Michael Shane Enterprises, LLC v. Courtroom Connect Corp.
664 F. App'x 850
| 11th Cir. | 2016Background
- MSE (Michael Shane Enterprises, LLC) contracted with Courtroom Connect through multiple agreements in 2012–2013 for consulting/marketing services and compensation.
- Relevant contracts: Sales Commissions Agreement (Feb 2012) paid $5,000/month + bonus; Equity Transaction Agreement (Dec 2012) promised contingent equity/10% of sale or financing proceeds for specified services; Strategic Marketing Agreement (Apr 2013) superseded the Sales Commissions Agreement, promised $7,700/week + enhanced bonus and incorporated the same enumerated services as the Equity Transaction Agreement.
- The Strategic Marketing Agreement was labeled "non-cancellable" except for narrow termination rights granted to Courtroom Connect; it purported to run concurrently with the Equity Transaction Agreement’s 10-year term.
- Courtroom Connect stopped payments in Nov 2013. MSE sued for breach of contract and promissory estoppel; district court granted partial summary judgment for Courtroom Connect on claims under the Strategic Marketing Agreement, holding it lacked consideration and was void.
- MSE appealed only the ruling on the Strategic Marketing Agreement; the Eleventh Circuit affirmed, concluding MSE offered no new consideration because the services were pre-existing duties under the Equity Transaction Agreement and the termination clause was not a bargained-for exchange.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Strategic Marketing Agreement is supported by consideration under Delaware law | MSE argued the Agreement provided new, more lucrative compensation (weekly fee and higher bonus) and a termination clause that together supplied consideration | Courtroom Connect argued MSE’s obligations duplicated services already owed under the prior Equity Transaction Agreement, so no new consideration; the termination clause was not bargained-for consideration | Held: No consideration; agreement void. Services were pre-existing duties and termination clause not shown to be requested or induced by defendant |
| Whether the termination clause alone constituted valid consideration | MSE contended the addition of a termination right (which Sales Commissions Agreement lacked) constituted a bargained-for change | Courtroom Connect responded there is no evidence it requested or gave something in exchange for the termination clause | Held: Termination clause not consideration because it was not shown to be a bargained-for inducement |
| Whether MSE can rely on promissory estoppel for the Strategic Marketing Agreement on appeal | MSE raised promissory estoppel below but did not challenge district court’s summary judgment on that claim on appeal | Courtroom Connect maintained district court’s ruling stands | Held: MSE did not press this claim on appeal; no reversal on promissory estoppel (not before the panel) |
| Whether the Strategic Marketing and Equity Transaction Agreements should be read together to require dual compensation | MSE argued the agreements reflect an intent for both fees and contingent equity | Courtroom Connect and the panel noted the argument was not raised below | Held: Argument not preserved for appeal; immaterial to the Delaware-law consideration analysis |
Key Cases Cited
- Cigna Health & Life Ins. Co. v. Audax Health Sols., Inc., 107 A.3d 1082 (Del. Ch. 2014) (enforceable contract requires offer, acceptance, and consideration)
- Cont'l Ins. Co. v. Rutledge & Co., 750 A.2d 1219 (Del. Ch. 2000) (pre-existing duty cannot serve as consideration; modification must be induced by bargained-for exchange)
- Holloman v. Mail-Well Corp., 443 F.3d 832 (11th Cir. 2006) (standard of review for summary judgment requires viewing evidence in favor of non-moving party)
- Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324 (11th Cir. 2004) (issues not raised in district court are not preserved for appellate review)