Network Enterprises, Inc. v. APBA Offshore Productions, Inc.

264 F. App'x 36
CourtCourt of Appeals for the Second Circuit
DecidedFebruary 11, 2008
DocketNo. 06-5094-cv
StatusPublished
Cited by12 cases

This text of 264 F. App'x 36 (Network Enterprises, Inc. v. APBA Offshore Productions, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Network Enterprises, Inc. v. APBA Offshore Productions, Inc., 264 F. App'x 36 (2d Cir. 2008).

Opinion

[38]*38 SUMMARY ORDER

Defendants-Appellants APBA Offshore Productions, Inc. (“Productions”) and Michael D. Allweiss appeal principally from the April 20, 2006 final decision of the Southern District of New York (Haight, /.), following a bench trial, directing judgment in favor of Plaintiff-Appellee Network Enterprises, Inc. (“Network”). We assume familiarity with the facts and procedural history.

After a bench trial, the Court reviews the district court’s findings of fact for clear error. Fed.R.Civ.P. 52(a); Connors v. Connecticut Gen. Life Ins. Co., 272 F.3d 127, 135 (2d Cir.2001). Legal conclusions are reviewed de novo. Shann v. Dunk, 84 F.3d 73, 77 (2d Cir.1996).

Defendants contend primarily that the district court erred in concluding that the parties entered into a Type II preliminary agreement when Productions exercised its option pursuant to the Renewal Option Rider (“ROR”) to the August 21, 2000 Time Buy Agreement (“TBA”). The considerations relevant to whether a binding Type II agreement exists are: (1) whether the intent to be bound is revealed by the language of the agreement; (2) the context of the negotiations; (3) the existence of open terms; (4) whether there was partial performance; and (5) the necessity of putting the agreement in final form, as indicated by the customary form of such transactions. Brown v. Cara, 420 F.3d 148, 157 (2d Cir.2005). We agree with the district court that these factors indicate the existence of a binding Type II agreement between Network and Productions.

First, the ROR granted Productions the option to purchase up to thirteen episodes for the 2001 season. It provided also that “[t]he dates and times of such telecasts shall be mutually agreed to by the parties hereto.” A.40. This language suggests that once Productions exercised its option, the parties contemplated that they were bound to “work out the details” of the 2001 broadcast season.

Second, leading up to the exercise of the renewal option, the parties began discussing the possibility of entering into a new deal not contemplated by the TBA. Brian Hughes of Network told Allweiss that the renewal option could be a “fall back” if the new deal fell through. A.274. Allweiss never expressed any dissatisfaction with this arrangement to Network. And on March 1, 2001, the last day the option could be exercised, Allweiss caused Productions to exercise the option. A.275. These facts, when viewed objectively, see Klos v. Polskie Linie Lotnicze, 133 F.3d 164, 168 (2d Cir.1997) (objective manifestation of parties’ intent guides contract interpretation), are consistent with the conclusion that the parties believed they would negotiate under the ROR’s framework if the new deal was not consummated.

Third, the ROR left open the number, dates, and times of telecasts to be made during the 2001 season. It supplied a price term and an upper limit on the number of episodes. A.40. All remaining terms were covered by the TBA. This supports the conclusion that the parties created a general framework in which to work, with the expectation that they later would agree on the details of precisely when to broadcast Productions’ shows. “[Wjhere the existence of open terms creates a presumption against finding a binding contract as to the ultimate goal, these same omissions may actually support finding a binding Type II agreement.” Brown, 420 F.3d at 158 (citations omitted). This is so even where the open terms are “critical to every aspect” of the parties’ ultimate contractual objective. See id.

[39]*39Fourth, the evidence shows that Network partially performed by reserving air time for Productions’ shows. A.188-89. The district court reasonably found that Network did this because Hughes had a legitimate basis to believe that the parties, pursuant to the ROR, had agreed to the terms contained in the August 7, 2001 proposal sent to Allweiss by Mary Beth Pacisi. A.584-85.

Finally, there is no evidence in the record from either side indicating whether the broadcasting industry generally views preliminary agreements to negotiate in good faith to be binding. Accordingly, this last factor has little weight in our analysis.

Defendants’ remaining arguments challenging a finding of a Type II agreement are without merit. Assuming, arguendo, that the district court’s statement in its summary judgment order that no binding agreement to agree had been formed had established the law of the case, the district court reasonably strayed from the law of the case to correct a clear error or prevent manifest injustice in light of the ample evidence adduced at the bench trial establishing the existence of a Type II agreement. See United States v. Becker, 502 F.3d 122, 127 (2d Cir.2007). Furthermore, defendants conceded at oral argument that they were not prejudiced by the district court’s earlier statement.

Defendants complain that the pleadings did not allege the existence of a Type II agreement. They did not object to trying this issue, however, and both parties addressed it in their trial briefs. A.517-23, 543-49. Given these facts, the preliminary agreement issue properly may be “treated in all respects as if [it] had been raised in the pleadings.” Fed.R.Civ.P. 15(b)(2).

Defendants next claim that there was no breach of any Type II agreement because Allweiss earnestly sought to enter into some kind of new arrangement for the 2001 broadcast season and therefore acted in good faith. This is unavailing. The ROR imposed the obligation to negotiate in good faith within its general framework toward the contractual goal it contemplated. Brown, 420 F.3d at 153. Negotiating outside of that framework did not discharge defendants’ duty to negotiate within it as well.

Defendants also challenge the district court’s damages calculation. This Court is especially deferential to a district court’s damages finding, however, see Vermont Microsystems, Inc. v. Autodesk, Inc., 88 F.3d 142, 151 (2d Cir.1996), and we see no reason to disturb the finding here. Defendants argue that the $400,000 damages figure is inappropriate because defendants cannot be held liable as though a final agreement to purchase ten episodes at $40,000 per episode had been consummated and breached. But the district court did not base its damages finding on a conclusion that the parties formally had agreed to a ten-episode deal at $40,000 per episode. Rather, the court found that Productions acted in bad faith by leading Network to believe that the parties were on the brink of consummating such a deal, causing Network to set aside air time for Productions’ programming, and then backing out at the last minute—nine days before the first scheduled telecast—when Network had no profitable alternative programming to fill the time slots.

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Bluebook (online)
264 F. App'x 36, Counsel Stack Legal Research, https://law.counselstack.com/opinion/network-enterprises-inc-v-apba-offshore-productions-inc-ca2-2008.