Court Opinion

ID: 2978493
Source: CourtListenerOpinion
Date Created: 2015-09-22 18:26:35.290348+00
Date Added: 2024-06-11T15:40:18.545939
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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 09a0706n.06

                                           No. 08-1617                                 FILED
                                                                                   Oct 29, 2009
                          UNITED STATES COURT OF APPEALS                      LEONARD GREEN, Clerk
                               FOR THE SIXTH CIRCUIT

STEVEN S. HUBBARD and KATHLEEN                           )
HUBBARD,                                                 )       ON APPEAL FROM THE
                                                         )       UNITED STATES DISTRICT
                Plaintiffs-Appellees,                    )       COURT FOR THE EASTERN
                                                         )       DISTRICT OF MICHIGAN
                          v.                             )
                                                         )                OPINION
GEOSTAR FINANCIAL SERVICES                               )
CORPORATION, a Delaware Corporation,                     )
                                                         )
                 Defendant-Appellant.                    )

BEFORE: MOORE and WHITE, Circuit Judges; and OLIVER, District Judge.*

       SOLOMON OLIVER, JR., District Judge. Defendant/Appellant GeoStar Financial

Services Corporation (“GeoStar” or “Defendant”) appeals the following orders of the district court:

(1) the April 17, 2007 order denying Plaintiffs/Appellees Steven S. and Kathleen Hubbard

(collectively, the “Hubbards” or “Plaintiffs”) Motion for Summary Judgment on the Hubbards’

breach of contract claim; (2) the January 18, 2008 supplemental order granting the Hubbards’ Motion

for Summary Judgment on the breach of contract claim; and (3) the February 11, 2008 order denying

GeoStar’s Motion for Reconsideration of the supplemental order.1 In accordance with the district

       *
          The Honorable Solomon Oliver, Jr., United States District Judge for the Northern
District of Ohio, sitting by designation.
       1
         The Hubbards do not appeal the portion of the district court April 17, 2007 order
granting Defendant’s Motion to Dismiss the Hubbards’ common law and statutory conversion
claims.
court’s prior opinions and orders and the parties’ Stipulation Regarding Amount of Damages, the

court issued a judgment on April 25, 2008, in favor of the Hubbards and against GeoStar in the

amount of $256,372. However, the district court held that GeoStar did not waive its right to appeal

the district court’s liability findings as determined in the prior orders set forth above.

        For the following reasons, we AFFIRM the district court’s April 17, 2007 order denying the

Hubbards’ Motion for Summary Judgment, REVERSE the district court’s January 18, 2008

supplemental order granting the Hubbards’ Motion for Summary Judgment, REVERSE the district

court’s February 11, 2008 order denying GeoStar’s Motion for Reconsideration, VACATE the

Judgment for the Hubbards, and REMAND the case to the district court for a determination by the

trier of fact as to whether time was of the essence in the Purchase Agreement between the parties and

to determine any consequent damages that the Hubbards may have sustained.

                     I. BACKGROUND AND PROCEDURAL HISTORY

        A.      Factual History

        This case involves a series of transactions that the Hubbards and their company, S & K

Breeders, entered into with GeoStar and affiliated companies.

                1. The Conversion Agreement

        On October 25, 2002, the Hubbards, through S & K Breeders, invested $255,900 in an oil

and gas drilling program. (Conversion Agreement, Record on Appeal (“ROA”) at 102.) The

investment was made with GeoStar, and the drilling program was run by one of its affiliates, Gastar

Exploration, Ltd. (“Gastar”). (Id.) Based on the Conversion Agreement memorialized by the parties,

                                                   2
the Hubbards had the right to convert this investment into shares of Gastar common stock.2 (Id.)

The Conversion Agreement included a provision that “[a]ny Gastar stock that you acquire in this

conversion shall be restricted from trading for a period of one (1) year following the date of the

conversion.” (Conversion Agreement, ROA at 101.) If the Hubbards elected to convert their interest

into shares of Gastar, the Conversion Agreement required that they give their “assurances of

compliance with the appropriate securities laws . . .” (Conversion Agreement, ROA at 102.)

                2. The Purchase Agreement

       The Hubbards exercised their right of conversion on January 21, 2004, which resulted in their

ownership of 100,000 shares of Gastar stock. On March 11, 2005, GeoStar agreed to purchase the

100,000 shares from the Hubbards in accordance with the Purchase Agreement executed by the

parties. (Purchase Agreement, ROA at 14.) The Purchase Agreement provided that GeoStar would

purchase the first 50,000 shares for a cash payment of $175,000. (Id.) The Hubbards admit that

GeoStar timely made this payment. (Pls.’ Mot. for Summ. J., ROA at 40.)

       According to the Purchase Agreement, GeoStar was to pay for the remaining 50,000 shares

on or before February 3, 2006. (Purchase Agreement, ROA at 14-15.) The Purchase Agreement

provided for two alternative methods of payment. First, GeoStar could make a cash payment to the

Hubbards, not later than February 3, 2006, in an amount based on the current market value of the

       2
           The Conversion Agreement read in pertinent part:

                1.Conversion to Public Stock

                The Investor [S & K Breeders] shall have the right at any time beginning
                December 10, 2003 to January 10, 2004 to exchange his or her working
                interest for shares of Gastar Exploration, Ltd. (“Gastar”) stock . . .

                                                3
shares. (Id.) The current market value was to be determined by the average closing price per share

for the 15 trading days beginning January 9, 2006 and ending January 27, 2006, but this average

could not be less than $3.50 per share. Alternatively, if the average closing price per share for the

15 trading days beginning January 9, 2006 and ending January 27, 2006, was above $3.50 per share,

GeoStar, at its “sole discretion” had the “exclusive option” of delivering 50,000 tradable shares to

the Hubbards, not later than February 3, 2006. (Id.) Specifically, the Purchase Agreement provides,

in pertinent part:

        3. Seller hereby agrees to sell any and all of Seller’s Gastar Conversion Shares, whether
        in specie, right, title, and/or interest referenced in 2, above, in accordance with the following
        schedule:

                                                  ...

                b.      The remaining Fifty Thousand (50,000) shares of Gastar Exploration
                        Ltd. shall be delivered or purchased in accordance with the following:

                        i.      Buyer may pay Seller not later than February 3, 2006 the
                        current market value of the remaining 50,000 shares, with the market
                        value defined as the average closing price per share for the 15 trading
                        days beginning January 9, 2006 and ending January 27, 2006, but not
                        less than US$3.50 per share, a total not less than One Hundred
                        Seventy-Five Thousand US Dollars ($175,000); or

                        ii. If the average closing price per share for the 15 days beginning
                        January 9, 2006 and ending January 27, 2006 is above three dollars
                        and fifty cents US, (US$3.50) then at the sole discretion of Buyer,
                        and at Buyer’s exclusive option, Buyer may forgo option b.(i) and
                        instead, Buyer may deliver to Seller the remaining 50,000 tradable
                        shares to Seller, not later than February 3, 2006.

(Id.) (emphasis added.)

        The Purchase Agreement also included the following provision:

                                                   4
        5.     Seller recognizes that the Shares were not registered under the Securities
        Act of 1933 or other applicable state securities laws. Seller further acknowledges
        that neither Seller nor the company were under any obligation to register the
        Shares.

(Purchase Agreement, ROA at 15.) Finally, the Purchase Agreement stated that, “[t]his Agreement

constitutes the entire agreement between the Seller and the Company regarding the offer and sale of

the Shares, which Seller is selling . . .” (Purchase Agreement, ROA at 17.)

        GeoStar admits that it failed to pay cash for the remaining shares or tender tradable shares

of stock by February 3, 2006. (Appellant’s Br. at 7.) The market value for the shares, i.e., the average

share price beginning on January 9, 2006, and ending January 27, 2006, was $4.58857, which the

Hubbards contend would have resulted in a cash payment of $229,428.57. (Appellees’ Br. at 6, citing

ROA at 26.)

        On April 12, 2006, GeoStar tendered a share certificate to the Hubbards as satisfaction for

the second set of shares. (Share Certificate, ROA at 65-66.) On that date, the Gastar stock had a

closing price of $3.70, or a value of $185,000 for 50,000 shares. The certificate bore a legend that

restricted the sale of the shares for one year, or until after April 1, 2007, as required by SEC Rule

144, which governs the sale of unregistered securities. (Id.) The Hubbards rejected the certificate,

as well as the accompanying Power of Attorney to Transfer Securities, because of the restrictive

legend. The Hubbards returned the documents to GeoStar, contending that the tender of shares was

not in compliance with the Purchase Agreement, which provided for “tradable shares.”3 (Pls.’ Mot.

for Summ. J., ROA at 41.)

        3
         GeoStar re-sent the certificate and Power of Attorney to Transfer Securities, after the
commencement of this suit, and the Hubbards did not return or endorse the documents. (Pls.’
Mot. for Summ. J., ROA at 41.)

                                                   5
        B. Procedural History

        The Hubbards filed suit in the U.S. District Court for the Eastern District of Michigan,

asserting claims of breach of contract, common law conversion, and statutory conversion against

GeoStar. (Compl., ROA at 4-5.) Thereafter, they filed a Motion for Summary Judgment, arguing that

they were entitled to summary judgment on their breach of contract claim. Specifically, the

Hubbards argued that a condition precedent to GeoStar’s alternative method of performance was that

it deliver the shares to the Hubbards by February 3, 2006, and the late delivery of the shares meant

this condition precedent was not fulfilled. As a result, the Hubbards maintained that the option to

tender shares in lieu of cash was foreclosed to GeoStar, and the only method of performance left to

it under the Purchase Agreement was a cash payment to the Hubbards. (Pls.’ Mot. for Summ. J.,

ROA at 43.) Alternatively, the Hubbards argued that GeoStar’s tender of Gastar shares was

nonconforming because the shares were not “tradable” as provided for in the Purchase Agreement.

        GeoStar’s response to the Hubbards’ Motion did not explicitly confront the Hubbards’

argument that the alternative method of performance--the tender of tradable shares--was foreclosed

because GeoStar failed to satisfy a condition precedent to its exercise of this option. However,

GeoStar explicitly addressed the Hubbards’ alternative argument that it did not timely perform,

arguing that it had substantially performed by tendering unregistered shares, which complied with

the Purchase Agreement.

        1. District Court’s April 17, 2007 Order Denying the Hubbards’ Motion for Summary
        Judgment

        The district court held in its April 17, 2007 order that, because GeoStar conceded that it

breached the contract by failing to either pay for or return the shares by February 3, 2006, “the central

                                                   6
remaining question pertains to the nature of [the Hubbards’] damage remedy.” (Order, ROA at 144.)

In assessing damages, the district court did not address the Hubbards’ argument that GeoStar was

foreclosed from exercising the option to tender stock shares in lieu of making a cash payment

because GeoStar failed to satisfy a condition precedent to the option.

       Rather, the district court addressed the Hubbards’ alternative argument that GeoStar’s

performance was nonconforming because it failed to tender “tradable shares.” Specifically, the

district court found that the Purchase Agreement on its face contains an ambiguity: the Purchase

Agreement expressly refers to “tradable shares” in paragraph A.3., but paragraph A.5 expressly states

that the shares were not registered under the Securities Act of 1933. (Id.) Moreover, the district

court noted that the parties agreed not to violate any laws in paragraph A.13, but shares that are

publicly traded must comply with the applicable securities law. (Id.) The district court found that

“the ambiguity present on the face of the [Purchase Agreement] due to the use of the term ‘tradable

shares’ is only heightened by considering the Conversion Agreement, i.e., the means by which [the

Hubbards] initially acquired the shares.” (Id.) Accordingly, the district court denied the Hubbards’

Motion for Summary Judgment based on its finding that a genuine issue of material fact remains

regarding the meaning of “tradable shares.”

       2. District Court’s January 18, 2008 Supplemental Order Granting in Part the Hubbards’
       Motion for Summary Judgment

       In its April 17, 2007 Order, the district court noted as a preliminary matter that it “found that

[GeoStar] had breached the parties’ contract, leaving a single issue as to the damages on [the

Hubbards’] claim of breach of contract.” (ROA at 157.) However, in accordance with the parties’

request at a final pretrial conference on January 15, 2008, the district court further reviewed the

                                                  7
Purchase Agreement. The court held that its prior determination that GeoStar breached the contract

still holds. However, the court supplemented its prior order “to note that the meaning of the term

‘tradable’ in subpart (ii) [GeoStar’s option to deliver “tradable shares” to the Hubbards] does not

inform on the damages analysis.” (Id.)

        Specifically, the district court noted that GeoStar correctly relied upon the contractual

provision allowing it to exercise its “sole discretion” and act at its “exclusive option” to return, rather

than pay for, the shares. (Id. at 158.) The district court concluded, though, that this option was

barred after February 3, 2006. (Id.) The district court reached this decision based upon its analysis

of how the structure of the time limitation of February 3, 2006 differs in the two subparts addressing

GeoStar’s performance:

        Subpart b.(i) opens with the option for GeoStar to pay for the shares “not later than
        February 3, 2006" and concludes with a minimum threshold for such a payment.
        Subpart b.(ii) opens with that same minimum threshold which, if met, is the
        condition on which Defendant can exercise its sole discretion to return the shares.
        Importantly, “at the sole discretion of [Defendant], and at [Defendant’s] exclusive
        option, [Defendant] may forgo option b.(i) and instead, [Defendant] may deliver to
        [the Hubbards] the remaining 50,000 shares to [Plaintiffs], not later than February
        3, 2006. Although the same date limitation appears in both subparts, the date in
        subpart (ii) is linked not only to the timing of the delivery of the shares but to the
        timing of the election to do so. Given the structure of that sentence, the date of
        February 3, 2006 circumscribes the time by which Defendant could elect the
        delivery-of-shares option for payment. The verbs “may forgo” and “may deliver”
        appear in the conjunctive, such that the date limitation applies to both, not just to the
        portion of the sentence closest to the date. The failure to deliver the shares by
        February 3, 2006 could provide grounds for a breach, but, regardless of whether any
        such delivery occurred, Defendant only had until February 3, 2006 to pursue that
        course of action. When it did not timely exercise its sole discretion to do so, it lost
        that avenue of payment.

        In a footnote, the district court also noted that:

        Indeed, interpreting this contract provision as if the date did not operate as a bar
        would introduce an absurd result. If Defendant could make the election to return the

                                                    8
        shares at any time, independent of the contracted-for date, then Defendant could wait
        for a decrease in share price and seek to return the shares at an inopportune time for
        Plaintiffs.

(Id. at 159, n.1.) Accordingly, the district court granted the Hubbards’ Motion for Summary

Judgment in part, holding that:

        [T]he February 3, 2006 date for [GeoStar] to exercise its sole discretion to deliver the
        shares, tradable or otherwise, has come and gone. [GeoStar’s] late proffer of those
        shares does not cure its breach, and the amount of damages for that breach remains
        an issue.

(Id. at 160.)

        3. District Court’s February 11, 2008 Order Denying GeoStar’s Motion for Reconsideration
        of the January 18, 2008 Supplemental Order

        In its Motion for Reconsideration, GeoStar argued that the supplemental order contained the

following defects:

        (1) First, the Supplemental Order ignores a bedrock principle of contract damages:
        where a contract has alternate methods of performance, as this one does, a plaintiff
        claiming breach is entitled to recover, at most, in accord with the alternative that will
        result in the smallest recovery, even where the defendant failed to make a timely
        election;

        (2) Second, nowhere in the plain language of the contract, the nature of the contract,
        or the circumstances surrounding the contract did the parties indicate that time is of
        the essence. As a matter of Michigan law, time is not considered of the essence
        unless the contract expressly so states or unless the nature of the contract or the
        circumstances under which it was executed makes it so;

        (3) Finally, by failing to accept [Defendant’s] tender of the shares, Plaintiffs failed
        to mitigate their damages. Had Plaintiffs accepted the shares, they would have been
        in a materially better position as a result of the breach. Accordingly, their claim is
        barred.

(Def.’s Mot. for Recons., ROA at 166-67.) With regard to the third argument, Defendant notes that

the value of the shares on February 3, 2007 was $92,000 at a price of $1.84 per share, while the value

                                                   9
of the shares on April 12, 2007 was $113,500 at a price of $2.27 per share, representing a net gain

of $21,500. (Def.’s Mot. for Recons., ROA at 170.)

        The district court rejected GeoStar’s first argument, based on the court’s finding that the

terms of the Purchase Agreement foreclosed one method of performance, the tender of stock shares,

due to GeoStar’s failure to tender the stock to Plaintiffs by February 3. (Id. at 175.) Second, the

district court found that, “although the contract did not expressly use the phrase ‘time is of the

essence,’ the nature of the contract does involve a critical time constraint.” (Id. at 176.) Finally, the

court found that the Hubbards’ duty to mitigate “raises issues unrelated to Defendant’s liability,” and

that GeoStar could advance this argument at a bench trial on the valuation of damages. (Id.)

        4. District Court’s April 25, 2008 Judgment Entry for the Hubbards and Against GeoStar

        The parties stipulated that, assuming liability based only on the court’s April 17, 2007,

January 18, 2008, and February 11, 2008, opinions and orders, the total amount of damages is

$256,372, as defined by the market share price defined in supbart b.i. (Stip. Regarding Amount of

Damages, ROA at 179-80.) Consistent with these opinions and orders, the district court ordered that

final judgment be entered for the Hubbards and against GeoStar in the amount of $256,372.

(Judgment, ROA at 182.) Additionally, the district court noted that, “[GeoStar] does not waive its

right to appeal the court’s finding of liability as determined in the Court’s April 17, 2007, January 18,

2008, and February 11, 2008 opinions and orders.” (Id.)

                                  II. STANDARD OF REVIEW

        A district court’s decision to grant a motion for summary judgment is subject to de novo

review. Little v. BP Exploration & Oil Co., 265 F.3d 357, 361 (6th Cir. 2001). Summary judgment

is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together

                                                   10
with any affidavits show that there is no genuine issue of material fact. Fed. R. Civ. P. 56(c);

LaPointe v. UAW, Local 600, 8 F.3d 376, 378 (6th Cir. 1993).

                                    III. LAW AND ANALYSIS

        GeoStar appeals the district court’s orders and Judgment, arguing that the district court erred

in granting the Hubbards’ Motion for Summary Judgment by reading into the parties’ contract a time-

is-of-the-essence provision that was not in the Agreement, and then compounded its error when

analyzing the Hubbards’ damages claim. Specifically, GeoStar argues:

        (1) The time for performing the Purchase Agreement was not “of the essence”;

        (2) GeoStar properly delivered Gastar shares that were not registered under the Securities
        Act of 1933;

        (3) The Hubbards suffered no damages as a result of the “modest” delay in
        Defendant’s tender of the unregistered shares. Under an alternative contract like the
        Purchase Agreement, a non-breaching party is entitled to damages based on the
        alternative that will result in the lesser recovery, which is $0. Alternatively, the
        Hubbards’ failure to mitigate their damages also bars any recovery as a matter of law.

(See Appellant’s Br. at 10-22.)

        Conversely, the Hubbards argue that: (1) the option to tender tradable shares expired without

being exercised; (2) the nature of the contract is such that time was of the essence; (3) the late tender

of shares was nonconforming; and (4) the Hubbards suffered damages. (Appellees’ Br. at 9-22.) As

a preliminary matter, we note that a review of the record reveals that the Hubbards argue for the first

time on appeal that paragraph 3.b.ii. of the Agreement constitutes an option contract and thus must

be strictly construed under Michigan law. Because “this court generally will not consider an

argument not raised in the district court and presented for the first time on appeal,” Foster v. Barilow,

6 F.3d 405, 408 (6th Cir. 1993), the court shall not address the Hubbards’ first argument.

                                                   11
        As set forth above, GeoStar conceded that it breached the Purchase Agreement by failing

either to pay for or to return the shares to the Hubbards on or before February 3, 2006. (ROA at

144.) As a result, the district court correctly noted in its April 17, 2007 Order denying the Hubbards’

Motion for Summary Judgment, that “the central remaining question pertains to the nature of

Plaintiffs’ damage remedy.” (Id.) The district court’s holding that an issue of fact remained

regarding damages was premised on its finding that “the [Purchase] Agreement on its face contained

an ambiguity.” (Id.) Specifically, the district court concluded that the Purchase Agreement on its

face expressly referred to “tradable shares” in paragraph A.3, but the Purchase Agreement also

expressly states that the shares were not registered under the Securities Act of 1933 in paragraph A.5.

(Id.)

        The district court, however, changed course in its supplemental order, concluding that the

Purchase Agreement contained a time-is-of-the-essence provision, and that, therefore, GeoStar only

had until February 3, 2006 to exercise b.ii of the Purchase Agreement. Because this time had

elapsed, the court determined that GeoStar’s option to proffer the shares was foreclosed and it was

required to provide the cash payment to the Hubbards. Significantly, after reaching the conclusion

that time was of the essence, the district court stated that “the meaning of the term ‘tradable’ in

subpart (ii) does not inform on the damages analysis” because “the valuation of those damages does

not turn on the term ‘tradable.’” As discussed below, we find that the district court was incorrect in

this regard.

        Under Michigan law, “naming the date when payments fall due is not sufficient to make time

the essence of a contract.” Jenkins v. U.S.A. Foods, Inc., 912 F. Supp. 969, 974 (E.D. Mich. 1996)

(citing Range v. Davison, 218 N.W. 789, 792 (Mich. 1928)). In Jenkins, the court denied the

                                                  12
plaintiff’s summary judgment motion on its contract claim based on its finding that the defendant

buyer of a business substantially performed its obligations under the contract, even though it made

a periodic interest payment two days after the expiration of a grace period, because there was no

indication in the contract that time was of the essence and no harm resulted from the slight delay in

repayment. Here, like the Jenkins court, the district court analyzed the text of the Purchase

Agreement to determine whether time was of the essence. However, the district court’s analysis

missed a crucial first step because it failed to address a threshold issue, the resolution of which

necessarily determines whether the Purchase Agreement contained a time-is-of-the-essence

provision: the meaning of the term “tradable shares.”

        The district court erred in failing to address this crucial issue because the parties’ arguments

regarding whether time is of the essence in the Purchase Agreement are necessarily premised upon

their divergent interpretations of the word “tradable.” For example, GeoStar argues that it delivered

“tradable shares,”which were subject to a one-year restriction on trading under applicable securities

laws, in April 2006. Thus, if the court accepts GeoStar’s interpretation of the meaning of “tradable

shares,” timing was clearly not of the essence in the Purchase Agreement because the shares could

not be traded until a year after delivery of the shares. Conversely, the Hubbards construe the term

“tradable” to mean that the shares are free from restriction and immediately able to be traded. Thus,

the Hubbards argue that the Purchase Agreement shows that time was of the essence because the

Hubbards accepted only a seven-day risk--from January 27, 2006, to February 2, 2006--that the share

price would dip below $3.50, not the seventy-five day risk imposed upon them by the late delivery

of the shares.

                                                  13
        It is apparent that the district court impliedly accepted the Hubbards’ interpretation of the

term “tradable shares” in reaching its conclusion that time was of the essence in the Purchase

Agreement. For example, the district court stated that “interpreting this contract provision as if the

date did not operate as a bar would introduce an absurd result” because “if Defendant could make

the election to return the shares at any time, independent of the contracted-for date, then Defendant

could wait for a decrease in share price and seek to return the shares at an inopportune time for

Plaintiffs.” (ROA at 1617.) However, if GeoStar’s interpretation of the term “tradable shares” in

the Agreement is correct, GeoStar could not “play the market” in the manner described by the district

court because it would have no way of knowing what the share price would be almost a year later

when the shares were capable of being traded.

        The record evidence reveals, however, that there remain genuine issues of material fact with

regard to the meaning of “tradable” shares under the Purchase Agreement, as the district court

correctly concluded in its April 17, 2007 order. Paragraph A.3 of the Purchase Agreement states that

GeoStar has the option of providing the Hubbards “50,000 tradable shares.” (Purchase Agreement,

ROA at 15, emphasis added.) The term “tradable,” based on its plain meaning, could be read as

requiring the delivery of shares that are immediately tradable. However, other provisions contained

in the Purchase Agreement may be read to suggest otherwise. Paragraph A.5 states that the shares

of Gastar are unregistered and that GeoStar is under no obligation to register the shares. (Id.)

Pursuant to securities laws, these shares would not be immediately tradable. See 17 C.F.R.

§ 230.144(d)(1)(ii) (restricting the resale of unregistered securities for a one-year period). Based on

the provisions of the Purchase Agreement, the meaning of this term is ambiguous. Therefore,

                                                  14
because there are genuine issues of material fact regarding the meaning of “tradable” shares, the

district court improperly granted judgment as a matter of law in favor of the Hubbards.

        Instead, the meaning of the term “tradable” must be resolved by the trier of fact, and this

determination is critical to the resolution of this case. If it is determined that “tradable” required that

GeoStar deliver readily tradable shares on that day, then it would have breached the contract by

failing to do so on February 3rd. The Hubbards would then be entitled to resulting damages for this

breach based on the average price per share for the fifteen days beginning January 9, 2006, and

ending January 27, 2006, as was required under b.ii of the Purchase Agreement. If, however, the

contract did not require readily tradable shares, then time was not of the essence, and the Hubbards

would appear to have no damages as a consequence. Accordingly, the court remands the case to the

district court for a determination by the trier of fact as to whether time was of the essence, based on

the meaning of “tradable” shares, and to determine the amount of damages, if any, the Hubbards

incurred as a result of GeoStar’s breach.

                                          IV. CONCLUSION

        For the reasons stated above, the court AFFIRMS the district court’s order denying the

Hubbards’ Motion for Summary Judgment because the district court correctly concluded that genuine

issues of material fact exist regarding the meaning of “tradable shares,” which precluded a

determination of damages at that time. Therefore, the court REVERSES the district court’s

supplemental order granting the Hubbards’ Motion for Summary Judgment, REVERSES the district

court’s order denying GeoStar’s Motion for Reconsideration of the supplemental order, VACATES

the Judgment for the Hubbards and REMANDS the case to the district court for a determination by

                                                    15
the trier of fact as to whether time was of the essence and to determine any consequent damages that

the Hubbards may have sustained.

                                                16