Vici Racing, LLC v. T-Mobile USA, Inc.
921 F. Supp. 2d 317
D. Del.2013Background
- VICI Racing filed suit against T-Mobile USA seeking $14,000,000 for alleged breach of a sponsorship contract tied to an American Le Mans racing program.
- Bench trial occurred May 21–24, 2012; court entered findings of fact and conclusions of law.
- Dispute centered on section 5.8 of the sponsorship agreement, allegedly granting T-Mobile exclusive telematics/right to business from Porsche, Audi, and VW.
- Final contract (March 31, 2009) contained an unresolved, undefined 5.8 provision; recitals reference sponsorship of a Le Mans race rather than a telematics-only deal.
- Court held section 5.8 ambiguous, unenforceable, and severable from the rest of the contract; 14.7 severability clause evidenced parties’ intent to preserve the rest of the agreement.
- Judgment entered February 8, 2013: T-Mobile breached by failing to pay the first $7,000,000 due January 1, 2010; VICI awarded $7,000,000 plus reasonable attorneys’ fees and costs; second $7,000,000 payment denied for lack of mitigation and as a windfall.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is section 5.8 ambiguous and unenforceable? | VICI contends 5.8 created telematics obligations. | T-Mobile contends 5.8 conveys telematics rights. | Yes; 5.8 is ambiguous and unenforceable, severable. |
| Did VICI breach contract by not delivering telematics business? | VICI performed as to racing and related commitments. | VICI failed to provide promised telematics business. | No; contract as a whole not breached; 5.8 unenforceable. |
| Was VICI's failure to race a breach? | N/A | N/A | No; force majeure / section 13.2 excused non-performance due to car damage. |
| Is T-Mobile obligated to pay the $7 million under the contract? | T-Mobile breached by nonpayment. | Payment obligation disputed given 5.8 issues. | T-Mobile owes the first $7,000,000; pay obligation remains despite 5.8 issues. |
| Are damages limited to the $7 million payment and fees? | Damages include unpaid amounts and fees. | Mitigation reduces recoverable damages; no windfall. | Second $7 million denied; plaintiff awarded attorney fees and costs as prevailing party. |
Key Cases Cited
- Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192 (Del.1992) (contract interpretation and ambiguity analysis; four-corners rule)
- GMG Capital Invs., LLC v. Athene Venture Partners I, L.P., 36 A.3d 776 (Del.2012) (interpretation; overall contract scheme governs meaning)
- Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228 (Del.1997) (parol evidence to resolve contract ambiguity; course of dealing evidence permissible)
- Zirn v. VLI Corp., 681 A.2d 1050 (Del.1996) (fraud elements and reliance standards)
- Paul v. Deloitte & Touche, LLP, 974 A.2d 140 (Del.2009) (contract damages; foreseeability and mitigation principles)
- Tracey v. Franklin, 67 A.2d 56 (Del.Ch.1949) (severability of contract provisions; severability doctrine)
- Hildreth v. Castle Dental Ctrs., Inc., 939 A.2d 1281 (Del.2007) (severability and enforceability of contract terms)