Opinion
NO. 217-2008-EQ-099
08-24-2011
New Hampshire Speedway, Inc. and Speedway Properties Company, LLC d/b/a Performance Racing Network v. Motor Racing Network, Inc. v. Speedway Motorsports, Inc.
MERRIMACK, SS
ORDER
New Hampshire Speedway, Inc. ("NHS") has filed motions in limine seeking to exclude: (1) evidence of Motor Racing Network's ("MRN") alleged lost profit damages; (2) evidence of oral representations and promises made by NHS related to providing MRN with a specific number of races; (3) contracts that MRN entered into with other formerly independent speedways not parties to the present action; and (4) evidence of NHS's contract with Performance Racing Network ("PRN"). MRN objects to each of NHS's motions. The Court considers each of the motions in turn.
1. Lost Profits
NHS's first motion in limine seeks to exclude all evidence of MRN's lost profits on two grounds: first, that MRN abused the discovery process; and second, that lost profits are not recoverable under Florida law, which this Court has held governs the present promissory estoppel action.
This Court held in its July 19, 2011 Order that Florida Law applies to this case. See July 19, 2011 Order at 4. Furthermore, the Court has, along with deciding the present motions in limine, denied MRN's motion to reconsider whether Florida law applies.
The Court cannot find that MRN abused the discovery process based on the submissions. MRN represents that it has provided NHS with more than 5,700 pages of documents, that it disclosed its lost profits information by way of spreadsheet, and that it does not intend to introduce any documents to support its damage calculation other than those which have been produced. At least on the present record, the drastic remedy of exclusion of evidence is unwarranted.
The more significant issue raised by this motion is whether "lost profits" or "expectancy damages" are recoverable in a promissory estoppel action under Florida law. In support of its argument that lost profits are not recoverable, NHS relies primarily on two cases: Young v. Johnston, 475 So.2d 1309 (Fla. Dist. Ct. App. 1985) and Devon Med. v. Ryvmed, 60 So.3d 1125 (Fla. Dist. Ct. App. 2011) (Gross, C. J., concurring). In Young, the Florida District Court of Appeals held that because the parties' contract lacked mutuality of obligation, the plaintiff was precluded from recovering damages "for breach based on the 'loss of bargain' at the time their negotiations came to an end." 475 So.2d at 1312-13. However, the Court did find that reimbursement damages on the theory of promissory estoppel were recoverable upon appropriate proof. Id. at 1314-15.
In Devon Med., the Court of Appeals held that in proving its promissory estoppel claim, the plaintiff had failed to adequately prove lost profits with "the reasonable certainty necessary to support the yardstick approach to lost profits, rendering the testimony too speculative to sustain the damages." 60 So.3d at 1129-30. In Chief Justice Gross's concurrence, he noted, "Florida appears to follow the view that promissory estoppel does not support lost profits damages, although the issue has not been definitively decided in this state." Id. at 1130. In analyzing the issue, he relied on Eric Mills Holmes's comprehensive review of the four phases of promissory estoppel. See id. (citing Eric Mills Holmes, 20 Seattle U. L. Rev. 45 (1996)). Ultimately, Chief Justice Gross concluded that the plaintiffs "could have received damages premised on a promissory estoppel theory, [but], under the view [Florida] appears to follow, those damages could not have included lost profits." Id. at 1132.
Holmes's analysis is set forth in his revision of Corbin on Contracts, 3 Corbin on Contracts. Sec. 8.11 (1996).
In contrast, MRN relies on a line of insurance cases, which appear to support the view that parties may seek expectation damages under promissory estoppel. See, e.g., Crown Life Ins. v. McBride, 517 So.2d 660 (Fl. 1988); see also, e.g., JN Auto Collection corp. v. U.S. Security Ins. Co., 59 So.3d 256 (Fla. Dist. Ct. App. 2011). Furthermore, MRN notes that Florida has also approved of lost profits damages on a promissory estoppel theory in other circumstances. See, e.g., Perry Publ., Inc. v. Bankers Life and Cas. Co., 246 So.2d 604 (Fla. Dist. Ct. App. 1971) (receiving yet unused "advertising credit"); see also, e.g., Elgin Nat'l Indus, v. Howard Indus., 264 So.2d 440 (Fla. Dist. Ct. App. 1972) (ordering specific performance).
What is evident from the parties' review of the case law on lost profits in promissory estoppel is that the law is far from clear in Florida. Illustrative of the confusion in the Florida lower courts is the fact that in Devon Med. Chief Justice Gross stated that Florida law appeared not to allow such damages, 60 So.2d 1132, while the majority tacitly accepted the proposition that such damages could be awarded and analyzed whether the plaintiff had adequately proven lost profits with "reasonable certainty." 60 So.3d at 1130. Furthermore, as MRN points out, some Florida cases have allowed expectancy damages on a theory of promissory estoppel.
It is unsurprising that the Florida law is so unclear. The doctrine is essentially equitable in nature and, therefore, fact dependent. A review of the case law from the lower courts in Florida illustrates the fact the courts have applied different rationales for damage awards, based on fluctuating theories. See Eric Mills Holmes, Corbin on Contracts, (1996) Sec. 8.11 p.56-58; Section 8.12 pp. 108-113.
One thing, however, is clear: the Florida Supreme Court expressly follows the Restatement (Second) of Contracts in analyzing promissory estoppel eases. See W.R. Grace and Co. v. Geodata Serv., Inc., 547 So.2d 919, 924 (Fla. 1989). In that case, the Florida Supreme Court specifically quoted comment (d) to the Restatement (Second) of Contracts, § 90. Thus, under the circumstances, the Court believes that the best predictor of the unsettled law of Florida is the Restatement (Second) of Contracts, § 90.
Under the Restatement, it is apparent that the promissory estoppel doctrine does not expressly prohibit the recovery of lost profits in all circumstances. Section 90 provides, "A promise binding under this section is a contract, and full-scale enforcement by normal remedies is often appropriate." Restatement (Sec- ond) of Contracts, § 90, at section (d). Section 90 goes on to provide two relevant illustrations:
8. A applies to B, a distributor of radios manufactured by C, for a "dealer franchise" to sell C's products. Such franchises are revocable at will. B erroneously informs A that C has accepted the application and will soon award the franchise, that A can proceed to employ salesmen and solicit orders, and that A will received an initial delivery of at least 30 radios. A expends $1,150 in preparing to do business, but does not receive the franchise or any radios. B is liable to A for the $1,150 but not for the lost profit on 30 radios.Restatement (Second) of Contracts, § 90, Illustrations 8-9 (emphasis supplied). The sustaining principle of the two illustrations is not a rigid rule of express inclusion or exclusion of lost profits from promissory estoppel, but instead a rule dependent upon whether or not an unjust benefit has been conferred upon the promisor. More simply, "[u]nless there is unjust enrichment of the promisor, damages should not put the promisee in a better position than performance of the promise would have put him." Id. at section (d). The Court finds this rule persuasive and consistent with Florida law. It is consistent with the equitable nature of the doctrine, in that the Court will make a preliminary determination as to what remedy may be appropriate and then submit purely factual questions to the jury.
9. The facts being otherwise as stated in Illustration 8, B gives A the erroneous information deliberately and with C's approval and requires A to buy the assets of a deceased former dealer and thus discharge C's "moral obligation" to the widow. C is liable to A not only for As expenses but also for the lost profit on 30 radios.
Ultimately, what damages are available will depend upon the evidence ad-duced at trial. But, assuming evidence supporting its position is presented, MRN may seek damages based upon lost profits. This is not a case where a simple promise is made, the plaintiff acts, and only reliance damages result. Instead, if proven at trial, it is one where a promise was made and was broken so as to take income from MRN and give it to PRN, a subsidiary of SMI, NHS's parent company. This is precisely the benefit contemplated by Section 90. See illustrations 8 and 9. As a result, MRN may be, depending upon the evidence presented, entitled to seek damages for lost profits. 2. Statute of Frauds/Parol Evidence
NHS next argues that MRN should not be allowed to submit evidence of alleged oral representations and promises made by NHS related to guarantees to provide MRN with races. Its argument rests upon two separate grounds: (1) that such statements do not comply with the statute of frauds because they could not have been completed within one year; and (2) that they violate the parol evidence rule.
NHS's argument that the statute of frauds bars MRN from submitting evidence of certain promises made by NHS is without merit. Florida's statute of frauds provides, in pertinent part:
No action shall be brought . . . upon any agreement that is not to be performed within the space of 1 year from the making thereof . . . unless the agreement or promise upon which such action shall be brought, or some note or memorandum thereof shall be in writing and signed by the party to be charged therewith or by some other person by her or him thereunto lawfully authorized.City of Orlando v. West Orange Country Club. Inc., 9 So.3d 1268,1271 (Fla. Dist. Ct. App. 2009) (citing Fla. Stat. § 725.01). Here, MRN's promissory estoppel claim complies with the statute of frauds because it is brought upon a promise made in writing: the 2000 Agreement. Furthermore, there is no language in either Florida statute or supporting case law that stands for the proposition that the writing must constitute a legally binding contract to avoid the statute of frauds. Instead, it requires only that the binding promise be memorialized by any writing, which could even include a note or memorandum. See Fla. Stat. § 725.01.
Nor is this Court persuaded that the parol evidence rule bars MRN's use of certain oral representations made by NHS. In Florida, "[t]he parol evidence rule applies to oral agreements between the parties to a written contract which are made before or at the time of execution of the contract." DK Arena, Inc. v. EB Acquisitions I. LLC, 31 So.3d 313,321 (Fla. Dist. Ct. App. 2010) (quotation and brackets omitted). However, the rule does not apply when a party seeks only to clarify ambiguous language provided in a written contract. See In re Estate of Barry, 689 So.2d 1186,1188 (Fla. Dist. Ct. App. 1997). In the first instance, the Court is not persuaded that the parol evidence rule even applies given that in Florida the rule acts only to bar "oral agreements between the parties to a written contract." DK Arena. Inc., 31 So.3d at 321 (emphasis added). However, assuming it does apply, the Court agrees with MRN that the statements it seeks to admit are merely attempts to clarify the promise made and not to contradict or modify the promise written. This includes statements made by NHS on the number of races it would provide. As a result, any statements made by NHS that clarify its promise to MRN are admissible. 3. Contracts with Other Speedways
In its third motion in limine, NHS argues that the Court should exclude "evidence of 'form broadcast agreements' entered into with formerly independent speedways across the country, specifically Las Vegas Motor Speedway and Kentucky Speedway LLC." NHS's Contracts with Former Speedways Mot., at 2. MRN seeks to introduce this evidence to demonstrate that it reasonably relied on NHS's promise to provide three years' notice to MRN before termination. MRN attempts to link its contracts with other speedways to the issue of reasonable reliance by providing evidence that SMI, NHS's current parent company, also owns the other third party speedways. MRN argues that it "anticipated" that NHS might eventually be purchased by another track group such as SMI.
Relevant evidence means "evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." N.H. R. Evid. 401; see also N.H. Ball Bearings. Inc. v. Jackson, 158 N.H. 421,431 (2009). In an action for promissory estoppel, MRN must demonstrate reasonable reliance upon a promise made by NHS. See Restatement (Second) of Contracts, § 90. The Court cannot find, however, the link between the contracts with third party speedways and a required showing that MRN reasonably relied on promises by NHS. The fact that MRN may have "anticipated" that someday in the future SMI could possibly acquire NHS does not have any tendency to make the existence of its reasonable reliance on NHS's promise more or less probable.
Most importantly, however, even if the evidence had some limited probative value, that value would be outweighed by the risk of confusion and delay because NHS would undoubtedly wish to introduce evidence showing why the agreements between SMI and the other speedways may have been handled differently. See N.H. R. Evid. 403. Therefore, the Court finds that MRN's contracts with other independent speedways are inadmissible.
4. PRN's Contract with NHS and Resulting Revenue
Finally, NHS seeks to exclude any evidence of PRN's contract with SMI for the rights to broadcast races at the Speedway, as well as evidence of any resulting revenue. This argument rests almost exclusively on NHS's assertion that lost profits are unavailable in promissory estoppel cases under Florida law. See NHS's Resulting Revenue Mot., at 1-4. However, because this Court has already determined that, depending upon the evidence introduced, lost profits may be available on promissory estoppel claims under Florida law, this argument is without merit.
Moreover, NHS's argument that MRN cannot satisfy Florida's "yardstick theory" of proving lost profits is inapposite. As stated above, in order to demonstrate that it is entitled to lost profits under a promissory estoppel theory, MRN is required to prove some "unjust enrichment of the promisor. . . ." Restatement (Second) of Contracts, § 90. PRN's contract and the resulting profit are relevant to proving that requirement. As a result, the evidence is admissible.
5. Conclusion
Based on the foregoing, NHS's motions in limine regarding lost profits, oral representations, and contracts with PRN and resulting revenue are DENIED. However, NHS's motion in limine concerning MRN's contracts with third party speedways is GRANTED.
SO ORDERED.
Richard B. McNamara,
Presiding Justice