Nature of the Case
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Facts
An agreement was made on November 25, 1992, in a rough preliminary form, which contemplated memorialization. This agreement called for a down payment of $500,000 by Shann (P) with monthly payments to Dunk (D) for a grand total of $2,352,000 plus interest over five years and a payment of $360,000, plus interest to be made after five years to D’s daughter in exchange for her stock. The monthly payments were for consulting and for a non-compete agreement. D was the controlling shareholder of St. Lawrence Explosives Corp. In 1991, D was 65 and eager to retire. P began negotiations and agreed with D to an option sale. The terms involved a down payment of $1,712.000 plus additional payments of $1,500,000 over six years pursuant to a consult-noncompete clause. This option agreement failed to result in a sale because of the inability to secure financing. The lenders would not lend without P’s personal guarantee. D then told P’s representative that he might finance the deal for P. The terms were agreed upon, and both parties signed the agreement of November 25th. Both sides conceded that they considered the November 25th deal to be binding notwithstanding its expected replacement by a more elaborate formal contract. Soon after, D argued that for tax reasons the deal was unfair to D. Shortly after getting a memo regarding the formal contract, D met with his advisors and told P that the deal did not give him sufficient security. D wanted P’s personal guarantee for the deferred payments or some other form of security. D faxed this request and also sent a letter asserting that several aspects of the transaction as modified by P would be unacceptable. D wanted an increase of almost $1,000,000 at closing, interest of 15% and payment to the daughter spread over five years instead of being deferred for five and that P personally guarantee the obligations. D sent P closing documents along with a check for $450,000. D refused to sign, did not cash the check, and insisted on P’s personal guarantee. D filed suit in state court for breach and a declaration of rights and P sued in federal for breach and removed the case. They were both consolidated. D got the verdict from a 5-day bench trial; the agreement was unenforceable because it lacked certain essential terms regarding the consulting/noncompete clause. The court found that there were no terms of employment, salary and no defined scope of non-compete. P then moved under Rule 59(e) for the return of his $50,000 deposit with interest. The court denied that motion because P had failed to raise the issue prior to judgment.
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