Court Opinion

ID: 214171
Source: CourtListenerOpinion
Date Created: 2011-04-07 00:00:22+00
Date Added: 2024-06-11T17:28:19.017403
License: Public Domain

10-1547-cv
     Dolphin Direct Equity Partners v. Interactive Motorsports & Entm’t Corp.

                          UNITED STATES COURT OF APPEALS
                              FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER
     RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
     ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
     PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
     DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
     ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
     SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1            At a stated term of the United States Court of Appeals
 2       for the Second Circuit, held at the Daniel Patrick Moynihan
 3       United States Courthouse, 500 Pearl Street, in the City of
 4       New York, on the 6th day of April, two thousand.
 5
 6       PRESENT: DENNIS JACOBS,
 7                              Chief Judge,
 8                GUIDO CALABRESI,
 9                DENNY CHIN,
10                              Circuit Judges.
11
12       - - - - - - - - - - - - - - - - - - - -X
13       INTERACTIVE MOTORSPORTS AND
14       ENTERTAINMENT CORPORATION, RACE CAR
15       SIMULATORS, INCORPORATED, WILLIAM
16       DONALDSON, AND PERFECT LINES,
17       INCORPORATED,
18
19                    Defendants-Appellants,
20
21                    -v.-                                               10-1547-cv
22
23       DOLPHIN DIRECT EQUITY PARTNERS, LP,
24       AND RACE CAR SIMULATION CORPORATION,
25
26                Plaintiffs-Appellees.
27       - - - - - - - - - - - - - - - - - - - -X

                                                  1
 1
 2   FOR APPELLANTS:   Mario DeMarco
 3                     Law Office of Mario DeMarco
 4                     Port Chester, NY
 5
 6   FOR APPELLEES:    Michael Tiger
 7                     Hughes Hubbard & Reed LLP
 8                     New York, NY
 9
10        Partial appeal from the grant of summary judgment for
11   Appellees on all issues by the United States District Court
12   for the Southern District of New York (Berman, J.).
13
14        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
15   AND DECREED that the district court’s grant of summary
16   judgment in favor of Appellees and its assessment of damages
17   against Appellants are AFFIRMED.
18
19        Appellants appeal the summary judgment ruling that they
20   breached the Asset Purchase, Noncompetition, and Management
21   Agreements (the “Agreements”) when they sold and leased SMS
22   and Reactor racecar simulators not owned by Appellees while
23   Appellees’ simulators sat idle (i.e., were not being leased
24   out). They also appeal the district court’s ruling that
25   William Donaldson is liable in his personal capacity for his
26   breaches of the Noncompetition Agreement. The district
27   court’s damage award is also contested. We assume the
28   parties’ familiarity with the underlying facts, the
29   procedural history, and the issues presented for review.
30
31        A grant of summary judgment is reviewed de novo. Guest
32   v. Hansen, 603 F.3d 15, 20 (2d Cir. 2010). “Summary
33   judgment is warranted when, after construing the evidence in
34   the light most favorable to the non-moving party and drawing
35   all reasonable inferences in its favor, there is no genuine
36   issue as to any material fact.” Id. Interpretation of the
37   terms of a legally binding agreement, such as a contract,
38   are questions of law and therefore appropriate for summary
39   judgment. See Cent. States S.E. & S.W. Areas Health &
40   Welfare Fund v. Merck-Medco Managed Care, L.L.C., 504 F.3d
41   229, 247 (2d Cir. 2007) (“[W]e review de novo a district
42   court’s legal conclusions with respect to its interpretation
43   of the terms of a settlement agreement.”).
44
45        The record supports the conclusion that, as a matter of
46   law, Appellants breached the Agreements when they leased SMS
47   simulators, sold SMS simulators, and leased Reactor

                                  2
 1   simulators while Appellees’ simulators were idle. As to the
 2   SMS leases, Appellants advance no argument to the contrary.
 3   As to the SMS sales and the Reactor leases, the
 4   Noncompetition and Management Agreements both include broad
 5   prohibitions on Appellants competing with Appellees in the
 6   racecar simulator market. These prohibitions make no
 7   distinction between leases and sales, and they make no
 8   distinction among types of racecar simulators. A
 9   straightforward reading of these Agreements compels the
10   conclusion that they prohibited Appellants from selling SMS
11   simulators and from leasing Reactor simulators while any of
12   Appellees’ simulators were idle.
13
14        Appellants argue that, in any event, Donaldson cannot
15   be held liable personally because he signed the
16   Noncompetition Agreement only in his official capacity as an
17   officer for the Appellant corporations. Under New York
18   contract law, “an agent for a disclosed principal will not
19   be personally bound [by the contract] unless there is clear
20   and explicit evidence of the agent’s intention to substitute
21   or superadd his personal liability for, or to, that of his
22   principal.” Salzman Sign Co. v. Beck, 10 N.Y.2d 63, 67
23   (1961) (internal quotation marks omitted); see also Lerner
24   v. Amalgamated Clothing & Textile Workers Union, 938 F.2d 2,
25   5 (2d Cir. 1991). Donaldson’s argument is defeated by the
26   first sentence of the Noncompetition Agreement, which
27   identifies the parties and provides that the contract binds
28   “William Donaldson” (making no reference to any official
29   capacity). Likewise, the signature block at the end of the
30   contract is signed by Donaldson with no title attached to
31   his signature (Donaldson signed all of the other contracts
32   with the title “CEO” below his name). Moreover, given the
33   existence of the simultaneously executed Management
34   Agreement, which functioned as a corporate non-compete
35   agreement, the Noncompetition contract would be wholly
36   superfluous unless it was intended to bind Donaldson
37   personally.
38
39        Although Appellants assert that the district court
40   miscalculated the damages it awarded Appellees, Appellants
41   failed to identify evidence or advance a coherent argument
42   in support of this assertion. In any event, Appellants
43   waived this argument by failing to raise it in front of the
44   district court below. The district court’s damages
45   calculation is affirmed.
46
47

                                  3
 1        We hereby AFFIRM in full the district court’s grant of
 2   summary judgment in favor of Appellees and its assessment of
 3   damages against Appellants.
 4
 5
 6                              FOR THE COURT:
 7                              CATHERINE O’HAGAN WOLFE, CLERK
 8
 9
10
11

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