Chedd-Angier Production Co., Inc. v. Omni Publications Intern., Ltd.

• Decision Date: 15 March 1985
• Docket Number: Nos. 84-1129,CHEDD-ANGIER,1142,s. 84-1129
• Citation: 756 F.2d 930
• Parties: ThePRODUCTION CO., INC., Plaintiff, Appellee, v. OMNI PUBLICATIONS INTERNATIONAL, LTD., Defendant, Appellant. ThePRODUCTION CO., INC., Plaintiff, Appellant, v. OMNI PUBLICATIONS INTERNATIONAL, LTD., Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

Page 930

756 F.2d 930

The CHEDD-ANGIER PRODUCTION CO., INC., Plaintiff, Appellee, v. OMNI PUBLICATIONS INTERNATIONAL, LTD., Defendant, Appellant.

The CHEDD-ANGIER PRODUCTION CO., INC., Plaintiff, Appellant, v. OMNI PUBLICATIONS INTERNATIONAL, LTD., Defendant, Appellee.

Nos. 84-1129, 1142.

United States Court of Appeals, First Circuit.

Argued Jan. 7, 1985.

Decided March 15, 1985.

Norman Roy Grutman, New York City, with whom Bernard J. Bonn, III, Dennis C. Hart, Jewel H. Bjork, Adrienne DeLuca, Testa, Hurwitz & Thibeault, Boston, Mass., and Grutman, Miller, Greenspoon, Hendler & Levin, New York City, were on brief for Omni Publications International, Ltd.

Craig E. Stewart, Boston, Mass., with whom Laurie S. Gill and Palmer & Dodge, Boston, Mass., were on brief for The Chedd-Angier Production Co., Inc.

Before COFFIN and ALDRICH, Circuit Judges, and GIGNOUX, ^* Senior District Judge.

COFFIN, Circuit Judge.

In a contract dispute between The Chedd-Angier Production Co., Inc. (Chedd-Angier) and Omni Publications International, Ltd. (Omni) over the production of a scientific television series, the jury awarded Chedd-Angier full contract damages, apparently concluding that Omni breached some agreement between the parties. Omni challenged the jury verdict on several grounds and now appeals from the denial of its motion for judgment notwithstanding the verdict or for new trial. In a companion case, Chedd-Angier appeals from the district court decision that Omni did not engage in unfair or deceptive acts or practices in violation of Mass.Gen.Laws Ann. ch. 93A, Sec. 11. After a careful review of the record, we affirm the judgments below on all counts.

Omni, a New York corporation, is the publisher of OMNI magazine, a monthly publication devoted to developments in science, technology and medicine. Robert Guccione, the chairman of Omni, publishes the OMNI magazine and several sexually explicit adult magazines, including Penthouse. Chedd-Angier is a Massachusetts based film and television production company founded in 1980 by John Angier, its president, and Graham Chedd, its treasurer. The parties came together in the summer of 1980 when Guccione and Kathryn Keeton, the president of Omni, decided to create a science and technology television program based on OMNI magazine, and Chedd-Angier was looking for corporate underwriters to finance a science television magazine series. After a number of meetings involving Guccione, Keeton, Chedd, Angier and David Rothkopf, an employee of Tilley, Marlieb and Alan, Inc., Omni's advertising agency, the parties entered into a two-page letter agreement on December 8, 1980 pursuant to which Chedd-Angier would produce a one-hour pilot television program "about science, technology and related subject areas", with the intention of producing "a successful and long-running TV series." The letter agreement further provided that:

"If the pilot is completed and successful and seems to be the basis for a commercially viable series, then you [Omni] and we [Chedd-Angier] intend to continue forward to make the series, on terms that will be agreed at that time. If, on the other hand, the pilot is not completed or we cannot agree on terms, or the pilot is not a success, or if you do not wish to carry on working with us, or if we do not wish to carry on working with you, or if you or we see at any time the likelihood of a successful pilot is not worth additional expenditures, you will pay all costs incurred to date and then both you and we will be free to develop and produce independently any science programs that we are interested in, including those similar to the pilot."

The agreement provided for the production of a pilot using on-camera reporters, retaining for Guccione the "sole right of approval over the final cut of the program", "final selection" of the major elements of the program and even approval rights over "day to day operations." It also provided that any additional expenses had to be approved by Guccione or Keeton in advance.

In the weeks following the December 8 agreement Chedd-Angier began active work on production of the pilot and the series. At the same time, Omni began to market the proposed series in order to sell it to network or affiliate stations. Omni extensively advertised the series proclaiming it to be a joint effort from both the publishers of OMNI magazine and the Chedd-Angier production company, "the most acclaimed science producers in America."

In January, 1981, Omni requested that Chedd-Angier produce a promotional tape (Promo) for the program, and authorized payment of $45,000 for its production. In February, with a rough version of the Promo, Keeton, Rothkopf, Chedd and Angier met with representatives of the American Broadcasting Company (ABC) who expressed possible interest in purchasing the series. On March 5, Rothkopf telephoned Chedd-Angier and in words or substance said that ABC had agreed to air an Omni series--"It's a go on the series."

Guccione, not yet having approved of the promotional tape, met with Keeton, Rothkopf, Chedd and Angier on March 13 to view it for the first time. Apparently Guccione objected to aspects of the tape, including the use of reporters. Nevertheless, according to Angier, Keeton said that Guccione approved of the use of the reporters.

On March 17 Chedd-Angier sent a letter addressed to Guccione and Keeton outlining the proposed terms for production of the series which incorporated many of the terms and conditions agreed upon in the December 8 contract, including a producers' fee for Chedd-Angier of 15%. In addition, Chedd-Angier specifically requested approval to hire the two reporters who had appeared in the promotional tape. Neither Guccione nor Keeton ever signed the agreement, although on April 2 in a telephone conversation, Rothkopf accepted the proposed budget figures with some modification.

On April 4, 1981 Chedd and Angier met with Guccione and Keeton in New York to review creative aspects of the series, including a television set design which Guccione had commissioned from an Italian movie set designer. Chedd and Angier objected to the set because it was incompatible with the use of the reporter format. To Guccione's suggestion that perhaps Chedd-Angier "should consider not using reporters", Chedd and Angier replied that Guccione had previously agreed to the use of reporters, that it was too late to make the changes he was suggesting, that it would be too expensive, and that it was inconsistent with the contract and difficult if not impossible to do.

A memorandum written by Rothkopf to Keeton subsequent to this meeting suggests that as of April 9 Omni had decided not to use reporters, to terminate Chedd-Angier and to form their own production company. The memorandum indicated that Omni was exploring the viability of in-house production and was concerned about the effect of the proposed "change" in production company on ABC's decision regarding the series. Although Chedd-Angier was told on April 16 that Guccione was upset because they had objected to the dropping of the reporters, it was not until April 22 that Rothkopf, instructed by Guccione and Keeton, telephoned Chedd and Angier and informed them of Omni's decisions. He also asked them at that time for an accounting of the $212,000 that had been advanced by Omni.

One week later, on April 29, Chedd wrote a letter to Discover magazine, a science magazine published by Time, Inc., in which he stated that Chedd-Angier's only signed document with Omni "explicitly gives either party the right to terminate the arrangement at any time, and either party then has the right to do anything in the science field it wishes."

In its Memorandum and Order dated January 5, 1984 denying Omni's motion for judgment notwithstanding the verdict or for a new trial, the district court summarized the parties' positions:

"The entire course of conduct between the parties was marked by numerous meetings and communications. At trial, both defendant Omni and plaintiff Chedd-Angier introduced into evidence numerous exhibits in support of their respective positions. In substance, Chedd-Angier claims that Rothkopf, acting as Omni's agent, entered into an agreement with Chedd-Angier on March 5, 1981, for the production of the Omni series. Chedd-Angier claims that the entire course of dealing between the parties evidenced their intent to jointly produce the Omni series, and that Omni made oral expressions of agreement on terms for the production of the series on a number of occasions subsequent to March 5, 1981. Until notified of their termination, Chedd-Angier had been continually at work on the series. Omni claims, however, that the December 8, 1980 agreement, by its terms, controlled the rights and obligations of the parties to the end of their relationship and that, as a matter of law, there are no facts to support the allegation of a superseding oral contract for the series. Omni claims that the plaintiff's work for the series was performed at the assumed risk that it would not be asked to produce the series."

The case came to trial in October 1983. Six of the eight counts brought by Chedd-Angier were submitted to the jury. Count 1 alleged the breach of the December 8 agreement in which Chedd-Angier sought unreimbursed production costs and a production fee for its work on the promotional tape. Chedd-Angier claimed that the December 8 agreement was intended to cover production costs of the Promo as well as the pilot. On Count 2, Chedd-Angier sought contract damages of some $275,000 for breach of an oral contract to produce the television series. ¹ The same damages were sought and were charged by the court for: breach of the duty of good faith and fair dealing (Count 3); promissory estoppel (Count 5); and misrepresentation (Count 7). On an implied-in-fact contract claim (Count 4), the measure of damages was limited to the reasonable value of services rendered, or quantum meruit. The...