CBS Inc. v. Capital Cities Communications, Inc.
| Decision Date | 09 July 1982 |
| Docket Number | WPVI-T,A,WPVI-TV and L,WCAU-TV |
| Citation | 301 Pa.Super. 557,448 A.2d 48 |
| Parties | CBS INC., d/b/a/v. CAPITAL CITIES COMMUNICATIONS, INC., d/b/appellant. PHILADELPHIA NEW YEAR SHOOTERS AND MUMMERS ASSOCIATION, INC. v. CAPITAL CITIES COMMUNICATIONS, INC. d/b/aawrence J. Pollock and Charles R. Bradley. Appeal of CAPITAL CITIES COMMUNICATIONS, INC. d/b/appellant. |
| Court | Pennsylvania Superior Court |
Gregory M. Harvey, Philadelphia, for CBS, appellee at No. 91.
Janet M. Sonnenfeld, Philadelphia, for Philadelphia New Year at No. 92.
Before BECK, MONTEMURO and WATKINS, JJ.
These appeals are from Declaratory Judgments entered in two actions consolidated for trial below. Appellees WCAU-TV and Philadelphia New Year Shooters and Mummers Association, Inc. (the latter appellee hereinafter referred to as Association) brought suit seeking to have a clause contained in an agreement, entered into between appellant WPVI-TV and appellee Association on October 5, 1977, declared void and unenforceable. 1 We hold that the challenged "option" portion of the agreement, if enforceable at any time, had expired prior to any attempt to exercise it, and affirm judgment for appellees. Appellant WPVI-TV filed a counterclaim in the WCAU suit claiming tortious interference with a contractual relation. Appellee Association sought in its action a further declaration that the agreement of October 5, 1977 was voidable in its entirety for fraud, and sought an accounting. Appellant WPVI-TV filed no counterclaim in this action, but prayed in its answer for a declaration interpreting the contract in accordance with its claims.
In Philadelphia, tradition hails the mummers who parade annually through the city on New Year's day. For as long as any living Philadelphian can remember, the Mummers' Parade of elaborately costumed string bands, portraying serious, comic, theatrical and historical themes, with prizes awarded to those judged best in each of the traditional "divisions," has been a major New Year's day event. The parade is televised and transmitted live. It has become an anticipated and lustrous part of the City's holiday celebration.
Appellee Association is an unincorporated association of string bands whose membership is comprised of some of the string bands (24 of them) which compete in the Mummers' Parade and two string bands which do not. Some time prior to 1974, pursuant to a series of written agreements, appellant WPVI-TV began to make payment to appellee Association in return for which it received the "exclusive right to telecast the performances" of the members of the Association during the Mummers' Parade. 2 For many years, the Mummers' Parade was telecast by and on WPVI-TV (Channel 6) and not by any other television station.
In September of 1977, the Vice-President and General Manager of WPVI-TV, Lawrence J. Pollock, the Program Director of WPVI-TV, Charles R. Bradley, the President of the Association, Frederick Calandra, and members of the "Television Committee" of the Association met at a restaurant. The prior written agreement between WPVI-TV and the Association, dated November 5, 1974 "expired January one, 1977" 3 and the meeting was held in order to discuss the terms of a new agreement.
At trial, Mr. Bradley testified that he stated to Mr. Calandra that the station would like to have a "first refusal option" in the agreement and explained to him "what a first refusal option was." 4 No other witness gave testimony with regard to the negotiation of the 1977 agreement. The written agreement was prepared by counsel for appellant WPVI-TV 5 and was executed under date October 5, 1977.
The agreement contained a preamble describing the subject matter, and then set forth the following terms:
1. Association hereby grants STATION the exclusive right to telecast the performances of its members in the said PARADE, and to record and telecast preview programs and other programs in which the performances by its members may be shown.
2. Subject to the provisions of paragraph 3 hereof, the STATION agrees to pay ASSOCIATION the following consideration for the said rights for the following years:
A. $13,000.00 for the PARADE scheduled for January 1, 1978;
B. $14,000.00 for the PARADE scheduled for January 1, 1979;
C. $15,000.00 for the PARADE scheduled for January 1, 1980;
and STATION agrees to supply to ASSOCIATION $10,000.00 worth of television advertising for the Mummers' Annual Show of Shows held at the City's Civic Center.
3. It is agreed that if a PARADE is not held in any year during the term of and any extensions of the term of this agreement, no consideration shall be paid for each year or years when such PARADE is not sponsored and officially recognized by the City of Philadelphia, or in any year in which the PARADE is not held.
4. Failure to telecast the PARADE in any year or years for reasons as set forth in Paragraph 3 hereof shall not effect the rights of the parties for other years during the term of this agreement or any extension hereof.
5. STATION is hereby granted the first option and privilege to renew this agreement beyond the termination date as set forth herein upon the same terms and conditions of any bona fide offer received by ASSOCIATION beyond the termination date as set forth herein.
ASSOCIATION agrees to give STATION notice of all details of any other bona fide offer received by ASSOCIATION, and STATION is hereby granted two months after receipt of such notice in which to exercise such first refusal option by written notice of election to do so. Upon exercise of such first refusal option, the terms and conditions of this agreement shall be extended in conformity therewith.
The agreement contained no terms other than the foregoing. Despite several references to "the term of this agreement" and "the termination date as set forth herein," no term of the agreement or designated termination date is anywhere set forth in the agreement.
By letter dated February 20, 1980 6, appellee WCAU-TV offered terms for similar "exclusive" rights for a three year period, including an offer of escalating payments in the annual amounts of $30,000., $35,000., and $40,000. By letter dated April 29, 1980 7, appellant WPVI-TV offered a five- year agreement in terms including escalating payments in the annual amounts of $40,000., $45,000., $50,000., $55,000., and $60,000. The letter stated, inter alia, "In addition, Channel 6 will want to maintain the option and similar renewal agreement for a period beyond the proposed five years covered by this agreement, as exists in the current contract." By letter to appellee Association dated May 30, 1980 8, appellee WCAU-TV, by its Vice-President and General Manager, Jay R. Feldman, stated that it had been advised "that a perpetual first refusal option for exclusive broadcast rights to Mummer events, such as might be claimed on the basis of your expired contract with WPVI-TV, would constitute an unreasonable restraint of trade and therefore would not be legally enforceable." The letter again offered a three year contract increasing the escalating annual payments to $70,000., $80,000., and $100,000. Joseph A. Purul, Chairman of the TV Committee of appellee Association, wrote to appellant WPVI-TV, by letter dated and hand-delivered June 3, 1980 9, "to advise that WCAU-TV" had made an offer, and describing the terms of the offer. The letter concluded:
On June 16, 1980, Mr. Pollock, in behalf of appellant WPVI-TV, met with the TV Committee of the Association and read aloud letter dated June 16, 1980 addressed to the Association, "attn: Joseph A. Purul, Jr., Esquire." 10 The letter thanked him for the June 3 letter "in which you gave us notice of the other offer, as provided in our 1977 agreement," and stated "WPVI-TV elects to exercise its first refusal option." The letter then stated, inter alia, "We offer a three-year rights package of $75,000 the first year, $87,500 the second year, and $100,000 the third year" and offered to "match or exceed" all the terms of the WCAU-TV proposal.
Following the June 16 meeting, the Association received three additional offers:
June 18 11--WCAU-TV--increasing their payments to equal those set forth by appellant
June 19 12--KYW-TV--offering $100,000. each year for three years
June 19 13--WCAU-TV--increasing their payments to $100,000. per year for three years.
None of these offers was communicated to appellant WPVI-TV by appellee Association. Each of the two additional offers by appellee WCAU-TV contained language identical to the earlier offer stating its view that the "first refusal option ... would not be legally enforceable."
On June 19, 1980, representatives of the 24 Association members who appear in the Mummers' Parade met and voted 23 to 1 to accept the June 19 offer by WCAU-TV. Accordingly, Mr. Calandra initialed WCAU's June 19 letter of intent and returned it to them. On June 23, 1980, WCAU-TV delivered to WPVI-TV its letter of the same date 14 notifying appellant of the intent of WCAU-TV to enter into a contract with appellee Association on the terms of the June 19 letter of intent, a copy of which was enclosed. Following conversations between respective counsel for the parties, on June 30, 1980 appellees brought the separate suits against appellant which resulted in the judgment from which this appeal is taken.
The court below held that:
A. Paragraph 5 of the agreement in suit [quoted above at page (5) ] could only legally be construed to require appellee Association to give appellant notice of bona fide...
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