Reier Broadcasting Co., Inc. v. Kramer

• Decision Date: 13 June 2003
• Docket Number: No. 02-773.,02-773.
• Citation: 72 P.3d 944,2003 MT 165,316 Mont. 301
• Parties: REIER BROADCASTING COMPANY, INC., Plaintiff and Appellant, v. Michael KRAMER, Defendant and Respondent, and Montana State University, Intervenor.
• Court: Montana Supreme Court

72 P.3d 944

2003 MT 165

316 Mont. 301

REIER BROADCASTING COMPANY, INC., Plaintiff and Appellant, v. Michael KRAMER, Defendant and Respondent, and Montana State University, Intervenor.

No. 02-773.

Supreme Court of Montana.

Submitted on Briefs February 20, 2003.

Decided June 13, 2003.

John M. Kauffman, Kasting, Combs & Kauffman, P.C., Bozeman, Montana, for Appellant.

Thomas Roberts, Roberts & Mahoney, Spokane, Washington, for Respondent.

Leslie C. Taylor, Montana State University, Bozeman, Montana (Intervenor).

Justice W. WILLIAM LEAPHART delivered the Opinion of the Court.

¶ 1 Reier Broadcasting Company, Inc., appeals from the order of the Eighteenth Judicial District Court, Gallatin County, denying Reier's motion for relief from judgment. We affirm. ¶ 2 The following issue is raised on appeal:

¶ 3 Whether the District Court correctly concluded that Reier Broadcasting was not entitled to injunctive relief to prevent a breach of its employment agreement with Michael Kramer.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 4 Appellant, Reier Broadcasting Company, Inc., owns several radio stations in Gallatin County and, until 2002, had exclusive rights to broadcast Montana State University athletic events. Respondent, Michael Kramer, is the head football coach at MSU. In January 2001, Reier Broadcasting and Kramer entered into an employment contract at the behest of MSU, whereby Reier agreed to pay Kramer $10,020 per year in exchange for exclusive broadcast rights with Kramer. Pursuant to the contract, Reier agreed to employ Kramer as an announcer and talent on the weekly, one-hour "Cat Chat" program, which airs during the MSU football season. In addition, Kramer agreed to record commercials for several of Reier's advertisers. The agreement remains in force and effect until November 2004. Section Two of the contract contains an exclusivity clause that provides the following:

That Coach shall diligently and faithfully serve Station in such capacity, shall devote his entire skill and energies to such service, and shall not perform on or permit his name to be used in connection with any other radio or television station or program, or to accept any other engagement which will conflict with his performance or effectiveness for Station, without prior approval and consent in writing by the Station.

¶ 5 Reier Broadcasting had earlier purchased exclusive broadcast rights to all MSU athletic events. These rights expired in the summer of 2002, at which time MSU began seeking competitive bids from other broadcasting companies. After reviewing MSU's Request for Proposal, under which these bids were to be obtained, Reier notified the university that there was a potential conflict between the Request for Proposal and Reier's contract with Kramer. According to Reier, the Request for Proposal required the successful offeror to broadcast interviews and conduct a commentary program with Kramer in violation of Section Two of the Reier-Kramer employment agreement, under which Kramer was contractually prohibited from announcing, or otherwise providing talent for Reier's competitors.

¶ 6 MSU declined to amend the Request for Proposal to address this conflict. MSU then disqualified Reier Broadcasting as a potential bidder, and awarded broadcast rights to the university's athletic events to Clear Channel Communications. MSU also notified Kramer that he was expected to provide interviews to Clear Channel despite the exclusivity clause contained in his contract with Reier.

¶ 7 Reier Broadcasting subsequently filed a Complaint and Application for Temporary Restraining Order with the Eighteenth Judicial District Court in an effort to protect its rights under the employment agreement, and to prevent Kramer from providing services to Clear Channel. The District Court granted the request for a TRO, pending an evidentiary hearing on the matter. In August 2002, the court held an evidentiary hearing on the question of whether or not to convert the TRO into a preliminary injunction. The TRO was later amended to allow Kramer to "engage in audio, video or printed media obligations in connection with his coaching job...."

¶ 8 After hearing testimony and reviewing the parties' pleadings, the court concluded that § 27-19-103(5), MCA, prohibited the issuance of an injunction under the circumstances. The court also dissolved the TRO. Reier Broadcasting moved to alter or amend the court's judgment. The court denied the motion, and Reier appealed.

STANDARD OF REVIEW

¶ 9 Generally, when reviewing a trial court's grant or denial of an injunction, our standard of review is for abuse of discretion. Spoklie v. Montana Dep't of Fish, Wildlife & Parks, 2002 MT 228, ¶ 15, 311 Mont. 427, ¶ 15, 56 P.3d 349, ¶ 15. However, when a trial court "`bases its decision to grant such relief upon its interpretation of a statute, no discretion is involved and we review the [] court's conclusion of law to determine whether it is correct.'" Spoklie, ¶ 15 (citing Hagener v. Wallace, 2002 MT 109, ¶ 12, 309 Mont. 473, ¶ 12, 47 P.3d 847, ¶ 12). Accordingly, we review a trial court's statutory interpretations and the resulting conclusions of law for correctness. To the extent that the court's conclusions are correct, "`we will not interfere with the court's exercise of discretion unless there is a showing of manifest abuse of discretion.'" Spoklie, ¶ 16 (citing Montana Tavern Ass'n v. Dep't of Revenue (1986), 224 Mont. 258, 263, 729 P.2d 1310, 1314).

DISCUSSION

¶ 10 This appeal concerns the scope and effect of § 27-19-103(5), MCA, which provides the following: "An injunction cannot be granted: ... (5) to prevent the breach of a contract the performance of which would not be specifically enforced...." The paramount issue raised by the appellant, Reier Broadcasting, is whether, within the context of a personal services contract such as the employment agreement between Reier and Kramer, the language of § 27-19-103(5), MCA, may be interpreted as prohibiting the use of injunctive relief to prevent one of the contracting parties (in this case, Kramer) from performing services elsewhere during the life of the contract.

¶ 11 Characterizing the Reier-Kramer employment agreement as a personal services contract and not subject to specific enforcement, the District Court concluded that the prohibition contained in § 27-19-103(5), MCA, precluded the issuance of the injunction sought by Reier. The court relied, in part, on § 27-1-412(1), MCA, which states that, "[t]he following obligations cannot be specifically enforced: (1) an obligation to render personal service...." Combining this restriction with the language of § 27-19-103(5), MCA, the court concluded that it "may not enjoin one from doing something in violation of a contract if the [c]ourt cannot enforce the contract by specific performance.... The [a]greement between Kramer and [Reier] is a personal services contract and cannot be enforced by specific performance." The court explained that it could not prevent Kramer from violating the terms of that contract without improperly enforcing the affirmative obligations of the Reier-Kramer agreement through indirect means.

¶ 12 Reier Broadcasting argues that neither § 27-1-412(1), MCA, nor § 27-19-103(5), MCA, applies in the present case. Reier contends that by seeking an injunction, the company did not intend to require Kramer to render personal services, but rather to prevent Kramer from providing the same services to Clear Channel. Accordingly, Reier asserts that § 27-1-412(1), MCA, and its prohibition against the specific enforcement of personal services contracts, has no bearing on the present case, and thus § 27-19-103(5), MCA, is equally irrelevant.

¶ 13 Reier characterizes its request for an injunction as an attempt to enforce a negative covenant which, according to Reier, is appropriate given that Kramer's services are special or unique. According to Reier, contracts based on special or unique personal services, or in which a person holds a unique position, may be indirectly enforced by restraining the person from providing services to another. In support of this, Reier cites Volume 71, Section 165 of the American Jurisprudence, Second Edition, which states the following:

Contracts calling for personal services or acts of a special, unique, or extraordinary character, or by persons in eminence in their profession or calling who possess special and extraordinary qualifications, may be indirectly enforced by restraining the person employed from rendering services to another....

71 Am.Jur.2d Specific Performance § 165, 213 (1973).

¶ 14 Reier also cites a 1972 decision, Nassau Sports v. Peters (E.D.N.Y.1972), 352 F.Supp. 870, 875 (citations omitted), in which the federal district court for the eastern district of New York noted that "it has long been settled that injunctive relief may be granted to restrain an employee's violation of negative covenants in a personal services contract...." On this basis, Reier concludes that although Kramer should not be forced to fulfill his contractual obligations to the company, he nonetheless may be prevented from providing his unique services to Reier's competitors until the employment agreement expires in 2004.

¶ 15 We discussed the proper application of § 27-19-103(5), MCA, in Westland Enterprises, Inc. v. Boyne, USA, Inc. (1989), 237 Mont. 186, 772 P.2d 309. Although we held that an injunction against the defendant was improperly issued for reasons not associated with § 27-19-103(5), MCA, we set forth the rationale for the statute, and articulated the circumstances under which it would apply. We stated the following:

Injunctions are rarely used to enforce contract rights or prevent breaches, and applicable court decisions concerning the propriety of this tactic are scarce. However, the legislature has set forth statutory guidelines for the use of injunctions. An applicable guideline is found at § 27-19-103(5), MCA. Under this

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