John Pavone and Signature Management Group, L.L.C. v. Gerald M. Kirke and Wild Rose Entertainment, L.L.C.
801 N.W.2d 477
Iowa2011Background
- Pavone, via SMG, sought to manage Iowa casinos; Wild Rose formed to obtain licenses.
- October 22, 2004 agreement outlines Pavone/SMG management relationship for Ottumwa/Emmetsburg projects.
- Parties' applications to IRGC referenced SMG as manager before and after license decisions.
- Negotiations continued, with drafts showing dispute over terms and control of management personnel.
- Wild Rose terminated the October 22 agreement in May 2005; Emmetsburg opened in 2006 with Preston as acting GM.
- SMG sued in 2006; district court awarded $10 million; court of appeals vacated; supreme court affirmed district court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 3A breach claim was properly submitted | SMG argues binding management terms existed. | 3A was an unenforceable agreement to agree. | District court proper; 3A binding terms supported. |
| Whether statute of frauds precluded 3A modification testimony | Modification possible within one year; not barred. | Oral modification not within statute exception. | Modification falls outside statute; admissible evidence. |
| Whether 5A breach of good faith negotiations was supported | Wild Rose stalled to secure favorable terms; failed in good faith. | Negotiations could fail without bad faith. | Substantial evidence supports breach of 5A. |
| Whether damages for 5A were improperly awarded as expectation damages | Damages appropriate under breach terms. | Damages limited to initial term; speculative beyond. | Harmless error; award sustained as relation to 3A breach; 30-year extent not improper. |
| Whether IRGC approval/lack thereof bars claims | IRGC approval not prerequisite for contract validity. | IRGC approval required for enforcement. | Issue not preserved on appeal; merits not reached. |
Key Cases Cited
- Easton v. Howard, 751 N.W.2d 1 (Iowa 2008) (substantial-evidence standard for directed verdicts)
- Northrup v. Miles Homes, Inc., 204 N.W.2d 850 (Iowa 1973) (law-of-the-case principle on instructions)
- Clinton Physical Therapy Servs., P.C. v. John Deere Health Care, Inc., 714 N.W.2d 603 (Iowa 2006) (internal inconsistency in special verdicts; harmonization)
- Olson v. Nieman’s, Ltd., 579 N.W.2d 299 (Iowa 1998) (damages recoverable where basis proven, not necessarily exact amount)
- Summy v. City of Des Moines, 708 N.W.2d 333 (Iowa 2006) (trial-instruction/abuse-of-discretion standards for instruction error)