Judge Gregg Costa, of the U.S. Court of Appeals for the Fifth Circuit.

The U.S. Court of Appeals for the Fifth Circuit has ruled in favor of a member of the Saudi royal family in his efforts to recover a $3 million investment from an Irving businessman in a failed social media/television project called Youtoo Media.

According to the court’s decision in Al-Saud v. Youtoo Media, Youtoo’s technology blended social media and television by allowing viewers to actively participate in broadcasts by sending texts, pictures and videos that networks could insert into programs.

According to the court, businessman Christopher Wyatt, Youtoo’s general partner, signed a letter of intent with Mansour Bin Abdullah Al-Saud to initiate operations in the Middle East in which the royal family member gave $3 million to Youtoo as a down payment to cover its short-term costs. Under the deal, Al-Saud had three months to decide whether to buy a stake in the company. If he declined that option, Youtoo would reimburse the payment.

Al-Saud ultimately opted out of purchasing an interest in the company. But because Wyatt made it clear that Youtoo needed cash to continue operations, Al-Saud gave them an additional $310,000, the court said.

Despite the infusion of cash, Youtoo’s primary lender eventually forced the company to sell its intellectual property and assets to cover outstanding debt. Because of Youtoo’s wind-down, Al-Saud asked for his money back, but Youtoo rejected his request, claiming that Al-Saud had agreed to be repaid in services performed for Youtoo Middle East, according to the decision.

Al-Saud sued Youtoo for breach of contract in the U.S. District Court for the Northern District of Texas, and a jury found that Youtoo and Wyatt were liable for breaching the letter of intent, and awarded Al-Saud $3 million in damages for the down payment. It also found Youtoo liable for breaching a separate facilities agreement, awarding him $6,820 for that claim.

Al-Saud also sought attorney fees for his success on both claims, and the trial judge allowed him to recover them against Wyatt—but not Youtoo—for the $3 million down payment. The judge denied fees for work relating to the facilities agreement.

Youtoo did not appeal the judgment entered against it for breaching the letter of intent. However, Wyatt did appeal by arguing to the Fifth Circuit that the agreement did not make him directly liable for the down payment, and that he could not be derivatively liable as Youtoo’s general partner because the contract was mistaken in saying he held that position.

The Fifth Circuit rejected Wyatt’s arguments in their decision and made their point on the third page of the decision by featuring Wyatt’s signature on the letter of intent under his title as “General Partner.”

“Of course, our holding might be different if Wyatt had no notice that the contract designated him General Partner,” wrote Judge Gregg Costa in a per curiam decision. “But Wyatt was on notice because he signed the LOI directly to the right of the words ‘Signed for and on behalf of: Chris Wyatt as the General Partner.’”

The Fifth Circuit also upheld the judgment requiring Wyatt to pay attorney fees for the breach of the letter of intent.

But the court reversed and remanded the attorney fee request under the facilities agreement, by noting that while Al-Saud had not initially properly requested them under Texas Civil Practices and Remedies Code, he may have cured that problem by later invoking the statute in a summary judgment motion.

David Coale, a partner in Dallas’ Lynn Pinker Cox & Hurst who represents Al-Saud on appeal, is pleased with the decision. While Coale’s client is royalty, the case was won by arguing fairly pedestrian Texas contract law, he said.

“There’s a little sizzle to it because of our client,” Coale said of the Fifth Circuit’s ruling. “But it was decided on basic business law principles. And that’s exactly what they are—the building blocks of contracts.’’

Ken Carroll, a partner in Dallas’ Carrington, Coleman, Sloman & Blumenthal who represents Wyatt and Youtoo on appeal, did not return a call for comment.