EMPLOYMENT TELEVISION ENTER. v. Barocas, No. 02CA0216.
| Decision Date | 12 August 2004 |
| Docket Number | No. 02CA0216. |
| Citation | 100 P.3d 37 |
| Parties | EMPLOYMENT TELEVISION ENTERPRISES, LLC, d/b/a Digital Media Classifieds; Evan A. Neubeiser; and Etienne B. Neubeiser, Plaintiffs and Third-Party Defendants-Appellees and Cross-Appellants, v. Jon J. BAROCAS; Employment Television, Inc.; Employment Television of California, Inc.; and Employment Television of New England, Inc., Defendants and Third-Party Plaintiffs-Appellants and Cross-Appellees. |
| Court | Colorado Court of Appeals |
Morrison & Foerster, LLC, Tarek F.M. Saad, Lila M. Bateman, Denver, Colorado, for Plaintiffs and Third-Party Defendants-Appellees and Cross-Appellants.
Yates and Leal, LLP, Carlos Leal, Denver, Colorado, for Defendants and Third-Party Plaintiffs-Appellants and Cross-Appellees.
Opinion by Chief Judge DAVIDSON.
In this action involving a purchase and licensing agreement, defendants, Jon J. Barocas; Employment Television, Inc.; Employment Television of California, Inc.; and Employment Television of New England, Inc. (collectively, ETV), and plaintiffs, Employment Television Enterprises, LLC, d/b/a Digital Media Classifieds; Evan A. Neubeiser, and Etienne B. Neubeiser (collectively, DMC), appeal and cross-appeal, respectively, the judgments of the trial court entered after a bench and a jury trial. We affirm in part, reverse in part, and remand for further proceedings.
In 1997, the parties entered into a business partnership for purposes of jointly developing and providing television programs based on newspaper classified ads. In 1999, the parties ended their partnership and entered into a sale and purchase agreement, which provided for the sale of ETV's partnership interest to DMC and also outlined a framework for the parties' future relationship. Additionally, the parties contemporaneously entered into a license agreement governing the use of certain trademarks by the parties.
Central to this litigation, the purchase agreement provided that, because of ETV's preexisting relationship with MediaNews Group, an owner of several newspapers throughout the United States, ETV "shall only operate in cities where MediaNews Group now or hereafter owns a controlling interest in a newspaper." However, DMC was permitted to operate in a MediaNews Group city if, upon providing notice to ETV of its intention to commence operations, ETV did not provide counternotice within 30 days of its intention to operate in that city and did not air "classified advertising programs for cable or broadcast television in that city" within 120 days after providing the counternotice.
DMC filed this case in 2000, alleging numerous claims against ETV, including that ETV breached the purchase agreement by operating in Boston and Sacramento and tortiously interfered with DMC's prospective business relationship in Sacramento. DMC also sought declaratory relief interpreting the purchase agreement regarding the rights to operate in Salt Lake City and Charleston, and rulings on whether ETV breached the agreement by misrepresenting the existence of a contract when the purchase agreement was executed and whether it was entitled to any prospective relief from this breach.
In response, ETV filed several counterclaims against DMC. As relevant here, ETV asserted that DMC breached the purchase agreement and tortiously interfered with it by operating in Sacramento. ETV also alleged a breach of the license agreement based upon the misuse of certain trademarks by DMC.
Prior to trial, upon DMC's motion, the court granted preliminary injunctive relief ordering a competitive freeze by both parties in the Boston market. During trial, the court entered directed verdicts on several of the claims, specifically ruling that (1) ETV breached the purchase agreement by operating in Boston; (2) DMC failed to establish damages in Boston; (3) ETV failed to prove any damages in Sacramento; and (4) alternatively, based on the court's interpretation of "MediaNews Group city" in the purchase agreement, DMC did not breach the purchase agreement by operating in Sacramento.
Ultimately, the jury found that ETV breached the purchase agreement and tortiously interfered with DMC in Sacramento and awarded damages in the amount of $315,750 for both of these claims. The jury also found in favor of ETV on its claim of breach of the license agreement, but awarded only nominal damages.
In addition, the trial court granted declaratory relief, concluding that (1) ETV breached the purchase agreement by misrepresenting the existence of a contract in Oakland, but DMC was not entitled to any relief; and (2) ETV was entitled to operate in Salt Lake City and Charleston because these cities were MediaNews Group cities. The trial court also granted a permanent injunction in favor of DMC prohibiting ETV from operating in Boston based upon ETV's breach of the purchase agreement in Boston, and it awarded attorney fees and costs in favor of DMC under a prevailing party provision in the agreement.
The trial court determined that ETV had breached the purchase agreement by airing a program in Boston because the 120-day period had expired and, consequently, DMC had acquired exclusive rights to operate there.
ETV contends that this determination was error because it had aired a program prior to the 120-day deadline imposed by the agreement. In the alternative, ETV contends that the permanent injunction from operating in the Boston area was improper.
In response, DMC argues that the court properly determined that ETV breached the agreement and correctly enjoined ETV from operating in the Boston area, but that the court's directed verdict on its damages claim was erroneous.
We conclude that the trial court correctly determined that a breach occurred, that the injunction should be imposed, and that damages should not be awarded. However, we remand for further proceedings on the scope of the injunctive relief.
Pursuant to the terms of the purchase agreement, upon DMC's notice to ETV to commence operations in Boston, ETV provided counternotice on January 21, 2000, of its intention to occupy the Boston market. On May 12, 2000, ETV began airing promotional spots for the employment program. On May 22, 2000, 122 days after providing counternotice to DMC, ETV began airing an employment television show in Boston.
In the trial court, ETV argued that it had aired a "program" within the 120-day deadline because television promotions are included within the television industry's definition of program. However, the trial court determined that the term "program" in the agreement referred to the airing of a finished television product because the "plain meaning and general usage of the word" did not encompass promotional spots.
In the appropriate context, a "program" usually refers to "a scheduled radio or television show." The American Heritage Dictionary of the English Language 1401 (4th ed.2000).
ETV contends that, regardless whether "program" is generally a plain and unambiguous term, the trial court erred by not fully considering proffered evidence of usage of trade within the television industry to more broadly define the term. We agree that a court should initially consider any evidence of trade usage when interpreting an agreement, but conclude that any failure to do so here was harmless.
Even if a term is not facially ambiguous, evidence of industry standards may be used to demonstrate the parties' intent. Atmel Corp. v. Vitesse Semiconductor Corp., 30 P.3d 789 (Colo.App.2001); see also § 4-2-202 cmt. 1(c), C.R.S.2003 (); Restatement (Second) of Contracts § 222 cmt. b ("There is no requirement that an agreement be ambiguous before evidence of a usage of trade can be shown."); Farnsworth on Contracts § 7.12, at 319 (3d ed. 2004)( ); Corbin on Contracts § 24.13, at 109-23 (rev. ed.1993).
In deciding whether usage of trade evidence makes a term ambiguous, a court should first consider any evidence of trade usage that proposes an alternative definition. Thus, trade usage evidence is admissible even if the language is plain and unambiguous on its face, as long as the evidence is sufficient to suggest an alternative meaning. See Cheyenne Mountain Sch. Dist. No. 12 v. Thompson, 861 P.2d 711 (Colo.1993)
; cf. Lazy Dog Ranch v. Telluray Ranch Corp., 965 P.2d 1229, 1236 (Colo.1998).
ETV's offer of proof, contained in its industry expert's report, was that ETV was "on air" in Boston prior to the 120-day deadline because promotional spots for the show appeared prior to May 22, 2000. The record reflects that the trial court reviewed this proffer, but concluded the "plain meaning and general usage" of the term to be paramount. We cannot ascertain from this ruling whether the trial court properly considered ETV's trade usage evidence but found it insufficient to establish ambiguity in light of the plain meaning, or whether the court considered the evidence to be irrelevant in light of the plain and unambiguous nature of the term.
Nevertheless, in reviewing ETV's proffer, we conclude that it was inadequate to establish any ambiguity in the term. Significantly absent was any assertion that airing a "program" — as was required under the agreement — was equivalent to being "on air." More important, the report did not assert that the term "program," as used in the industry, referred to anything other than a television show. Any error by the trial court in failing to properly consider the trade usage evidence is, therefore, of no consequence, and the trial court correctly determined that ETV breached the purchase agreement by airing a program in Boston after the time...
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