Obligations

A recent case out of Arkansas, Baxter v. Wing, No. CV-16-21 (behind paywall), has a nice discussion of the difference between moral obligation and legal obligation. In the case, a man named one of his four stepchildren, Susannah, as the sole beneficiary of his life insurance policy and asked her to share it with her three siblings.

Nobody disputed that it was the deceased man's wish that Susannah share the money with her siblings. The problem, though, was that her obligation to comply with his wishes was merely moral, not legal, and the court could do nothing to force her to comply with it. The deceased man gave Susannah instructions, but he did not make her any promise, nor did Susannah make any promise in exchange. There was no deal along the lines of, "I promise to make you the sole beneficiary if you promise in exchange to share the proceeds with your siblings." The deceased man gave Susannah instructions, which did not rise to the level of an enforceable contract. 

Cases like this are valuable when you're teaching consideration but they always make me sad, because consideration cases so frequently seem to be about families feuding on a level so rancorous that they turn to the court system. Tough cases to get through. 

December 15, 2016 in Commentary, Recent Cases, Teaching, True Contracts | Permalink | Comments (0)

Monday, December 12, 2016

In Which Messy Handwriting Renders a Contract Ambiguous

Competition swimming pool block

If you've ever been in charge of taking care of a swimming pool, you know that it has a lot of moving parts and requires a working knowledge of chemistry and an adroitness at mathematics that is often lacked by those who become lawyers.* So I started reading this case because the first sentence told me it was about a swimming pool, but it's an interesting and fairly straightforward situation of contract ambiguity being resolved by extrinsic evidence. If you're looking for a recent case for your students to see this in action, this one might be it. 

The case is Horizon Pools & Landscapes, Inc. v. Sucarichi, No. 01-15-01079-CV, out of Texas. Sucarichi entered into a contract with Horizon to install a swimming pool and spa. The dispute centered around the number of lights Horizon was supposed to install. Sucarichi alleged that Horizon was supposed to install three lights total: two in the swimming pool and one in the spa. Horizon maintained that it was supposed to install two lights total: one in the swimming pool and one in the spa. 

The contract was ambiguous on this point. The contract was divided into many different sections. The relevant ones were as follows: 

  • A section reading "Lights(s)" [sic] with the handwritten notation "(2) L.E.D."
  • A section reading "Pool Light" with a handwritten notation that was illegible
  • A section concerning the spa reading "Light 100 watt." 

The court found that it was equally plausible that the contract here required three lights total, with the first general light section referring to two in the swimming pool and the spa section referring to one, or that the contract required two lights total, with the first general light section giving just the total of lights to be installed between the swimming pool and the spa. The illegibility of the "Pool Light" section made this question impossible to resolve without looking to extrinsic evidence. 

Horizon admitted that its salesman filled out the contract (including the illegible notation). Horizon also did not contest that its salesman told Sucarichi he needed to have two lights installed in his swimming pool. Sucarichi testified that he thought the contract provided for two lights in the swimming pool, based on the Horizon salesman's recommendation, and one light in the spa, for three total. He wrote as much in a letter to Horizon prior to the beginning of the court case, when he was trying to get Horizon to add the second light. Therefore, the court thought there was sufficient proof that the parties had agreed to install a total of three lights, with two in the swimming pool and one in the spa. 

One of the lessons to take away: Make sure your contracts are legible! 

*gross overgeneralization based on me and my frequent intense confusion when I try to take care of our family swimming pool. My talents lie elsewhere!

December 12, 2016 in Commentary, Recent Cases, Television, True Contracts | Permalink | Comments (0)

Wednesday, December 7, 2016

Prince's Complicated Legal Legacy Continues

When the legendary musician Prince died suddenly, he left behind an enormous volume of music and no will. The courts have already been dealing with how to distribute Prince's assets to a complicated and squabbling cadre of potential heirs. The rights to all of his music have raised their own complicated issues that have most recently manifested themselves in a lawsuit in the District of Minnesota, NPG Records, Inc. v. Roc Nation LLC, Case No. 16-cv-03909

The case revolves around Roc Nation's streaming of Prince's music on its streaming service Tidal, and whether or not it had the contractual rights to do so. Roc Nation alleges yes, based on what it terms both written and oral agreements that it struck with Prince before his death. Commentators have tried to draw conclusions about these agreements based on Prince's statements and other behavior before his death. NPG, meanwhile, claims that there was a single contract between Prince and Roc Nation and that it only allowed Roc Nation to stream a very limited number of songs, which Roc Nation has now violated in streaming a much wider variety of Prince's song catalog. The case has been reported on in multiple places, including here and here and here and here.

If this case progresses, it seems like it's going to require an untangling of written contracts between the parties, whatever oral statements Prince will allege to have been made, and the interaction between the two. It adds an interesting layer to consider that Prince was notorious for fighting for artists' rights to their music and had a fraught relationship with online streaming of music. He does seem to have favored Tidal above the other Internet services. In any case, although NPG claims that there was never any such license and Tidal has been infringing the songs' copyright since it began streaming them, NPG has already proactively sought to cancel any license that Prince may have granted to Roc Nation to stream the music in question. 

(I'd post something Prince-related from YouTube, but Prince didn't like his music to be on YouTube. And, in fact, Lenz v. Universal Music Corp., the recent case that wended its way through the Ninth Circuit and is currently on petition to the Supreme Court, involves a Prince song in a YouTube video.)

December 7, 2016 in Celebrity Contracts, Commentary, Current Affairs, In the News, Music, Recent Cases, True Contracts, Web/Tech | Permalink | Comments (0)

Air Force None?

Recently, Donald Trump famously tweeted that “Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!”  Trump has not said why he believes the planes will cost "more than $4 billion." Boeing says it currently has an Air Force One contract worth $170 million.

Air-force-one-3

This raises several contractual issues that could be used as an interesting issue-spotting practice for our students. At first blush, it seems like an impossible attempt at a breach of contract that would, conversely, at least give very reasonable grounds for insecurity if not constitute an anticipatory repudiation outright.

Needless to say, Trump’s remark that “[w]e want Boeing to make a lot of money, but not that much money” finds no support in contract law. One contractual party has no control over how much money the other party should make. One would have thought that Trump – as a staunch “market forces” supporter – would have understood and embraced that idea, but that either was not the case or he is flip-flopping in that respect as well.

Digging deeper into the story, however, it turns out that “not even [Boeing] can estimate the cost of the program at this time, since the Pentagon has not even decided all the bells and whistles it wants on the new Air Force One." Further, “without knowing all the security features, it is hard to estimate the cost … and the Air Force isn't even sure whether it wants two or three of the planes.” Does a contract even exist at this point, then, when the essential terms have apparently not been mutually agreed upon, or is there simply an unenforceable agreement to agree? A valid argument cold be made for the latter, I think.

Mr. Trump has been accused of overestimating the cost of the planes. Does he, however, have a point? “So far[,] the Air Force has budgeted $2.9 billion through 2021 for two new Air Force Ones.” It is not inconceivable that the price tag may, in these circumstances, run higher than that. That circularity goes back to the essential terms – the price in this case – arguably not having been decided on yet.

There might, of course, be other issues in this that I have not seen in my admittedly hasty review of the story, but it is interesting how the media jumps at a legally related story without thoroughly or even superficially attempting to get the law right.

December 7, 2016 in Celebrity Contracts, Commentary, Contract Profs, Current Affairs, Government Contracting, In the News, Travel, True Contracts | Permalink | Comments (0)

Monday, December 5, 2016

Considering Parol Evidence to Decide If There Was Ever a Contract

One of the things I find students struggle with when it comes to parol evidence is determining for what purpose they are considering the evidence. A recent case out of Maryland, Wiencek + Associates Architects + Planners v. Community Homes Housing, Inc., No. 0642 September Term 2015 (behind paywall), has a nice discussion on this. 

In the case, the parties both signed a document that was called "Agreement to Redevelop and Preserve Affordable Housing." The contract contained an integration clause. Both parties also admitted later that they had signed the document because it was required to obtain financing from the Department of Housing and Urban Development ("HUD"), which the parties had both desired. HUD, however, refused to guarantee any financing for the project. Community Homes then took the position that there was no contract with Wiencek because the contract was not to take effect unless HUD financing was received. Wiencek disagreed and sued Community Homes for breach of contract.

The trial court considered parol evidence to determine whether the contract between the parties was enforceable. Wiencek argued this was improper because of the contract's integration clause. But Community Homes noted that the parol evidence was not being considered to add a term to the contract; rather,  it was being considered to determine if the contract even existed in the first place, and therefore was permissible. The court agreed with Community Homes that considering parol evidence was perfectly acceptable in this situation. The court noted that it could not enforce the contract's integration clause when what it was trying to determine was whether the contract containing the integration clause even existed. 

The parties here had agreed orally that the contract would not come into effect unless HUD guaranteed financing. Although there was nothing in the contract about that, the parol evidence admitted as to the intent of the parties was clear. The contract was only signed in order to try to obtain the HUD financing; once that objective had failed, the parties did not intend the contract to be enforceable any longer. 

Wiencek tried to make an argument that the law should have a policy to deter "fictitious" contracts. In effect, Wiencek claimed that the court was allowing the parties to "pretend" to have entered into a contract to try to "trick" HUD into providing financing, with no intention of actually entering into a contract with each other. The court, however, did not see any reason to enforce the contract between the parties in this circumstance. It was the court's view that, if HUD felt it had been harmed by the representation that there had been a contract between the parties (even though the court did not decide one way or the other whether that representation was incorrect), HUD should seek a remedy from the court for the harm, not Wiencek. 

December 5, 2016 in Government Contracting, Recent Cases, True Contracts | Permalink | Comments (0)

Can a Breach of Contract Become Elder Abuse and Bad Faith?

A California Court of Appeals recently answered yes to this question, although finding that in the case at issue, the facts didn’t warrant a finding of actual elder abuse.

At bottom, the facts were as follows: an elderly couple – the wife was in her 80s – suffered rain damage to their house and claimed repair benefits under an insurance policy. The insurance company initiated investigations as to whether the damage was covered. The investigations were, among other things, hampered by the couple having discarded debris from the damaged room although the insurance company had requested an immediate investigation and announced its arrival two days later. Unknown

The couple first claimed bad faith in the insurance company subsequently denying part of the insurance claim. The court granted the insurance company’s motion for summary judgment in this respect, finding that a mere incorrect denial of insurance policy benefits does not constitute bad faith. Said the court: “[A]n insurer denying or delaying the payment of policy benefits due to the existence of a genuine dispute with its insured as to the existence of coverage liability or the amount of the insured's coverage claim is not liable in bad faith even though it might be liable for breach of contract.”

The bad faith issue also came up in another case where a husband died from a lethal dose of a prescription drug, the insurer assigned an investigator, who unsuccessfully attempted to obtain information from the plaintiff wife regarding the husband's state of mind before his death and the source of the fatal drugs. Where the insurer simply tried to “do all it reasonably could” to determine the cause of death, no bad faith was at issue in simply denying benefits.

California law broadly defines financial abuse of an elder as “occurring when a person or entity takes, secretes, appropriates, obtains, or retains real or personal property of an elder for a wrongful use or with intent to defraud, or both,” as well as “by undue influence.” See Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst.Code, § 15610.30, subds. (a)(1), (a)(3).)). Additionally, the wrongdoer must have known or should have known that the conduct was likely to be harmful to the elder. In this case, however, the improper conduct was missing: there was no evidence that the insurance company acted in subjective bad faith or unreasonably denied policy benefits. This stands in contrast to cases where, for example, insurance companies have employed deceptive practices in executing contract such as annuity agreements with senior citizens.

December 5, 2016 in Current Affairs, Miscellaneous, True Contracts | Permalink | Comments (0)

Wednesday, November 30, 2016

A Settlement Agreement That's Too Vague Doesn't Settle Much At All

I am always saying to my students that if they care about something, they should put it in their contract, and they should be specific about what it is they want. I think sometimes people might think there's something to gain strategically by being vague, but introducing ambiguity into a contract can work out very poorly (and also takes control out of the hands of the parties). A recent case out of Florida, Boardwalk at Daytona Development, LLC v. Paspalakis, Case No. 5D15-1944, is a case where the court, faced with an ambiguous description of the land at issue in a contract, just threw up its hands in frustration. 

The dispute between these two parties has been long and contentious. According to this article, it's dragged on for over a decade. It was originally rooted in an eminent domain proceeding in which Boardwalk at Daytona ("BDD")'s predecessor obtained property belonging to Paspalakis and the other appellees. The appellees contested BDD's acquisition of their land and eventually that lawsuit was settled. The settlement agreement provided the appellees with an option to purchase and operate 7500 square feet of retail space on the Daytona Boardwalk. The agreement contained no legal description or street address for the property at issue. The agreement said that the land would: (1) be adjacent to another particular business; (2) have a minimum of 50 boardwalk frontage feet; and (3) have sufficient land to build a 7500-square-foot, one-story building. Unfortunately for the appellees, there were at least three parcels of land that met this description, and they ranged drastically in size from around 7700 square feet to over 17,000 square feet. 

The problem with the description of the land in the settlement agreement was exposed when the appellees tried to operate their option. BDD offered a piece of property that met all three criteria set forth in the settlement agreement. However, the property required unusual structural design features that troubled the appellees and also came with a negative easement for light, air, and unobstructed view that benefitted the BDD property next door. The appellees therefore objected to this plot of land and asked for another one. 

BDD sought a declaratory judgment that the plot of land it proposed was sufficient under the settlement agreement and that it did not have to provide another plot of land. The appellees, in response, sought specific performance that BDD provide  a plot of land fitting the description in the settlement agreement, without the restrictions of the land BDD had offered. In the face of the counterclaim, BDD shifted stance and argued that the settlement agreement was too ambiguous to be enforced. 

The trial court sided with the appellees and ordered BDD to convey the largest possible plot of land to the appellees. BDD appealed, and this court agreed with BDD. The court noted that a description of the land in question is usually considered an essential part of any land purchase agreement, and that without any such description there are serious doubts whether the parties reached a meeting of the minds. The description of the land in the settlement agreement here was ambiguous. The trial court correctly examined parol evidence to try to resolve the ambiguity, but it didn't help. The contract terms at issue here simply could have been fulfilled by any of three very different parcels of land.  To this court, there was no contractual way to choose between them and no parol evidence that shed light on which parcel of land the parties had in mind. Indeed, the court was skeptical the parties ever really agreed on which parcel of land would be conveyed, and so the parties never reached a meeting of the minds that could be enforced. Therefore, the court reversed the order of specific performance and entered judgment for BDD instead. 

A bitter pill here for the appellees, who doubtless thought that they were getting something of value in the settlement agreement they struck and end up with nothing to show for it. But it does seem like there was considerable confusion about which land was affected by the situation here. I guess it's a lesson to all of us: try to be as specific as possible. I tell my students drafting contracts is frequently like playing a game of what-if with yourself. What if BDD offers this parcel of land instead of that parcel of land? If the answer to that question is that you would prefer one parcel of land over the other, best to be specific in the contract. 

November 30, 2016 in Commentary, Current Affairs, In the News, Law Schools, Recent Cases, Teaching, True Contracts | Permalink | Comments (2)

Monday, November 28, 2016

Rights of First Refusal to License Mineral Rights and Unconscionability

If you are looking for a case with a nice analysis of procedural and substantive unconscionability, a recent case out of Ohio, Christ Holdings, LLC v. Schleappi, Case No. 15 NO 0427, has one. 

The case involved a right of first refusal that the defendants claimed was unconscionable. The trial court agreed with the defendants, but this court reversed the finding. The court started by looking at procedural unconscionability and noting that it requires consideration of "age, education, intelligence,  business acumen and experience," etc. The court then presented in some amount of detail the education and employment history of both parties, concluding that their educational level is roughly equivalent but that the plaintiff did have more business acumen and experience than the defendant. 

However, importantly for this decision, the court noted that the parties actually had a history of conducting real estate transactions between them without the aid of any attorneys, negotiating several times over the course of several years. To the court, this was an indication that both parties were knowledgeable in the particular type of real estate transaction at issue here, even if the plaintiff had more general business acumen. 

The trial court had also been very concerned about the fact that the defendant had been operating under time constraints. But this court noted that the time constraints were not the plaintiff's fault: he gave no indication that he wouldn't have given her time to read the contract over if she had requested it (which she did not). 

After finding no procedural unconscionability, the court then turned to substantive unconscionability. The trial court had found substantive unconscionability for a number of reasons, most notably, though, because this right of first refusal involved the licensing of mineral rights. The trial court asserted that rights of first refusal should be limited to real estate purchases, not to the leasing or licensing of real estate as was at issue here. The trial court seemed to think that rights of first refusal to license were unconscionable in and of themselves, without further inquiry into their terms. This court, however, said that there was no reason to so narrowly restrict the ability of the parties' to use rights of first refusal in their agreements. It found the right of first refusal to be enforceable and remanded for further proceedings. 

 

November 28, 2016 in Recent Cases, Teaching, True Contracts | Permalink | Comments (0)

Wednesday, November 23, 2016

Here's a Nice Anticipatory Repudiation Case for the Next Time You Teach That

A recent case out of West Virginia, Stiles Family Limited Partnership v. Riggs and Stiles, Inc., No. 16-0220, does a nice job analyzing the fact that an anticipatory breach must be unequivocal. The fairly straightforward facts could be a useful way of helping to illustrate this topic the next time you teach it. 

The parties (all members of the same family) entered into a lease under which Riggs and Stiles agreed to farm the property at issue. The lease has been in effect since 2006 without dispute until 2013, when Riggs and Stiles allowed a production company to file an application for a permit to hold a music festival on the farm property. When Stiles Family Limited Partnership learned of the application, they objected; the following month, when they failed to convince the Partnership to allow them to hold the music festival, Riggs and Stiles withdrew the application, and no music festival was ever held on the property. However, the Partnership tried to terminate the lease, arguing that Riggs and Stiles had anticipatorily repudiated the lease when it permitted the filing of the application.  The Partnership claimed that this permission by Riggs and Stiles demonstrated an unequivocal intent on their part to use the land for something other than farming, in violation of the terms of the lease, and it made sense to treat the lease as breached as the moment of application rather than having to wait for the music festival to actually take place.  

The court disagreed, however. It was undisputed that Riggs and Stiles had at all times farmed on the land, never stopping and continuing to farm on the land even after the filing of the application. The application alone was not a breach of the promise to use the land only for farming, as it was undisputed that it was all Riggs and Stiles ever did. And continuing to farm the land was not consistent with an unequivocal repudiation of the lease, because it was actually what Riggs and Stiles was required to do under the lease. Performing consistent with the lease couldn't be considered an unequivocal repudiation of the lease. Moreover, when the Partnership informed Riggs and Stiles that it didn't agree to the music festival being held on the land, Riggs and Stiles withdrew the application for the permit. Rather than being an unequivocal intent to breach the contract, that displayed equivocation on the part of Riggs and Stiles: they sought to take actions to not breach the contract.  

November 23, 2016 in Commentary, Recent Cases, Teaching, True Contracts | Permalink | Comments (0)

Monday, November 21, 2016

Top Gear, Grand Tour, Non-Competes--What Could Possibly Go Wrong?

My love for the British car show "Top Gear" over the past few years was deep and abiding, despite the fact that I am not interested in cars at all. Like most of the people I know, I watched Top Gear for the hosts, Jeremy Clarkson, Richard Hammond, and James May--a trio of men whose friendly and hilarious chemistry was, I thought, a little like capturing lightning in a bottle; it comes around so infrequently that it's striking when it does. 

For a taste of what this version of Top Gear was like, please enjoy my personal favorite, one of the caravan episodes: 

 

Or maybe you would prefer one of the boat-car episodes: 

 

The Top Gear Wikipedia entry details that the show's popularity resulted in consistently high ratings, a waiting list for tickets to the stage-filmed portion of the show that numbered in the hundreds of thousands, and a Guinness World Record for the world's most widely watched factual television show

There have been a number of high-profile Top Gear events over the years that I could document here, from Richard Hammond's terrifying crash while filming the show to the fascinating contractual dispute over the Stig, the show's famously anonymous racing driver, revealing his true identity

But what I'm really focusing on in this entry is the fact that the Top Gear hosts have a new show, "The Grand Tour," that looks a whole lot like their old show, and it made me wonder what their contracts looked like. 

The hosts left Top Gear over controversially. The BBC declined to renew Jeremy Clarkson's contract in March 2015, following an attack by Clarkson on one of the producers on the show (later the subject of a lawsuit that Clarkson settled for a hundred thousand pounds and a formal apology). The other two presenters, Hammond and May, also had contracts up for renewal and chose not to re-sign with the BBC, instead following Clarkson to Amazon, where the trio have launched a show called The Grand Tour

I didn't know what to expect from The Grand Tour but it turns out to be Top Gear by a different name. Where Top Gear had a Stig, The Grand Tour has "the American" -- and they tell us who he is right off the bat, rather than get embroiled in that kind of controversy again. Top Gear had a segment called, simply, "The News"; The Grand Tour launched a similar segment called "Conversation Street." Top Gear had a segment called "Star in a Reasonably Priced Car"; The Grand Tour...well, you should watch the show for its take on that segment. This review does a nice job running down all the similarities between the old show and the new. 

This all fascinated me from a contract perspective. I knew that Clarkson had previously co-owned the commercial rights to Top Gear. He sold them to the BBC in 2012 for fourteen million pounds. So, having given up those rights and left the BBC, Clarkson clearly couldn't keep making "Top Gear." But he is making a motoring show that is almost identical in every cheeky winking respect to the one he left behind (right down to a simple title highlighting a prominent "T" and "G"). 

I do think, from an IP point of view, the new show seems safe: they've been careful to avoid any trademarks and only seem to resemble Top Gear in the uncopyrightable idea level, i.e., being a playful show about cars. But I assumed that Clarkson, Hammond, and May had to have had a non-compete with the BBC, so I went looking for it, and I did find evidence that there was one. It apparently prohibited the three from presenting a competing car program for a period of two years. The two years aren't up yet, leaving lawyers to speculate that a conclusion was drawn that the non-compete only applied to terrestrial broadcast stations and not to Amazon's streaming Internet television. The entertainment industry is changing so quickly, it doesn't surprise me that the contracts are having trouble keeping up. 

Surely the BBC would have preferred to keep Clarkson, Hammond, and May from kicking a rival car show into production so quickly, especially while the BBC's relaunched Top Gear has reportedly struggled. But apparently their contracts failed to give them sufficient protection to save them from the result. 

I will leave for another day the issues of contracts made during the filming of Top Gear itself; like, for instance, the time Clarkson offered to save Hammond from a sinking boat in exchange for a bucket...that turned out to have holes. 

And instead I will leave this entry with an acknowledgment that Jeremy Clarkson is a problematic and controversial figure who is not a stranger to making offensive statement. That's beyond the scope of this article about the BBC's contracts, but this review, I think, does a decent job of capturing the internal tension of a former Top Gear fan contemplating the new Grand Tour.  

November 21, 2016 in Celebrity Contracts, Commentary, Current Affairs, Film Clips, In the News, Television, True Contracts, Web/Tech | Permalink | Comments (0)

Wednesday, November 16, 2016

Remember: Things That Are "Routine" to Lawyers Can Be Confusing to Pro Se Plaintiffs

A recent case out of the Eastern District of Michigan, Bucciarelli v. Wells Fargo Home Mortgage, No. 15-13900, is an illustration of the confusion that can sometimes occur when two parties talk past each other and never really understand each other. The result is that there is no enforceable contract between these parties who never seem to be on the same page.

This is a mortgage foreclosure case in which settlement was attempted but complicated by the fact that there was a lawyer on one side and a pro se plaintiff on the other and they never seemed to be speaking the same language. The defendant's counsel tried to settle the case by by proposing a "routine" settlement to the plaintiff of $500. The plaintiff responded to the proposal by calling the defendant's counsel leaving the following message:

I don't know where it stands but I got it couple days ago regarding the settlement offer of $500 from Countrywide. We can go ahead and do that. So if you wanna give me a call back. My number is []. I do have a lot of mistakes in the Countrywide financial [unclear]. Of those funds that were applied and misapplied to my account but my main focus is Wells Fargo who purchased the loans from Countrywide after Countrywide made some substantial mistakes. Give me a call back. Mary. Thanks bye.

The defendant focused on the "We can go ahead and do that," but the court pointed out that the plaintiff went on after that statement to make allegations regarding Countrywide's mistaken behavior toward her. The court characterized this voicemail as "ambiguous as to her acceptance of all the proposed terms" of the settlement agreement, especially considering that, once the plaintiff received an actual draft of the entire settlement agreement, she refused to execute it. When the defendant moved to enforce the settlement agreement on the basis of the voice message (and subsequent other telephone calls whose contents seem to be disputed), the plaintiff countered that there was no agreement to settle the case. 

In this situation, the court said that it did not feel that the parties had ever agreed on all of the material terms of the settlement. There was no mutual understanding between the parties. The court concluded that each party "heard only what it wanted to hear," and pushed back on defendant's characterization of the settlement offer as "routine": "[I]t must be remembered that Ms. Bucciarelli is appearing pro se, and therefore it is likely that nothing in this litigation is 'routine' to her." 

November 16, 2016 in Recent Cases, True Contracts | Permalink | Comments (2)

Monday, November 14, 2016

If You're Going to Plead Promissory Estoppel, Be Specific!

I just wrote up a promissory estoppel case last week, and here's another one out of Connecticut, Sorrentino v. Rizza, Docket Number CV156013599 (behind paywall). In this case, the plaintiff failed to allege specific enough statements to form the foundation of her promissory estoppel claim. The case is a dispute over a promise of employment, and the relevant part of the complaint alleged that the defendant had promised the plaintiff "on several occasions" that she would be given "a similar position" with the defendant's company as the plaintiff already held in another company, with "a salary plus a percentage of any advertisement revenue she generated." 

This was, in the court's view, "nebulous at best." No specific dates or locations were given for the promises in question, there was no explanation of the salary that was discussed, and there were no details about what percentage of revenues the plaintiff had been promised. The plaintiff's allegations were about indefinite statements that seemed to lack any material terms. The court said those could not be construed as any "clear and definite promise" that could the plaintiff could reasonably have relied on. 

So if you think you have a promissory estoppel claim, the lesson from this case is to make sure you are very specific in relaying to the court exactly what was said and when. 

November 14, 2016 in Commentary, Labor Contracts, Recent Cases, True Contracts | Permalink | Comments (0)

Sunday, November 13, 2016

Scholarship highlight: Climate change and the "Act of God" doctrine

Allow me to highlight my most recent article, An “Act of God”? Rethinking Contractual Force Majeure in an Era of Anthropogenic Climate Change.

Given anthropogenic climate change, what were previously considered to be inexplicable and unpredictable “acts of God” cannot reasonably be said to be so anymore. They are acts of man. “Extreme” weather events have become the new normal. Accordingly, the contractual force majeure defense, which largely rests on the notion that contractual parties may be exculpated from liability for failed or delayed performances if supervening unforeseen events that the party could not reasonably control or foresee have made a performance impracticable, is becoming outdated in the weather context. It makes little sense to allow contractual parties to escape contractual performance liability for events that are highly foreseeable given today’s knowledge about climate change. Parties can and should take reasonable steps to contractually assess and allocate the risks of severe weather events much more accurately than ever before. Further, they should be better prepared to take reasonable steps to alleviate the effects of severe weather on their contractual performances instead of seeking to avoid liability at the litigation stage.

Time has come for the judiciary to rethink the availability of the impracticability defense based on “extreme” weather for public policy purposes. Perhaps most importantly, by taking a hard look at the doctrine and modernizing it to reflect current on-the-ground reality, the judiciary may help instigate a broader awareness of the underlying pollution problem and need for action at many scales. Meanwhile, a more equitable risk-sharing framework that might become known as “comparative risk sharing” and which would resemble the notion of comparative negligence in torts could be introduced where parties have failed to reach a sufficiently detailed antecedent agreement on the issue. This is surprisingly often the case. Parties often use mere boilerplate phrases that do not reflect today’s highly volatile weather and appurtenant risks.

The law is never static. It must reflect real world phenomena. Climate change is a super-wicked problem that requires attention and legal solutions at many fronts to many problems, including contractual ones. The general public is often said to have lost faith in the judiciary. Given this perception, courts could regain some of that faith in the context of contracts law and force majeure caused by events for which no “God,” other supernatural power, or even nature can be blamed.

The article can be downloaded here.

I apologize that I have not been able to post very many blogs recently and that I will, for family and work reasons, also not be able to do so until January.  I trust it that my lovely assistant Ashley and my co-bloggers will keep you intrigues until then!

November 13, 2016 in About this Blog, Commentary, Contract Profs, Current Affairs, Legislation, Miscellaneous, Science, True Contracts | Permalink

Wednesday, November 9, 2016

Here's a Nice Case to Use to Review Contract Formation, Conditions Precedent, and Promissory Estoppel

As we reach the end of the semester, I keep trying to remind my students of what we learned at the beginning of the semester, which was only a few weeks ago but feels like several lifetimes ago. As we turn our attention to our last topic of third-party rights, I don't want the students to forget the basics of contract formation. I want them to realize that contracts law builds on itself and is self-referential and so they can't just forget about the stuff that came first. 

Anyway, I say all of that to lead into this nice recent case out of the Eastern District of Pennsylvania, Killian v. Ricchetti, Civil Action No. 16-2874, that deals with issues of contract formation, and then turns to promissory estoppel. Exactly as I keep trying to remind my students to do! So I couldn't resist writing this case up for the blog. It serves as a nice review of a lot of what we've learned and I think I may actually use it in class. 

The alleged contract was a series of e-mails exchanged between two friends. The first e-mail set out a bunch of terms and ended with "there are more little details...it's a start." The response to the e-mail added a few additional terms. This, the court found, did not form a contract, because the response was not an acceptance but rather a counteroffer, due to the fact that it added terms. There was never any reply to that particular e-mail, so the counteroffer was never accepted. 

After these initial e-mails, there were further e-mails between the two regarding the real estate transactions at the heart of the alleged agreement. Those e-mails were enough to form a contract as follows: The first e-mail read, "[W]hen the Pine [Street property] is clear title we form an LLC with an equal partnership of 50% . . . ." with some further details given. The reply to the e-mail was "OF COURSE," which constituted an acceptance. However, there was a condition precedent to this contract: that the parties receive clear title on the Pine Street property in question. Due to no fault of the parties themselves, they never received this clear title, so the condition precedent never occurred, so no duties to perform under the contract ever arose. 

The court then turns to the promissory estoppel question, though. The court found here there were genuine issues of material fact whether there was a promise made and whether the other party acted in reliance on that promise. Similar issues of material fact existed for the unjust enrichment and qunatium meruit claims. Therefore, although the court granted summary judgment on the breach of contract claims, it denied summary judgment on the remaining claims. 

November 9, 2016 in Commentary, Law Schools, Recent Cases, Teaching, True Contracts, Web/Tech | Permalink | Comments (1)

Monday, November 7, 2016

Liberty Mutual's Ad Campaign Is a Call for Clearer Contracts

I was struck by this ad that Liberty Mutual Insurance is now running: 

Because what it boils down to is a call for greater clarity in contracts so that they can be more easily understood by consumers. (I appreciate the lawyer shout-out but not even all lawyers read all 22 pages!) But, in the midst of trying to simplify things, the small print on the commercial takes care to explain that "Not all of your coverages are shown in Coverage Compass(TM). For complete explanation of your coverages, please consult your Liberty Mutual sales representative and your policy" (emphasis added). You can try to streamline things, but there's no avoiding that 22-page policy in the end!

November 7, 2016 in Commentary, Current Affairs, Film Clips, True Contracts | Permalink | Comments (0)