McMahon v. Meredith Corp., 78-1091

• Decision Date: 02 April 1979
• Docket Number: No. 78-1091,78-1091
• Citation: 595 F.2d 433
• Parties: 1978-81 Copr.L.Dec. 25,063 Dr. Frank B. McMAHON, Appellant, v. MEREDITH CORPORATION, and Dr. Charles G. Morris, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 433

595 F.2d 433

1978-81 Copr.L.Dec. 25,063

Dr. Frank B. McMAHON, Appellant, v. MEREDITH CORPORATION, and Dr. Charles G. Morris, Appellees.

No. 78-1091.

United States Court of Appeals,

Eighth Circuit.

Submitted Sept. 13, 1978.

Decided April 2, 1979.

Richard E. Haferkamp of Rogers, Eilers & Howell, St. Louis, Mo., argued, for appellant; John M. Howell, St. Louis, Mo., filed briefs.

George B. Newitt (on brief) of Allegretti, Newitt, Witcoff & McAndrews, Chicago, Ill., argued, for appellee, Meredith Corp.; George P. McAndrews, Chicago, Ill., on brief.

Robert S. Allen (on brief) of Lewis, Rice, Tucker, Allen & Chubb, St. Louis, Mo., argued, for appellee, Dr. Charles G. Morris.

Before HEANEY and STEPHENSON, Circuit Judges, and HANSON, ^* Senior District Judge.

HANSON, Senior District Judge.

This is an appeal from summary judgment entered in favor of appellee Meredith Corporation (Meredith), and from partial summary judgment in favor of appellee Dr. Charles G. Morris, in a copyright infringement, unfair competition, and disparagement action. Morris and appellant, Dr. Frank B. McMahon, are writers in the field of psychology and the gravamen of McMahon's complaint is that Morris plagiarized McMahon's work and Meredith, whose division Appleton-Century-Crofts (ACC) ¹ published the works of both authors, implicated itself by publishing the plagiarized material. Prentice-Hall, Inc., a third defendant, was joined in McMahon's complaint and remains a party to the action in the district court, as does Morris with respect to those claims against him on which summary judgment was not entered. Subsequent to entry of its order sustaining the summary judgment motions, the district court, ² finding no just reason for delay, ordered entry of final judgment on the pertinent claims against Meredith and Morris pursuant to Rule 54(b), F.R.Civ.P. Appellant McMahon thereafter brought this timely appeal.

Meredith and Morris interposed an affirmative defense of a release from liability executed by McMahon and it was upon the basis of such release that the district court granted summary judgment. McMahon unsuccessfully sought to void the release on a theory of fraud in the inducement. Therefore, the sole question before this Court on appeal concerns the validity of the release.

The district court sustained the summary judgment motions to the extent of giving the release retroactive application. McMahon v. Prentice-Hall, 443 F.Supp. 596, 598-99 (E.D.Mo.1977). In an effort to gain judgment on all the claims against him, Morris argued that the release should be applied prospectively to future wrongdoing as well. The district court declined to resolve that issue by summary judgment and hence it is not before us.

Dr. McMahon is a citizen of Missouri and the release was executed by him in that state. The district court applied Missouri law to the summary judgment motions, and the parties have relied on Missouri law as governing disposition of the appeal. Hence, we look to the substantive law of Missouri.

The alleged fraud involves failure on the part of Meredith ³ to disclose a material fact to McMahon, which failure allegedly resulted in consummation of the release by McMahon. The fact in issue was Meredith's ongoing contacts with Prentice-Hall through an agent in an effort to interest Prentice-Hall in purchasing Meredith's Appleton-Century-Crofts division. Prentice-Hall eventually purchased ACC approximately two months after the release was signed. Dr. McMahon has described these contacts as "negotiations." For the purpose of the summary judgment motions the district court assumed the existence of "negotiations" between Meredith and Prentice-Hall for the sale of ACC, 443 F.Supp. at 598, and appeared to assume also that any negotiations were material to the release. ⁴ Since under McMahon's allegations of fraud the concealment was passive rather than the product of a positive misrepresentation of fact, the district court correctly narrowed the issue to "whether defendant Meredith had a duty to speak" under Missouri law. 443 F.Supp. at 598. The district court held there was no such duty on the uncontroverted facts. We agree and affirm.

I.

In 1968 Dr. McMahon contracted with Prentice-Hall to write an introductory psychology textbook, published in 1972 under the title, Psychology, the Hybrid Science. In late 1971 Dr. McMahon entered into three contracts with Meredith/ACC. These provided that Dr. McMahon would write and Meredith/ACC would publish a book on abnormal psychology and other related materials. The abnormal psychology book was never published by Meredith/ACC because of a breakdown in the author-publisher relationship precipitated by Meredith/ACC's publication in early 1973 of Dr. Morris' book entitled Psychology, An Introduction. Dr. McMahon has claimed that Morris' book plagiarized substantial portions of McMahon's earlier Psychology, the Hybrid Science. Dr. McMahon also felt that Meredith/ACC had wrongfully used his name in the acknowledgments portion of the Morris book, and McMahon was further dissatisfied because he believed Merdith/ACC had attempted to exert improper control over the contents of the abnormal psychology text.

By mid-1973 Dr. McMahon considered himself to be in an intolerable situation with Meredith/ACC. McMahon retained an attorney, Mr. Jack Chasnoff, and after a series of conferences matters gelled to the point that a four-party transaction founded on mutual releases became a possibility. Meredith/ACC would release Dr. McMahon from his contracts in return for releases from McMahon and Prentice-Hall (as publisher of the plagiarized work) of claims against Meredith/ACC and Dr. Morris arising out of the publication of Psychology, An Introduction. ⁵ All parties contemplated that Dr. McMahon would subsequently contract with Prentice-Hall for the publication of the abnormal psychology work.

Finalization of the transaction was delayed by Meredith/ACC's insistence on reimbursement of some $24,000 in pre-publication expenses it claimed to have incurred in anticipation of Dr. McMahon's book. However, on August 9, 1973 Mr. Howard Abrahams, counsel for Meredith/ACC, accepted a counteroffer previously made by Mr. Chasnoff of $2,200 plus the McMahon and Prentice-Hall releases in exchange for Meredith/ACC's release of McMahon's contract. During the telephone conversation between Mr. Abrahams and Mr. Chasnoff in which this agreement was reached, Abrahams revealed that time was of the essence and made other statements which indicated to Chasnoff that ACC was to be sold and accordingly Meredith was interested in speedily resolving disputes that might interfere with the sale. Mr. Chasnoff communicated these thoughts in an August 10, 1973 letter to Mr. William Daly, secretary and general counsel for Prentice-Hall. No inquiry was ever made by Dr. McMahon or Mr. Chasnoff, either to Meredith or Prentice-Hall, as to whether Prentice-Hall might be a prospective purchaser. Nor was any indication given to Meredith that the identity of potential purchasers was a matter of importance to Dr. McMahon in concluding the release.

In late August the parties exchanged releases as arranged. The release at issue here was signed by Dr. McMahon on August 22, 1973, and stated:

The undersigned, Frank B. McMahon, Jr. in consideration of the termination of three contracts dated November 15, 1971 between Appleton-Century-Crofts, Educational Division, Meredith Corporation and the undersigned, and in consideration of a contemporaneous release from Appleton-Century-Crofts, Educational Division, Meredith Corporation and the return to him of his manuscript and all of his rights as author in and to those works in the field of abnormal psychology which were the subjects of the contracts referred to above, hereby releases Appleton-Century-Crofts, Education Division, Meredith Corporation from any and all liability to him arising out of or which might arise out of any of said contracts or out of the dealings of the parties thereto from the beginning of time up to the date hereof, and the undersigned also releases Charles G. Morris, as author, and Appleton-Century-Crofts, Educational Division, Meredith Corporation, as publisher, of a book entitled "PSYCHOLOGY AN INTRODUCTION" from any liability to him arising out of the writing or publication of said book, and specifically (but without limiting the generality of the foregoing) releases any claims which the undersigned has or might have arising out of the use of his name in the "acknowledgements" section of said book or for copyright infringement by reason of the said writing or publication of said book. The undersigned also releases Appleton-Century-Crofts, Educational Division, Meredith Corporation from any liability to him arising out of its alleged publication in the past of erroneous and damaging comments concerning him or his book entitled "PSYCHOLOGY: THE HYBRID SCIENCE."

In December 1973 Dr. McMahon contracted with Prentice-Hall for the publication of the abnormal psychology book.

At the same time agreement was reached concerning Dr. McMahon's situation, Meredith was attempting to sell its ACC division. On July 30, 1973 Meredith issued a press release disclosing that it would attempt to sell ACC, including the college textbook department. Previously an investment banking firm White, Weld & Company had been retained by Meredith as exclusive sales agent for the ACC assets. White-Weld proceeded to contact some ten to twelve major publishing houses. On August 8, 1973 Mr. Keith Gollust of White-Weld called Prentice-Hall's chairman of the board, Mr. Howard Warrington, to solicit Prentice-Hall's interest in ACC. A memorandum of the call by Mr. Warrington indicates that Warrington asked Mr. Gollust to send more information about ACC's literary properties. In the same memorandum Mr. Warrington directed subordinates to attempt to obtain more information about ACC in an effort to determine ...