Courts Will Not Imply a Contract When There Is an Express Written Agreement

On August 24, 2021, Justice Ostrager of the New York Commercial Division issued a decision in Tri-City ValleyCats, Inc. v. Houston Astros, Inc., 2021 NY Slip Op 50802(U), holding that while “New York law recognizes the concept of a binding agreement implied from the parties’ words and conduct", none will be “implied in fact where there is an express contract covering the subject matter involved".

In this case, the minor league baseball team the Tri-City Valley Cats alleged, among other things, that its major league counterpart the Houston Astros encouraged them “to invest in improvements at the Stadium and made various public statements and press releases" that implied “an intent to continue the parties’ relationship and renew the PDC [Player Development Contract], as had been done repeatedly in the past”.

The Court held that whether viewed through the lens of promissory estoppel or an implied-in-fact contract, the claim had to be dismissed because

various written agreements exist that cover the nature and duration of the parties' relationship. None describe the relationship as a ‘joint venture’. What is more, as noted above, the PDC signed by the parties expressly provided that the agreement would terminate on August 31, 2020, and the PBA [Professional Baseball Agreement] expressly provided that ‘no affiliation between any major league club and minor league club could extend beyond September 30, 2020'. Rule 56 [of the Major League Baseball Rules] also provides for termination, stating that: ‘No PDC may have a term extending beyond the expiration of the PBA and the rights and obligations of all parties to a PDC shall terminate (and be of no force and effect) as of the expiration of the PBA.’ Based on the express terms of these contracts, plaintiff's claim of an implied agreement to maintain the parties' relationship must be dismissed.

Relatedly, the Court dismissed ValleyCat’s claim that as joint venture partners the Astros breached their fiduciary duty by ousting the ValleyCats out of their relationship for no legitimate reason, notwithstanding various indications that their affiliation would continue unchanged as it had for decades, because

the written agreements control, and the agreements create neither a joint venture nor an obligation to maintain the affiliation in perpetuity. The absence of any agreement to share losses, an ‘essential’ element of a joint venture, is further evidence that no joint venture exists that would create a fiduciary duty.

Conversely, plaintiff's claims for tortious interference with contract did survive the motion to dismiss.

The attorneys at Schlam Stone & Dolan draft joint venture agreements and frequently litigate breach of contract and tortious interference claims.

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions regarding joint venture agreements or claims related to breach of contract and tortious interference with contract.