Court Opinion

ID: 4100975
Source: CourtListenerOpinion
Date Created: 2016-11-22 15:01:38.152859+00
Date Added: 2024-06-11T14:14:31.813635
License: Public Domain

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                                                     [DO NOT PUBLISH]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