This case arises from a failed joint venture to provide a mobile taxi hailing service in Mexico City. The Plaintiff, Taxinet, Corp., is claiming that it entered into a joint venture with Defendant Santiago Leon to obtain a concession agreement with Mexico City, and Leon cut Taxinet out of the deal. Mexico City awarded Leon a concession agreement to operate the service for 10 years. Plaintiff seeks damages incurred as a result of its lost opportunity to operate the concession agreement in Mexico City. Leon moves for summary judgment on the affirmative defense that the Statute of Frauds bars Taxinet’s claims. He argues the parties’
oral joint venture agreement was to operate a mobile taxi hailing service in Mexico City, which could not be performed within a year and thus, any claims arising from that agreement are barred by the Statute of Frauds. Taxinet argues that the joint venture was formed for the sole purpose of obtaining the concession agreement, which can be (and was) completed in under a year. Taxinet relies on the parties’ text messages and emails, two of which bear Leon’s electronic signature, as evidence of the joint venture agreement.
JUDGE MORENO Florida’s Statute of Frauds requires that “all actions based on agreements for longer than one year must depend on a written statement …
[t]he statute should be strictly construed to prevent the fraud it was designed to correct[…].” Leon bears the burden of demonstrating that the oral contract is within the Statute of Frauds. Taxinet objects to the Magistrate Judge’s conclusion that the parties intended to enter a long-term agreement to operate the mobile taxi hailing service in Mexico City. It argues that the parties’ objective was simply to enter a concession agreement with Mexico City to provide the service, which could easily be performed within one year.
A signed writing overcomes the Statute of Frauds defense. The Magistrate Judge concluded that there was no signed writing establishing a meeting of the minds on the essential terms of a joint venture in this case. The parties agree the material terms of a joint venture are (1) community of interest in the performance of the common purpose; (2) joint control or right to control; (3) a joint proprietary interest in the subject matter; (4) a right to share in the profits;
and (5) a duty to share in any of the losses, which may be sustained.
While Taxinet is correct that the Court can review the aggregate of writings to establish a contract, the Court agrees with the Magistrate Judge that the writings in this case fail in that regard. The Magistrate Judge examined the writings, which this Court has also reviewed de novo, and there are two emails signed by Leon upon which Plaintiff relies. In late October 24, 2015, Leon sent the first signed email where he complains about technical software issues and proposes a revised equity split to reduce Taxinet’s interest. In that email, he refers to his “future partners” and signs it with a “hope you can agree.” Leon’s second email days later again changes the equity split, but changes Pedro Domit’s interest. Tellingly, that email states that they had a meeting where the “aim was to be clear about what we believe would be a fair plan in the different possible scenarios … I have agreed to add my basic observations in order to establish a common starting point for the successful and correct implementation on the project … I think that today we set out the necessary foundations to speak openly about our interests, which must work for the common good of all parties in the end.” Taxinet views this email as a proposed amendment to the prior agreement, which is not evidenced in an executed writing. The parties had previously exchanged text messages on the equity split. Similarly, the emails from Domit summarize discussions about the proposed by-laws and articles of incorporation, but he asks Leon and Noboa “if anything is wrong, or missing, add it.” Whether they agreed or not is not in the record. Moreover, the terms themselves contemplate future agreement, as he stated in the email: “the consolidation process of the operation with Taxinet Corp. will be documented in an agreement between Taxinet Corp. and the partners of the Mexican company.”
The Magistrate Judge correctly concluded that Leon’s stand-alone emails cannot evidence a meeting of the minds. Even if the Court views his signed emails together with the text messages, they do not show a meeting of the minds as to the equity split, but rather, as the Magistrate Judge concluded, “memorialize a number of different agreements reached on this term.” The emails are replete with language contemplating a future agreement. Domit’s email similarly states it is a summary of his understanding of the discussions and requests input from the partners. Accordingly, the Court agrees with the Report’s recommendation that the writings do not establish a meeting of the minds showing agreement on the material terms.
CRITICAL THINKING:
Looking at the material terms of a joint venture, suggest what the parties could have done that would have changed the court’s judgment about whether there was the necessary meeting of the minds.
ETHICAL DECISION MAKING:
What ethical theory might push the court to rule differently in this case? Who in the business community would be affected if this theory of ethical decision making was employed? Explain.