A legal showdown between a concert producer and a popular Latin performer, arising after the producer didn’t make required payments on time, and the singer subsequently canceled five concerts, displays the potential peril of requiring trial courts to draw inferences. Although the court judgment found the singer liable for breaching the contract and awarded the producer certain damages, it did not allow the producer to collect reimbursement for some of the partial payments it made to the singer for the shows that never took place. The 11th Circuit Court of Appeals upheld this decision, determining that the producer’s actions in the case did not make it clear that it sought reimbursement damages for the payments, and, although the producer raised an inference that it intended to pursue those damages, the trial court was not “compelled … to draw that inference.”
The origins of the dispute began with a pair of contracts between Daddy Yankee, a well-known, award-winning singer of Reggaeton music, and Five for Entertainment S.A. The agreements called for the singer to play five shows in Argentina that would be produced by Five. In exchange, the producer agreed to pay the singer $1.3 million — $820,000 under the first contract and $480,000 under the second.
The concerts never took place, though. The contracts called for Five to pay the singer in advance in several installments, with the full amount due by Nov. 1, 2010. By mid-November, Five had only paid a portion of the fees it owed the singer, so Daddy Yankee canceled the shows. From this failed arrangement came a lawsuit in federal court in Miami, with Five suing the singer and the singer counter-suing Five.
The trial court concluded that the producer was entitled to recover as damages the $382,000 in out-of-pocket expenses it had laid out on the concerts. Five was not, however, entitled to recover the money it paid to Daddy Yankee under the second contract, which was an amount of $219,000. In bringing forward its case, the producer never put the singer on notice that it was seeking reliance damages related to the second agreement, the trial court ruled.
Neither side was entirely happy with the trial court’s judgment, and both sides appealed. As part of its case in the appeals court, the producer alleged that the lower court wrongfully decided that it was not entitled to recover reimbursement of the payments it made to the singer under the second contract. The reimbursement of these payments constituted valid reliance damages, Five argued, and the law allowed it to recover them.
The 11th Circuit upheld the lower court’s ruling, including the decision denying the producer an opportunity to recover the payments it made to the singer under the second contract. The reason the producer lost this claim was the way that it pursued its case in the trial court. In its court filings, it asserted two breach of contract claims — one for each contract. However, Five’s case, including its complaint and amended complaints, never clearly stated that it sought reimbursement for reliance damages regarding the second contract. The producer also, in the course of making its case, never made factual allegations that it had, in fact, made any payments to Daddy Yankee under the second agreement. The 11th Circuit concluded that, since Five’s pursuit of its case was carried out in such a way that it was not truly clear whether Five was seeking reliance damages on the second contract, the trial court was free to draw that inference or, as the trial court did in Five’s case, decline to do so.
In your commercial litigation case, it is important to leave nothing to chance. For advice and counsel you can count on, contact the Florida business litigation attorneys at Stok Folk + Kon. Our skilled attorneys have extensive experience helping a wide variety of commercial entities with a wide array of disputes.
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Lack of Proof of Florida Company’s Profitability Causes Co-Founder to Lose Breach of Contract Case, Florida Business Lawyers Blog, June 14, 2016
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