Opinion
No. 12–P–1085.
2013-12-23
Robert FONTAINE v. CAPE COD TIMES.
By the Court (KANTROWITZ, GRAINGER & WOLOHOJIAN, JJ.).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The plaintiff, Robert Fontaine, appeals from a decision of a judge of the Superior Court granting summary judgment to Cape Cod Times (CCTimes). On the limited record the plaintiff has produced and on which he relies, he has not shown that the judge erred in granting summary judgment to CCTimes.
The plaintiff has failed to provide a complete record, omitting both the motion for summary judgment of which he seeks review and the memoranda in support of and in opposition to the motion. In addition, other than sporadic pages, he has failed to provide CCTimes's statement of facts or his response to it. Consequently, for purposes of this appeal, we accept the statement of facts as set out by the judge, supplemented where necessary by undisputed portions of the appendices.
On October 31, 2002, the plaintiff and CCTimes entered into a purchase and sale agreement (agreement) whereby CCTimes purchased the plaintiff's business containing valuable Internet Web sites related to real estate on Cape Cod. In consideration for the sale, CCTimes agreed to (i) pay a lump sum of $60,000; (ii) pay a twenty percent share of the net revenue over $100,000 derived from CCTimes's and the plaintiff's real estate Internet sites (net Internet revenue share) for years 2002–2006; (iii) pay a five percent share of net Internet revenue in excess of $50,000 for the first six months of 2007; and (iv) employ the plaintiff pursuant to an employment contract from November 1, 2002, through June 30, 2007. The agreement, negotiated over a period of months with both sides represented by counsel, specifically defines the plaintiff's net Internet revenue share and how it is to be calculated. No specific prices or minimum prices for Internet advertising or other revenue-producing Internet services are included in the agreement. After the agreement was executed, CCTimes began to sell Internet advertising in a “bundle” with print advertising, charging a discounted price for the Internet advertising. This bundle offer was one of several ways to purchase Internet advertising and services. Because of the associated costs for print, ninety percent of the income from bundle sales was thereafter allocated to print and ten percent was allocated to Internet. A portion of the plaintiff's net Internet revenue share was derived from the ten percent attributed to Internet advertising.
Contending that CCTimes (i) misrepresented its current and anticipated “pre-deal” Internet revenue income in order to inflate the deductible to $100,000; (ii) was aware of but failed to share with the plaintiff its plan to bundle print and Internet advertising at a reduced rate, thereby diminishing the plaintiff's net Internet revenue share, and (iii) failed to provide adequate support staff causing the plaintiff to spend less time pursuing sales and associated commissions, the plaintiff commenced this action on September 2, 2008. The plaintiff sought rescission and other relief. A judge of the Superior Court granted CCTimes's motion for summary judgment and the plaintiff appeals.
Discussion. A. Fraud in the inducement/misrepresentation. The plaintiff contends that during most of the negotiations, CCTimes misrepresented that its pre-deal Internet income was expected to be in the vicinity of $100,000 for 2002. He contends he relied to his detriment on the $100,000 figure in agreeing to the $100,000 deductible before calculation of his share in the net Internet revenue. Statements of expectation and prediction, however, may not form the basis of a claim for misrepresentation. Zimmerman v. Kent, 31 Mass.App.Ct. 72, 79 (1991). Moreover, as the judge points out, even if at times CCTimes's communications suggested its predicted income would be $100,000 for 2002 and this prediction could give rise to a claim of misrepresentation, a month before the agreement was signed, CCTimes clearly informed the plaintiff through electronic mail message (email) correspondence that its Internet income for 2002 would be closer to $75,000. In fact, it turned out to be $77,000.
An element of both misrepresentation and fraud in the inducement is that the plaintiff's reliance on the alleged misrepresentation must be reasonable. See Masingill v. EMC Corp., 449 Mass. 532, 540–541 (2007) (misrepresentation); Commerce Bank & Trust Co. v. Hayeck, 46 Mass.App.Ct. 687, 692 (1999) (fraud in the inducement). Any continued reliance on representations that CCTimes's Internet revenue was expected to be $100,000 for 2002 in light of the email informing the plaintiff that revenues would be closer to $75,000, was unreasonable as a matter of law.
It was CCTimes's position that even without purchasing the plaintiff's business, it expected its Internet income to continue to rise each year, making the static $100,000 figure over the five years a favorable number to the plaintiff. In fact, the plaintiff's net Internet revenue share was calculated, after deducting $100,000, on revenue of $61,047 in 2002; $64,241 in 2003; $135,229 in 2004; $172,545 in 2005; $188,461 in 2006; and $77,127 for the first six months of 2007.
B. Bundle sales. Summary judgment appropriately was granted to CCTimes on the plaintiff's claim that it breached the contract by bundling Internet and print advertising at a reduced rate. The agreement specifically provides that in calculating the plaintiff's net Internet revenue share, “discounts” will be deducted from the gross revenue. In addition, the plaintiff concedes that no provision prohibits CCTimes from bundling print and Internet advertising. Whether Internet advertising was discounted individually or in combination with print advertising is irrelevant given that CCTimes reserved the general right to discount rates.
The plaintiff's focus on when CCTimes conceived of the bundling idea and his insistence that CCTimes knew of and failed to tell him of its plan to bundle services is misplaced. In a July 18, 2002, letter from the plaintiff to CCTimes, he specifically questions how commissions on customers opting for both online and print advertising would be credited, indicating that if CCTimes “sells them ‘print’ and ‘gives' them internet, I would never have much chance to earn a commission or count that money towards the sale price, which would in turn defeat my ability to make money from helping you build a rental portal.... I will need some clarification on this.” Thus relatively early in negotiations, the plaintiff was aware that bundle sales were a possibility. Negotiations proceeded after this letter but the record does not reflect, and the plaintiff does not contend, that CCTimes ever promised or made any assurances that it would not combine sales or “give” Internet advertising or other services at a reduced rate. CCTimes cannot be faulted for the plaintiff's decision to sign the agreement without any protective provisions in this regard.
Where, as here, the plaintiff failed to negotiate a minimum price for Internet advertising, the agreement specifically allows discounts, the plaintiff was aware of the potential issues arising from combined sales, and nothing in the agreement prevents CCTimes from bundling print and Internet advertising or services, CCTimes's decision to bundle the products and sell them at a discount did not violate the agreement.
In addition, the record does not demonstrate that the ninety percent/ten percent allocation of revenue from bundle sales did not reflect true value. Equally fatal to the plaintiff's claim, the record also does not reflect that the plaintiff pursued the contractually-prescribed avenue for challenging the allocation. The agreement provides that the plaintiff's right to object to the amount of his net Internet revenue share “shall be deemed waived if he either fails to give notice to CCTimes of his objection, if any, ... within thirty (30) days of his access to such books of account, or fails to provide reasonable notice to CCTimes requesting access to such information.” So far as the record before us reveals, the plaintiff made no objection to the amount of his net Internet revenue share during the course of the contract as required.
Other claims. We agree with the judge that while it may be true that the plaintiff could have earned a higher commission with more staff support, there was no promise of any particular level of support in his employment agreement. We discern no error, therefore, in granting summary judgment on his claim of breach of his employment agreement. In addition, we discern no error in the judge's disposition of the plaintiff's G.L. c. 93A claim.
Judgment affirmed.