Retro Television Network, Inc. v. Luken Commc'ns, LLC

• Decision Date: 17 October 2012
• Docket Number: 12–1838.,Nos. 12–1287,s. 12–1287
• Citation: 696 F.3d 766
• Parties: RETRO TELEVISION NETWORK, INC., Plaintiff–Appellant v. LUKEN COMMUNICATIONS, LLC; Retro Television, Inc., formerly known as Retro Programming Services, Inc., Defendants–Appellees Retro Television Network, Inc., Plaintiff–Appellant v. Luken Communications, LLC; Retro Television, Inc., formerly known as Retro Programming Services, Inc., Defendants–Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

696 F.3d 766

RETRO TELEVISION NETWORK, INC., Plaintiff–Appellant

v.LUKEN COMMUNICATIONS, LLC; Retro Television, Inc., formerly known as Retro Programming Services, Inc., Defendants–Appellees

Retro Television Network, Inc., Plaintiff–Appellant

v.Luken Communications, LLC; Retro Television, Inc., formerly known as Retro Programming Services, Inc., Defendants–Appellees.

Nos. 12–1287, 12–1838.

United States Court of Appeals, Eighth Circuit.

Submitted: Sept. 20, 2012.

Filed: Oct. 17, 2012.

Gary Jon Barrett, argued, Little Rock, AR, for appellant.

Steven Shults, argued, Little Rock, AR, John P. Perkins, III, on the brief, Washington, DC, for appellee.

Before WOLLMAN, BEAM, and MURPHY, Circuit Judges.

WOLLMAN, Circuit Judge.

Retro Television Network, Inc., appeals the district court's ¹ dismissal of its claims against Luken Communications, LLC and Retro Television, Inc. (collectively Appellees) under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Retro Television Network, Inc. appeals also the district court's adverse award of attorneys' fees. We affirm.

I.

In December 2005, Equity Broadcasting Corporation (Equity) entered into an intellectual property agreement (IPA) with Retro Television Network, Inc. The IPA's recitals explained that Equity desired to acquire Retro Television Network, Inc.'s noncreative rights in Retro Television Network for the purpose of developing a national broadcast network. To accomplish this, Retro Television Network, Inc. agreed to transfer its noncreative rights in Retro Television Network to one of Equity's subsidiaries. In exchange for this transfer, Equity agreed to pay Retro TelevisionNetwork, Inc. royalty payments in the amount of ten percent of the net revenue of Retro Television Network.

The terms of the IPA established additional covenants, including (1) that Retro Television Network, Inc. and Equity would handle jointly the marketing of Retro Television Network; (2) that Equity would pay for the development of Retro Television Network; (3) that Retro Television Network, Inc. could audit Equity's accounts maintained pursuant to the IPA; (4) that Equity could assign the IPA to any of its wholly owned subsidiaries provided that Equity guaranteed the performance of the IPA in writing; and (5) that disputes between Equity and Retro Television Network, Inc. would be settled by arbitration. Finally, paragraph 13 of the IPA stated:

This agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors, and permitted assigns. No person or entity that is not a party to this agreement may claim any right or benefit hereunder.

In 2008, Luken Communications, LLC (Luken) purchased 100% of the stock of Equity's subsidiary, to which the IPA had transferred Retro Television Network's noncreative rights.² Thereafter, Equity's subsidiary merged with one of Luken's subsidiaries and became known as Retro Television, Inc.

In 2011, Retro Television Network, Inc. sued Luken and Retro Television, Inc., seeking royalty payments and an accounting under the IPA. Although neither Luken nor Retro Television, Inc. was in existence at the time the IPA was executed, Retro Television Network, Inc.'s amended complaint asserted that Retro Television, Inc. was a third party beneficiary to the IPA and that Luken had acquired Retro Television, Inc. “including its assets and liabilities.” Appellees filed a motion to dismiss for failure to state a claim, arguing that they were not parties to the IPA and therefore had no obligations under it. The district court granted Appellees' motion to dismiss, holding that the language of the IPA made clear that neither Retro Television, Inc. nor its predecessors were third party beneficiaries of the IPA. The district court ruled further that Retro Television Network, Inc. had failed to allege any facts that would make Luken liable under the IPA. In a subsequent order, the district court awarded Appellees $46,795.00 in attorneys' fees.

II.

We review de novo the district court's grant of a motion to dismiss under Rule 12(b)(6), construing all reasonable inferences in favor of the nonmoving party. E–Shops Corp. v. U.S. Bank Nat'l Ass'n, 678 F.3d 659, 662 (8th Cir.2012). To withstand a motion to dismiss, a complaint must contain enough facts to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “[C]onclusory statements” and “naked assertion[s] devoid of further factual enhancement” are insufficient. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks and citation omitted). Courts must accept a plaintiff's factual allegations as true but need not accept a plaintiff's legal conclusions. Id. Additionally, “documents attached to or incorporated within a complaint are considered part of the pleadings, and courts may look at such documents for all purposes, including to determine whether a plaintiff has stated a plausible claim[.]” Brown v. Medtronic, Inc., 628 F.3d 451, 459–60 (8th Cir.2010) (internal quotation marks and citations omitted).

It is undisputed that neither Retro Television, Inc. nor Luken is a party to the IPA. As a general rule, a contract's obligations do not extend to nonparties to the contract. EEOC v. Waffle House, Inc., 534 U.S. 279, 294, 122 S.Ct. 754, 151 L.Ed.2d 755 (2002) (“It goes without saying that a contract cannot bind a nonparty.”). Retro Television Network, Inc., however, alleges that Retro Television, Inc. is a third party beneficiary of the IPA. The parties agree that Arkansas law governs interpretation of the IPA. In Arkansas, “[a] contract is actionable by a third party when there is substantial evidence of a clear intention to benefit that third party.” Simmons Foods, Inc. v. H. Mahmood J. Al–Bunnia & Sons Co., 634 F.3d 466, 469–70 (8th Cir.2011) (quoting Perry v. Baptist Health, 358 Ark. 238, 189 S.W.3d 54, 58 (2004)). “[T]he presumption is that parties contract only for themselves and a contract will not be construed as having been made for the benefit of a third party unless it clearly appears that such was the intention of the parties.” Id. at 470 (internal quotation marks and citation omitted). We agree with the district court that the IPA between Retro Television Network, Inc. and Equity did not express an intent to make Retro Television, Inc. or any of its predecessors a third party beneficiary. Not only do the IPA's recitals make clear that the transfer of rights was for Equity's benefit, but paragraph 13 of the IPA explicitly denies an intention to create a third party beneficiary, stating that “[n]o person or entity that is not a party to this agreement may claim any right or benefit hereunder.”

Even if Retro Television, Inc. or one of its predecessors were a third party beneficiary of the IPA, the IPA does not impose any obligations on these parties. Instead, the terms of the IPA make clear that Equity was to provide all of the consideration for the transfer of rights and be the only obligor for such consideration.³ Because Retro Television Network, Inc. has provided no basis for concluding that either Retro Television, Inc. or any of its predecessors are responsible for Equity's obligations under the IPA, the district court correctly held that Retro Television Network, Inc. failed to plead sufficient facts to state a claim for relief against Retro Television, Inc. that is plausible on its face.

Retro Television Network, Inc.'s argument that the district court erred in dismissing its claim against Luken is likewise without merit. In its amended complaint, Retro Television Network, Inc. alleges that Luken “acquired [Equity's subsidiary], including its assets and liabilities,” but does not plead any additional facts to support this conclusory statement. In its brief and at oral argument, Retro Television Network, Inc. asserted that by virtue of purchasing the stock of Equity's subsidiary, Luken became a “successor” as that term is used in ...