Feld Motor Sports, Inc. v. Traxxas, L.P.
2017 U.S. App. LEXIS 11705
| 5th Cir. | 2017Background
- Traxxas (RC vehicle maker) and Feld Motor Sports (FMS, owner of Monster Jam) executed a 2010 merchandising license agreement for Traxxas to produce Stampede RC trucks using FMS intellectual property, term Oct 1, 2010–Dec 31, 2013.
- Contract defined “Licensed Articles” as hobby-grade battery-operated RC monster truck vehicles and bodies branded with the Property, and required payment of royalties; Clause 5 expanded ‘‘Licensed Articles’’ for royalty calculation to include all R/C units and bodies manufactured with the Stampede chassis and/or body, whether branded or not; first 30,000 units exempted.
- Traxxas sold the base Stampede (wholesale $150) and later premium Stampede-line models (Nitro, VXL, 4x4, 4x4 VXL; $220–$300+) that differ in chassis, power source, and features; some premium models were introduced after the agreement began.
- After an audit post-expiration, FMS claimed Traxxas owed nearly $1 million in additional royalties for Stampede-line models beyond the base Stampede; Traxxas paid royalties only on the standard and MJ-branded Stampedes during the term.
- Parties filed cross-motions for summary judgment arguing the contract was unambiguous in their favor; district court found the contract ambiguous, denied both motions, and a jury after trial found for FMS on royalties for the entire Stampede line; Traxxas moved under Rule 50 and timely preserved appeal.
Issues
| Issue | Plaintiff's Argument (FMS) | Defendant's Argument (Traxxas) | Held |
|---|---|---|---|
| Whether appellate court has jurisdiction to review district court’s denial of summary judgment after a jury trial | N/A (defends district court) | Traxxas sought review of district court legal ruling denying summary judgment | Court: Jurisdiction exists to review legal conclusions from denial of summary judgment after a jury trial only if preserved in a Rule 50 motion; Traxxas preserved argument; jurisdiction proper |
| Whether invited error bars Traxxas from challenging ambiguity after approving jury instruction | FMS: Traxxas approved instruction and induced error | Traxxas: Timely objected to ambiguity ruling and consistently argued contract was unambiguous; did not invite error | Court: Invited error doctrine does not apply; Traxxas objected and was overruled |
| Whether the agreement is unambiguous (interpretation of "Stampede body"/"Stampede chassis" and scope of "Licensed Articles") | FMS: Clause 5 reasonably expands royalties to all vehicles using Stampede chassis/body (covers Stampede line, including premium models) | Traxxas: Terms refer only to base Stampede; differences in chassis/components and definite article "the" limit scope; FMS’s reading absurdly broad | Court: Contract ambiguous under New York law; competing reasonable interpretations and extrinsic evidence appropriate for jury decision |
| Whether canons of construction or other contract principles mandate Traxxas’s narrower reading | FMS: Contract language and reasonable interpretations support broader scope | Traxxas: Drafting and interpretation rules (definite article, specific over general, contra proferentem) favor Traxxas | Court: Canons do not compel Traxxas’s view; ambiguity remains and factfinder may consider extrinsic evidence |
Key Cases Cited
- Blessey Marine Servs., Inc. v. Jeffboat, L.L.C., 771 F.3d 894 (5th Cir. 2014) (general rule on non-reviewability of interlocutory denial of summary judgment after final judgment on full trial)
- Becker v. Tidewater, Inc., 586 F.3d 358 (5th Cir. 2009) (recognized limited review of summary-judgment legal conclusions after a bench trial)
- JA Apparel Corp. v. Abboud, 568 F.3d 390 (2d Cir. 2009) (New York law: ambiguity is a question of law; if ambiguous, extrinsic evidence and factfinder determine meaning)
- Breed v. Insurance Co. of North America, 385 N.E.2d 1280 (N.Y. 1978) (contract is unambiguous only when words have definite and precise meaning without reasonable basis for difference of opinion)