American Totalisator v. Fair Grounds

Citation: American Totalisator Co. v. Fair Grounds Corp., 1992 WL 348354 (E.D. La. Nov. 18, 1992), aff’d, 3 F.3d 810 (5th Cir. 1993).

Factual Background
American Totalisator Company, Inc. (AmTote) and Fair Grounds, a race track operator, entered into a service agreement where AmTote agreed to provide Fair Grounds with tote services at Fair Grounds' live racing facilities and its off-track betting parlors. The service agreement did not expressly state the number of intertrack racetracks that the terminals must accommodate.

Soon after, Fair Grounds became interested in conducting intertrack wagering on more than three simultaneous intertrack racing programs. However, the TIM 300 model terminals used by AmTote were not capable of handling four events simultaneously. Fair Grounds advised AmTote's managers that it wanted to offer intertrack wagering on four simultaneous racing programs and that it considered AmTote to be in breach of contract for failing to provide them with a system with this capability. AmTote offered to modify its system to accommodate intertrack wagering on four simultaneous events by April 1991. However, Fair Grounds terminated the agreement on November 6, 1990. AmTote subsequently filed a breach of contract action in the Eastern District of Louisiana. Before the completion of discovery, the parties filed cross motions for summary judgment.

District Court Decision
The district court found the 1988 totalisator service agreement unambiguous and granted AmTote's summary judgment motion. Specifically, the district court found that the parties intended Fair Grounds to receive ticket issuing machines that could accommodate simultaneous intertrack wagering on "one or more" &mdash; but not necessarily four &mdash; intertrack races. Thus, Fair Grounds wrongfully terminated its agreement based on AmTote's system's failure to accommodate simultaneous wagering at all four intertrack racetracks.

Appellate Court Decision
Fair Grounds appealed the decision to the United States Court of Appeals for the Fifth District. The court affirmed the district court's decision and held that the contract's silence as to which kind of terminals were required did not create an ambiguity in the contract, that the contract was unambiguous, and that the amount of liquidated damages were reasonable. The court also affirmed the denial of Fair Grounds' Fed. R. Civ. P. 60(b) motion for relief from judgment because Fair Grounds could have inquired into the terminals' basic components earlier in the litigation.