228 A.3d 721
Me.2020Background
- In Feb. 2010 Chimani and InfoBridge executed a contract: InfoBridge would build a mobile Program for national parks; Chimani paid staged development fees and agreed to pay royalties.
- The contract set royalties at 14.5% of "Net Revenue" from each sale/download "up to a total amount of $150,000 in the aggregate from all revenue sources derived from the Program." Net Revenue was defined by deductions (refunds, taxes, app-store commissions, etc.).
- Chimani generated about $1.2 million from the Program and paid only $924.23 in royalties to date; InfoBridge sued in 2016 for breach of contract seeking the balance (about $149,075.77) plus fees.
- At summary judgment the Superior Court ruled the royalty clause unambiguous and capped InfoBridge's total recovery at $150,000; the court also denied Chimani’s estoppel defense as waived for failure to plead it.
- On appeal the Maine Supreme Judicial Court affirmed the waiver ruling as to equitable estoppel but held the royalty provision ambiguous and vacated the grant of partial summary judgment, remanding for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Chimani waived the equitable-estoppel defense | InfoBridge: Chimani failed to specially plead estoppel; therefore it is waived | Chimani: Estoppel applies because InfoBridge’s principal made representations/omissions that induced Chimani’s corporate actions | Court: Waiver affirmed — estoppel was not clearly and unmistakably pleaded; denial of Chimani’s motion affirmed |
| Proper interpretation of the royalty provision (what the $150,000 cap modifies) | InfoBridge: $150,000 caps total royalties InfoBridge may receive | Chimani: $150,000 caps the Net Revenue on which 14.5% is computed (i.e., royalties limited to 14.5% of $150,000) | Court: Provision is ambiguous and reasonably susceptible to both readings; summary judgment vacated and matter remanded for factual development |
Key Cases Cited
- Scott v. Fall Line Condo. Ass'n, 206 A.3d 307 (Me. 2019) (standard for contract ambiguity and summary judgment review)
- Tondreau v. Sherwin-Williams Co., 638 A.2d 728 (Me. 1994) (summary judgment inappropriate where factual issues remain about parties' intent)
- Travelers Indem. Co. v. Bryant, 38 A.3d 1267 (Me. 2012) (unambiguous contracts are enforced according to their terms)
- Pelletier v. Dep't of Health & Human Servs., 964 A.2d 630 (Me. 2009) (elements of equitable estoppel and reasonable reliance)
- Haskell v. Bragg, 167 A.3d 1246 (Me. 2017) (failure to timely plead an affirmative defense generally results in waiver)
- Graffam v. Geronda, 304 A.2d 76 (Me. 1973) (an affirmative defense must be "clearly and unmistakably" pleaded to avoid waiver)