Birch Broad. Inc. v. Capitol Broad. Corp.. Inc.

• Decision Date: 24 November 2010
• Docket Number: No. 2009–919.,2009–919.
• Citation: Birch Broad. Inc. v. Capitol Broad. Corp.. Inc., 2010 WL 4781474, 161 N.H. 192, 13 A.3d 224 (N.H. 2010)
• Parties: BIRCH BROADCASTING, INC. and anotherv.CAPITOL BROADCASTING CORPORATION, INC. and another.
• Court: New Hampshire Supreme Court

161 N.H. 192

13 A.3d 224

BIRCH BROADCASTING, INC. and another

v.CAPITOL BROADCASTING CORPORATION, INC. and another.

No. 2009–919.

Supreme Court of New Hampshire.

Argued: Oct. 14, 2010.Opinion Issued: Nov. 24, 2010.

Nelson, Kinder, Mosseau & Saturley, P.C., of Manchester (Mark D. Attorri on the brief and orally), and Patton Boggs LLP, of Washington, D.C. (Stephen Díaz Gavin and Kristen M. Jarvis Johnson on the brief), for the plaintiffs.Whittington Law Associates, PLLC, of Hanover (W.E. Whittington on the brief and orally), for the defendants.DALIANIS, J.

Following a bench trial in Superior Court( McNamara, J.), the defendants, Capitol Broadcasting Corporation, Inc.(Capitol Broadcasting), Concord Broadcasting, LLC(Concord Broadcasting) and Vox Radio Group, LP(Vox Radio), appeal the trial court's order requiring them to specifically perform their contract with the plaintiffs, Birch Broadcasting, Inc.(Birch Broadcasting) and Nassau Broadcasting I, LLC(Nassau I) for the sale of a radio station in Concord.We affirm.

I.Background

The following facts were either found by the trial court or derive from the record submitted on appeal.This appeal concerns a February 9, 2004 stock purchase agreement among Capitol Broadcasting, Concord Broadcasting and Nassau Broadcasting Holdings, Inc.(Nassau Holdings).Capitol Broadcasting holds a license from the FCC to own and operate radio station WHHK–FM in Concord.

Capitol Broadcasting, Concord Broadcasting and Vox Radio are all related companies.Capitol Broadcasting is a wholly-owned subsidiary of Vox Radio; Concord Broadcasting is Capitol Broadcasting's sole shareholder; and, Vox Radio is the sole managing member of Concord Broadcasting.

Under the agreement, Nassau Holdings agreed to purchase all of Capitol Broadcasting's stock for $1 million.The agreement called for the license to operate the Concord radio station to be transferred from Capitol Broadcasting to Nassau Holdings.This transfer required approval from the Federal Communications Commission(FCC).The agreement provided that if approval did not become final within one year after the parties applied to the FCC for it, the parties had the right to terminate the agreement.

On July 16, 2004, the stock purchase agreement was amended to extend the time for obtaining FCC approval.The amended agreement provided, in pertinent part: “If the Closing has not occurred within five (5) years from the date hereof, the Stock Agreement shall automatically terminate without the need for action on the part of any party, and Seller shall be entitled to keep any amounts paid to it to the date of termination.”

The agreement was again amended on September 30, 2004, when the defendants were paid $950,000 of the $1 million purchase price.In the second amended agreement, Nassau Holdings assigned its rights to Nassau I.On February 26, 2009, Nassau I signed an assignment and assumption agreement under which it assigned its rights to Birch Broadcasting.

Over the next several months, the parties worked cooperatively to obtain FCC approval to transfer control of the radio station from Concord Broadcasting to Birch Broadcasting.The FCC ultimately approved the transfer on June 19, 2009.On July 1, 2009, however, counsel for Capitol Broadcasting and Concord Broadcasting advised plaintiffs' counsel that Capitol Broadcasting and Concord Broadcasting refused to close on the transaction.He also advised that he believed that the stock purchase agreement had expired in February 2009.

The plaintiffs filed the instant petition on July 16, 2009, seeking specific performance and other relief.The trial court held a bench trial on an expedited basis in December 2009 and found that the defendants breached their agreement with the plaintiffs and breached the agreement's implied covenant of good faith and fair dealing by refusing to close on the transaction.The trial court ordered the defendants to specifically perform the agreement within a reasonable period of time.This appeal followed.

II.Analysis

The defendants contend that the trial court erred when it: (1) found that they breached the parties' agreement; (2) found that they breached the implied covenant of good faith and fair dealing; (3) denied their motions to dismiss Vox Radio and Nassau I from the case; (4) declined to defer its decision pending the conclusion of proceedings then currently before the FCC; and (5) failed to rule specifically upon each of their requests for findings of fact and rulings of law.We address each argument in turn.

A.Breach of Contract Claim

The defendants first argue that their refusal to close on the transaction in July 2009 did not breach the parties' agreement because, by then, the agreement had expired by its own terms.Under the defendants' interpretation, the parties' agreement expired in February 2009—five years from the date the parties executed their original agreement.

Resolving this issue requires that we interpret the parties' agreements.The interpretation of a contract, including whether a contract term is ambiguous, is ultimately a question of law for this court to decide.Behrens v. S.P. Constr. Co.,153 N.H. 498, 500, 904 A.2d 676(2006).Accordingly, we review a trial court's interpretation of a contract de novo.Id.

When interpreting a written agreement, we give the language used by the parties its reasonable meaning, considering the circumstances and the context in which the agreement was negotiated, and reading the document as a whole.Id. at 503, 904 A.2d 676.We give an agreement the meaning intended by the parties when they wrote it.Id.“Absent ambiguity, however, the parties' intent will be determined from the plain meaning of the language used in the contract.”Ryan James Realty v. Villages at Chester Condo. Assoc.,153 N.H. 194, 197, 893 A.2d 661(2006)(quotation omitted).

“The language of a contract is ambiguous if the parties to the contract could reasonably disagree as to the meaning of that language.”In the Matter of Taber–McCarthy & McCarthy,160 N.H. 112, 115, 993 A.2d 240(2010)(quotation omitted).If the agreement's language is ambiguous, it must be determined, under an objective standard, what the parties, as reasonable people, mutually understood the ambiguous language to mean.Id.In applying this standard, a court should examine the contract as a whole, the circumstances surrounding execution and the object intended by the agreement, while keeping in mind the goal of giving effect to the intentions of the parties.Id. at 115–16, 993 A.2d 240.Although the intentions of the parties at the time of the contract's formation are determinative, those intentions may be inferred from the situation of the parties and their actions after the contract was executed.SeeWhite v. Ford,124 N.H. 452, 455, 471 A.2d 1176(1984);see alsoAuclair v. Bancroft,121 N.H. 393, 395, 430 A.2d 169(1981)(“In determining the parties' intention, the court may properly consider their actions after the contract was executed.”);Spectrum Enterprises, Inc. v. Helm Corp.,114 N.H. 773, 776, 329 A.2d 144(1974)(“In this State how the parties acted with regard to the contract is considered as part of the relevant circumstances.”).Applying an objective standard to determine what the parties, as reasonable people, mutually understood the ambiguous language to mean necessarily involves factual findings by the trial court to which we will defer if they are supported by the evidence and are not legally erroneous.SeeN.A.P.P Realty Trust v. CC Enterprises,147 N.H. 137, 141, 784 A.2d 1166(2001).

Here, the parties dispute the meaning of section 9.1 of their agreement, as amended on July 16, 2004, which read:

Closing.The Closing shall be held within seven (7) days of the FCC's consent becoming a final order ... at 10AM (Eastern Standard Time)(the “Closing”) by exchange of documents by overnight carrier or facsimile, or such other date as shall be mutually agreed to by the parties, contingent on satisfaction of all conditions precedent to the parties' obligations to close (the “Closing Date”).If the Closing has not occurred within five (5) years from the date hereof, the Stock Agreement shall automatically terminate without the need for action on the part of any party, and Seller shall be entitled to keep any amounts paid to it to the date of termination.

The parties differ as to the meaning of these terms.The defendants argue that the “only possible reading of the term five (5) years from the date hereof is that ‘date hereof’ refers to the date of the [stock purchase agreement] itself, i.e., February 9, 2004, not the date of the 1st Amendment.”(Emphases omitted.)The plaintiffs counter that, while “[t]he word ‘hereof’ obviously refers to the contract,” it is impossible to tell from the language alone to which contract the parties intended to refer.As the plaintiffs explain, when the parties executed the first amended agreement, the stock purchase agreement “was no longer a single, stand-alone document; it now consisted of two documents—the one signed on February 9, 2004, and the one signed on July 16, 2004....[T]here is no way to tell from the language alone which date was intended; either date is possible.”It is equally possible, the plaintiffs assert, to interpret the phrase “date hereof” to refer to the date of the second amended agreement (September 30, 2004), because that was the date the parties actually began performing on the agreement.We believe that the respective interpretations assigned to the disputed language are reasonable.We conclude, therefore, that the language is ambiguous.

The trial court found that the parties' subsequent cooperative conduct in continuing to seek FCC approval after February 2009 demonstrated that they intended the phrase “date hereof” to refer to the July 16, 2004 first amended agreement, and not to the date of the parties' original February 9, 2004 agreement.As these...