Consideration Cases Iacono and Blackmon

• Please review theIaconoandBlackmoncases, which are set forth below.
• Brief each case separately by setting forth the following items for each case inbullet point format:
  • Facts,
  • Issue,
  • Law,
  • Analysis
  • Conclusions
• How do the cases inform your understanding of the concept ofconsideration?
• What purposes do you think consideration serves? Should it be a requirement of contracts?

Iacono v. Lyons

Court of Appeals of Texas, First District, Houston

Opinion

Mary Iacono, the plaintiff below and appellant here, appeals from a take-nothing summary judgment rendered in favor of Carolyn Lyons, the defendant below and appellee here. We reverse and remand.

Background

The plaintiff and defendant had been friends for almost 35 years. In late 1996, the defendant invited the plaintiff to join her on a trip to Las Vegas, Nevada. There is no dispute that the defendant paid all the expenses for the trip, including providing money for gambling.

The plaintiff contended she was invited to Las Vegas by the defendant because the defendant thought the plaintiff was lucky. Sometime before the trip, the plaintiff had a dream about winning on a Las Vegas slot machine. The plaintiff's dream convinced her to go to Las Vegas, and she accepted the defendant's offer to split "50-50" any gambling winnings.

In February 1997, the plaintiff and defendant went to Las Vegas. They started playing the slot machines at Caesar'sPalace. The plaintiff contends that, after losing $ 47, the defendant wanted to leave to see a show. The plaintiff begged the defendant to stay, and the defendant agreed on the condition that she (the defendant) put the coins into the machines because doing so took the plaintiff too long.¹The plaintiff agreed, and took the defendant to a dollar slot machine that looked like the machine in her dream. The machine did not pay on the first try. The plaintiff then said, "Just one more time," and the defendant looked at the plaintiff and said, "This one's for you, Puddin."

The slot machine paid $ 1,908,064. The defendant refused to share the winnings with the plaintiff, and denied they had an agreement to split any winnings. The defendant told Caesar's Palace she was the sole winner and to pay her all the winnings.

The plaintiff sued the defendant for breach of contract. The defendant moved for summary judgment on the groundsthat any oral agreement was unenforceable under the statute of frauds or was voidable for lack of consideration. The trial court rendered summary judgment in favor of the defendant. The plaintiff asserts the trial court erred in granting the defendant's motion for summary judgment.

Summary Judgment Standard of Review

A defendant is entitled to summary judgment if it pleads and conclusively establishes each element of an affirmative defense. Once the defendant produces evidence that entitles it to summary judgment, the plaintiff must present evidence that raises a fact issue. In reviewing the defendant's summary judgment proof, every reasonable inference must be indulged in favor of the plaintiff, and any doubts resolved in her favor.

Consideration

The defendant asserted the agreement, if any, was voidable because there was no consideration. The defendant contended the plaintiff's only contribution was the plaintiff's dream of success in Las Vegas and her "luck." The plaintiff asserted the defendant bargained with her to go to Las Vegas in return for intangibles that the defendant thought the plaintiff offered (good luck and the realization of the dream). The plaintiff said she gave up her right to remain in Houston in return for the agreement to split any winnings. The plaintiff also asserted the agreement was an exchange of promises.

A contract must be based upon a valid consideration, in other words, mutuality of obligation. Consideration is a bargained-for exchange of promises. Consideration consists of benefits and detriments to the contracting parties. The detriments must induce the parties to make the promises and the promises must induce the parties to incur the detriments.

The plaintiff alleged she promised to share one-half of her winnings with the defendant in exchange for the defendant's promise to share one-half of her winnings with the plaintiff. These promises, if made, represent the respective benefits and detriments, or the bargained for exchange, necessary to satisfy the consideration requirement.

Therefore, the plaintiff raised a genuine issue of material fact sufficient to defeat the defendant's entitlement to summary judgment based on the affirmative defense of lack of consideration.

Statute of Frauds

The defendant asserted the agreement, if any, was unenforceable under the statute of frauds because it could not be performed[**6]within one year. There is no dispute that the winnings were to be paid over a period of 20 years.

The statute of frauds is set forth inSection 26.01 of the Texas Business and Commerce Code and provides, in pertinent part:

(a) A promise or agreement described in Subsection (b) of this section is not enforceable unless the promise or agreement, or a memorandum of it, is

(1) in writing; and

(2) signed by the person to be charged with the promise or agreement or by someone lawfully authorized to sign for him.

(b) Subsection (a) of this section applies to:

. . .

(6) an agreement which is not to be performed within one year from the date of making the agreement; . . . .

Tex. Bus. & Com. Code 26.01.

Whether a contract falls within the statute of frauds is a question of law. Section 26.01(b)(6) does not apply if the contract, from its terms, could possibly be performed within a year--however improbable performance within one yearmay be.Section 26.01(b)(6) bars only oral contracts that cannot be completed within one year.

To determine the applicability of the statute of frauds with indefinite contracts, this Court may use any reasonably clear method of ascertaining the intended length of performance. The method is used to determine the parties' intentions at the time of contracting. The fact that the entire performance within one year is not required, or expected, will not bring an agreement within the statute.

Assuming without deciding that the parties agreed to share their gambling winnings, such an agreement possibly could have been performed within one year. For example, if the plaintiff and defendant had won $200, they probably would have received all the money in one pay-out and could have split the winnings immediately. Therefore, the defendant was not entitled to summary judgment based on her affirmative defense of the statute of frauds.

We reverse the trial court's judgment and remand for further proceedings.

End of Document

Blackmon v. Iverson

United States District Court for the Eastern District of Pennsylvania

Opinion

The plaintiff, Jamil Blackmon, has sued the defendant, basketball player Allen Iverson, for idea misappropriation, breach of contract, and quantum meruit (unjust enrichment), all arising out of the defendant's use of "The Answer," both as a nickname and as a logo or slogan. The plaintiff, who describes himself as Mr. Iverson's "surrogate father," alleges that Mr. Blackmon came up with the idea that Mr. Iverson use "The Answer" as a nickname, and that Mr. Iverson promised that he would pay Mr. Blackmon twenty-five percent of the proceeds from the sale of merchandise using"The Answer."

Presently before the Court is the defendant's motion to dismiss. The Court will grant the motion.

I. Background

The facts, according to the amended complaint are as follows. Mr. Blackmon met Mr. Iverson and his family in 1987. At that time, Mr. Iverson was a young high school student who showed tremendous promise as an athlete. Mr. Blackmon maintained a close personal friendship and relationship with Mr. Iverson and his family from 1987 forward. At various times in their friendship, Mr. Blackmon provided Mr. Iverson and his family with financial support, allowed Mr. Iverson and his family members to live in Mr. Blackmon's home, and provided other support to Mr. Iverson, such as picking him up from school and providing him with a tutor.

In July of 1994, Mr. Blackmon suggested that Mr. Iverson use "The Answer" as a nickname in the summer league basketball tournaments in which Mr. Iverson would be playing. Mr. Blackmon told Mr. Iverson that Mr. Iverson would be "The Answer" to all of the National Basketball Association's ("NBA's") woes. Mr. Blackmon and Mr. Iverson also discussed the fact that the nickname "The Answer" had immediate applications as a label, brand name, or other type of marketing slogan for use in connection with clothing, sports apparel, and sneakers. The parties also discussed using "The Answer" as a logo.

Later that evening, Mr. Iverson promised to give Mr. Blackmon twenty-five percent of all proceeds the merchandising of products sold in connection with the term "The Answer." The parties understood that in order to "effectuate Mr. Iverson's agreement to compensate" Mr. Blackmon, Mr. Iverson would have to be drafted by the NBA.

Mr. Blackmon thereafter began to invest significant time, money, and effort in the refinement of the concept of "The Answer." Mr. Blackmon continued to develop and refine the marketing strategy for the sale of merchandise, such as athletic wear and sneakers, in connection with the term "The Answer."

Mr. Blackmon retained a graphic designer to develop logos bearing "The Answer" as well as conceptual drawings for sleeveless t-shirts, adjustable hats, and letterman jackets for sale in connection with "The Answer."

In 1994 and 1995, during Mr. Iverson's freshman year at Georgetown University and the summer thereafter, there were numerous conversations between Mr. Blackmon and Mr. Iverson regarding Mr. Blackmon's progress in refining the marketing concept for "The Answer."

In 1996, just prior to the NBA draft, during which Mr. Iverson was drafted by the Philadelphia 76ers, Mr. Iverson advised Mr. Blackmon that Mr. Iverson intended to use the phrase "The Answer" in connection with a contract with Reebok for merchandising of athletic shoes and sports apparel. Mr. Iverson repeated his promise to pay Mr. Blackmon twenty-five percent of all proceeds from merchandising goods that incorporated "The Answer" slogan or logo.

****

Many months later, Reebok began manufacturing, marketing, and selling a line of athletic sportswear and sneakers using and incorporating "The Answer" slogan and logo. On numerous occasions thereafter, Mr. Iverson repeated his promise to pay Mr. Blackmon.

In the fall of 1997, Mr. Iverson told a third party that Mr. Blackmon had told him, "you need to call yourself 'The Answer,'" and had then explained to him the many marketing applications of "The Answer." During the week of Thanksgiving 1997, Mr. Iverson again promised to give Mr. Blackmon twenty-five percent of the "Reebok deal."

During the 1997-1998 NBA season, there were numerous conversations regarding Mr. Blackmon's marketing plan for merchandise, such as athletic wear and sneakers, sold in connection with "The Answer." Mr. Iverson also continued to repeat his promise to pay Mr. Blackmon.

Also during the 1997-1998 season, Mr. Iverson persuaded Mr. Blackmon to relocate to Philadelphia so that Mr. Blackmon could "begin seeking the profits from his ideas." Mr. Iverson also wanted to pay Mr. Blackmon back for the benefits the Iverson family had received when they had lived with Mr. Blackmon.

Inthe fall of 1998, Mr. Iverson advised Mr. Blackmon that Mr. Iverson had instructed his attorney to account for the number of "The Answer" units sold by Reebok and to distribute proceeds from those units to the plaintiff. At Thanksgiving of that year, Mr. Iverson told a third party that Mr. Blackmon was about to be a rich man, and that Mr. Blackmon could have twenty-five percent of Mr. Iverson's proceeds from the Reebok deal.

During the 1998-1999 NBA season, Mr. Blackmon again presented Mr. Iverson with logos incorporating "The Answer." Mr. Iverson advised Mr. Blackmon that Mr. Iverson intended to have Reebok incorporate the logo, that Mr. Iverson would give the logos to his lawyer, Lawrence Woodward, "Woody," and that Woody would present them to Reebok.

Thereafter, a meeting took place between Mr. Blackmon, Mr. Iverson, Mr. Woodward, and another individual. Mr. Blackmon told Mr. Woodward that Mr. Blackmon wanted to present him with some things Mr. Blackmon had produced for "The Answer" project. Mr. Blackmon then gave him with a package containing logos and graphics for jackets, t-shirts, and other items relating to "The Answer" project. Mr. Woodward agreed to discuss the matter with David Falk, Mr. Iverson's agent.

During the 1998-1999 and 1999-2000 NBA seasons, Mr. Iverson told Mr. Blackmon and a third party that Mr. Iverson was going to make sure that Mr. Blackmon got his due compensation from the Reebok proceeds. Mr. Iverson also told someone that he was happy that Mr. Blackmon would receive compensation from the exploitation of "The Answer" because he would not have to pay Mr. Blackmon directly from his basketball contract. Mr. Iverson stressed that the proceeds from "The Answer" were the vehicle for Mr. Blackmon's financial independence and restoration.

On or about November of 2000, Mr. Iverson was questioned as to why he had not talked to Mr. Blackmon about "The Answer" deal. Mr. Iverson stated that his attorney, Woody, had instructed him to cease all communications with Mr. Blackmon.

Reebok has continued to sell products bearing "The Answer" slogan and Mr. Iverson has continued to receive profits from the sale of products bearing "The Answer" slogan. Despite repeated requests and demands from Mr. Blackmon, Mr. Iverson has never compensated Mr. Blackmon and continues to deny Mr. Blackmon twenty-five percent of the proceeds from the merchandising of productsincorporating "The Answer."

The plaintiff has not alleged that either Mr. Iverson or Reebok used any of the graphics or logos that he designed using "The Answer." At oral argument, the plaintiff conceded that his graphics were not incorporated into any of Reebok's products sold in connection with "The Answer."

... For the breach of contract claim, the plaintiff seeks compensation in an amount equal to twenty-five percent of the profits received by Mr. Iverson from the sale of goods using "The Answer." For the unjust enrichment claim, the plaintiff seeks compensation in an amount equal to the defendant's unjust enrichment.

II. Analysis. . . .

B. Breach of Contract

The plaintiff claims that he entered into an express contract with the defendant pursuant to which he was to receive twenty-five percent of the proceeds that the defendant received from marketing products with "The Answer" on them. The defendant argues that there was not a valid contract because the claim was not timely filed under the Pennsylvania statute of limitations, the terms of the contract were not sufficiently definite, and there was no consideration alleged.

Under Pennsylvania law, a plaintiff must present clear and precise evidence of an agreement in which both parties manifested an intent to be bound, for which both parties gave consideration, and which contains sufficiently definite terms.

Consideration confers a benefit upon the promisor or causes a detriment to the promisee and must be an act, forbearance, or return promise bargained for and given in exchange for the original promise. Under Pennsylvania law, past consideration is insufficient to support a subsequent promise.

The Court will. . . consider whether there was consideration at the various times the plaintiff alleges the formation of a contract.

The plaintiff has argued that, in exchange for the defendant's promise to pay the twenty-five percent, the plaintiff gave three things as consideration: (1) the plaintiff's idea to use "The Answer" as a nickname to sell athletic apparel; (2) the plaintiff's assistance to and relationship with the defendant and his family; and (3) the plaintiff's move to Philadelphia.

According to the facts alleged by the plaintiff, he made the suggestion that the defendant use "The Answer" as a nickname and for product merchandising one evening in 1994. This was before the defendant first promised to pay; according to the plaintiff, the promise to pay was made later that evening. The disclosure of the idea also occurred before the defendant told the plaintiff that he was going to use the idea in connection with the Reebok contract in 1996, and before the sales of goods bearing "The Answer" actually began in 1997.

Regardless of whether the contract was formed in 1994, 1996, or 1997, the disclosure of "The Answer" idea had already occurred and was, therefore, past consideration insufficient to create a binding contract.

According to the complaint, the plaintiff's relationship and support for the defendant, his "surrogate father" role, began in 1987, seven years before the first alleged promise to pay was made. There is no allegation that the plaintiff began engaging in this conduct because of any promise by the defendant, or that the plaintiff continued his gratuitous conduct in 1994, 1996, or 1997 in exchange for the promise to pay. These actions are not valid consideration.Greene v. Oliver Realty, 363 Pa. Super. 534, 546, 526 A.2d 1192 (1987)(HN8[] promise is only binding if made in exchange for consideration);Brewer, 202 Va. at 815 (HN9[] consideration is something given in exchange for the promise to pay).

The plaintiff also alleged at oral argument that his move to Philadelphia during the 1997-1998 season was consideration for the promise to pay. If the parties reached a mutual agreement in 1994, the plaintiff has not properly alleged that the move was consideration because there is no allegation that the parties anticipated that the plaintiff would move to Philadelphia three or four years later, or that the plaintiff promised to do so in exchange for the defendant's promise to pay.

Nor is there any allegation that the move was part of the terms of any contract created in 1996 or 1997. The complaint states only that the defendant "persuaded" him to move to Philadelphia to "begin seeking the profits from his ideas." Even when the complaint is construed broadly, there is no allegation that the move was required in exchange for any promise by the defendant to pay. In the absence of valid consideration, the plaintiff has no claim for breach of an express contract.

The plaintiff has not made a claim of promissory estoppel. At the hearing, the plaintiff confirmed that he was not making an argument based on detrimental reliance or promissory estoppel because he would only be entitled to reliance damages, an amount far less than what the plaintiff is seeking here. T., at 107.

If the plaintiff wishes to amend the complaint to state a claim of promissory estoppel, the Court will permit him to do so. The Court does note, however, that in order for the Court to have jurisdiction under28 U.S.C. 1332, the plaintiff's damages must exceed $ 75,000.00.

**** ORDER

AND NOW, this 4th day of April, 2003, upon consideration of the defendant's Motion [*614] to Dismiss the plaintiff's opposition thereto, and all supplemental filings by the parties, and following oral argument, IT IS HEREBY ORDERED that the motion is GRANTED and the plaintiff's first amended complaint is DISMISSED for the reasons set forth in a memorandum of today's date.

End of Document

¹The plaintiff, who suffers from advanced rheumatoid arthritis, was in a wheelchair.