New ERA Article July, 2002

No Good Deed Goes Unpunished!

In 1998, an outfit known as the Upper Deck Company developed the idea of placing a hologram on a baseball card. Since holograms protect credit cards from counterfeiting, the Upper Deck Company, then a rookie baseball card company, thought such a device could also protect baseball cards.

Although the Upper Deck would ultimately become a major corporation with a value of at least a quarter of a billion dollars, the outlook was bleak during the Summer of 1988. The company apparently lacked funds for a $100,000 deposit needed to buy special paper by August 1. Without the deposit being timely placed, the company’s contract with the Major League Baseball Players Association would have been jeopardized.

As a California Court of Appeal ultimately observed,

"The Upper Deck’s corporate attorney . . . then came through in the clutch. [The attorney] found the money from the brother of his law partner, and, on the morning of July 29, had it wired to a company controlled by one the directors. That evening, the directors of the company accepted the loan and, in gratitude, agreed among themselves that the corporate attorney should have three percent of the firm’s stock. The rest is history. Instead of striking out, the Upper Deck struck it rich.

At this point, if we may be forgiven the mixed metaphor, we must change gears. No good deed goes unpunished. [The attorney] never sought to collect the . . . gift of stock, and later, the company just outright reneged on its promise. [The attorney] sued for breach of oral contract . . . ."

Although the jury awarded almost 33 million, the approximate value of three percent of the stock at the time of trial during 1993, the trial court granted a judgment notwithstanding the verdict, and the attorney appealed.

The Court of Appeal determined that the promise was gratuitous and thus "legally unenforceable, even though it might have moral force."

The attorney had already arranged the loan before the board came up with the idea of giving him stock as appreciation for his effort on behalf of the company. Since there was no expectation of payment by either party when the service was actually rendered, as the court notes, "the promise is a mere promise to make a gift and not enforceable."

The Court of Appeal thus affirmed the judgment of the trial court although noting that it had "perhaps a degree of reluctance".

The Court of Appeal observed:

"The board had a clear moral obligation to honor its promise to [the attorney]. He had, as the baseball cliche goes, stepped up to the plate and homered on the Upper Deck’s behalf. And if this court could enforce such moral obligations, we would advise the company even yet to pay something in honor of its promise."

The moral of the story? Sometimes there are choices to be made between clear moral obligations and clear legal obligations! What choice would you have made?


[This column is intended to provide general information only  and
is  not intended to provide specific legal advice; if you have  a
specific  question  regarding the  law,  you  should  contact  an
attorney  of your choice.  Suggestions for topics to be discussed
in this column are welcome.]


Reprinted from New Era Magazine
Myles M. Mattenson © 2002

	Myles M. Mattenson ATTORNEY AT LAW 5550 Topanga Canyon Blvd. Suite 200 Woodland Hills, California 91367 Telephone (818) 313-9060 Facsimile (818) 313-9260 *Email:* MMM@MattensonLaw.com *Web:* http://www.MattensonLaw.com	No Good Deed Goes Unpunished!
Myles M. Mattenson engages in a general civil and trial practice including litigation and transactional services relating to the coin laundry and dry cleaning industries, franchising, business, purchase and sale of real estate, easements, landlord-tenant, partnership, corporate, insurance bad faith, personal injury, and probate legal matters. In providing services to the coin laundry and dry cleaning industries, Mr. Mattenson has represented equipment distributors, coin laundry and dry cleaning business owners confronted with landlord-tenant issues, lease negotiations, sale documentation including agreements, escrow instructions, and security instruments, as well as fraud or misrepresentation controversies between buyers and sellers of such businesses. Mr. Mattenson serves as an Arbitrator for the Los Angeles County Superior Court. He is also past chair of the Law Office Management Section of the Los Angeles County Bar Association. Mr. Mattenson received his Bachelor of Science degree (Accounting) in 1964 and his Juris Doctorate degree from Loyola University School of Law in 1967. Bi-monthly articles by Mr. Mattenson on legal matters of interest to the business community appear in alternate months in The Journal, a leading coin laundry industry publication of the Coin Laundry Association, and Fabricare, a leading dry cleaning industry publication of the International Fabricare Institute. During the period of May 1995 through September 2002, Mr. Mattenson contributed similar articles to New Era Magazine, a coin laundry and dry cleaning industry publication which ceased publication with the September 2002 issue. This website contains copies of Mr. Mattenson's New Era Magazine articles which can be retrieved through a subject or chronological index. The website also contains copies of Mr. Mattenson's Journal and Fabricare articles, which can be retrieved through a chronological index. In addition to Mr. Mattenson's trial practice, he has successfully prosecuted and defended appeals on behalf of his clients in various areas of the law. Some of these appellate decisions are contained within his website.