Practice problem- Jennings: Business: Its Legal, Ethical, and Global Environment, 12e

WhenWillieNelson'sThrowdownBugsOut

Creative Artists Agency, LLC v Las Palmas Race Park, LLC

2015 WL 6652655 (Tex. App. 2015)

Facts

Creative Artists (Appellants), through its employee, Brett Saliba, entered into a contract with Promotions of America, Inc., which was an agent for Arnaldo "Nano" Ramirez, for the purchase of a performance of theWillieNelson'sCountryThrowdownFestival Concert Tour at Las Palmas Race Park in Mission, Texas. Ramirez then had an oral agreement with the owners of Las Palmas Race Park and the Garzas (Roman and Jorge) to host the tour. Melhart Music was to provide the stages for the performance.

Under the Creative Artists Agreement, Ramirez was to pay $160,000 or 50% of the gross box office receipts less approved expenses and taxes and was to provide promotion for the event. The agreement contained an arbitration clause:

[a]ny claim or dispute arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration in Los Angeles, California in accordance with the commercial rules and regulations then in effect of the American Arbitration Association. The parties hereto agree to be bound by the award of sucharbitration and judgment upon the award may be entered upon any court having jurisdiction thereof.

Las Palmas paid an $80,000 deposit to Creative Artists. On the morning of the planned event, things did not go well. A representative of Creative Artists arrived and indicated that the Melhart staging was not correct. Then Creative Artists canceled the show but demanded another $80,000 for a promise to reschedule. Las Palmas paid the $80,000, but Creative Artists refused to reschedule.

Las Palmas filed suit against Creative Artists alleging theft, conversion, fraud, conspiracy, and unjust enrichment. Creative Artists filed a motion to compel arbitration. The court denied the motion because there was no valid arbitration clause between Las Palmas and Creative Artists. Creative Artists said that Las Palmas took over the agreement with Ramirez and appealed.

Judicial Opinion

VALDEZ, Chief Justice

Appellants argue that Las Palmas seeks a direct benefit from the Agreement because they seek to recoup the purchase price paid under the Agreement and to recover "lost profits" that can be measured only with reference to the Agreement. Specifically, appellants claim that Las Palmas assumed the Agreement and its arbitration clause by undertaking to meet the Agreement's obligations, including the making of payments, in order to potentially reap a profit from the Agreement.

Las Palmas responds that the Agreement does not require it to arbitrate because Las Palmas is a non-signatory and the trial court's factual determinations are supported by the evidence. Las Palmas further argues that the evidence is legally and factually sufficient to support all of the trial court's implied findings of fact.

Assuming, without deciding, that appellants are correct that the evidence is insufficient to support a finding that there was no separate oral agreement, they do not explain how omitting this factual finding from our analysis proves the exceptions cited by appellantsi.e., that Las Palmas assumed the Agreement or that Las Palmas is seeking a direct benefit from the Agreement.

Appellants argue that Las Palmas "undertook to meet [the Agreement's] obligations, including making paymentsall for the potential to reap a profit from the Agreement." However, the evidence supports the trial court's implied finding that Las Palmas paid appellants because Ramirez could no longer pay the purchase price and Las Palmas would have suffered financial loss if the concert did not take place. In addition, the evidence further supports the trial court's implied findings that: (1) appellants offered the performance of the concert to Las Palmas if it paid an $80,000 deposit and an $80,000 fee prior to the concert; (2) Las Palmas declined to pay the $80,000 fee prior to the concert and demanded that the concert be performed; (3) appellants refused and cancelled the concert; (4) appellants offered to reschedule the concert if Las Palmas paid $80,000; (5) Las Palmas accepted; (6) Las Palmas performed by paying the $80,000 as consideration for rescheduling the concert; and (7) appellants failed to reschedule the concert as promised. Thus, under these facts, the trial court was not required to find that Las Palmas agreed to pay the $160,000 "for the potential to reap a profit from the Agreement."

The trial court could have properly found that appellants understood that their agreement with Las Palmas did not depend on its Agreement with Ramirez. Accordingly, we cannot conclude that appellants conclusively established that Las Palmas implicitly assumed the terms of the Agreement. Therefore, the trial court did not abuse its discretion by determining that no valid arbitration clause existed under the theory of assumption.

Moreover, there is no evidence that any agreement between Las Palmas and appellants contained an arbitration clause. Therefore, because the trial court did not abuse its discretion by concluding that there is no valid arbitration agreement in this case.

Affirmed.

Case Questions

1. Outline the relationships among and between the parties involved.
2. What was the substance of the oral agreement between Creative Artists and Las Palmas?
3. What lessons do we know about having written contracts? About on-the-fly deals and new agreements and their performance?