Michael Shane Enterprises, LLC v. Courtroom Connect Corp. ( 2016 )

Case: 16-11003 Date Filed: 11/21/2016 Page: 1 of 8
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 16-11003
Non-Argument Calendar
________________________
D.C. Docket No. 9:14-cv-80736-KLR
MICHAEL SHANE ENTERPRISES, LLC,
a Florida limited liability company,
Plaintiff - Counter Defendant - Appellant,
MICHAEL SHANE,
individually,
Cross Defendant - Counter Defendant,
versus
COURTROOM CONNECT CORP.,
a foreign corporation,
Defendant - Counter Claimant -
Cross Claimant - Appellee.
Case: 16-11003 Date Filed: 11/21/2016 Page: 2 of 8
________________________
Appeals from the United States District Court
for the Southern District of Florida
________________________
(November 21, 2016)
Before HULL, MARCUS, and EDMONDSON, Circuit Judges.
PER CURIAM:
Michael Shane Enterprises, LLC (“MSE”) appeals the district court’s grant
of partial summary judgment in favor of Courtroom Connect Corporation on
MSE’s civil action for breach of contract. No reversible error has been shown; we
affirm.
This case involves a series of contracts entered into between MSE and
Courtroom Connect pursuant to which MSE was to provide consulting services to
Courtroom Connect in exchange for compensation. First, on 28 February 2012,
MSE and Courtroom Connect entered into a “Sales Commissions Agreement.” In
pertinent part, the Sales Commissions Agreement provided that Courtroom
Connect was to pay MSE (1) $5,000 per month plus (2) a monthly bonus equal to
10% of gross sales in excess of $50,000 on certain products. The agreement
2
Case: 16-11003 Date Filed: 11/21/2016 Page: 3 of 8
purported to be “non-cancelable for any reason whatsoever (including death).”
The agreement contained no description of MSE’s obligations under the contract.
On 5 April 2012, MSE entered into an “Equity Share Agreement” with
David Feinberg, Courtroom Connect’s Chief Executive Officer. Under the terms
of this agreement, Feinberg agreed to transfer to MSE 30% of Feinberg’s equity
interest in Courtroom Connect in the event Courtroom Connect was either sold or
obtained a round of financing. Like the Sales Commissions Agreement, the Equity
Share Agreement contained no description of MSE’s obligations under the
contract.
On 7 December 2012, MSE and Courtroom Connect entered into an “Equity
Transaction Agreement,” which incorporated and superseded expressly the Equity
Share Agreement between MSE and Feinberg. Under the terms of the Equity
Transaction Agreement, MSE agreed to perform certain enumerated “management,
development, marketing, and organizational services” for Courtroom Connect. As
compensation for those services, Courtroom Connect agreed to transfer to MSE
10% of the gross proceeds of any sale of the business or of additional rounds of
financing. The agreement specified a 10-year term and was “non-cancellable.”
Four months later, on 16 April 2013, MSE and Courtroom Connect entered
into another contract: the “Strategic Marketing Agreement.” This agreement
purported to incorporate and supersede the Sales Commissions Agreement. Under
3
Case: 16-11003 Date Filed: 11/21/2016 Page: 4 of 8
the terms of the Strategic Marketing Agreement, MSE agreed to provide to
Courtroom Connect the same “management, development, marketing, and
organizational services” already set forth in the Equity Transaction Agreement. In
exchange for those services, Courtroom Connect agreed to pay MSE (1) $7,700 per
week plus (2) a monthly bonus equal to 12.5% of every dollar of revenue collected
above $400,000. The Strategic Marketing Agreement was to “run concurrently”
with the remainder of the Equity Transaction Agreement’s 10-year term. The
agreement was “non-cancellable,” except under specific “narrow” circumstances in
which Courtroom Connect could terminate the agreement with 30 days’ written
notice.
Courtroom Connect ultimately stopped making payments to MSE in
November 2013. MSE then filed this civil action, alleging claims for breach of
contract and for promissory estoppel.
The district court granted partial summary judgment in favor of Courtroom
Connect on MSE’s claims based on the Strategic Marketing Agreement. 1 In
particular, the district court concluded that the Strategic Marketing Agreement was
void for lack of consideration. This appeal followed.2
1
The district court later dismissed without prejudice MSE’s remaining claims against Courtroom
Connect based on the Equity Transaction Agreement. The district court entered final judgment
in favor of Courtroom Connect on MSE’s claims based on the Strategic Marketing Agreement.
2
On appeal, MSE raises no challenge to the district court’s grant of summary judgment on
MSE’s claim for promissory estoppel under the Strategic Marketing Agreement: that claim is,
4
Case: 16-11003 Date Filed: 11/21/2016 Page: 5 of 8
We review de novo the district court’s grant of summary judgment, viewing
all evidence and drawing all reasonable inferences in favor of the non-moving
party. Holloman v. Mail-Well Corp., 443 F.3d 832, 836-37 (11th Cir. 2006).
Summary judgment is proper “if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a).
The Strategic Marketing Agreement is governed by Delaware law.
Delaware courts have said “[i]t is the blackest of black-letter law that an
enforceable contract requires an offer, acceptance, and consideration.” E.g., Cigna
Health & Life Ins. Co. v. Audax Health Sols., Inc., 107 A.3d 1082, 1088 (Del. Ch.
2014). “Consideration” is defined as “a benefit to a promisor or a detriment to a
promisee pursuant to the promisor’s request.” Cont’l Ins. Co. v. Rutledge & Co.,
750 A.2d 1219, 1232 (Del. Ch. 2000). “A party cannot rely on a pre-existing duty
as his legal detriment in an attempt to formulate a contract.” Id. Instead, a
promisee incurs a “sufficient legal detriment” “if it promises or performs any act . .
. which it is not obligated to promise or perform so long as it does so at the request
of the promisor and in exchange for the promise.” 3 Williston on Contracts § 7.4
(4th ed. 2016) (emphasis added) (cited with approval by Delaware courts); see also
thus, not before us on appeal. MSE’s promissory estoppel claim was based on MSE’s reliance
on Feinberg’s assurance that Feinberg was authorized to execute the Strategic Marketing
Agreement on behalf of Courtroom Connect.
5
Case: 16-11003 Date Filed: 11/21/2016 Page: 6 of 8
Cont’l Ins. Co., 750 A.2d at 1233 (contract modification was unenforceable for
lack of consideration because, although defendants incurred greater expenses under
the modified terms, nothing evidenced that those expenses were incurred “in
exchange for a modification” of the contract or “as an inducement for [plaintiff’s]
promise to amend the agreement”).
The district court committed no error in concluding that the Strategic
Marketing Agreement was void for lack of consideration. Between 7 December
2012 and 15 April 2013, the relationship between Courtroom Connect and MSE
was governed by two contracts: the Sales Commissions Agreement and the Equity
Transaction Agreement. Under the Sales Commissions Agreement, MSE was
entitled to receive ongoing monthly fees in exchange for unspecified consulting
services. Meanwhile, under the Equity Transaction Agreement, MSE was entitled
to a contingent equity interest in Courtroom Connect in exchange for specific
enumerated consulting services.
The parties then entered into the Strategic Marketing Agreement, which
superseded the Sales Commissions Agreement, but left intact the Equity
Transaction Agreement. For the Strategic Marketing Agreement to be enforceable
under Delaware law, MSE must show, in pertinent part, the existence of
consideration. See Cigna Health & Life Ins. Co., 107 A.3d at 1088.
6
Case: 16-11003 Date Filed: 11/21/2016 Page: 7 of 8
Because the consulting services MSE was obligated to perform under the
Strategic Marketing Agreement were identical to those services MSE was already
obligated to perform under the Equity Transaction Agreement, MSE cannot rely on
those pre-existing duties as consideration. See Cont’l Ins. Co., 750 A.2d at 1232.
About the existence of consideration, MSE relies instead on the termination
clause in the Strategic Marketing Agreement which allowed Courtroom Connect to
terminate the contract under certain conditions: a right that Courtroom Connect
lacked under the Sales Commissions Agreement. Nothing evidences, however --
nor does MSE contend -- either that Courtroom Connect requested the inclusion of
the termination clause or that the termination clause otherwise induced Courtroom
Connect’s promise to pay MSE substantially increased consulting fees. 3 In the
absence of evidence that the termination clause was a bargained-for term, it
constitutes no consideration under Delaware law. See Cont’l Ins. Co., 750 A.2d at
1233. We affirm the district court’s grants of partial summary judgment in favor
3
In addition to providing a more lucrative bonus structure, the Strategic Marketing Agreement
entitled MSE to receive $7,700 per week instead of $5,000 per month.
7
Case: 16-11003 Date Filed: 11/21/2016 Page: 8 of 8
of Courtroom Connect.
AFFIRMED. 4
4
On appeal, MSE also contends that the Strategic Marketing Agreement and the Equity
Transaction Agreement should be read together as reflecting the parties’ intent for MSE to
receive two forms of compensation -- ongoing consulting fees and a contingent equity interest --
in exchange for MSE’s consulting services. Because MSE failed to raise this argument in the
district court, the argument is not properly before us. See Access Now, Inc. v. Sw. Airlines Co.,
385 F.3d 1324, 1331 (11th Cir. 2004). Moreover, MSE’s argument about the parties’ intent is
immaterial to whether -- as a matter of Delaware contract law -- the Strategic Marketing
Agreement was void for lack of consideration.
8