Corey v. Clear Channel Outdoor, Inc.

• Decision Date: 14 July 2009
• Docket Number: Nos. A09A0304, A09A0305, A09A0306.,s. A09A0304, A09A0305, A09A0306.
• Citation: 299 Ga. App. 487,683 S.E.2d 27
• Parties: COREY v. CLEAR CHANNEL OUTDOOR, INC. Smith-McIver v. Clear Channel Outdoor, Inc. U.S. Media, Inc. v. Clear Channel Outdoor, Inc.
• Court: Georgia Court of Appeals

683 S.E.2d 27

299 Ga. App. 487

COREY v. CLEAR CHANNEL OUTDOOR, INC.

Smith-McIver v. Clear Channel Outdoor, Inc.

U.S. Media, Inc. v. Clear Channel Outdoor, Inc.

Nos. A09A0304, A09A0305, A09A0306.

Court of Appeals of Georgia.

July 14, 2009.

Reconsideration Denied July 31, 2009.

Fisher & Phillips, Mairen C. Kelly, Matthew R. Simpson, Griffin B. Bell Jr., Balch & Bingham, Michael J. Bowers, J. Matthew Maguire, Atlanta, Hasty Pope, Canton, Marion T. Pope, for appellants.

King & Spalding, John W. Harbin, W. Ray Persons, Bryan, Cave, Powell & Goldstein, Damon J. Whitaker, John T. Marshall, Eric P. Schroeder, William V. Custer IV, Atlanta, for appellee.

BARNES, Judge.

The three appellants in these appeals were defendants in a suit brought by Clear Channel Outdoor, Inc., a billboard company that purchased the assets of defendant U.S. Media in 1998 for approximately $44 million. Clear Channel alleged that the defendants violated a noncompete clause in the sales agreement, and the jury agreed, awarding the company almost $4.9 million in damages, attorney fees and pre-judgment interest. The trial court denied the defendants' motion for a judgment notwithstanding the verdict or new trial. On appeal, Corey contends the trial court erred in dismissing his counterclaim, and all three appellants argue they should have been allowed to present evidence regarding Clear Channel's original motive for suing them and that the trial court should not have allowed the jury to consider Clear Channel's claim for pre-judgment interest. McIver also contends the court erred in sanctioning her. For the reasons that follow, we affirm.

On appeal of a verdict and the trial court's denial of a motion for new trial, this court must affirm the judgment if any evidence supports it, as the jurors are the sole and exclusive judges of the weight and credit to be given the evidence. Dumas & Assoc. v. Nalecz, 249 Ga.App. 662, 549 S.E.2d 730 (2001). We "must construe the evidence with every inference and presumption in favor of upholding the verdict, and after judgment, the evidence must be construed to uphold the verdict even where the evidence is in conflict." MARTA v. Green Intl., 235 Ga.App. 419, 420(1), 509 S.E.2d 674 (1998).

So construed, the evidence at trial showed that in December 1997, Clear Channel entered into a purchase agreement to buy the billboard assets of Corey Media, Inc., owned by William Corey, for $43.74 million. The agreement included a noncompete clause prohibiting Corey from "directly or indirectly" competing with Clear Channel in the billboard business in metro Atlanta for two years and also prohibited Corey from interfering with Clear Channel's outdoor advertising properties for five years. The clause provided that Corey would take reasonable steps to prevent its affiliates from competing "but not including, in their individual capacities, the employees, officers or directors" of Corey's companies. The contract assigned the sum of $2 million to be paid to Corey in exchange for not competing. Corey testified that he did not tell any of his employees about the clause, which he did not read because he was not planning to build any more billboards.

Defendant Diane Smith-McIver ("McIver") admitted that, shortly before the sale to Clear Channel was completed in March 1998, Corey's in-house counsel formed a new company called U.S. Media. McIver was the new company's titular owner, but a forensic accountant who reconstructed U.S. Media's general ledger testified she did not actually own or run the company.¹ The accountant testified that Corey funded U.S. Media from the proceeds of his sale to Clear Channel and ran the business from Corey's offices using his long-time employees. Clear Channel argued that McIver's ownership was only a ruse, and that Corey continued operating his billboard business through U.S. Media, which bought nine more Atlanta area billboards in the next two years worth approximately $1.5 million.

McIver transferred U.S. Media to Corey in January 2001 for a net gain of $25,000, although, according to the testimony of Clear Channel's forensic accountant, U.S. Media's fair market value at that time was $3.29 million. Corey later sold part of U.S. Media's assets in 2004 for $8.3 million.²

In late 2002, Corey's company Corey Airport Services submitted an unsuccessful bid for the advertising concession at the Atlanta airport, which Clear Channel had held for many years. After Clear Channel was awarded the contract, Corey filed a protest with the city. Clear Channel alleged that the advertising displays inside the airport were "outdoor advertising" covered by the noncompete clause and advised Corey to drop his bid protest or be sued.

Corey did not drop his bid protest and Clear Channel sued him and Corey Airport Services in December 2002, alleging that Corey breached the noncompete clause of the asset sales contract by interfering with Clear Channel's airport advertising operation. Corey and his company denied that the airport signage constituted "outdoor advertising" or that the agreement applied to the airport bid. Clear Channel then amended its complaint, dropping all allegations regarding the airport bid, and sued Corey and U.S. Media for fraud and breach of the noncompete clause. Clear Channel added McIver as a defendant, alleging that McIver, U.S. Media, and Corey conspired to commit fraud, and also sought attorney fees against all three defendants. Corey counterclaimed, contending that Clear Channel breached the contract's noncompete clause and its implied duty of good faith and fair dealing by suing him, but the trial court granted Clear Channel's motion to dismiss the counterclaim, finding that Clear Channel did not breach the contract and that its motive in filing suit was irrelevant to whether the defendants breached the contract or committed fraud. The defendants raised the same claims in their proposed pre-trial order, and the trial court granted Clear Channel's motion in limine, ruling that evidence regarding Clear Channel's motive in filing suit was inadmissible.

The first trial resulted in a mistrial on the second day of testimony after McIver mentioned the airport dispute, and the trial court subsequently granted Clear Channel's motion for attorney fees and costs against McIver for $70,859. After the close of evidence during the second trial, the defendants moved for a directed verdict, arguing among other things that Clear Channel was not entitled to seek pre-judgment interest because it had not requested it in its pleadings or in the joint pre-trial order. The trial court denied the motion, and the jury awarded Clear Channel $2 million in damages, pre-judgment interest at seven percent from March 1998, and expenses of litigation. Before the second phase of the trial establishing Clear Channel's attorney fees, the trial court denied the defendants' motion to introduce evidence regarding the airport issue. After hearing evidence, the jury awarded $1.513 million in fees and costs. The trial court entered judgment for $2 million in damages, $1.38 million in pre-judgment interest, and $1.513 million in attorney fees.

1. Corey contends the trial court erred in dismissing his counterclaim, in which he alleged that the noncompete clause released him from any liability for McIver's individual competitive actions and that Clear Channel violated the clause by suing him for McIver's actions "to advance certain anti-competitive objectives in [other] business ventures,", and "by holding Corey up to the Atlanta business community as unreliable and untrustworthy." Corey also alleged that Clear Channel violated its contractual duty of good faith and fair dealing by its actions.

In granting Clear Channel's motion to dismiss the counterclaim for failure to state a claim, the trial court held that the noncompete clause placed no duty on Clear Channel other than to pay Corey $2 million, which it did. Further, Corey had no standing to complain that Clear Channel breached its agreement to exclude other individuals from the noncompete clause.

Corey argued at trial that he did not violate the contract's noncompete clause, and on appeal, he argues that he should have been able to show that Clear Channel's motive for suing him was to stop him from trying to obtain the airport advertising concession. Clear Channel responds that the trial court properly held that its motives for filing suit were irrelevant to the issue of whether or not Corey violated the agreement's noncompete clause.

(a) A motion to dismiss a counterclaim for failure to state a claim may be granted only if the movant shows that the counterclaimant could not possibly introduce evidence sufficient to sustain a grant of the relief requested. Willis v. Dept. of Revenue, 255 Ga. 649, 650(1), 340 S.E.2d 591 (1986); Grant v. Fourth Nat. Bank etc., 229 Ga. 855, 859(1), 194 S.E.2d 913 (1972) (rules of pleading for counterclaim same as original claim). The claim need only set forth a claim for relief, Koehler v. Massell, 229 Ga. 359, 361(1), 191 S.E.2d 830 (1972), and our review of a trial court's dismissal is de novo. Rinaldi v. Willison, 289 Ga.App. 87, 656 S.E.2d 231 (2008).

(b) Here, Corey alleged in his counterclaim that his asset purchase agreement and noncompete clause created an implied duty on Clear Channel's behalf not to sue him. In this State,

[t]he construction of contracts involves three steps. At least initially, construction is a matter of law for the court. First, the trial court must decide whether the language is clear and unambiguous. If it is, the court simply enforces the contract according to its clear terms; the contract alone is looked to for its meaning. Next, if the contract is ambiguous in some respect, the court must apply the rules of contract construction to resolve the ambiguity. Finally, if the ambiguity remains after applying the rules of construction, the issue of what the ambiguous language means and what the...