Eighth Circuit Affirms That Letter of Intent is not a Contract in Rave Cinemas Lawsuit
The Eighth Circuit affirmed a motion to dismiss and motion for summary judgment in 168th and Dodge, L.P. v. Rave Reviews Cinemas, LLC, No. 06-3063 (8/31/07).
Plaintiffs purchased a plat in Omaha, Nebraska, to develop as a shopping center. Rave Cinemas approached them about building a theater complex in the center. The parties negotiated extensively and signed a letter of intent. Plaintiffs incurred additional expenses of nearly $600,000 to acquire more land, and a Rave official said the project was a "done deal." Rave backed out of the deal, and Plaintiffs brought this lawsuit for breach of contract, breach of implied contract and promissory estoppel.
The district court dismissed the breach of contract claim and later granted summary judgment on the other two claims. The Eighth Circuit affirmed and cautioned against this scenario where the losing party in a deal tries to give legal effect to a preliminary document. The letter of intent plainly states it is not a binding contract, and the court found that Plaintiffs could not have reasonably relied on representations that the matter was a done deal.
