VICI Racing, LLC v. T-Mobile USA, Inc.
2014 U.S. App. LEXIS 15506
| 3rd Cir. | 2014Background
- VICI Racing LLC and T-Mobile USA, Inc. entered a Sponsorship Agreement for 2009–2011 Le Mans seasons.
- Section 5.8 granted T-Mobile exclusive wireless carrier rights for telematics programs beginning in 2011; its meaning was disputed at trial.
- Section 11.2 purportedly limited damages to $20,000 or aggregate payments, whichever higher, creating a dispute over liquidated damages.
- T-Mobile breached by failing to pay $7 million due January 1, 2010; VICI sued for damages and cross-appealed for $7 million under the liquidated-damages clause.
- The district court severed section 5.8 as ambiguous, enforcing the remainder of the contract, and found VICI’s breach excused by force majeure due to a racecar accident.
- The district court awarded VICI $7 million in damages for 2010 but denied the 2011 $7 million, concluding mitigation and liquidated-damages issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether severance of 5.8 was proper | VICI argues severance preserved the contract's remainder. | T-Mobile contends severance ignores essentiality and intent of contract. | Section 5.8 severed; remainder enforced. |
| Whether force majeure excused VICI’s nonperformance | VICI asserts accident-modified nonperformance fell within force majeure. | T-Mobile contends no force majeure justification for missing races. | Force majeure excused nonperformance; damages narrowed. |
| Whether section 11.2 constitutes a liquidated damages clause | VICI claims section 11.2 fixes liquidated damages for breach of the entire contract. | T-Mobile argues the clause limits liability as liquidated damages. | Section 11.2 is not a liquidated-damages clause; liability is a cap. |
| Appropriate measure and calculation of 2010 damages | VICI seeks full expectancy damages with costs incurred; mitigation not waived for 2010. | T-Mobile asserts deduction for costs avoided and mitigation should reduce damages. | District court applied proper standard; affirmed as to 2010 damages |
| but implied offset of costs avoided; not clearly erroneous. | |||
| Validity of 2011 damages and mitigation/waiver | VICI argues entitled to second $7 million under contract. | T-Mobile argues mitigation and waiver prevent recovery of 2011 amount. | District Court erred in 2011 damages analysis; remanded for proper measurement without mitigation argument (waived). |
Key Cases Cited
- Gulf Oil Corp. v. F.E.R.C., 706 F.2d 444 (3d Cir. 1983) (force majeure defines events beyond control; uncertainty element recognized)
- Orenstein v. Kahn, 119 A. 444 (Del. 1922) (severability and intent considerations in contract terms)
- Scarborough v. State, 945 A.2d 1103 (Del. 2008) (contract must be reasonably definite to be enforceable; severability guidance)
- Paul v. Deloitte & Touche, LLP, 974 A.2d 140 (Del. 2009) (damages should place injured party in position as if contract performed)
- Duncan v. Theratx, Inc., 775 A.2d 1019 (Del. 2001) (reasonable foreseeability and loss in contract damages; mitigation context)