McKinney v. Gannett Co., Inc., s. 81-2156
| Citation | 694 F.2d 1240 |
| Decision Date | 09 December 1982 |
| Docket Number | Nos. 81-2156,81-2180 and 81-2181,s. 81-2156 |
| Parties | Robert M. McKINNEY, Plaintiff-Appellant, Cross-Appellee, v. GANNETT CO., INC., and The New Mexican, Inc., Defendants-Appellees, Cross-Appellants. |
| Court | United States Courts of Appeals. United States Court of Appeals (10th Circuit) |
Victor R. Marshall, Albuquerque, N.M. (William A. Sloan and Edward Ricco, Albuquerque, N.M., with him on the brief), of Rodey, Dickason, Sloan, Akin & Robb, Albuquerque, N.M., for plaintiff-appellant.
Jerry Wertheim, Santa Fe, N.M. (Steven L. Tucker and H.R. Quintero, Santa Fe, N.M., with him on the brief), of Jones, Gallegos, Snead & Wertheim, Santa Fe, N.M., for defendant-appellee The New Mexican, Inc.
John B. McCrory, Rochester, N.Y. (William S. Brandt, Rochester, N.Y., with him on the brief) of Nixon, Hargrave, Devans & Doyle, Rochester, N.Y., and Ortega & Snead, Albuquerque, N.M., for defendant-appellee Gannett Co., Inc.
Before BARRETT, BREITENSTEIN and LOGAN, Circuit Judges.
These consolidated appeals arise from a fourteen week jury trial, related post-trial hearings, and judgment ordering a rescission and accounting. The record is voluminous. 1 The facts will be developed only insofar as is necessary for our disposition on appeal.
In 1974 Robert M. McKinney (McKinney) was the owner of The New Mexican, Inc. (The New Mexican), a New Mexico corporation which publishes The New Mexican, a daily newspaper in Santa Fe, New Mexico. McKinney had been the owner and publisher of The New Mexican since 1949. Over the years McKinney also held numerous positions with other corporations and governmental agencies outside of Santa Fe. To this end McKinney maintained a New York apartment in addition to his Santa Fe residence. He employed a general manager to manage the day-to-day affairs of the newspaper. In early 1975, McKinney's physicians recommended that he move to a lower elevation in view of a recurring heart problem and his age. At the same time, McKinney decided to sell his newspaper.
McKinney subsequently commenced negotiations with Gannett Co., Inc. (Gannett), the largest newspaper chain in the United States. These negotiations culminated in an "Agreement and Plan of Reorganization" executed on December 18, 1975 by McKinney, McKinney's holding company, Gannett, and The New Mexican, Inc. Under the agreement, McKinney agreed to transfer all of the common stock of The New Mexican in exchange for 300,000 shares of Gannett stock valued at $11,700,000. The parties agreed that the agreement would be consummated at a later date after several related issues, including an employment contract, had been resolved and related documents had been finalized.
The agreement, as supplemented and amended, was executed on February 27, 1976. The final agreement included McKinney's sale of the Taos News, a second newspaper which he owned. At McKinney's request he was granted an oral option to reacquire this newspaper after two years, in accordance with his earlier plans to gift it to his daughter. The agreement also included a ten year employment contract between McKinney and The New Mexican, whereby McKinney was to be in complete charge of the business, operations, news and editorial policies of the newspaper for the first five years, and in complete charge of the news and editorial policies for the second five years. The contract provided that McKinney was not required to devote all of his time, skill or energy to the newspapers and that he could "in accordance with his customary past practice", devote such time and effort to the performance of his duties, in such manner, in such place or places, and to such extent, as he may individually and solely determine. In conjunction with his employment contract, McKinney was afforded an office, a car, and an annual salary of $30,000.00. Pursuant to the initial agreement, McKinney transferred all the stock of The New Mexican to Gannett, and Gannett transferred 300,000 shares of Gannett stock to McKinney.
Throughout 1976 and early 1977, McKinney and Gannett worked in apparent harmony. This relationship deteriorated rapidly during the latter part of 1977 and early 1978 with the implementation of Gannett's profit oriented policies, personnel changes, and repeated disregard of McKinney's editorial autonomy.
On September 3, 1978, McKinney filed suit against Gannett and The New Mexican. Within his complaint, McKinney alleged breaches of contract and fraud. McKinney sought compensatory damages of $10,000,000.00, punitive damages of $10,000,000.00, and restoration of his ownership and control of the newspaper.
Within an amended complaint, McKinney alleged eleven causes of action, including breach of contract, fraud, inducement of breach, and conspiracy. McKinney sought relief of rescission, an accounting, compensatory damages relative to rescission, and punitive damages for fraud or deliberate breach of contract.
Gannett answered, denying any wrongdoing and asserting eight affirmative defenses. The New Mexican answered, denying any wrongdoing and asserting twenty-six affirmative defenses. The New Mexican also filed a counterclaim against McKinney for his alleged breach of the employment contract.
As a result of pretrial motions and rulings made during the course of the trial, the district court limited McKinney's causes of action to breach of contract, and fraud. The district court similarly reduced the defenses of Gannett and The New Mexican to waiver, and legal excuse for the alleged breaches of contract. (The New Mexican's counterclaim was dismissed by the court after all the parties rested.)
Prior to trial, the district court granted McKinney partial summary judgment against The New Mexican, finding that an editorial incident constituted a breach of McKinney's employment contract.
The district court divided the trial into two phases. The first phase dealt with the issues of liability for breach of contract and fraud. It was heard by the jury over a period of fourteen weeks. During a motion hearing which occurred immediately prior to the time McKinney rested his case and during the phase one proceeding, the following colloquy transpired between counsel for McKinney and the court:
* * *
* * *
For one thing, Mr. McKinney isn't interested in money. He's got lots of money. He's interested in the rights he bargained for.
After the parties had rested and the jury had been instructed, a similar colloquy arose between the court and McKinney's counsel while the court was considering objections and exceptions to instructions:
On June 27, 1980, the jury returned special verdicts finding in favor of McKinney on the five claimed breaches of contract and for Gannett and The New Mexican on the fraud claim.
On June 30, 1980, a hearing was conducted and arguments presented on the appropriateness of rescission. Gannett argued that the contractual breaches as found by the jury, did not effectively destroy the essence of the bargain, that rescission was too drastic a remedy, that rescission would amount to the imposition of a penalty, and that the breaches could be cured in other ways via "a combination of declaratory judgment, of injunctive relief and other equitable means". The New Mexican argued that the breaches were not substantial and that equitable relief aside from rescission would be adequate and proper. McKinney argued that rescission was the only adequate remedy, inasmuch as the original agreement provided that without the employment contract there would not be a sale, and because he wanted to continue running the paper and he "doesn't want, or for that matter really need, additional money".
After the arguments of counsel, the court made oral findings, including: any relief other than rescission would be mere patchwork; rescission is not a remedy which a jury can award or consider; and that rescission must be considered and awarded by the court.
On March 17, 1981, the district court entered a detailed memorandum order. The court found, inter alia, that its findings and conclusions coincided with the jury's verdicts and that McKinney was entitled to elect for rescission after an accounting. The court observed, inter alia:
My observation of the Gannett men who appeared and testified in court, consideration of their testimony and the exhibits admitted into evidence, and reflection on the testimony of others regarding the conduct which molded the breaches of the Employment Agreement tell me that these are hard-charging, wilful men who, almost without exception, were fully cognizant of the...
To continue reading
Request your trial
-
Coleman v. Alcolac, Inc.
...that are not justiciable, ripe, or are involved in disputes between parties that are not truly adverse. See McKinney v. Gannett Co., 694 F.2d 1240, 1251 (10th Cir.1982). Likewise, federal courts may not advise Congress on the constitutionality of proposed legislation. See, e.g., Muskrat v. ......
-
In re Braniff, Inc.
...documents may form one unified agreement. McKinney v. Gannett Co., 660 F.Supp. 984 (D.N.M.1981), app. dismissed and remanded, 694 F.2d 1240 (10th Cir.1982), aff'd, 817 F.2d 659 (10th Cir.1987); In re Gardinier, Inc., 831 F.2d 974 (11th Cir.1987), reh'g denied, 849 F.2d 1480, cert. denied, 4......
-
Chavarria v. Fleetwood Retail Corp.
...relief subject to an election by the prevailing party is not final until an election has been made. See, e.g., McKinney v. Gannett Co., 694 F.2d 1240, 1248-49 (10th Cir.1982); Mid-State Homes, Inc. v. Beverly, 20 Ark.App. 213, 727 S.W.2d 142, 143 (1987). However, as Defendant notes, this ap......
-
Milligan-Hitt v. Board of Trustees Sheridan County
...Fed. R.App. P. 10(b)(2), although we have sometimes ordered such transcripts on our own authority. See, e.g., McKinney v. Gannett Co., 694 F.2d 1240, 1241 n. 1 (10th Cir.1982). 10. The Supreme Court has granted certiorari to decide "[w]hether the Court's decision in Saucier v. Katz should b......