Dunn v. CCH Inc.
| Decision Date | 30 November 2011 |
| Docket Number | Case No. 10–13731. |
| Citation | 834 F.Supp.2d 657 |
| Parties | Stephen J. DUNN, Plaintiff, v. CCH INCORPORATED, Defendant. |
| Court | U.S. District Court — Eastern District of Michigan |
OPINION TEXT STARTS HERE
Michael R. Dorfman, Demorest Law Firm Birmingham, MI, Mark S. Demorest, Demorest Law Firm, Royal Oak, MI, for Plaintiff.
Carl F. Jarboe Abbott, Nicholson Detroit, MI, Kenneth S. Ulrich, Goldberg Kohn Ltd., Chicago, IL, for Defendant.
MEMORANDUM AND ORDER DENYING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT (Doc. 21) AND DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (Doc. 22)
This is a contract case. Plaintiff Stephen J. Dunn (“Dunn”) is suing defendant CCH Incorporated (“CCH”) claiming that CCH breached a Publishing Agreement regarding Dunn's authorship of a treatise on IRS Tax Practice and Procedure to be published by CCH. Dunn says CCH improperly terminated the contract. Dunn claims (1) breach of contract and (2) breach of implied covenant of good faith and fair dealing.
Before the Court is Dunn's motion for partial summary judgment as to liability and CCH's motion for summary judgment on liability and damages. While the parties believe that resolution of the motions revolves around the legal consequences of undisputed facts, there are disputed facts making summary judgment inappropriate. Accordingly, for the reasons that follow, the motions are DENIED.
The material facts as gleaned from the parties' papers follow.
Dunn is an licensed attorney who specializes in tax law and litigation. He has written several articles, including a 2006 article in CCH's Journal of Tax Practice & Procedure. Dunn is also an adjunct lecturer at the University of Michigan–Dearborn College of Business, where he has taught courses on tax practice and procedure and estate planning and taxation.
CCH is a legal publishing house. It publishes tax and business law information products for corporations, accounting firms, and law firms.
In 2009, CCH decided to create and publish a line of treatises (the “Expert Treatises Library”) to supplement its existing tax and accounting products. Before this, CCH had never published a treatise. After researching the market in corporations and accounting firms, CCH believed that offering treatises could help CCH compete more effectively against its main competitor, Thomson Reuters, Inc. (“Thomson Reuters”), which has published a successful line of treatises for decades, called the “WGL Treatises.” CCH determined that some of its potential customers chose Thomson Reuters for other products and libraries over CCH because Thomson Reuters offered treatises as part of its line of products. CCH decided that it would develop six new treatises from scratch and that those treatises would cover the topics of Federal Income Taxation of Corporationsand Shareholders, State Taxation, Partnership Taxation, Consolidated Returns, IRS Practice and Procedure (P & P Treatise), and U.S. International Taxation. CCH planned to have at least three authors for each treatise: a practicing lawyer, an accountant, and an academic.
Mark Friedlich (“Friedlich”) was assigned to oversee the development of the Expert Treatises Library. Jennifer Codner (“Codner”) was assigned to act as Acquisitions Editor—her primary responsibility was to act as a recruiter for authors for the Expert Treatises Library. Susan Frayman (“Frayman”) was assigned to work as Managing Editor—her primary responsibility was to act as the supervisor of the editors working on the individual treatises. Maureen Bornstein (“Bornstein”) was assigned to work as the Lead Editor for the P & P Treatise—she performed the main editorial work on the P & P Treatise.
CCH projected sales for the entire Expert Treatises Library (all six treatises) for the first year of publication, assumed at that time as 2010, to be $494,662. CCH also projected sales for the second year of publication, assumed at that time as 2011, to be $1,277,845.
In the summer of 2009, Codner began recruiting authors for the Expert Treatises Library. She communicated with Michael Desmond (“Desmond”) about being an author for the P & P Treatise.
In September of 2009, Codner was told by a colleague that Dunn might be a potential author prospect for the P & P Treatise. Because Dunn was associated with the University of Michigan—Dearborn, Codner thought that he might fill the role of the academic for the P & P Treatise. Codner contacted Dunn on or about October 2, 2009 and asked him whether he would be interested in possibly being an author for the P & P Treatise. Dunn indicated he was interested. Codner sent Dunn editorial guidelines drafted by the editorial team to help potential authors understand what CCH required for the Expert Treatises Library. The editorial guidelines emphasized the need for a comprehensive analysis of each topic and that CCH wanted the “author's ‘voice’ ” to permeate each individual treatise. The guidelines also stated that the Expert Treatises were intended to
Codner also told Dunn that CCH intended the P & P Treatise to compete directly with the Thomson Reuters treatise on tax practice and procedure written by Michael I. Saltzman (the “Saltzman Treatise”). CCH says the Saltzman Treatise is the leading tax procedure treatise in the marketplace and has been on the market for over 25 years. Although, as will be explained, Dunn believes that the Saltzman Treatise is not reliable.
As part of the author selection process, Codner asked Dunn to submit a sample chapter. In December of 2009, Dunn submitted a sample chapter on a topic he selected—testimonial privileges (“Testimonial Privileges Chapter”). Bornstein reviewed Dunn's sample chapter and concluded that it was an acceptable as a starting point for the Testimonial Privileges Chapter, but that it lacked sufficient depth and breadth of coverage on many topics. Bornstein provided both general editorial comments and line-edits to Dunn. These comments included that the chapter needed to be more “treatise–like” and that Dunn needed to “expand discussion in areas he commented on with one or two lines—we would like more leads ins and conclusions.” These comments were communicated in an email from Codner to Dunn. Corder's portion of the email states in part that “[t]he general consensus is that you are a very solid writer.”
Dunn responded to those comments by offering to revise the Testimonial Privileges Chapter and thereafter submitted a revised draft incorporating Bornstein's comments.
In February of 2010, Dunn and CCH executed CCH's Publishing Agreement 1 in which Dunn agreed to act as an author for the P & P Treatise. The meaning of paragraph 1 of the Publishing Agreement is at issue. Paragraph 1 provides in relevant part:
If the Author has not delivered in form and content acceptable to the Publisher a complete manuscript and all permissions by the delivery date herein agreed to, including any delivery date pursuant to paragraph 8 with respects to any new edition of the Work, the Publisher may, if it so chooses, return all of the unpublished materials that have been submitted to the Publisher by the author and, at its sole option, terminate this Agreement by prior written notice to the Author without any liability whatsoever on the Publisher's part. Alternatively, the Publisher may, at its sole option, extend the manuscript delivery date or give the Author a reasonable amount of additional time to make changes or revisions acceptable to the Publisher (although the Publisher shall not be required to do so). Should the Author be unwilling or unable to meet the new delivery date or make changes or revisions acceptable to the Publisher in that time, the Publisher may return all unpublished materials as provided above and, at its sole option, terminate this agreement by prior written notice to the Author, without any liability whatsoever on the Publisher's part.
The Publishing Agreement also provided that the authors were entitled to royalties in the amount of 20% of net sales of the P & P treaties during the first full year and 15% of net sales each year after. The percentages were to be divided among the authors. In addition, Dunn was paid $5,000.00 as an advance on royalties.
In the meantime, Codner was continuing to search for additional author prospects for the P & P Treatise and was communicating with Desmond—who would have filled the attorney role—and Jeffrey Frishman (“Frishman”)—who would have filled the CPA role. After learning that Dunn was under contract, Desmond asked to see some of Dunn's articles. Desmond also read Dunn's Testimonial Privileges Chapter. Desmond and Frishman each had substantive and organizational concerns with that draft chapter. Desmond, however, testified at deposition that he thinks he did not share his concerns with either Codner or Bornstein. Desmond recalls that perhaps Frishman mentioned that he had concerns about the Testimonial Privileges Chapter to Codner during a phone call.
Bornstein was not aware of Desmond or Frishman's opinions on the Testimonial Privileges Chapter or on any of Dunn's other work or reputation. Ultimately, in April of 2010, Desmond and Frishman each decided not to act as authors for the P & P Treatise. Desmond's concerns with the Testimonial Privileges Chapter was just one of many factors that led him to decline CCH's offer at that time. Other factors included the time commitment required.
After Desmond and Frishman declined CCH's offer to be authors, Bornstein, Frayman, and Codner decided to ask Dunn to write additional chapters while Codner searched for additional author prospects to...
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