Utah Reverse Exchange, LLC et al v. Donado et al
Order granting in part denying in part the 108 MOTION for Partial Findings filed by Plaintiffs. The parties are ordered file their proposed final judgment by 11/18/2016. Signed by Chief Judge William H. Steele on 11/4/2016. (tgw)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
UTAH REVERSE EXCHANGE, LLC,
LINDA DONADO, et al.,
) CIVIL ACTION 14-0408-WS-B
As set forth in more detail in other Court orders, the plaintiffs are four
limited liability companies (“Utah,” “Range,” “Water” and “Patmos”), and one
corporation (“Florencia”), all formed by non-party Charles Breland to facilitate his
business of buying, developing and reselling real estate. The defendants are a
mother and son (“Linda” and “William”) who performed services for Breland and
certain of his entities regarding various properties. The plaintiffs seek a
declaration that they owe nothing to the defendants arising out of their rendition of
such services. (Doc. 1 at 7; Doc. 88-1 at 2).
The defendants counterclaimed against all five plaintiffs, as well as against
another LLC formed by Breland (“Osprey”), on theories of breach of contract and
promissory estoppel.1 The defendants’ claims address two properties: the
“Mexico property” and the “Utah property.” The claims concerning the Mexico
property were tried to a jury in February 2016 and resulted in a verdict for the
defendants on the promissory estoppel claim in the amount of $250,000 and a
verdict for the plaintiffs on the contract claim. (Doc. 113 at 5-6).
As discussed in detail in a previous Court order, (Doc. 74), Breland filed for
personal bankruptcy and received a discharge, which presumably explains the
defendants’ failure to pursue a counterclaim against him.
The defendants’ claims regarding the Utah property were tried to the Court,
with the Court considering evidence presented to the jury as well as additional
evidence presented only to the Court. After the parties rested, the plaintiffs2
moved for judgment as a matter of law. (Doc. 108).3 The Court provided the
parties an opportunity to submit post-trial briefs, and they did so. (Doc. 109, 112).
The presentation of evidence and the submission of briefing having concluded, the
matter is ripe for resolution.4 After carefully considering the evidence, the written
and oral argument of counsel, and the final pretrial order and incorporated joint
pretrial document, (Docs. 88-1, 90), the Court issues these findings of fact and
conclusions of law pursuant to Rule 52(a).5
For convenience, and unless otherwise noted in a particular instance, the Court
includes Osprey within the term “plaintiffs,” even though it was not an original plaintiff
but is instead only a counterclaim defendant.
As the defendants point out, (Doc. 109 at 1 n.1), since the Utah portion of the
case is being resolved by bench trial, the motion should have been denominated as one
for judgment on partial findings pursuant to Rule 52(c) rather than as one for judgment as
a matter of law pursuant to Rule 50(a). The Court, however, does not agree with the
defendants that the misnomer requires denial of the motion on that ground. Instead, the
Court will treat the motion as one for partial findings, as did the Eleventh Circuit in the
case on which the defendants rely.
Resolution has been delayed by Osprey’s post-trial bankruptcy. (Doc. 114).
The defendants received relief from the automatic stay on October 12, 2016. (Doc. 1231). That relief having been obtained, the parallel stay imposed by the Court, (Doc. 115),
As the Court noted in its order establishing that the case as to the Mexico
property would be tried to a jury and that the case as to the Utah property would be tried
to the Court, (Doc. 97), “[w]hen legal and equitable claims are joined in the same action,
the right to jury trial on the legal claim, including all issues common to both claims,
remains intact.” Lytle v. Household Manufacturing, Inc., 494 U.S. 545, 550 (1990)
(internal quotes omitted). The Court acknowledged it “will be bound on the Utah side by
findings made by the jury on the Mexico side,” to the extent the jury’s findings are
known. (Doc. 97 at 3 & n.4). The Court suggested that the parties propose special
interrogatories for this purpose, (id.), but the parties declined to do so. Therefore, only
such facts as are necessarily established by the jury’s general verdict regarding the
Mexico property can be binding on the Court as to the Utah property. E.g., Brown v.
Alabama Department of Transportation, 597 F.3d 1160, 1184 (11th Cir. 2010).
FINDINGS OF FACT AND CONCLUSIONS OF LAW6
As noted, the defendants bring two claims regarding the Utah property:
breach of contract and promissory estoppel. The Court addresses the defendants’
claims in sequence, followed by the plaintiffs’ prayer for declaratory relief.
I. Breach of Contract.
The defendants assert that Breland, on behalf of himself and the LLC
plaintiffs, agreed to compensate them with a 25% mineral interest in the Utah
property. The single measure of relief demanded by the defendants is specific
performance, that is, transfer to them of a 25% mineral interest.
The parties agree that Utah law supplies the elements of the defendants’
claim for breach of contract. (Doc. 88-1 at 8). They further agree that the
elements of such a claim are: (1) a contract; (2) performance by the party seeking
recovery; (3) breach by the other party; and (4) damages. (Id.).
The Court finds that the defendants and Breland originally agreed that they
would be compensated for their work in connection with the Utah property by
payment of 10% of the resale price of the property. The Court also finds that the
defendants and Breland, on behalf of himself and the LLC plaintiffs, later agreed
to compensate the defendants instead with a 25% mineral interest in the Utah
property. The defendants testified that these agreements were entered orally,
while Breland denied any such agreement. The Court finds the defendants more
credible than Breland for several reasons, including without limitation the
First, Breland admits that he (through one of his entities) had an oral
agreement with the defendants regarding their compensation with respect to the
All findings of fact are by a preponderance of the evidence.
Mexico property, (Doc. 112 at 2), so an oral agreement with respect to the Utah
property is consistent with the parties’ previous dealings. Second, the 10%-ofresale-price measure of the original agreement regarding the Utah property is the
same as with the Mexico property, and there was plentiful evidence that Breland
and the defendants discussed and even laughed about the defendants’ consistent
10% arrangement. Third, there was substantial evidence of Breland’s tendency to
abruptly alter business proposals to suit his purposes, with which practice his
switch to a 25% mineral interest is consistent. Fourth, while the defendants’
receipt of other forms of compensation for their efforts might suggest that such
compensation was to the exclusion of a 25% mineral interest, the plaintiffs admit
that the defendants have received from them no compensation of any sort in
connection with the Utah property. (Doc. 88-1 at 8). Fifth, while Breland denied
the specific compensation arrangement to which the defendants testified, he
identified no different agreement governing the parties’ relations; it is not
plausible that the defendants purposely labored for free, so Breland’s silence
leaves the defendants’ asserted compensation agreement as the only one supported
by any evidence. Sixth, after observing the parties throughout the trial, the Court
finds that Breland – in both his testimony and his demeanor – was less than
ingenuous.7 The Court finds that he was in all important respects a less credible
witness than the defendants.8
By way of example only, Breland testified that the first time he ever heard about
a claimed 25% mineral interest was in this lawsuit. Adrian Zajac, however – who has no
interest in this litigation and whom the Court finds to be credible despite the plaintiffs’
ineffectual attempt to paint him as a dishonest businessman – testified that he discussed
the 25% deal with Breland and the defendants in or before 2011. In fact, Breland initially
testified that the first he had heard of a 25% agreement was during trial; his counsel then
had to walk him back to admitting he had known of the alleged arrangement from the
The Court has considered the plaintiffs’ specific challenges to the defendants’
credibility, (Doc. 112 at 7-9), and finds them to be overblown, largely inaccurate
sideshows that do not appreciably undermine the defendants’ credibility, certainly not
compared to Breland’s.
The Court finds that the agreement to compensate the defendants with a
25% mineral interest was entered on July 20, 21 or 22, 2005. William testified
that Breland entered the agreement on behalf of himself and his LLCs, the first of
which were formed on July 20, two days before closing.9
The Court finds that Breland entered the agreement to compensate the
defendants with a 25% mineral interest on behalf of himself and on behalf of the
LLC plaintiffs. It is uncontroverted that Breland is and always has been the sole
member of these entities, and their close connection to both Breland and the Utah
property satisfies the Court that Breland entered the agreement for them as well as
As addressed in Part I.B, the Court finds that the defendants fully
performed their obligations under the July 2005 agreement. As discussed above,
the LLC plaintiffs have breached the agreement because no mineral interest has
been transferred to the defendants. And the defendants have been damaged by the
failure to receive the agreed (or any) compensation for their efforts.
For the reasons set forth above, the Court finds that the defendants have
established all elements of their claim for breach of contract against the LLC
B. Statute of Frauds.
The plaintiffs argue that the Utah statute of frauds bars the defendants’
contract claim. They originally invoked four different statutes, (Doc. 64 at 19-20),
but they have now confined their argument to Utah Code § 25-5-3. (Doc. 108 at
William testified in deposition that the agreement was reached right before
closing. (Doc. 71-5 at 87; Doc. 74 at 7). Because the parties (who presented this
evidence to the Court on motion for summary judgment) inexplicably failed to present
such testimony at trial, the Court does not rely on it, but the Court’s finding based on the
evidence that was introduced at trial is consistent with it.
18).10 The Court, noting the defendants’ concession, (Doc. 71 at 14, 16), has
previously ruled that this provision “definitely applies.” (Doc. 74 at 6-7).11
The defendants invoke the “partial performance” exception to Utah’s
statute of frauds. “Nothing in this chapter shall be construed to abridge the powers
of courts to compel the specific performance of agreements in case of part
performance thereof.” Utah Code § 25-5-8. The plaintiffs agree that “the doctrine
of part performance allows a court to enforce an oral agreement, if it has been
partially performed.” (Doc. 108 at 16).
“It is clear … that a verbal agreement to transfer an interest in land can be
taken out of the statute of frauds, and that one can be estopped from challenging
the oral agreement if three requirements are met: A court must find (1) that there
was such an agreement, (2) that there had been part or full performance, and (3)
that there was reliance thereon.” Orton v. Carter, 970 P.2d 1254, 1259 (Utah
1998). The parties agree that these are the elements of the part performance
Demonstrating these elements is not easy. As to the first element, “the
terms of the oral contract must be clear and definite and established by clear and
definite testimony.” Bradshaw v. McBride, 649 P.2d 74, 79 (Utah 1982); accord
Spears v. Warr, 44 P.3d 742, 751 (Utah 2002), disavowed in part on other
“Every contract … for the sale, of any lands, or any interest in lands, shall be
void unless the contract, or some note or memorandum thereof, is in writing subscribed
by the party to whom the … sale is to be made, or by his lawful agent thereunto
authorized in writing.” Utah Code § 25-5-3.
The defendants, without explanation, now appear to question whether Section
25-5-3 applies. (Doc. 109 at 5 (“Even if Utah’s Statute of Frauds applies to this claim
….”). Any resistance on this ground comes too late to undo their previous concession,
especially given their failure to identify any basis for concluding the statute does not
apply. Cf. Flying Diamond Oil Corp. v. Newton Sheep Co., 776 P.2d 618, 629 (Utah
1989) (“An oil and gas royalty is an interest in land.”); Utah Code § 57-1-1(3) (defining
“real property” to include “any … interest in land, including all nonextracted minerals
located in, on, or under the land ….”).
grounds, Tangren Family Trust v. Tangren, 182 P.3d 326, 331 n.20 (Utah 2008).12
As to the second element, “the acts done in performance of the contract must be
equally clear and definite ….” Spears, 44 P.3d at 79 (internal quotes omitted).
And as to the third element, “[s]uch acts in reliance must be such that (a) they
would not have been performed had the contract not existed, and (b) the failure to
perform on the part of the promisor would result in fraud on the performer who
relied, since damages would be inadequate.” Id. (internal quotes omitted).13 “The
critical observation to make in reading these delineations of what constitutes
sufficient part performance is that it must be proved by strong evidence.” Martin
v. Scholl, 678 P.2d 274, 275 (Utah 1983).
As noted above, the Court has found that an oral agreement to transfer to
the defendants a 25% mineral interest in the Utah property existed. The
defendants argue that the consideration for this promise consisted of their efforts
in acquiring the Utah property as well as their post-acquisition efforts in exploring
the mineral interests thereunder. They point to evidence that they engaged in such
exploration activity as demonstrating that they performed and that they did so in
reliance on the agreement.14
According to the plaintiffs, the “clear and definite” standard can be met only by
the resisting party’s admission, a partial writing, or “the testimony of disinterested
witnesses.” (Doc. 108 at 17-18). The plaintiffs, however, identify no Utah authority for
such a stringent rule. Instead, they rely on a law review article that did not purport to
express existing law but merely offered a “suggested formulation for a modern part
performance doctrine.” (Doc. 109-1 at 17-18). In the 52 years since its publication,
apparently no Utah court has adopted the article’s suggestion, and the Court declines to
be the first to do so.
“The reason for such requirement [that acts of part performance “must be
exclusively referable to the contract”] is that the equitable doctrine of part performance is
based on estoppel and unless the acts of part performance are exclusively referable to the
contract, there is nothing to show that the plaintiff relied on it or changed his [or her]
position to his prejudice ….” Spears, 44 P.3d at 751 (internal quotes omitted).
The plaintiffs argued at trial that evidence of post-acquisition activity lies
beyond the issues preserved for trial. This is incorrect, as the joint pretrial document
As found in Part I.A, the agreement to compensate the defendants with a
25% mineral interest was reached just before closing. The defendants presented
no evidence that they performed acquisition services after the agreement was
reached, and the Court finds that they did not do so. Thus, the part performance
exception to the statute of frauds can be in play only if the consideration for the
agreement to transfer the mineral interest included post-acquisition services in
exploring the property’s minerals.
According to the defendants, William testified that the agreement required
them, as part of the consideration for receiving a 25% mineral interest, to
participate with Breland in developing the Utah property’s mineral resources.
(Doc. 109 at 2-3, 5-6, 7). The Court cannot agree. What William actually said
was that “we were to have 25 percent of the minerals and mineral interest, the
revenue interest in the property as part of putting the deal together.” (Doc. 111-1
at 71 (emphasis added)). Putting the deal together is pre-acquisition activity, not
William also testified that, before presenting the Utah property to Breland,
he had been working with Southern Companies (“Southern”) “to put together an
offer to come in and buy the property.” (Doc. 111-1 at 29-30). He testified that
his “agreement for compensation” with Southern was “[a] 25 percent interest in
the minerals moving forward,” plus a ten percent fee based on the purchase price.
(Id. at 30). The Court finds that William reached an agreement with Southern to
receive a 25% mineral interest exclusively for his acquisition efforts. Because
William testified that the defendants’ deal with Breland was “basically the same
deal that I had made with Southern Companies,” (id. at 31), it is clear that the
defendants’ deal with Breland was to receive a mineral interest based solely on the
defendants’ acquisition efforts.
addresses in some detail the defendants’ post-acquisition exploration efforts. (Doc. 88-1
The defendants, (Doc. 109 at 3, 5), stress that Larry Trice, a representative
of Breland, wrote a letter in 2007 describing William as one “with whom we
participate in our Utah gas and oil exploration.” (Defendants’ Exhibit 8 at 1).
This statement, however, sheds no light on the terms of the agreement to transfer a
25% mineral interest; William would have had incentive to “participate” in
mineral exploration even if he had already fully performed his obligations under
the agreement, since he would be exploring a mineral interest he was already
As noted, to successfully invoke the part performance exception, the
defendants are required to establish, by clear and definite testimony, that the terms
of the oral contract clearly and definitely required them to perform postacquisition work as consideration for receiving a 25% mineral interest. They have
come nowhere close to meeting this demanding standard.16 The Court finds that
the agreement to compensate the defendants with a 25% mineral interest did not
make post-acquisition efforts part of the consideration.
The defendants argue that William’s deposition, their brief in opposition to
motion for summary judgment, and the joint pretrial document all reflect that postacquisition work was part of the consideration. (Doc. 109 at 3-4 n.3). Briefs and other
filings, of course, are not evidence, and no party submitted William’s deposition as trial
evidence. Even had the defendants done so, the Court has already noted that his
deposition testimony indicates only an agreement to transfer a mineral interest “as
compensation simply for their services in acquiring the Utah property.” (Doc. 74 at 7).
Even William’s deposition assertion that he “earned every dime” of the mineral interest
by his post-acquisition activity, (Doc. 71-5 at 116), is a rationalization for why he
deserves the mineral interest, not testimony as to what the terms of the contract actually
The defendants suggest they need prove the elements of the part performance
exception only by a “fair preponderance” of the evidence. (Doc. 109 at 5 n.6). This
language, however, addresses the standard of review on appeal, not the quality of
evidence that must be presented to sustain the exception – as the very case cited by the
defendants reflects. Spears, 44 P.3d at 751. At any rate, a fair preponderance of the
evidence does not support the proposition that post-acquisition activity was consideration
for the agreement to transfer a 25% mineral interest.
Because the defendants cannot establish the first element of the part
performance exception, the Court need not consider whether they could satisfy the
second and third elements.17 The defendants’ breach of contract claim is barred by
the statute of frauds.
The Court finds that the defendants have established every element of their
claim for breach of contract. The Court finds that the plaintiffs have established
every element of their affirmative defense of the statute of frauds. The Court finds
that the defendants have not established every element of any exception to the
statute of frauds. The defendants have not prevailed on their breach of contract
claim and are not entitled to any relief under that claim. The plaintiffs’ motion for
partial findings is granted as the breach of contract claim.
II. Promissory Estoppel.
The promissory estoppel claim is presented as an “alternative” to the
contract claim. (Doc. 109 at 2 n.2). The defendants assert that Breland promised
on behalf of himself and the plaintiff LLCs to transfer to the defendants a 25%
mineral interest in the Utah property.
The parties agree that Alabama law supplies the elements of the defendants’
claim for promissory estoppel. (Doc. 88-1 at 9). They further agree that the
elements of such a claim are: (1) a promise which; (2) the promisor should have
reasonably expected to induce action or forbearance of a definite and substantial
character; (3) the promise did in fact induce such action or forbearance by the
promisee; and (4) injustice can be avoided only by enforcing the promise. (Id.).
However, the discussion in text regarding the Larry Trice letter suggests the
defendants cannot establish – at all, much less by strong evidence – that their postacquisition work would not have been performed unless their receipt of a 25% mineral
interest contractually depended upon it.
For reasons expressed in Part I.A, the Court finds that Breland promised the
defendants, on behalf of himself and the plaintiff LLCs, to transfer to the
defendants a 25% mineral interest in the Utah property based on their services in
acquiring the property. The Court further finds that Breland at the same time
promised, on behalf of himself and the plaintiff LLCs, to participate with the
defendants in oil and gas exploration on the Utah property.18 The Court further
finds that Breland and the plaintiff LLCs should have reasonably expected these
promises to induce the defendants to invest substantial time and treasure in
exploring the minerals on the Utah property, since they had been promised both
that they would own ¼ of them and that Breland and his entities would participate
in the costs of developing them.
The Court finds that Breland’s promise induced the defendants to take
actions of a definite and substantial character. Without pretense of being
exhaustive, those efforts included securing a petroleum engineer, identifying
additional mineral leases, negotiating mineral leases, crafting a drilling deal,
working on multiple wells, exploring financing needed to retain state leases, and
testifying as an entity representative. For years, William traveled to Utah 20-30
times a year, staying as long as six weeks at a time, and he paid all his own
expenses for almost all these trips.
Finally, the Court concludes that injustice can be avoided only by enforcing
the promise to transfer a 25% mineral interest. The plaintiffs admit the defendants
“have not received any compensation from Breland or his entities in connection
with the Utah property.” (Doc. 88-1 at 8). This is an extraordinary injustice.
Breland extracted from the defendants all their services in acquiring the Utah
property (beginning with their bringing the property to his attention in the first
place), in exchange for a promise to pay them 10% of the resale price. Shortly
Trice confirmed this arrangement in the letter discussed in Part I.B.
before closing, he swapped the cash compensation for a 25% mineral interest.
Failing to enforce this promise would condone Breland’s complete stiffing of the
defendants for services that he himself valued in seven figures.19 This injustice
would only be magnified by his stiffing the defendants for all the time, effort and
money they expended in developing the mineral interests, the benefits of which
Breland now claims exclusively for himself and his entities.20
The plaintiffs offer no relevant response. Rather than addressing
promissory estoppel with respect to the 2005 promise to transfer a 25% mineral
interest, they focus exclusively on attempting to show that promissory estoppel
does not apply to a separate (and redundant) promise by Breland, made in 2010, to
use the assets of all his entities to satisfy all obligations to the defendants. (Doc.
108 at 13-16). The plaintiffs’ confusion is not easy to understand, given that the
The Utah property was purchased for $13 million, and the Court finds Breland
did not expect to resell the property at a loss. Thus, the parties anticipated the defendants
would receive at least $1.3 million on resale.
Breland blames William for unsuccessful drilling efforts on the property, but by
his own telling the fault lay with the petroleum engineer, and Breland offered no
evidence that William knew or should have known the engineer would fail. Breland also
blames William for a $3 million judgment against Breland that occurred because Breland
sought and obtained a loan that he thereafter refused to accept, triggering a default and
litigation. Breland blames William for bringing the lender to his attention (after
William’s exhaustive efforts to obtain other financing failed to produce an acceptable
proposal), but it is clear that Breland brought the whole mess on himself by his
repudiation of his own deal. The Court finds that William is not at fault, either for the
well failures or for Breland’s loan fiasco, and neither furnishes grounds for finding no
injustice in the refusal of Breland and his entities to honor their promises. What
Breland’s testimony on these matters chiefly accomplishes is to illustrate what the Court
finds to be his pattern of resistance to honoring his obligations and of making excuses for
Breland also suggests that injustice is lacking because Zajac and/or Levada paid
William $450,000 after Levada’s 2011 bid to purchase the Utah property fell through.
By the plaintiffs’ own admission, the payment was made for services rendered in
connection with that transaction, (Doc. 108 at 14), not for the defendants’ work for
Breland in acquiring the property years earlier. It is therefore irrelevant to the injustice
joint pretrial document expressly and in detail ties the promissory estoppel claim
to Breland’s 2005 promise to transfer a mineral interest. (Doc. 88-1 at 8-9). Even
after the defendants explicitly set forth their theory in their post-trial brief, (Doc.
109 at 2-5), the plaintiffs in their subsequent post-trial brief completely ignored it
and instead repeated – essentially verbatim – their earlier, misdirected argument
regarding the 2010 agreement. (Doc. 112 at 14-17). They have thereby forfeited
whatever argument (if any) they might have raised in opposition to the defendants’
B. Broker’s License.
With exceptions not relevant here, “an individual is required to be licensed
as a principal broker … if the individual performs, offers to perform, or attempts
to perform one act for valuable consideration of … buying … real estate for
another person” or of “offering for another person to buy … real estate.” Utah
Code § 61-2f-201(2). “Unless a person is licensed under this chapter, it is
unlawful for the person to … act in the capacity of a principal broker ….” Id. §
61-2f-201(1). “An individual required to be licensed under this chapter who
violates this chapter … is, upon conviction of a first violation, guilty of a class A
misdemeanor.” Id. § 61-2f-405(1)(a). “A person may not bring or maintain an
action in any court of this state for the recovery of a commission, fee, or
compensation for any act done or service rendered if the act or service is
prohibited under this chapter.” Id. § 61-2f-409(1)(a). The plaintiffs assert that
Alabama law precludes the defendants from recovering under a theory of
promissory estoppel because they lacked a Utah broker’s license. (Doc. 108 at 2122; Doc. 112 at 14).21
The defendants maintain the plaintiffs forfeited this defense by not preserving it
in the joint pretrial document. (Doc. 109 at 9 n.14). They are mistaken. The plaintiffs
expressly stated as an affirmative defense that “the Donados lack the requisite
professional licenses to be paid for engaging in the transactions involved in this case.”
(Doc. 88-1 at 9-10).
The burden is on the plaintiffs to establish all elements of this affirmative
defense.22 The first of these elements is that the defendants bought or offered to
buy the Utah property for Breland and/or his entities or offered or attempted to do
so. The plaintiffs have identified no such evidence. It is clear that the defendants
performed services in connection with Breland’s acquisition of the Utah property
(including informing Breland of its availability, examining the property,
performing due diligence, and talking to the property owner’s chief creditor), but
the plaintiffs point to no evidence that the defendants actually bought the Utah
property on behalf of Breland23 or that they made the property owner (or chief
creditor) an actual offer to purchase on behalf of Breland. The Court finds that the
defendants did not engage in activity that would trigger the license requirement.24
Even had the plaintiffs demonstrated that the defendants were required to
hold a license but did not possess one, they have not demonstrated that such a
failure precludes the defendants’ claim. In identifying the consequences of such a
failure, the plaintiffs eschew Utah law. Instead, they rely exclusively on Alabama
law, arguing that it prohibits the defendants’ claim because their pursuit of a 25%
mineral interest is based on an “illegal contract,” enforcement of which is barred
by public policy. (Doc. 108 at 21-22).
The Court detects multiple deficiencies in the plaintiffs’ cursory treatment
of the issue. First, the plaintiffs have not explained – despite the defendants’
E.g., Fibro Trust, Inc. v. Brahman Financial, Inc., 974 P.2d 288, 295 n.8 (Utah
The purchase agreement was executed by Breland, not by either defendant.
(Defendants’ Exhibit 4).
The plaintiffs apparently seek to switch the focus of the inquiry to the
defendants’ efforts in connection with resale of the Utah property. (Doc. 108 at 21).
However, as the plaintiffs admit, (id. at 19-20), and as the Court has found, the 25%
mineral interest was promised exclusively for the defendants’ pre-acquisition efforts. At
any rate, the Court finds the defendants did not sell the Utah property for Breland and/or
his entities and did not make an actual offer to sell the property.
objection, (Doc. 109 at 8) – why Alabama law would supply the rule of decision.25
Second, they have oversimplified Alabama law concerning the enforcement of
“illegal” contracts. According to the plaintiffs, Alabama law is rigid and
unforgiving: once a contract is declared illegal, its enforcement is automatically
prohibited. The law, however, appears to be more nuanced:
As a general principle, a party may not enforce a void or illegal
contract either at law or in equity. [citations omitted] [T]he principle
that contracts in contravention of public policy are not enforceable
should be applied with caution and only in cases plainly within the
reason on which the doctrine rests. [citations omitted] The true test
to determine whether a contract is unenforceable because of public
policy is whether the public interest is injuriously affected in such a
substantial manner that private rights thereunder should yield to
Beverly v. Chandler, 564 So. 2d 922, 924 (Ala. 1990) (internal quotes omitted);
accord J.C. Bradford & Co., L.L.C. v. Vick, 837 So. 2d 271, 175 (Ala. 2002).
Because the Court finds the defendants were not required to have a broker’s
license, the Court need not consider further the difficulties with the plaintiffs’
C. Other Matters.
As noted in Part I.B, the defendants’ contract claim is barred by the statute
of frauds. The plaintiffs have explicitly limited their invocation of this defense to
the contract claim. (Doc. 108 at 16; Doc. 112 at 17). Because the plaintiffs have
preserved no argument that the promissory estoppel claim is barred by the statute
of frauds, the Court does not consider or address this forfeited defense.
Choice-of-law issues are notoriously tricky, and the plaintiffs cannot by their
own inaction shift to the Court the burden that rests on them of developing and
articulating a logical, legally supported rationale for applying Alabama law. While the
parties agreed that Alabama law supplies the elements of the defendants’ promissory
estoppel claim, (Doc. 88-1 at 9), they reached no similar agreement regarding the law
governing the plaintiffs’ affirmative defense.
The plaintiffs argue that the defendants’ claims are barred by res judicata.
(Doc. 108 at 5-13). The argument is presented as an almost verbatim repetition of
the plaintiffs’ trial brief. (Doc. 92 at 10-18). The Court, addressing that trial brief,
has previously ruled that “the plaintiffs’ res judicata defense is legally
insupportable.” (Doc. 103 at 4). That ruling remains unchanged.
The joint pretrial document preserved an affirmative defense of laches.
(Doc. 88-1 at 9-10). The plaintiffs, however, did not mention – much less address
– such a defense in either their Rule 50 motion or their post-trial brief. They have
thereby forfeited any argument they might (or might not) have regarding the
timeliness of the defendants’ claim. Cf. Sapuppo v. Allstate Floridian Insurance
Co., 739 F.3d 678, 681 (11th Cir. 2014) (“We have long held that an appellant
abandons a claim when he either makes only passing references to it or raises it in
a perfunctory manner without supporting arguments and authority.”).
The plaintiffs propose that any recovery on the defendants’ promissory
estoppel claim should be limited to a 3% mineral interest rather than the 25%
demanded. (Doc. 112 at 3-4 n.3). The basic idea seems to be that, because the
jury awarded the defendants $250,000 on their promissory estoppel claim
regarding the Mexico property (or about 12% of the $1.9 million they were
seeking), the plaintiffs’ recovery regarding the Utah property should likewise be
limited to about 12% of what they seek, which would be roughly a 3% mineral
interest. As discussed in note 5, supra, only such facts as are necessarily
established by the jury’s general verdict regarding the Mexico property can be
binding on the Court as to the Utah property. The plaintiffs identify nothing
necessarily established by the jury’s verdict – on the contrary, they concede the
“uncertain nature of the binding effect of the jury’s finding in favor of the
Donados on their promissory estoppel claim on the Mexico side.” (Doc. 112 at 3
n.3). Because the Mexico claim involved a promise, made in 2004, to pay money
for work regarding the Mexico property, while the Utah claim involves a different
promise, made at a different time, to provide different compensation for different
work, and with different acts of reliance supporting the two claims, it is impossible
to conclude that the jury made any finding regarding the quantum of recovery that
could be binding on the Utah claim. To the extent the plaintiffs suggest the Court
follow the jury though not bound to do so, the Court declines.
The Court finds that the defendants have established every element of their
claim for promissory estoppel. The Court finds that the plaintiffs have not
established every element of their affirmative defense regarding a broker’s license.
The Court rejects the plaintiffs’ affirmative defense of res judicata on grounds
previously stated. The plaintiffs have not presented or preserved any other
defense to the promissory estoppel claim. The defendants have prevailed on their
promissory estoppel claim and are entitled to a judgment awarding them a 25%
mineral interest in the Utah property. The plaintiffs’ motion for partial findings is
denied as to the promissory estoppel claim.
III. Declaratory Relief.
The plaintiffs seek a declaration “that there are no commissions, fees or
expenses owed by” them to the defendants. (Doc. 1 at 7). Given the jury’s verdict
as to the Mexico claims and the Court’s ruling as to the Utah claims, the plaintiffs
are not entitled to the relief they seek.
The parties are ordered to confer as to the form and content of a final
judgment to be entered in this action and to file their proposed final judgment on
or before November 18, 2016.
DONE and ORDERED this 4th day of November, 2016.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE
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