Opinion
Case No. 2:00-CV-936-ST
December 12, 2002
This matter came before the court on December 2, 2002, for hearing on the Second Motions for Summary Judgment filed by defendant Deseret News Publishing and by the MediaNews Defendants (MediaNews and Kearns-Tribune).
I
The parties are familiar with the factual and procedural background of this case and it has been extensively discussed in prior orders. Accordingly, it need not be repeated here. The standard for summary judgment is as follows:
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In applying this standard, we examine the factual record and draw reasonable inferences therefrom in the light most favorable to the non moving party. Bullington, 186 F.3d at 1313.
As the moving parties, defendants shoulder the "initial burden to show that there is an absence of evidence to support the nonmoving party's case." Thomas v. IBM, 48 F.3d 478, 484 (10th Cir. 1995) (internal quotation marks and citation omitted). If defendants meet this burden, it falls to plaintiff to "identify specific facts that show the existence of a genuine issue of material fact." Id. "The party opposing the motion must present sufficient evidence in specific, factual form for a jury to return a verdict in that party's favor." Id. (internal quotation marks and citation omitted).Clinger v. New Mexico Highlands Univ. Bd. of Regents, 215 F.3d 1162, 1165 (10th Cir. 2000).
The movant bears the initial burden of making a prima facie demonstration of the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. In so doing, a movant that will not bear the burden of persuasion at trial need not negate the non movant's claim. Such a movant may make its prima facie demonstration simply by pointing out to the court a lack of evidence for the non movant on an essential element of the nonmovant's claim.
If the movant carries this initial burden, the nonmovant that would bear the burden of persuasion at trial may not simply rest upon its pleadings; the burden shifts to the nonmovant to go beyond the pleadings and "set forth specific facts" that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant. Fed.R.Civ.P. 56(e). To accomplish this, the facts must be identified by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein.Adler v. K-Mart Stores, Inc., 144 F.3d 664, 670-71 (10th Cir. 1998) (citations partially omitted).
II. Undisputed Facts
The court granted Defendants' Motions to file this second round of summary judgment motions after the deadline for filing dispositive motions for the limited purpose of addressing the effect, if any, on Plaintiffs claims of two recent events in this case. The events were as follows: First, on June 26, 2002, Deseret News Publishing categorically rejected Plaintiff's request that it waive the prohibition against transfer of the NAC stock to allow Plaintiff to exercise its option on the Tribune Assets, including the NAC stock. Second, the Management Agreement expired on July 31, 2002. The court finds that these events are undisputed.
III. Desert News Publishing's Motion
Deseret News Publishing moves for an order granting partial summary judgment in its favor on Plaintiff's third claim for relief, for an injunction avoiding transfers of alleged Tribune Assets under the 2001 JOA, and on Plaintiff's ninth and tenth claims for relief for tortious interference with contract.
In its ninth and tenth claims for relief, Plaintiff contends that Deseret News Publishing's actions in amending the 1982 JOA by entering into the 2001 JOA interfered with its rights under the Management Agreement and Option Agreement. Deseret News Publishing contends that the undisputed facts show specific performance is impossible because it will not waive its section 2 rights. As a result, it contends that Plaintiff will never have to live under the 2001 JOA and therefore cannot show damages from the amendments. In the alternative, it contends that even if specific performance were still a possibility, the 2001 JOA sections at issue were enjoined and therefore Plaintiff has failed to show how it is damaged. Either way, it contends that Plaintiff cannot show a material issue of fact on its claim for intentional interference because it has no evidence of damages.
Plaintiff contends that it is damaged because § 10 of the 2001 JOA, requiring Deseret News Publishing's consent before there can be any sale of a majority ownership interest in Kearns-Tribune, frustrates its ability to exercise its option on the Tribune Assets by means of acquisition of Kearns-Tribune. Section 10 of the 2001 JOA was not enjoined.
The court agrees with Deseret News Publishing that § 10 of the 2001 JOA does not interfere with the Option Agreement because ownership of the company is not equivalent to ownership of the company's assets. It is the latter and not the former which is subject to the Option Agreement. Id. Thus, § 10's restriction on the sale of the company is not equivalent to a restriction on the sale of the Tribune Assets and does not frustrate Plaintiff's rights under the Option Agreement.
See this court's February 21, 2001 Order granting a preliminary injunction, 2001 WL 670928 *12-14 (transfer of company's stock not equivalent to sale of company's assets). The metamorphosis of Kearns-Tribune from a corporation to a limited liability company is explained in the November 16, 2001 Order Granting Motion to Disqualify, at 12 and 14.
As to the other provisions of the 2001 JOA that Plaintiff alleges interfered with Plaintiffs rights under the Management Agreement, those provisions were enjoined almost immediately. See February 21, 2001 Order at *27 (enjoining sections 2.02, 2.03 and 2.04 of the 2001 JOA). Although it was not a party to this case at the time of the February 21, 2001 injunction, Deseret News Publishing volunteered to abide by the ruling. See January 21, 2001 affidavit of James Wall (publisher of the Deseret News). Deseret News Publishing contends that, even if specific performance were possible despite its refusal to waive the anti-alienation provision, the 2001 JOA has been enjoined and it will either be determined to be valid or will continue to be enjoined. Thus, it contends that Plaintiff can show no damages from Deseret News Publishing's participation in the 2001 JOA because Plaintiff will never have to live under the changes.
Under Utah law, claims of interference with present economic relations are claims for pecuniary damages. St. Benedict's Dev. Co. v. St. Benedict's Hospital 811 P.2d 194, 201 (Utah 1991) (citing Restatement (Second) of Torts (1979) § 766). Thus, in order to prevail on its ninth and tenth claims for relief for interference with present economic relations, Plaintiff must show damages. St. Benedict's, 811 P.2d at 201 ("a defendant is liable for tortious interference with business relationships if the plaintiff proves `(1) that the defendant intentionally interfered with the plaintiffs existing or potential economic relations, (2) for an improper purpose or by improper means, (3) causing injury to the plaintiff'") (quoting Leigh Furniture Carpet Co. v. Isom, 657 P.2d 293, 304 (Utah 1982)).
Plaintiff's ninth claim for relief is based on § 766 and its tenth claim for relief is based on § 766A of the Restatement (Second) of Torts.
Unlike the situation with breaches of contract, discussed below, nominal damages are not available for these claims. Restatement (Second) Torts § 907 and cmt. a and b. The limited exceptions allowing nominal damages for some torts, do not include the tort of interference with contract. Id. cmt. b (listing exceptions) accord Carter v. St. John's Regional Medical Center, ___ S.W.3d ___, 2002 WL 1678883 (Mo.Ct.App. 2002) (proof of pecuniary loss is an indispensable element of claim for interference with contract or business expectancy).
Consistent with the Restatement (Second) of Torts § 907, Utah allows nominal damages only for those torts where harm is not requisite to a cause of action, such as trespass to land. See e.g. A.L. Williams Sons v. Brown, 418 P.2d 981 (Utah 1966) (damages need not be proved for claim for unlawful intrusion over easement).
In its opposition to the second motions for summary judgment, Plaintiff raises two possible sources of damages. First, the attorneys' fees it incurred when it obtained an injunction against implementation of three sections of the 2001 JOA Second, a diminution in its management fee incurred as a result of certain changes to the treatment of costs, changes that were not enjoined.
The court agrees with Deseret News Publishing's position that a claim for attorneys' fees incurred in obtaining the injunction does not show damages attributable to Deseret News Publishing. Plaintiff presents no evidence of any basis for the award of attorneys' fees against Deseret News Publishing. In the absence of statutory or contractual authority, attorneys' fees are not recoverable in actions on contract or tort. DeBry Hilton Travel Service Inc. v. Capitol International Airways, Inc., 583 P.2d 1181, 1186 (Utah 1978).
As to the changes in allocations of costs, Deseret News Publishing is correct that there is no evidence that the changes were made for any purpose other than to advance Deseret News Publishing's own economic interest and therefore they are likely privileged. However, more fundamentally, Plaintiff has presented absolutely no evidence to show such damages exist for the period of the Management Agreement. The expert report relied upon by Plaintiff estimates damages from the day after the expiration of the Management Agreement and continuing for 18 years. MediaNews' Ex. 12 at 10-12 and Pl's Ex. 14. However, there is no information supporting Plaintiffs claim of damages incurred during the period of the Management Agreement.
Neither side attached the expert report's supporting exhibits to their summary judgment materials.
Defendant Deseret News Publishing has met its initial burden of making a prima facie demonstration of the absence of a genuine issue of fact by "simply pointing out to the court a lack of evidence for [Plaintiff] on the essential element" of damages. Adler, 144 F.3d at 67. In response, Plaintiff cannot rest on the pleadings or on argument of counsel, but must set forth specific facts "that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant. Fed.R.Civ.P. 56(e). To accomplish this, the facts must be identified by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein." Id. This Plaintiff has failed to do. There are no specific facts submitted that would be admissible in evidence from which a rational jury could find damages during the period of the Management Agreement.
It is well settled that, although the plaintiff has the burden of proving the fact, causation, and amount of damages, he need only do so with reasonable certainty rather than with absolute precision. "[A]lthough damages may not be determined by speculation or guesswork, evidence allowing a just and reasonable estimate of the damages based on relevant data is sufficient."Alta Health Strategies, Inc. v. CCI Mechanical Service, 930 P.2d 280, 286 (Utah App. 1996) (quoting Price-Orem Inv. Co. v. Rollins, Brown Gunnell, Inc., 784 P.2d 475, 478 (Utah App. 1989)).
On this issue, the evidence cited does not relate to the period in question. While estimated rather than actual data may be a sufficient basis for damages, Price-Orem, 784 P.2d at 478-9, in this case there is no admissible evidence to connect the expert's estimates of future damages to the period of alleged actual damages. See Expertise, Inc. v. Aetna Finance Co., 810 F.2d 968, 972-3 (10th Cir. 1987) (granting directed verdict for defendant on tortious interference with prospective advantage claim where no evidence of damage to plaintiff within limitations period). The evidence presented for the period in question is so meager as to invite sheer speculation and is insufficient to meet Plaintiff's burden on summary judgment.
Plaintiff having failed to show a material issue of fact on the required element of damages, the court will grant summary judgment in favor of Deseret News Publishing on Plaintiff's claims of tortious interference with contract.
Plaintiffs third claim for relief seeks to preliminarily enjoin and permanently nullify the 2001 JOA Amendments. Plaintiff's claim results from Deseret News' actions in jointly entering into the 2001 JOA with Kearns-Tribune. Pl's Mem. in Opp. at 8-9. The 2001 JOA provisions regarding management of The Tribune, were, as noted above, enjoined for the duration of the Management Agreement, rendering the third claim for reliefs request for a preliminary injunction moot.
Deseret News Publishing contends that it is entitled to summary judgment on the third claim for reliefs request for nullification of the 2001 JOA because Plaintiff lacks standing as it is not a party to the 1982 or 2001 JOA, and, as a result of Deseret News' refusal to waive section 2, Plaintiff can never be affected by the 2001 JOA.
In response, Plaintiff argues that specific performance is still a possibility. In support, it submits many of the same arguments that it advanced, and the court rejected, in the prior summary judgment motion. For the reasons stated in its May 31, 2002 Order on Motions for Summary Judgment, the court rejects those arguments.
Plaintiff also relies upon the court's remarks at the August 20, 2002 hearing on Plaintiff's Rule 54(b) Motion to the effect that the application of the equitable remedy of specific performance could not be finally determined until after the presentation of all evidence at trial. The court was referring to the possibility that facts could be developed at trial that could convince the court that specific performance should be considered. This served as an invitation for Plaintiff to come forward with said facts, either at trial, or at this stage of the proceedings since the court has permitted this additional round of summary judgment motions.
Defendants having pointed out the lack of any evidence supporting a claim of specific performance because Deseret News Publishing is declining to waive its rights under section 2 of the 1982 JOA, it then became Plaintiff's burden to come forward with any facts that could entitle it to specific performance. Plaintiff has not done so. Accordingly, it appears to the court that the equitable remedy of specific performance is not available as the parties are now positioned with Deseret News Publishing declining to waive the anti-alienation clause.
The court will grant Deseret News Publishing's Second Motion for Summary Judgment as to Plaintiff's ninth and tenth claims for relief for interference with contract and for Plaintiff's third claim for relief for a permanent injunction against and to nullify the 2001 JOA.
IV. MediaNews Defendants' Motion
The MediaNews Defendants seek summary judgment on all of Plaintiffs remaining claims against it as follows: On the fifth claim for relief for specific performance of the Option Agreement because Deseret News Publishing has declined to waive its rights under section 2; on the first claim for relief for declaratory judgment on the Management Agreement and on the fifth claim for relief for specific performance of the Management Agreement because it expired and the claims are now moot; on the ninth and tenth claims for relief for interference with contract, the second claim for relief for breach of the Option Contract, the eighth claim for relief for breach of the implied covenant of good faith and fair dealing and the first claim for relief for declaratory judgment on the Option Contract because Plaintiff has failed to show damages.
In support of its motion for summary judgment on the claims for specific performance, the MediaNews Defendants rely on the undisputed fact of Deseret News Publishing's decision not to waive its rights under section 2. For the reasons stated above, the court will grant the MediaNews Defendants summary judgment on the fifth claim for relief for specific performance of the Option Agreement. The court also agrees that specific performance of the Management Agreement is now moot.
The court finds that the MedaNews Defendants have not shown that there are no issues of material fact on Plaintiff's second claim for relief for breach of the Option Contract or on the eighth claim for breach of the implied covenant of good faith and fair dealing on the Option Agreement. These claims are very much disputed between the parties. Further, MediaNews' current position that the claim is not ripe is not an issue that results from the limited circumstances resulting in this court's allowing filing of summary judgment motions after the dispositive motion deadline. It appears that this issue should have been timely raised by the original dispositive motion deadline. The court will therefore deny summary judgment on these claims.
MediaNews' moves for judgment on Plaintiffs claims for interference with contract arising from the 2001 JOA. MediaNews' position is similar to that raised by Deseret News Publishing. It contends that no damages are shown because if there is no specific performance, there is no showing of compensable damages on these claims because Plaintiff will not be a party to the 1982 JOA or be subject to the 2001 JOA.
Plaintiff contends that there are damages because, as discussed above, some provisions were not enjoined. In addition, in connection with its claims against MediaNews, Plaintiff contends that it suffered damages from being out of management for approximately five weeks before the injunction was entered. Plaintiff contends that under Leigh Furniture, supra, if it shows that it had to bring this lawsuit, and was bothered by MediaNews sending letters and coming in and trying to run the business before it was enjoined, and as a result incurred expenses, it has shown that there are compensable elements of damages.
The court does not agree. In Leigh Furniture there was ample evidence of actual damages, namely that the plaintiff therein was forced to close its business as result of continual harassment, including the defendant therein filing two separate lawsuits that were subsequently found to be baseless. 657 P.2d at 306 (finding causation between plaintiffs losses and the defendant's actions). The three year pattern of harassment in Leigh Furniture included not just bothering or distracting the owner during hours of operation, but also of evidence that the defendant's frequent trips to the store and demands in front of customers caused some of those potential customers to complain and leave the store and there was a loss of profits due to the time required to meet demands. 657 P.2d at 229 and 306. Such evidence of the essential causal connection between the harassing actions in Leigh Furniture and actual losses is very different from the present case where there is no competent evidence of expenses incurred or damages suffered by Plaintiff as a result of the operation of the business under the 2001 JOA amendments prior to the injunction. Without such a link, the allegation of some similar actions in bothering or distracting the Plaintiff during the period of the Management Agreement do not meet Plaintiff's burden on summary judgment. See also Id. at 306 (taken in isolation, or even in small groups none of the incidents of harassment would even establish the intentional interference element). For the reasons stated above, the court finds that Plaintiff has failed to show an issue of fact on the essential element of damages on these claims. Accordingly the court will grant MediaNews' summary Judgment on Plaintiffs Ninth and Tenth claims for relief.
The MediaNews Defendants also move for summary judgment on the claims for breach of the Management Agreement because Plaintiff has failed to show damages. For reasons already stated in connection with the tortious interference claims, the court agrees that there is no showing of damages. However, unlike the tort claims, damages are not an essential element of breach of contract under Delaware law. In a recent case, the Delaware Superior Court applied this rule.
While the Court is inclined to grant Summary Judgment on the contract claims for failure of proof of damages and for failure to provide expert testimony as to damages, that does not theoretically end the matter. It is repeatedly announced by the Courts that, where the Plaintiff establishes the fact of loss in contract, but not its amount, he may recover nominal damages. Charles T. McCormick, Handbook on the Law of Damages, 91 (1935); Arthur L. Corbin, Corbin on Contracts § 1001 (1964).
"Nominal" damages are not given as an equivalent for the wrong, but rather merely in recognition of a technical injury and by way of declaring the rights of the plaintiff. Nominal damages are usually assessed in a trivial amount, selected simply for the purpose of declaring an infraction of the Plaintiffs rights and the commission of a wrong. David L. Finger Louis J. Finger, Delaware Trial Handbook, § 22:1 (1994).
It seems farfetched that the Plaintiffs in this case would pursue this extended and expensive case simply for nominal damages to prove "technical injury." But I suppose technically Summary Judgment is not available on this ground.USH Ventures v. Global Telesystems Group, Inc., 796 A.2d 7, 23 (Del.Super.Ct. 2000).
The USH Ventures court went on to hold that only nominal damages could be found because of the failure to offer required expert evidence on the issue, not a requirement in this case, and then granted summary judgment on an alternative ground. In Standard Distributing Co. v. NKS Distributors, Inc., 1996 WL 944898 *11 (Del.Super.Ct. 1996), the court noted that nominal damages for breach of contract reflecting no more than a technical wrong could be six cents.
In a similar case applying the rule of nominal damages for damage-less breaches of contracts under Iowa law the trial court noted courts have applied this rule despite their puzzlement with it. Scallon v. U.S. Ag Center, Inc., 42 F. Supp.2d 869, 871-72 (D. Iowa 1999) (denying defendants' motion for summary judgment on their breach-of-contract claim on the ground that there was no competent evidence of damages) and Chronister Oil Co. v. Unocal Refining Mktg., 34 F.3d 462, 466 (7th Cir. 1994) ("for reasons we do not understand every victim of a breach of contract, unlike a tort victim, is entitled" to nominal damages); see also Restatement (Second) of Contracts (1981) § 346(2) (if the breach of contract caused no loss, "a small sum fixed without regard to the amount of loss will be awarded as nominal damages").
The same rule applies in Utah law. Turtle Mangement, Inc. v. Haggis Management, Inc., 645 P.2d 667, 670 (Utah 1982).
Thus, summary judgment is not appropriate for the claim of breach of the Management Agreement. However, based on the lack of evidence presented, the court finds that only nominal damages are available. Where only nominal damages are available for a technical breech, courts leave it to the plaintiff to determine if it wishes to proceed to trial on a claim for the purpose of obtaining nominal damages. See USH Ventures, 796 A.2d at 23 and Scallon, 42 F. Supp.2d 872 n. 2 (leaving it up to plaintiffs "to determine just how Pyrrhic such a victory on their breach-of-contract claims would be").
As to MediaNews Defendants' claim that the claim for relief for declaration of the rights and obligations of the parties under the Management Agreement is now moot, it appears that some issues may remain for trial. While the parties will never again operate under the now-expired Management Agreement, the parties's rights and responsibilities under it may be relevant to the breach of the Management Agreement claim.
Additionally, Plaintiff seeks attorneys' fees for enforcing its rights under the Management Agreement. That Agreement provides:
8.07 Costs and Attorneys' Fees. In the event either party hereto commences a legal proceeding to enforce any of the terms of this Agreement, the prevailing party in such action shall have the right to recover reasonable attorneys' fees and costs from the other party at the discretion of the court in which such action was decided. The term "legal proceeding" shall include appeals from a lower court judgment. The "prevailing party" shall mean the party that prevails in obtaining a remedy or relief which most nearly reflects the remedy or relief which the party sought.
Management Agreement, at § 8.07.
Three sections of the 2001 JOA were enjoined as interfering with Plaintiff's right under the Management Agreement to manage The Tribune. The court found that the Management Agreement was ambiguous regarding the respective rights of Plaintiff and Kearns-Tribune regarding managing The Tribune. The ambiguous area being whether Kearns-Tribune had direct or indirect rights to exercise management authority over The Tribune during the term of the Management Agreement. The court then looked to extrinsic evidence and found, for purposes of the preliminary injunction, that extrinsic evidence showed that Kearns-Tribune retained only indirect authority under the Management Agreement and granted the injunction. Only one section, § 10, was not enjoined as requested by Plaintiff, and that was alleged to have interfered with Plaintiff's rights under the Option Agreement.
Thus, Plaintiff appears to be a "prevailing party" under the Management Agreement's definition and may be entitled to attorneys' fees. Unless the MediaNews Defendants do not intend to dispute that the three enjoined sections of the 2001 JOA sections interfered with Plaintiff's rights under the Management Agreement, an award of attorneys' fees may require a determination of the first claim for relief for declaratory judgment on the parties' respective rights under the Management Agreement.
V. Conclusion
It is therefore
ORDERED that Deseret News Publishing's Second Motion for Summary Judgment is GRANTED and it is entitled to judgment on Plaintiff's third, ninth and tenth claims for relief. It is further
ORDERED that the MediaNews Defendants' Second Motion for Summary Judgment is GRANTED in part and the MediaNews Defendants are entitled to summary judgment on the Plaintiff's fifth claim for relief for specific performance of the Option Agreement and the Management Agreement; on the ninth and tenth claims for relief for tortious interference with the Management Agreement. It is further
ORDERED that the MediaNews Defendants' Second Motion for Summary Judgment is otherwise DENIED.