Charles Woods Television Corp. v. Capital Cities/ABC, Inc.

• Citation: 869 F.2d 1155
• Decision Date: 20 April 1989
• Docket Number: No. 88-2036,88-2036
• Parties: 27 Fed. R. Evid. Serv. 685 CHARLES WOODS TELEVISION CORP., Appellant, v. CAPITAL CITIES/ABC, INC., Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 1155

869 F.2d 1155

27 Fed. R. Evid. Serv. 685

CHARLES WOODS TELEVISION CORP., Appellant, v. CAPITAL CITIES/ABC, INC., Appellee.

No. 88-2036.

United States Court of Appeals,

Eighth Circuit.

Submitted Dec. 14, 1988.

Decided March 16, 1989.

Rehearing and Rehearing En Banc Denied April 20, 1989.

Gary R. Cunningham, Springfield, Mo., for appellant.

Thomas F. Connell, Washington, D.C., for appellee.

Before ARNOLD, Circuit Judge, BRIGHT, Senior Circuit Judge and JOHN R. GIBSON, Circuit Judge.

BRIGHT, Senior Circuit Judge.

Plaintiff-appellant Charles Woods Television Corporation (Woods TV) recovered a jury verdict of $3.5 million ($1.5 million actual damages plus $2 million punitive damages) resting on fraudulent misrepresentations allegedly made by defendant-appellee Capital Cities/ABC, Inc. to induce Woods TV to purchase and improve a television station then affiliated with the American Broadcasting Company (ABC). ¹ Woods TV brought this action after ABC cancelled the affiliation. The district court, ² however, rejected the jury verdict and granted appellee's motion for judgment n.o.v., or in the alternative, its motion for a new trial. From the adverse judgment, Woods TV brings this appeal, alleging that the trial court erred in setting aside the verdict and entering judgment for Capital Cities/ABC based on the court's determination that Woods TV failed to create a submissible case of fraud under Missouri law. Woods TV also questions on appeal certain evidentiary rulings of the trial court. For the reasons discussed below, we affirm the judgment. ³

I. BACKGROUND

Television station KMTC in Springfield, Missouri, became an ABC affiliate in 1966. Federal regulations provide that affiliation agreements between networks and local stations cannot exceed two years and that either party may cancel an agreement upon six months' written notice. 47 C.F.R. Sec. 73.658(c) (1987). ABC renewed KMTC's affiliation agreement without interruption through a renewal that became effective in January 1985.

On January 11, 1985, Woods TV signed a contract to purchase KMTC from Midland Television Corporation (Midland) at a later date for $13 million. The affiliation agreement between ABC and KMTC required that the network approve all assignments of affiliations to purchasers such as Woods TV. In a letter dated February 15, 1985, however, ABC informed Woods TV and KMTC that Telepictures Corporation (Telepictures) had asked to make a presentation to ABC in hopes of obtaining the Springfield affiliation for KSPR, an independent station Telepictures had recently purchased. The network invited both KMTC and Woods TV to make a presentation for retaining the affiliation, and transmitted to both parties an official policy book that outlined the network's criteria for evaluating competing applicants.

Charles Woods (Woods), the president and sole owner of Woods TV, testified at trial that he became concerned after reading the February 15 letter. While he understood that networks usually renew affiliation agreements routinely, ABC appeared to be putting the Springfield affiliation up for grabs. Woods requested ABC's position on KMTC retaining the affiliation, but Richard Kozak, ABC's vice president for affiliate relations, responded in a letter dated March 15, 1985, that the network could not state its position until after it had evaluated the competing presentations.

The ABC Affiliation Policy Book, which was introduced into evidence at trial, outlines the procedure the network generally follows in deciding whether to switch affiliates. First, the vice president for affiliate relations evaluates the presentations, ratings data and engineering reports, and thereafter submits a recommendation to the Affiliation Review Committee. This committee, composed of representatives from various network departments, then reviews the matter and makes a formal recommendation whether the network should switch the affiliation. The vice president for affiliate relations delivers the committee's recommendation to the president of the ABC Television Network, who has authority to make the final decision.

KMTC and KSPR each delivered presentations to the Affiliation Review Committee in April 1985. The committee met on May 21 to discuss the proposals. By all accounts, the committee members stated that KSPR gave a superb presentation. Although most members leaned toward switching the affiliation to KSPR, the engineering department favored remaining with KMTC. The committee tabled the decision without taking a formal vote.

Kozak then reported to George Newi, the president of the ABC Television Network, a subsidiary of ABC Television, that the committee was leaning strongly toward changing affiliates. While Newi tended to agree with the switch, he decided to discuss the matter first with his immediate superior, Mark Mandala, the president of ABC Television. Mandala in turn suggested that he, Kozak, Newi, and Robert Kaufman, a network attorney and committee member, meet with Everett Erlick, an executive further up the chain of command who served as ABC's general counsel and as a member of the network's board of directors. At this meeting, Erlick recommended that Newi and Kozak defer any final decision on the Springfield affiliation, and they concurred. Although the exact date of the meeting is unclear, it occurred sometime in May or June of 1985.

ABC granted written approval to the assignment of the affiliation from KMTC to Woods TV on May 28, 1985. The network reiterated, however, that it still was considering a switch of stations and that it reserved the right to terminate the affiliation upon six months' notice. After receiving this letter, Woods called Kozak and said that he planned not to close the purchase of KMTC because the affiliation remained in doubt.

On June 20, 1985, Kozak sent a letter to Woods, Telepictures, and KMTC's president Kenneth Meyer stating that the network had decided to defer a decision on the affiliation switch for at least the rest of 1985. Woods, nevertheless, closed the purchase of KMTC on July 17, 1985, after negotiating a $5 million price reduction in the event that ABC terminated the affiliation before July 1986. After Woods purchased the station, he changed its call letters to KDEB. ABC terminated KDEB's affiliation on April 3, 1986.

Thereafter, Woods TV filed this suit for fraud in Missouri state court, and Capital Cities/ABC removed the action to federal court on diversity grounds under 28 U.S.C. Secs. 1332 and 1441. After a six-day trial, a jury awarded Woods TV a total of $3.5 million, including compensatory damages and punitive damages. Capital Cities/ABC then moved for judgment n.o.v., or alternatively for new trial, on the grounds that Woods TV had failed as a matter of law to establish the elements of fraud under Missouri law. The trial court granted the motion. This appeal by Woods TV followed.

II. DISCUSSION

A. Judgment N.O.V.

Woods TV's fraud claim focuses on an allegation that ABC misrepresented the true facts when it stated in the June 20 letter that the network had not decided yet whether to switch the affiliation to KSPR. ⁴ Woods TV contends that ABC already had decided to switch, but deferred announcing the decision because it feared possible litigation that could cause a "flap" or "glitch" in the pending Federal Communications Commission (FCC) approval of the merger of ABC and Capital Cities. In addition, Woods TV argues that it relied on the representation that the affiliation decision remained open when it purchased KMTC and improved the station's facilities and programming.

Under Missouri law, a plaintiff alleging fraud must establish the following elements:

1) a representation, 2) its falsity, 3) its materiality, 4) the speaker's knowledge of its falsity, or his ignorance of its truth, 5) the speaker's intent that it should be acted on by the person and in the manner reasonably contemplated, 6) the hearer's ignorance of the falsity of the representation, 7) the hearer's reliance on the representation being true, 8) his right to rely thereon, and 9) the hearer's consequent and proximately caused injury.

Country Shindig Opry, Inc. v. Cessna Aircraft Co., 780 F.2d 1408, 1411 (8th Cir.1986) (quoting Sofka v. Thal, 662 S.W.2d 502, 506 (Mo.1983) (en banc)). A failure to make a submissible case on any one of the elements defeats the entire claim. Craft v. Metromedia, Inc., 766 F.2d 1205, 1218 (8th Cir.1985), cert. denied, 475 U.S. 1058, 106 S.Ct. 1285, 89 L.Ed.2d 592 (1986).

Although a party alleging fraud under Missouri law may establish each element with circumstantial evidence, that proof must rest on "something more substantial than suspicion, surmise, and speculation." Glass Design Imports, Inc. v. Import Specialties, 867 F.2d 1139, 1142 (8th Cir.1989). "[A] party's case will fail if he can show only facts and circumstances which are equally consistent with honesty and good faith." Craft, 766 F.2d at 1218. In addition, "[t]he language of an alleged misrepresentation must be considered in light of the background in which the statements were made and the context in which the words were used." Id. at 1220.

In this case, the trial court granted judgment n.o.v. because it decided that Woods TV had failed to make a submissible case on four elements of fraud: misrepresentation, intent to induce action, reliance, and damages. In reviewing this determination, we must apply the same standard as the trial court. Washburn v. Kansas City Life Ins. Co., 831 F.2d 1404, 1407 (8th Cir.1987). A judgment n.o.v. should be granted only when the evidence, viewed in the light most favorable to the prevailing party, "points one way and is susceptible of no reasonable inferences sustaining the position of the non-moving party." Sunkyong Int'l, Inc. v. Anderson Land & Livestock Co., 828 F.2d 1245, 1248 (8th Cir.1987). Based on the record before us, we affirm the grant of judgment n.o.v. in this case.

1. Misreprese...