Cox v. Snap, Inc.

859 F.3d 304 (4th Cir. 2017)

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Nature of the Case

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Facts

D contracted with P where P agreed 'to promote and market D in exchange for obtaining an equity stake' in the company. P agreed to use best efforts to help D obtain specific contracts, to consider d for any potential leads, and to provide D with approximately $240,000 worth of marketing support and assistance. In return W 'will issue a non-qualified stock option to P granting him the right to purchase 308 shares, representing five percent of the total authorized shares of stock of D.' It gives D the right to re-purchase the options at any time after January 1, 2008, and gives P the right to require D to repurchase his options - a 'put option' - anytime after January 1, 2011. The repurchase price is payable to P 'over a five-year period with interest at the then current prime rate.' P attempted to exercise his put option on March 18, 2011. P filed suit for breach of contract. D contends that the contract did not grant any stock options but merely memorialized D's promise to issue the options in the future. As such, issuing the options was a condition precedent to its obligation to repurchase those options from P. P argued in part that under the prevention doctrine, D waived any such condition precedent by refusing to issue the stock options. The court held that D issued the stock options to P and that the contract did not require any further steps as a condition precedent before those options issued. It also held that the language at issue was patently ambiguous and must, therefore, be construed against D. D appealed. D maintains that the contract did not convey stock options to P. It merely promised to issue stock options to P, and the contract, therefore, made the issuance of stock options a condition precedent to D's obligation to repurchase those options. D maintains that its refusal to issue the stock options was the only conceivable basis for the lawsuit, and the limitations period for the claim expired well before November 2015, when Cox filed his initial complaint in state court. The statute of limitations bars P's only potentially meritorious claim.