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Cox v. SNAP, Inc.

United States Court of Appeals, Fourth Circuit

June 13, 2017

CURTIS COX, Plaintiff - Appellee,
v.
SNAP, INC., Defendant-Appellant.

          Argued: May 10, 2017

         Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. Liam O'Grady, District Judge. (1:16-cv-00009-LO-IDD)

         ARGUED:

          Anand Vijay Ramana, MCGUIREWOODS, LLP, Washington, D.C., for Appellant.

          Nicholas M. DePalma, VENABLE, LLP, Tysons Corner, Virginia, for Appellee.

         ON BRIEF:

          Elizabeth A. Hutson, MCGUIREWOODS, LLP, Washington, D.C., for Appellant.

          Randall K. Miller, Kevin W. Weigand, Taylor S. Chapman, VENABLE, LLP, Tysons Corner, Virginia, for Appellee.

          Before MOTZ, AGEE, and DIAZ, Circuit Judges.

          DIANA GRIBBON MOTZ, Circuit Judge:

         In this diversity action for breach of contract, SNAP, Inc. appeals from the grant of summary judgment to Curtis Cox. The district court concluded that SNAP breached its contract with Cox by refusing to repurchase stock options the contract granted to him and awarded Cox $637, 867.42 in damages, the full value of his options plus interest. On appeal, SNAP argues that the contract itself did not convey options to Cox but merely included an executory promise to issue those options, which SNAP never in fact issued. SNAP also challenges the calculation of damages. For the reasons that follow, we affirm the judgment of the district court.

         I.

         In 2006, SNAP, a Virginia corporation, sought to expand its business in the field of federal procurement by contracting with Curtis Cox, a Maryland resident and the president of C2 Technologies, an established government contracting firm. On January 12, 2006, the parties executed a memorandum of understanding in which Cox agreed "to promote and market [SNAP] in exchange for obtaining an equity stake" in the company. For purposes of this appeal, there is no dispute that the memorandum constitutes a binding contract.[1]

         Under the terms of this contract, Cox and C2 Technologies agreed to provide various forms of assistance to SNAP. Among other things, they agreed to use their best efforts to help SNAP obtain specific contracts, to consider SNAP for any potential leads, and to provide SNAP with approximately $240, 000 worth of marketing support and assistance.

         In return, the contract provides that "[o]n January 12, 2006, " the same day the parties executed the contract, SNAP "will issue a non-qualified stock option to Mr. Cox granting him the right to purchase 308 shares, representing five (5%) percent of the total authorized shares of stock of [SNAP]." The contract announces SNAP's intention to execute a stock split, under which Cox's options would increase proportionally. It gives SNAP the right to re-purchase Cox's options at any time after January 1, 2008 and gives Cox the right to require SNAP to repurchase his options - a "put option" - any time after January 1, 2011. The repurchase price is payable to Cox "over a five-year period with interest at the then current prime rate."

         Cox attempted to exercise his put option on March 18, 2011 in a letter to SNAP President Navneet Gupta. The parties discussed but never came to a resolution regarding Cox's request. On October 6, 2015, Cox sent Gupta a second letter demanding that SNAP pay him the full value of his ...


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