Donahue v. Multimedia, Inc.

• Citation: 362 S.C. 331,608 S.E.2d 162
• Decision Date: 10 January 2005
• Docket Number: No. 3922.,3922.
• Court: South Carolina Court of Appeals
• Parties: Phillip J. DONAHUE, Appellant, v. MULTIMEDIA, INC., Multimedia Entertainment, Inc., Gannett Co., Inc., and Universal Television Enterprises, Inc., Respondents.

362 S.C. 331

608 S.E.2d 162

Phillip J. DONAHUE, Appellant, v. MULTIMEDIA, INC., Multimedia Entertainment, Inc., Gannett Co., Inc., and Universal Television Enterprises, Inc., Respondents.

No. 3922.

Court of Appeals of South Carolina.

Heard November 16, 2004.

Decided January 10, 2005.

Steven E. Farrar, Jack H. Tedards, Jr., William B. Swent and William J. Watkins, Jr., all of Greenville, for Appellant.

Donald A. Harper, N. Ward Lambert, Cynthia Buck Brown, James B. Pressley, Jr., Brent O. Clinkscale, all of Greenville and Robert C. Bernius, of Washington, for Respondents.

WILLIAMS, J.:

Phillip J. Donahue appeals a grant of summary judgment in favor of Multimedia, Inc., Multimedia Entertainment, Inc., Gannett Co., Inc., and Universal Television Enterprises, Inc. ("Respondents"), arguing the trial court erred in interpreting a longstanding contract between the parties under the applicable law of New York. We affirm.

FACTS

The facts as set forth by the trial court are as follows:

Th[is] action arises from a 1982 contract between . . . Phillip J. Donahue and [Respondents] . . . providing for Mr. Donahue's performance as Master of Ceremonies on a television talk show.

On April 15, 1982, [Donahue] entered into a Contract for Services with Multimedia Program Production, Inc. (the former name of the Defendant MEI). This contract cancelled and superseded a 1978 contract between the parties.

Under the terms of the 1982 contract, [Donahue] agreed to serve as "Master of Ceremonies on the television program presently entitled `Donahue' (the `Program')." The parties further agreed in Section 10(q) of the contract that the laws of the State of New York govern its terms. The contract was subsequently amended four times. The amendments primarily adjusted the amount of remuneration due to [Donahue] and extended the contract's "term." Each iteration of the contract was for a definite term. The last amendment was entered into on October 12, 1994. Pursuant to that final amendment, the contract's term expired on August 31, 1996:

Extended Term: The term of the Contract shall be extended so that, as extended, it shall expire at midnight on August 31, 1996. (1994 amendment to Contract, Section 2)

The final amendment also provided that discussions between the parties regarding the continuation of any programming beyond the expiration date were to be commenced on or before May 31, 1995.

. . . .

Sometime before May 31, 1995, [Donahue] decided not to renew his contract with MEI beyond its August 31, 1996 expiration date.

In July 1995 . . . Gannet Co., Inc. ("Gannett") submitted, and the Board of Directors of Multimedia approved, a proposal for Gannett's purchase of the stock of Multimedia. Multimedia shareholders approved the proposal at a special meeting on November 15, 1995. Pursuant to that transaction, [Donahue] received a substantial payment for his Multimedia shares.

Following Gannett's acquisition of Multimedia stock, MEI continued to produce the "Donahue" program, and [Donahue] continued to perform his duties as its master of ceremonies. The last program was taped on April 29, 1996. The "extended term" of the contract expired on August 31, 1996 pursuant to its explicit terms.

Almost three months later, on November 21, 1996 . . . Universal Television Enterprises, Inc. ("Universal") purchased the assets of MEI. Those assets included a group of videotapes of the "Donahue" program, characterized as the "Donahue Library."

(Trial Court Order dated August 15, 2002).

Section 6 of the contract, entitled "Sale and Assignment," contains the following language:

Donahue agrees that Multimedia shall have the right to sell and assign this contract at any time during the term hereof. . . .

Notwithstanding the foregoing, Multimedia agrees that it will not so enter into a binding commitment during the term hereof. . . for any assignment of rights and interests of Multimedia in the Program and in the distribution in syndication thereof which includes an assignment of this Contract without first consulting with Donahue and specifying and giving Donahue the option to meet the price and other related terms and conditions contained in the offer. . . .

In 2001, Donahue brought a breach of contract action against Respondents, arguing the Gannett and Universal transactions each constitute a violation of the contract's assignment clause and Donahue's right of first refusal. Donahue petitioned the court to have the transactions voided and sought exclusive ownership rights in the Donahue library. After reviewing voluminous materials submitted in support of both parties' positions, the trial court granted summary judgment in favor of Respondents. Following a Rule 59(e) motion by Donahue to alter or amend the trial court's initial order, the decision to grant summary judgment was reiterated in a lengthy second order. This appeal followed.

STANDARD OF REVIEW AND APPLICABLE LAW

The contract provides that its terms shall be subject to and construed in accordance with New York law. Because New York contract law does not violate South Carolina public policy, we find its application appropriate. See Standard Register Co. v. Kerrigan, 238 S.C. 54, 70, 119 S.E.2d 533, 541-542 (1961)

(finding the laws of other jurisdictions, when deemed applicable by agreement, are generally enforceable in South Carolina unless repugnant to the public policy of this state).

The purpose of summary judgment is to expedite the disposition of cases which do not require the services of a fact finder. Dawkins v. Fields, 354 S.C. 58, 69, 580 S.E.2d 433, 438 (2003); George v. Fabri, 345 S.C. 440, 452, 548 S.E.2d 868, 874 (2001). Summary judgment is proper only when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Laurens Emergency Med. Specialists, PA v. M.S. Bailey & Sons Bankers, 355 S.C. 104, 108, 584 S.E.2d 375, 377 (2003). In determining whether any triable issue of fact exists, the evidence and all factual inferences drawn from it must be viewed in a light most favorable to the nonmoving party. Sauner v. Public Serv. Auth. of South Carolina, 354 S.C. 397, 404, 581 S.E.2d 161, 165 (2003); Hendricks v. Clemson Univ., 353 S.C. 449, 455-56, 578 S.E.2d 711, 714 (2003).

New York law is consistent with South Carolina law with respect to summary judgment evidentiary standards. See Dougherty v. Kinard, 215 A.D.2d 521, 626 N.Y.S.2d 554, 555 (N.Y.App.Div.1995)

("Where there are no material and triable issues of fact, [a] motion for summary judgment should be granted.").

LAW / ANALYSIS

I. The Gannett Transaction

Donahue argues that Gannett's 1.7 billion dollar purchase of Multimedia's stock violated his contract with MEI because the transaction constitutes an unauthorized "assignment" of the contract. We disagree.

In regard to this issue, we adopt the following sound analysis of the trial court:

There is no question that the 1995 stock purchase transaction was between Gannett and Multimedia, the parent corporation of MEI. MEI was not a party to the transaction. After Gannett purchased Multimedia's stock, MEI continued as a wholly owned subsidiary of Multimedia, and MEI's contract with [Donahue] continued as it had before the transaction. [Donahue] acknowledges that there were no changes in the daily operation of his program, in the persons to whom he reported, in the production of the program, or in his contract with MEI.

An assignment consists of three elements: (1) an assignor, (2) an assignee, and (3) transfer of control of the thing assigned from the assignor to the assignee. Leon v. Martinez, 84 N.Y.2d 83, 88, 614 N.Y.S.2d 972, 638 N.E.2d 511 (N.Y.1994); see also Restatement (Second) of Contracts § 317 (1981) ("An assignment of a right is a manifestation of the assignor's intention to transfer it by virtue of which the assignor's right to performance by the obligor is extinguished in whole or in part and the assignee acquires a right to such performance.").

The transfer of the stock of a corporation, however, does not constitute an assignment of a contract of that corporation. See Dennis' Natural Mini-Meals, Inc. v. 91 Fifth Ave. Corp., 172 A.D.2d 331, 568 N.Y.S.2d 740, 743 (N.Y.App.Div.1991)

; Rubenstein Bros. v. Ole of 34th [St., Inc.], 101 Misc.2d 563, 421 N.Y.S.2d 534, 538 (N.Y.Civ.Ct.1979); In re Pearl-Wick Corp., 15 B.R. 143, 147 (Bankr.S.D.N.Y.1981),

aff'd without opinion, 697 F.2d 295 (2d Cir.1982). Here, Gannett did not purchase the stock of MEI, the party to the contract. Rather, Gannett bought the stock of Multimedia, the corporate parent of the contracting entity. Since the transfer of the stock of a corporation does not constitute an assignment of the corporation's contract, the transfer of the stock of the parent of a contracting corporation can hardly constitute an assignment of its subsidiary's contract.

(Trial Court Order dated August 15, 2002).

We find nothing in the language of Donahue's contract or the particularities of this transaction that would warrant, as Donahue argues on appeal, an interpretation of "assignment" which, in contravention to New York common law, would bar the sale of Mutimedia's stock to Gannett. As such, Gannett's purchase of Multimedia's stock did not breach any terms or conditions of the 1982 contract between MEI and Donahue.

II. The Universal Transaction

A. The Assignment Clause

Pursuant to Section 2 of Donahue's contract, as amended in 1994, the agreement's general term expired on August 31, 1996. In November 1996, MEI sold its assets, including the Donahue library, to Universal. Donahue argues this transaction violated the contract because his right of first refusal under Section 6 survived the contract's termination date and was not honored. We disagree, and again adopt the trial court's analysis:

Section 6 of the contract governs the sale or assignment "during the term hereof" of the "rights and interests of Multimedia [the designation of MEI in this

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