Charter Communications VI, LLC v. Eleazer

• Decision Date: 25 January 2006
• Docket Number: No. Civ.A.5:04 1204.,Civ.A.5:04 1204.
• Citation: 412 F.Supp.2d 588
• Parties: CHARTER COMMUNICATIONS VI, LLC, d/b/a Charter Communications, et al. Plaintiffs, v. Melvin ELEAZER, et al., Defendants.
• Court: U.S. District Court — Southern District of West Virginia

412 F.Supp.2d 588

CHARTER COMMUNICATIONS VI, LLC, d/b/a Charter Communications, et al. Plaintiffs, v. Melvin ELEAZER, et al., Defendants.

No. Civ.A.5:04 1204.

United States District Court, S.D. West Virginia, Beckley Division.

January 25, 2006.

Adam S. Caldwell, Maria C. Moran, Cole Raywid & Braverman, Washington, DC, J. Miles Morgan, Charleston, WV, for Plaintiffs.

Kevin W. Holt, Ryan C. Berry, Eugene E. Derryberry J. Scott Sexton, Gentry Locke Rakes & Moore, Roanoke, VA Lane O. Austin, Sanders Austin Prudich & Flanigan, Princeton, WV, for Defendants.

MEMORANDUM OPINION AND ORDER

FABER, District Judge.

This is a breach of contract case between entities associated with Charter Communications, a cable provider, and defendants Melvin Eleazer and WDRL-TV, Inc., both involved in television broadcasting, over breach of an indemnification provision included in a agreement involving retransmission of a television broadcast signal over a cable system in the Beckley, West Virginia area. (Compl. at 1.) Pending before the court is plaintiffs' motion for summary judgment. (Docket No. 50.)

Charter has moved for summary judgment on the grounds that defendant Eleazer has a personal contractual requirement to indemnify them for copyright fees based on an Out of Market Retransmission Agreement he signed, or because he is liable through piercing of the corporate veil of WDRL-TV, Inc., an entity of which he is the sole corporate officer. Charter also moves for summary judgment on the issue of whether the Agreement obligates defendants to indemnify plaintiffs for the attorney's fees they have encountered in the course of prosecuting this case, and on the issue of whether defendant Eleazer is liable for the conduct of defendant WDRL-TV, Inc. For the reasons discussed below, plaintiffs' motion (Docket No. 50) for summary judgment is GRANED IN PART and DENIED IN PART. Trial on all remaining issues is currently set for April 26, 2006, in Beckley, West Virginia.

I. Factual Background

In November 2004, plaintiffs Charter Communications VI, LLC, and Interlink Communications Partners, LLC, both doing business as Charter Communications ("Charter"), filed suit against WDRL-TV and Melvin Eleazer for breach of written contract. Specifically, Charter claimed indemnification under an Out-of-Market Retransmission Consent Agreement executed by Charter and WDRL-TV, Inc. (hereinafter "the Agreement"). The Contract was signed by "Karen Broach GM/VP of Operations" for Charter and "Melvin Eleazer President/Owner WDRL-TV, Inc."

In its Complaint, Charter seeks contractual indemnification from WDRL-TV, Inc. and Eleazer for certain copyright charges that Charter claims to have incurred by retransmitting the WDRL television signal in West Virginia. Charter alleges that the Agreement requires such indemnification and that they were required under law to pay it for the government. Additionally, Charter seeks its legal fees for prosecuting this action.

II. Standard of Review

Rule 56 of the Federal Rules of Civil Procedure provides that

[t]he judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

Fed.R.Civ.P. 56. The moving party has the burden of establishing that there is no genuine issue as to any material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has met this burden, the burden then shifts to the non-moving party to produce sufficient evidence for a jury to return a verdict for that party.

The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff. The judge's inquiry, therefore, unavoidably asks whether reasonable jurors could find, by a preponderance of the evidence, that the plaintiff is entitled to a verdict... . Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Id. at 250-251, 106 S.Ct. 2505. Significantly, "a party opposing a properly supported motion for summary judgment may not rest upon mere allegation or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Finally, "[o]n summary judgment the inferences to be drawn from the underlying facts . . . must be viewed in the light most favorable to the party opposing the motion." United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962).

III. Analysis

For the reasons outlined below, there is a legally binding and valid contract requiring defendants to indemnify plaintiffs for $274,376.45 they paid to the U.S. Copyright Office. The Agreement also includes a fee-shifting provision that obligates defendants to pay plaintiffs' legal fees incurred in this case. This said, because there are genuine issues of material fact as to who is liable under the contract, this case will continue to trial.

A. The Express Language of the Agreement Calls for the Station to Indemnify Charter.

Under West Virginia law, it is a well-settled principle that "it is the province of the Court, and not of the jury, to interpret a written contract." See, e.g., Stephens v. Bartlett, 118 W.Va. 421, 424, 191 S.E. 550, 552 (1937). Courts are to determine whether contracts are ambiguous as a matter of law. See Toppings v. Rainbow Homes, Inc., 200 W.Va. 728, 733, 490 S.E.2d 817, 822 (1997). Valid written agreements using plain and unambiguous language are to be enforced according to their plain intent and should not be construed. Cotiga Dev. Co. v. United Fuel Gas Co., 147 W.Va. 484, 490, 128 S.E.2d 626, 631 (1962). It is not the right or province of the court to alter, pervert, or destroy the clear meaning and intent of the parties as expressed in unambiguous language. See Warner v. Haught, Inc., 174 W.Va. 722, 727, 329 S.E.2d 88, 94 (1985).

The language of the Agreement present in this case is unambiguous as to the major questions present in this case. The text of the Agreement states that

The Station agrees to indemnify and hold harmless from and against (i) any and all copyright fees associated with carriage of the Station's Broadcast Signal on Operator's systems listed on Attachment 1 and (ii) any and all costs, expenses, loss, liability, damage, actions, and/or claims arising from Operator's carriage of Station's signal based on Station's authority and rights (or lack thereof) to authorize Operator to carry its signal hereunder.

(Agreement ¶ 6, Docket No. 52 at 3.)

Defendant Eleazer does not contest that he signed an Agreement containing this paragraph. As such, there is no dispute of material fact surrounding this paragraph's existence or inclusion in the Agreement. Eleazer's disputes regarding this paragraph, including whether it was the result of mutual mistake, induced by fraud, as to who is bound by it, and as to how it is to be construed, will be discussed later.

B. The Indemnification Provision Included in the Contract Was Triggered When Charter Was Forced to Pay Copyright Fees.

In 1992, Congress passed the Cable Television Consumer Protection and Competition Act, 47 U.S.C. §§ 521 et seq., which included a "must-carry" provision in order to preserve the vitality of local television broadcast stations. The "must-carry" provision provides that "each cable operator carry . . . the signals of local commercial stations" subject to statutory limitations concerning the operator's overall capacity. See 47 U.S.C. § 534(b); 47 C.F.R. § 76.56. The boundaries within which a station is considered "local" are defined by each station's "Designated Market Area" or "DMA"—an exclusive geographic designation based upon measured viewing patters by Nielsen Media Research. See 47 U.S.C. § 534(h). Mustcarry gives broadcast stations the option to demand carriage on cable systems located in the same DMA as the station's FCC city of license.

The Cable Act also gives the broadcaster the option to forego an election of mustcarry status and pursue a retransmission consent agreement with the cable operator. See 47 U.S.C. § 325(b)(1). As here, the transmission consent agreements may also extend beyond a broadcast station's DMA, see 47 U.S.C. § 325(b). No one disputes that, for must-carry purposes, WDRL is located in the Roanoke, Virginia DMA, and that it cannot require carriage in the Beckley DMA.

The parties agree that the consummation of a retransmission agreement between a cable operator and a broadcast station does not obviate copyright liability. To the contrary, the existence of an agreement allowing secondary transmission of a broadcast station over a cable system triggers the requirement of royalty payment under the compulsory license established by the Copyright Act of 1976 (the "Copyright Act").

Through the Copyright Act, Congress created a compulsory license under which cable operators compensate the creators or owners of programming for retransmitting over cable systems programs that are also carried on over-the-air broadcast signals. See 17 U.S.C. § 111(c) & (d). The mechanism present in the Copyright Act avoids the transaction costs and delays associated with "clearing" cable retransmissions of every program occurring during a broadcast day. See Cablevision v. MPAA, 836 F.2d 599, 602 (D.C.Cir.1988). Under the compulsory license, cable operators engaged in the secondary transmission of non-local or "distant" broadcast signals calculate and pay royalties based on the requirements of 17 U.S.C. § 111(d), the current and former FCC regulations referenced therein,...