Recognition Communications, Inc. v. American Automobile Association, Inc., No. 05-02-01619-CV (TX 9/1/2004)
| Decision Date | 01 September 2004 |
| Docket Number | No. 05-02-01619-CV.,05-02-01619-CV. |
| Parties | RECOGNITION COMMUNICATIONS, INC., Appellant, v. AMERICAN AUTOMOBILE ASSOCIATION, INC. & AAA CLUB SERVICES, INC., Appellees. |
| Court | Texas Supreme Court |
On Appeal from the 193rd Judicial District Court, Dallas County, Texas, Trial Court Cause No. 97-03140-L.
REVERSED AND RENDERED in part; AFFIRMED in part.
Before Justices FITZGERALD, RICHTER, and LANG.
Beginning in 1992, Recognition Communications, Inc. (RCI) contracted with American Automobile Association, Inc. (AAA) to act as a publisher's advertising representative soliciting and selling advertisements for AAA World, a magazine published by AAA. After AAA terminated the publisher's advertising agreement in 1997, RCI sued AAA for breach of the agreement. RCI alleged that it had an exclusive contract for advertisments that AAA received from RCI's territory, it was entitled to commissions on certain accounts pursuant to its agreement with AAA, and AAA failed to pay those commissions. RCI also alleged that AAA fraudulently induced it to add territory by representing those accounts were included in the new territory, but then AAA refused to pay commissions on those accounts. RCI also sued AAA Club Services, Inc., a subsidiary of an AAA member club, for tortious interference with the agreement. RCI alleged that certain agents of AAA Club Services, Inc. caused AAA to terminate the agreement. The trial court submitted to the jury issues on ambiguity and interpretation of the agreement, the claims described above, and RCI's requests for attorney's fees. The jury found against RCI on all issues.
The trial court entered a judgment that RCI take nothing. In nine issues, RCI challenges (a) the submission of the question regarding the ambiguity of certain paragraphs of the agreement and the factual sufficiency of the jury's failure to find that the accounts for which RCI sought payment were included in the agreement; (b) the trial court's ruling that certain paragraphs were ambiguous; (c) the sufficiency of the evidence supporting the jury's negative answer to RCI's request for attorney's fees incurred in obtaining a "termination fee"; and (d) the factual sufficiency of the evidence supporting the jury's negative answers to the tort, damages, and attorney's fees for breach of agreement questions. For the reasons that follow, we reverse the trial court's judgment as to the award of attorney's fees for the "termination fee" and render judgment in RCI's favor on that claim, and we affirm the trial court's judgment in all other respects.
Matt Kincaid was the president of RCI. His brothers Eric and Lance were also employed by RCI. RCI had contracts with various magazine publishers to solicit and sell advertisements. In turn, RCI had contracts with subrepresentatives to cover RCI's territory. AAA, a not-for-profit corporation, was a federation of independent member clubs. The member clubs provided various automobile and travel-related services to dues-paying members. The member clubs included whole states, parts of states, or spanned several states. The member clubs communicated with their members, usually through a travel magazine. AAA operated some clubs as divisions. In 1996, AAA sold three divisions, AAA Hawaii, AAA Texas, and AAA New Mexico, to AAA Club Services, Inc., a wholly owned subsidiary of the Automobile Club of Southern California (ACSC), an AAA member club. AAA Club Services, Inc. was formed in 1996 to be the parent of these three new subsidiaries. AAA published AAA World to communicate with the individual members in the divisions. Among its methods of selling advertising, AAA entered into contracts with advertising representatives, like RCI, to sell advertisements in AAA World.
In 1990, Matt Hamill was hired as national advertising manager of AAA World. He was told to increase the amount of advertisements in the magazine. Matt Kincaid contacted AAA soliciting business, and in early 1992, Hamill contacted Kincaid. In February 1992, Hamill and Kinkaid signed the "Publisher's Advertising Representative Agreement" between RCI and AAA, which is at issue here.
The record reflects that possibly before, but certainly after the initial contract was signed, Kincaid requested Hamill to give RCI additional territory by making RCI the national sales representative for AAA. At a meeting in December 1993, at which Kincaid discussed adding additional territory with Hamill, AAA provided a "Prepaid Commission Report" showing what accounts were already producing income for the advertising agency that held the account in the territory. According to RCI, this report was provided by AAA so RCI could see the "income stream" RCI could expect to acquire if it received additional territory. The report includes several accounts labeled "In-house": Auto Plan, Auto Insider, and two other accounts. All accounts showed a "net" amount and an advertising representative's identifying number. The previous advertising representative had been paid commissions on the "In-house" accounts.
Beginning in 1994, with AAA's agreement, RCI added the territory shown on the "Prepaid Commission Report." Later in 1994, AAA decided to stop paying commissions on the Auto Insider and Auto Plan accounts. AAA labeled certain accounts, including Auto Insider and Auto Plan, "house accounts." The house accounts, which previously had been "commissionable" were no longer "commissionable." RCI submitted claims to AAA for Auto Insider and Auto Plan advertisements, but AAA refused to pay. In January 1995, with AAA's agreement, RCI added New Jersey to its territory because RCI believed that New Jersey territory included the Hertz Rental Company, whose headquarters were in New Jersey. Later in 1995, RCI began a "media buying program" by instituting a "travel planner." RCI provided the travel planner to AAA under an oral agreement separate from the 1992 publisher's advertising agreement. Under the travel planner, RCI purchased advertising space in AAA World, sold advertisements in the advertising space, and then submitted the multi-advertisement copy to AAA. AAA paid RCI a commission on this advertising. AAA discontinued the travel planner effective January 1997. Also, in 1995, the title of AAA World changed to Car & Travel. When AAA Club Services, Inc. was formed in 1996, it continued to use Car & Travel as its member publication. In mid-1996, Harold Yankelevitz replaced Hamill as national advertising manager. In January 1997, AAA Club Services, Inc. stopped using Car & Travel and began publishing Journey. Bob Bradley and Mark Titel, who were employees of ACSC, the parent of AAA Club Services, Inc., acted as consultants on the publication of Journey. Later in 1997, AAA stopped publishing Car & Travel.
AAA canceled the contract with RCI effective January 1997. Shortly thereafter, RCI sued AAA, AAA Club Services, Inc., and other parties not before us in this appeal. RCI alleged that AAA breached the agreement by failing to pay commissions on "in house," "preferred provider," and the Hertz accounts.
RCI's breach of contract theory was that under the agreement, the territory assigned to RCI was exclusive and all the accounts in each geographic area were assigned to RCI. Therefore, according to RCI, no other advertising agency had the right to sell any advertisements, and RCI was entitled to receive commissions on every advertisement placed by any advertiser or sold in RCI's territory, whether RCI sold the advertisement or it was sold by another advertising representative or by AAA itself.
RCI also asserted a claim against AAA for fraudulent inducement for misrepresenting that the "house accounts," "preferred provider accounts," and the Hertz accounts were part of RCI's territory. As damages, RCI claimed it was entitled to $10,000 as a termination fee plus unpaid sales commissions, which RCI estimated at trial to total about $2 million. RCI also requested attorney's fees for both the "termination fee" and the breach of contract claim.
RCI asserted a claim for tortuous interference with contract against AAA Club Services, Inc. RCI alleged that Titel and Bradley, as agents of AAA Club Services, Inc., tortuously interfered with the RCI-AAA agreement by demanding that AAA terminate the agreement.
Before trial, the trial court granted partial summary judgment in RCI's favor by ruling that RCI was entitled to a "termination fee" under paragraph 2(B) of the agreement. Also before trial, the trial court ruled that paragraphs 1(D) and 5(A) of the agreement were ambiguous.1 Subsequently, RCI amended its pleading by asserting that paragraph 1(E) was ambiguous.2
Over RCI's objection, the jury charge submitted the issue of the meaning of paragraphs 1(A), 1(D), 1(E), 1(F), 4, and 5(A) and whether the contested advertisements were included in the agreement as modified, re-aligned, or re-assigned.3 The charge also submitted RCI's contract claims, tort claims, and RCI's requests for attorney's fees pursuant to the "termination fee" and breach of contract. The jury found that the contested accounts were not part of the agreement. The jury did not reach the issues relating to the breach of the agreement claim and found against RCI on all other issues.
RCI filed a motion for judgment notwithstanding the verdict and motion for new trial. Both were denied in a written order. This appeal followed.
Initially, we address AAA's assertion that Kincaid expressly waived RCI's right to appeal by certain statements during cross-examination.
Waiver is an intentional relinquishment of a known right or intentional conduct inconsistent with that right. Jernigan v. Langley, 111...
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