Johnson Enterprises of Jacksonville, Inc. v. FPL Group, Inc., 94-3324

• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)
• Citation: 162 F.3d 1290
• Docket Number: No. 94-3324,94-3324
• Parties: RICO Bus.Disp.Guide 9657, 37 UCC Rep.Serv.2d 244, 12 Fla. L. Weekly Fed. C 389 JOHNSON ENTERPRISES OF JACKSONVILLE, INC., a Florida corporation, Plaintiff-Appellee-Cross-Appellant, v. FPL GROUP, INC., a Florida corporation, FPL Group Capital, Inc., a Florida corporation, and Telesat Cablevision, Inc., a Florida corporation, Defendants- Appellants- Cross-Appellees.
• Decision Date: 18 December 1998

Page 1290

162 F.3d 1290 RICO Bus.Disp.Guide 9657, 37 UCC Rep.Serv.2d 244,
12 Fla. L. Weekly Fed. C 389 JOHNSON ENTERPRISES OF JACKSONVILLE, INC., a Florida
corporation, Plaintiff-Appellee-Cross-Appellant,
v.
FPL GROUP, INC., a Florida corporation, FPL Group Capital,
Inc., a Florida corporation, and Telesat
Cablevision, Inc., a Florida
corporation,
Defendants-
Appellants-
Cross-Appellees. No. 94-3324. United States Court of Appeals,
Eleventh Circuit. Dec. 18, 1998.

Page 1295

Michael J. Dewberry, Alexandra K. Hedrick, Jacksonville, FL, for Telesat Cablevision, Inc.

Gerry S. Gibson, John W. Little, West Palm Beach, FL, for FPL.

Gregory W. Johnson, Jacksonville, FL, Douglas B. Brown, Orlando, FL, Mary W. Chaisson, George N. Meros, Jr., Rumberger, Kirk & Caldwell, Tallahassee, FL, for Plaintiff-Appellee-Cross-Appellant.

Appeals from the United States District Court for the Middle District of Florida.

Before TJOFLAT and COX, Circuit Judges, and VINING ^*, Senior District Judge.

TJOFLAT, Circuit Judge:

A dispute arose between the parties to a construction contract, leading to a fifteen-claim lawsuit by the contractor alleging violations of federal and state criminal statutes and Florida tort law, in addition to breach of contract. Twelve of the claims went to trial. At the close of the evidence, the district court granted judgment as a matter of law on nine of these claims. The jury thereafter returned verdicts for the plaintiff contractor totaling $5.6 million; the district court ultimately entered a final judgment totaling $5.5 million. All parties now appeal: The plaintiff seeks the reinstatement of the claims the district court dismissed; the defendants contest the sufficiency of the evidence to support the jury's verdicts.

In this opinion, we sustain the district court's rulings granting the defendants judgment as a matter of law, set aside the jury's verdicts on damages and limit the plaintiff's recovery to nominal damages of one dollar for breach of contract, and remand the case for the imposition of attorneys' fees and costs in light of our disposition. The structure of

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the opinion is as follows: Part I provides the factual background to the dispute. Part II describes the claims brought by the plaintiff and the district court's resolution of those claims. Part III examines the issues raised on cross-appeal by the plaintiff. Parts IV and V examine the issues raised on appeal by the defendants. Part VI addresses the issues of attorneys' fees and costs. Finally, Part VII offers some concluding thoughts.

I.

The legislative backdrop against which this controversy arose was the Cable Communications Policy Act of 1984 (the "Cable Act"). After describing the Cable Act's influence on the cable television market, we discuss the parties, the construction contract, and the dispute that ultimately led to this lawsuit.

A. Background--The Cable Communications Policy Act of 1984

The Cable Act deregulated rates in the cable television industry. See Cable Communications Policy Act of 1984, Pub.L. No. 98-549, 98 Stat. 2779 (codified at 47 U.S.C. §§ 521-559) (1984) (amended 1992 and 1996). Prior to the Cable Act, municipalities generally regulated rates for "basic" cable service as a term of the franchise agreement with the cable operator. See H.R.Rep. No. 98-934, at 19, 23 (1984), reprinted in 1984 U.S.C.C.A.N. 4656, 4660. In exchange for submitting to rate regulation, cable operators were generally given monopolies--once they were granted a franchise, they would not have to compete with another cable operator for customers within the geographic region covered by their franchise. See Thomas W. Hazlett, Duopolistic Competition in Cable Television: Implications for Public Policy, 7 Yale J. on Reg. 65, 68-69 (1990) (noting that "out of a universe of 9,010 cable systems" in 1987, "municipalities had issued only 165 multiple, overlapping franchise awards"); Michael I. Meyerson, The Cable Communications Policy Act of 1984: A Balancing Act on the Coaxial Wires, 19 Ga.L.Rev. 543, 552 n. 57 (1985) (stating that "over 99% of the cable systems do not face direct competition from another cable system for subscribers").

The Cable Act affected this model by curtailing the power of municipalities to regulate rates for the provision of basic cable service. The initial effect of this deregulation was to allow incumbent cable operators to extract the monopoly profits previously unavailable to them. See Albert K. Smiley, Regulation and Competition in Cable Television, 7 Yale J. on Reg. 121, 121 (1990). The long-term effect of rate deregulation, however, was supposed to be competition in the cable television market. ¹ Cable companies would now have an incentive to acquire franchises in areas being serviced by an incumbent cable operator and to "overbuild" the incumbent's system by constructing a second cable system, thereby enabling them to compete with the incumbent cable operator for subscribers. ²

B. The Parties

It was against the backdrop of the Cable Act that FPL Group, Inc. ("Group"), a publically-owned holding company, sought to enter the cable television business. Group acquired all of the common stock of the Florida-based Telesat Cablevision, Inc. ("Telesat") in 1985. Group subsequently formed FPL Group Capital, Inc. ("Capital"), as a wholly owned subsidiary corporation, and transferred its shares in Telesat to Capital.

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Before its acquisition by Group, Telesat was a private cable company--that is, it provided cable television service to multiple-unit dwellings, such as condominiums and apartment complexes, via satellite dish antennas. Because Telesat usually used satellite dish antennas located on the grounds of the housing unit to provide this cable service, it was not necessary that Telesat install cable on public rights-of-way. It was thus not necessary for Telesat to obtain cable franchises from the local government. After Group acquired Telesat, Telesat took steps to acquire such franchises.

In the spring and summer of 1986, Telesat applied for and received six franchises throughout Florida. In each case, an incumbent cable operator was servicing the franchise area; thus, Telesat applied for these franchises with the stated intent of overbuilding the existing system. At this time, Telesat decided to use one independent contractor to perform all of its construction work. After considering the qualifications of at least nine companies, Telesat selected Johnson Enterprises of Jacksonville, Inc. ("JEJ").

C. The Agreement

The initial contract between Telesat and JEJ, signed on August 21, 1986 (the "1986 Contract"), was for an indefinite term and was subject to cancellation by either party without cause on sixty days notice. It was drafted by JEJ's attorney. ³ The key provision of that contract, entitled "Non-exclusive Contract; Right of First Refusal," read:

The parties agree that this is a non-exclusive contract for the construction of Systems throughout the State of Florida, that is, [Telesat] may employ other contractors to do work similar to the work performed by [JEJ] and [JEJ] may perform such work for other [cable system developers], as long as not working in the same franchised area with the exception of Centel Cable. Provided, however, before [Telesat] may offer any major work to other contractors, [Telesat] shall offer such work to [JEJ] and, unless such work is declined by [JEJ] or the parties mutually agree that [JEJ] cannot reasonably perform such additional work in a workmanlike and timely manner, then such work shall be performed by [JEJ] in accordance with this Agreement.

In effect, the contract obligated Telesat to give JEJ first crack at any major construction work Telesat undertook but imposed no obligation on JEJ in return. JEJ could either accept or reject any construction work Telesat offered.

The contract had a number of other important provisions. Under the "Restoration" provision, JEJ agreed that:

n]ormal restoration to original or better condition of landscape and/or structures, i.e., fences, lawn sprinkler systems, utility lines, and the like, damaged or destroyed will be repaired by [JEJ] at no cost to [Telesat] no later than seven days after notification by [Telesat]

Under the "Indemnification of Owner" provision, JEJ agreed to indemnify Telesat for claims arising from the negligence of JEJ's employees or subcontractors; this indemnification included claims resulting from "termination, disturbance, interruption or other interference with services of any type of aerial or underground installation, utility or other facility damaged, harmed or disturbed or caused to be disturbed by [JEJ]." The "Contractor's Default" provision gave Telesat the right to perform JEJ's obligations and charge JEJ for costs incurred in the event that JEJ defaulted by failing to complete work promptly or to comply with material terms of the contract. This section further provided that Telesat could terminate the contract if such default continued for thirty days or more. The contract also included an integration clause requiring that any changes, modifications, or alterations of the agreement be in writing:

This Agreement contains the entire Agreement between [Telesat] and [JEJ]. There are no other agreements or understandings stated or implied except as are contained herein. It is hereby further understood that any changes, modifications or alterations of this Agreement shall be in writing and executed by all parties hereto.

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Finally, the parties agreed that the contract would be governed by Florida law, and that the prevailing party in any disagreement would be entitled to attorney fees.

If JEJ accepted work offered by Telesat, JEJ's compensation would be governed by two price lists attached to the contract as Exhibits "A" and "B." ⁴ Because Telesat would provide all necessary materials, these price lists dealt only with the equipment and labor costs that JEJ would...