
Cain vs. Price (Nev. Supreme Ct. – Apr. 12, 2018)
The promisor in this case failed to fulfill its contractual obligations under a settlement agreement. The third-party beneficiaries claimed they were entitled to the contract’s release provision when the non-breaching party elected to seek damages for the promisor’s breach of the contract.
The Cains, as owners of Heli Ops International, entered into a joint venture agreement (JVA) with C4 Worldwide, Inc. The JVA provided that Heli Ops would loan $1,000,000 to C4 for the purpose of acquiring and then leveraging Collateralized Mortgage Obligations (CMOs). In return, Heli Ops would receive the first $20,000,000 in profits from C4’s leveraging of the assets, while retaining a 49 percent security interest in the CMOs until C4 had paid out that amount. The Cains transferred $1,000,000 to C4, but C4 did not distribute any profits to the Cains.
The Cains subsequently entered into a Settlement Agreement and Release of All Claims with C4 and its CEO. In the Settlement Agreement, C4 agreed to pay the Cains $20,000,000 no later than 90 days from February 25, 2010. In return, the Cains agreed to release C4 and its officers from any liability for C4’s financial misfortunes and resultant inability to timely pay. The Agreement further provided that California law governed its construction and interpretation and that the prevailing party in any action arising under the Settlement Agreement would be entitled to fees and costs.
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