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Salomon v. Kroenke Sports & Entertainment, LLC

United States District Court, N.D. Texas, Dallas Division

August 31, 2017

NIC SALOMON, Plaintiff,
v.
KROENKE SPORTS & ENTERTAINMENT, LLC, OUTDOOR CHANNEL HOLDINGS, INC., and PACIFIC NORTHERN CAPITAL LLC, Defendants.

          MEMORANDUM OPINION AND ORDER

          BARBARA M. G. LYNN, CHIEF JUDGE.

         Before the Court is a Motion to Alter or Amend the Judgment [ECF #55], filed by Plaintiff Nic Salomon. By his Motion, Plaintiff asks the Court to vacate its Final Judgment dismissing this civil action without prejudice, and grant him leave to file a Second Amended Complaint. Because the Court determines that Plaintiff should be allowed to file an amended complaint, the Motion is GRANTED.

         Background[1]

         This lawsuit arises out of Plaintiff's failed attempt to purchase SkyCam, LLC and CableCam, LLC, two wholly-owned subsidiaries of Defendant Outdoor Channel Holdings, Inc. (“Outdoor”) engaged in the aerial camera business (collectively, the “Camera Business”). Plaintiff filed this lawsuit on February 27, 2015, alleging that Outdoor had agreed to sell the Camera Business to Plaintiff and his investor partner, Defendant Pacific Northwest Capital LLC (“PNC”). As part of their negotiations for the purchase and sale of the Camera Business, Plaintiff, PNC, and Outdoor executed a “Term Sheet, ” dated February 27, 2013, containing promises by Outdoor (a) to deal exclusively with Plaintiff and PNC regarding the purchase of the Camera Business; (b) not to entertain any competing offers to purchase the Camera Business; and (c) not to disclose to any third party efforts by Plaintiff and PNC to purchase the Camera Business. Plaintiff alleges that Outdoor breached these promises (collectively, the “Exclusivity Provision”) when it negotiated a merger with Defendant Kroenke Sports & Entertainment, LLC (“KSE”), which resulted in KSE acquiring Outdoor and all its subsidiaries, including the Camera Business. Plaintiff alleges that KSE interfered with Plaintiff's efforts to purchase the Camera Business and usurped the opportunity for itself. Plaintiff further alleges that PNC breached its fiduciary duties to him by agreeing to amend the Term Sheet to give KSE the right to veto the sale of the Camera Business to Plaintiff and PNC. Based on this alleged conduct, Plaintiff sued Defendants asserting claims for (1) breach of contract against Outdoor; (2) tortious interference with an existing contract and prospective relationships against KSE; (3) breach of fiduciary duty against PNC; and (4) unjust enrichment against Outdoor, KSE, and PNC.

         On July 16, 2015, the Court granted a motion to dismiss Plaintiff's Original Complaint, filed by KSE and Outdoor. The Court explained in its Memorandum Opinion and Order that the Original Complaint failed to allege sufficient facts to establish that Plaintiff had standing to bring the claims asserted or was the real party in interest. Specifically, the Court found that the Original Complaint did not adequately allege that Plaintiff was asserting his own legal rights. Rather, the Complaint alleged that the party that lost the opportunity to purchase the Camera Business was an unformed corporate entity (the “Purchaser”). At the time the Term Sheet was signed, the parties contemplated that the Purchaser would be owned by Plaintiff and PNC, but the Purchaser was never formed. Plaintiff attempted to avoid dismissal by arguing he had standing in his capacity as a promoter of the Purchaser, but the Court found that the Complaint failed to allege that Plaintiff was a promoter of the Purchaser and did not contain any facts to support that theory.

         The Court granted Plaintiff leave to amend his pleadings, and Plaintiff filed an Amended Complaint. With respect to standing, the Amended Complaint contained a single, new allegation that Plaintiff signed the Term Sheet for the Purchaser. Plaintiff argued that his new allegation was sufficient to establish his standing to bring the claims alleged on his own behalf as a promoter of the Purchaser. The Court disagreed. In a Memorandum Opinion and Order granting Defendants' motions to dismiss Plaintiff's Amended Complaint, the Court explained that the new allegation failed to show Plaintiff suffered a cognizable injury in fact sufficient to establish Plaintiff's standing to bring the claims asserted. The Court rejected Plaintiff's argument that he was deprived of the opportunity to acquire the Camera Business, because the Term Sheet provided that opportunity belonged solely to the Purchaser. The Court also rejected Plaintiff's argument that all he had to show to establish that the lost opportunity actually belonged to him was a reasonable probability that Outdoor and the Purchaser would have entered into a contract for the sale of the Camera Business. The Court found that the mere fact that Outdoor and Plaintiff executed the Term Sheet, without more, failed to sufficiently allege a reasonable probability that the Purchaser and Outdoor would have entered into a contractual relationship.

         The Court further found that Plaintiff's allegation that he signed the Term Sheet for the Purchaser was not sufficient to establish that Plaintiff had prudential standing to bring the claims asserted or was the real party in interest. The Court determined that Plaintiff also must allege facts sufficient to show that the agreement he seeks to enforce is mutual and binding on Plaintiff and Defendants. Plaintiff conceded that the Term Sheet was not binding, but argued that the Exclusivity Provision, by itself, is a valid and enforceable bilateral contract. The Court rejected Plaintiff's argument as contrary to the plain language of the Exclusivity Provision, which lacked mutuality of obligation and thus was non-binding. Accordingly, the Court granted Defendants' motions to dismiss Plaintiff's Amended Complaint, and entered a Final Judgment dismissing Plaintiff's claims without prejudice for lack of subject matter jurisdiction.

         Plaintiff responded to the dismissal by filing his Motion to Alter or Amend the Judgment under Fed.R.Civ.P. 59(e), in which he argues that the Court committed manifest error of law by conflating the merits of Plaintiff's claims with his standing to assert them. Plaintiff further argues that the Court erred by improperly placing the burden on him to anticipate and rebut the affirmative defense of lack of consideration and by relying on inapposite case law. Plaintiff also seeks leave to file his Second Amended Complaint, which he asserts contains the facts necessary to establish not only his standing to sue, but also to show that the Exclusivity Provision is enforceable as a unilateral contract. KSE and Outdoor filed a joint opposition to Plaintiff's Motion. The Motion is ripe for determination.[2]

         Legal Standards and Analysis

         Plaintiff moves the Court to vacate its Judgment under Fed.R.Civ.P. 59(e). A motion to alter or amend a judgment under Rule 59(e) “must clearly establish either a manifest error of law or fact or must present newly discovered evidence” and “cannot be used to raise arguments which could, and should, have been made before the judgment issued.” Simon v. United States, 891 F.2d 1154, 1159 (5th Cir. 1990). “Reconsideration of a judgment after its entry is an extraordinary remedy that should be used sparingly.” Templet v. HydroChem Inc., 367 F.3d 473, 479 (5th Cir. 2004). A judgment should not be set aside except for substantial reasons. Id.

         Manifest Error of Law

         Plaintiff first contends that the Court should vacate the Judgment dismissing his claims because the Court committed a manifest error of law by conflating the merits of Plaintiff's claims with his standing to assert them. Plaintiff further contends the Court erred in failing to assume he would be successful on his claims. Contrary to Plaintiff's arguments, the Court did not conflate - or even consider - the merits of Plaintiff's claims in ruling on Defendants' motions to dismiss. Rather, the Court limited its analysis to the allegations set forth in Plaintiff's Amended Complaint. Even when the Court assumed Plaintiff's allegations were true, the Court determined the Amended Complaint failed to allege sufficient facts to establish Plaintiff's standing to sue. Specifically, the Amended Complaint failed to allege that Plaintiff suffered a cognizable injury in fact. To the extent Plaintiff relied on a lost opportunity to purchase the Camera Business as a sufficient injury, the Court explained that the Term Sheet, which was attached to the Amended Complaint, provided that such opportunity belonged to the Purchaser. The Amended Complaint acknowledged that the Purchaser was never formed and further failed to allege that Plaintiff took any action to create the Purchaser or consummate the purchase of the Camera Business.

         Plaintiff contends that the Court erroneously concluded that he could not prove it was reasonably probable that Outdoor would sell the Camera Business to Purchaser. However, the Court did not consider the sufficiency of any proof. The Court responded to Plaintiff's argument that he could avoid dismissal if he could show a reasonable probability that Outdoor and the Purchaser would have entered into a contractual relationship. Considering only the sufficiency of the allegations in the Amended Complaint, the Court found that the sole allegation that touched on the probability that Outdoor would have entered into a contractual relationship was the allegation that Outdoor and Plaintiff executed the Term Sheet. The Court also found that the Term Sheet unambiguously stated that a legally binding obligation with respect to the proposed sale would arise only upon execution and delivery of definitive documents by Outdoor and Purchaser. The Amended Complaint failed to allege that the parties executed definitive documents or that the parties took any steps to create such documents. The Court thus held that Plaintiff had failed to allege facts sufficient to demonstrate he had standing to sue.

         Plaintiff further argues that the Court erred in finding he lacked prudential standing or was the real party in interest because the Court improperly placed the burden on Plaintiff to anticipate and rebut the affirmative defense of lack of consideration. Again, contrary to Plaintiff's argument, the Court did not improperly shift any burden to Plaintiff in considering the Defendants' motions to dismiss. The Court addressed whether the Exclusivity Provision was supported by sufficient ...


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