Title: McCutchen Company v. Media General, Inc., d/b/a WKRG TV-5, etal.

State: alabama

Issuer: Alabama Supreme Court

Document:

REL: 1/25/08
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2007-2008
____________________
1060211
____________________
The McCutchen Company, Inc.
v.
Media General, Inc., d/b/a WKRG TV-5, et al.
Appeal from Mobile Circuit Court 
(CV-04-1090)
SEE, Justice.
The McCutchen Company, Inc., appeals from a summary
judgment entered in favor of Media General, Inc., d/b/a WKRG
TV-5, Media General Operations, Inc., d/b/a WKRG, and Sue
Cosgrove (collectively "WKRG").  The McCutchen Company sued
1060211
The 
billboard 
advertisements 
aired 
after 
the 
stock-report
1
segment on channel 5 during the 6 a.m. and 6 p.m. news
broadcasts and included audio or visual promotional spots that
identified The McCutchen Company as a sponsor of the stock-
report broadcast.
2
WKRG, alleging fraud, and WKRG counterclaimed, alleging breach
of contract.  The trial court entered a summary judgment in
favor of WKRG on The McCutchen Company's fraud claim and on
the breach-of-contract counterclaim.  We affirm.
Facts and Procedural History 
In 2003, The McCutchen Company, a small investment
company located in Mobile, began negotiations with WKRG TV-5,
a local television station that broadcasts in the Mobile area,
to purchase an advertising package.  The McCutchen Company was
founded by Jerry McCutchen, who is also its president and sole
shareholder.  McCutchen and his wife, Debbie, acting on behalf
of The McCutchen Company, met several times with the local
sales manager for WKRG, Sue Cosgrove, and its account
representative, Rhonda Pullen.  Cosgrove and Pullen proposed
three different advertising packages to the McCutchens.  The
McCutchens expressed interest in an advertising package that
included several advertising spots, morning and evening
billboard advertisements,  and a five-minute segment following
1
1060211
3
the 9 a.m. to 10 a.m. news broadcast, in which Mr. McCutchen
would give investment advice.
During one of the meetings with Cosgrove and Pullen,
McCutchen asked Cosgrove how many new customers The McCutchen
Company could expect as a result of the television advertising
campaign.  McCutchen alleges that Cosgrove responded that he
could expect "at least fifty" new clients per month.
McCutchen 
stated 
in 
his 
deposition 
that 
he 
believed
Cosgrove's estimate was a "reasonable expectation" and that he
thought Cosgrove believed the statement when she made it.
WKRG denies that Cosgrove told McCutchen that The McCutchen
Company could expect at least 50 new clients per month as a
result of advertising on channel 5.  Cosgrove testified in her
deposition that she told McCutchen that he could "expect as
many as 50 leads a month if he continued to work and stay with
the contract."  Cosgrove further stated that she told
McCutchen that she based her estimate on the results other
WKRG clients had experienced using similar advertising
packages.  Cosgrove admitted in her deposition that the
statement that one could expect at least 50 new clients per
month could induce an individual into entering into an
1060211
The contract also required The McCutchen Company "to pay
2
all costs of collection including attorney's fees and court
cost[s] if collected by law or through an outside collection
agency" if The McCutchen Company defaulted on any payments due
under the contract.
4
advertising contract.  Warren Fihr, WKRG's general sales
manager, admitted in his deposition that he could not think of
any reason to tell an advertising customer that he or she
could expect at least 50 new clients per month other than to
induce the customer into entering a promotional agreement.
McCutchen signed a two-year noncancellable advertising
contract.  The contract provides that The McCutchen Company
was required to purchase a minimum of $30,000 in advertising
in 2003 and to increase by at least 10 percent the amount of
advertising services it purchased in 2004.   The McCutchen
2
Company agreed to purchase $31,400 of advertising for 2003 and
$44,100 for 2004.
McCutchen testified that The McCutchen Company did not
obtain any new customers during the first four months of the
advertising campaign.  In January 2004, The McCutchen Company
gave WKRG two weeks' notice of its intention to cancel the
advertising contract, which the parties acknowledge is the
industry standard for canceling an advertising contract.  WKRG
1060211
5
then notified The McCutchen Company that the advertising
contract between The McCutchen Company and WKRG was an annual
contract that was not governed by the industry standard of two
weeks' notice, and that, therefore, WKRG expected The
McCutchen Company to abide by the terms of the contract.  
The McCutchen Company then sued WKRG, claiming that
Cosgrove's alleged statement that The McCutchen Company could
expect at least 50 new customers per month fraudulently
induced it to enter into the advertising contract.  WKRG
counterclaimed, alleging that The McCutchen Company had
breached the advertising contract.  WKRG moved for a summary
judgment on both The McCutchen Company's fraud claim and
WKRG's breach-of-contract counterclaim.  The trial court
entered a summary judgment in favor of WKRG on both claims.
The McCutchen Company appeals.
Standard of Review
"We review the trial court's grant or denial of a summary
judgment motion de novo."  Smith v. State Farm Mut. Auto. Ins.
Co., 952 So. 2d 342, 346 (Ala. 2006) (citing Bockman v. WCH,
L.L.C., 943 So. 2d 789 (Ala. 2006)).  A summary judgment is
proper if there is no genuine issue of material fact and the
1060211
6
moving party is entitled to a judgment as a matter of law.
Rule 56(c)(3), Ala. R. Civ. P.  If the movant meets this
initial burden, the burden then shifts to the nonmovant to
present "substantial evidence" of a genuine issue of material
fact.  Ex parte Alfa Mut. Gen.  Ins. Co., 742 So. 2d 182, 184
(Ala. 1999).  Substantial evidence is "evidence of such weight
and quality that fair-minded persons in the exercise of
impartial judgment can reasonably infer the existence of the
fact sought to be proved."  West v. Founders Life Assurance
Co. of Florida, 547 So. 2d 870, 871 (Ala. 1989); see also §
12-21-12(d), Ala. Code 1975.  In determining whether a genuine
issue of material fact exists, this Court views the evidence
in the light most favorable to the nonmovant and resolves all
reasonable doubts in favor of the nonmovant.  Jones v. BP Oil
Co., 632 So. 2d 435, 436 (Ala. 1993).  "The trial court's
ruling on a question of law carries no presumption of
correctness, and this Court reviews de novo the trial court's
conclusion as to the appropriate legal standard to be
applied." Dunlap v. Regions Fin. Corp., [Ms. 1060384, October
5, 2007] ___ So. 2d ___, ___ (Ala. 2007) (citing Ex parte
Graham, 702 So. 2d 1215, 1221 (Ala. 1997)).
1060211
7
Analysis
The McCutchen Company maintains that the summary judgment
on 
its 
fraud 
claim 
and 
on 
WKRG's 
breach-of-contract
counterclaim was not warranted because, it says, The McCutchen
Company presented substantial evidence demonstrating that
there are genuine issues of material fact as to both claims.
A. Fraud Claim
The McCutchen Company argues that the trial court erred
in entering a summary judgment in favor of WKRG on The
McCutchen Company's fraud claim.  "'The elements of fraud are:
(1) a misrepresentation of a material fact, (2) made willfully
to deceive, recklessly, without knowledge, or mistakenly, (3)
that was reasonably relied on by the plaintiff under the
circumstances, and (4) that caused damage as a proximate
consequence.'" Allstate Ins. Co. v. Eskridge, 823 So. 2d 1254,
1258 (Ala. 2001) (quoting Brushwitz v. Ezell, 757 So. 2d 423,
429 (Ala. 2000)).  Viewing the evidence, as we must, in the
light most favorable to The McCutchen Company, we assume that
Cosgrove represented to The McCutchen Company that it could
expect to obtain at least 50 new customers per month as a
result of the advertising campaign.  The McCutchen Company
1060211
8
contends that this was "a misrepresentation of a material
fact."  The McCutchen Company further contends that it
reasonably relied on Cosgrove's statement and that it suffered
damage because The McCutchen Company spent a substantial
amount of money paying for advertising services that generated
no new customer accounts.  
WKRG argues that it was entitled to a summary judgment on
The McCutchen Company's fraud claim because the statement The
McCutchen Company alleges Cosgrove made was nothing more than
her opinion or a prediction of future events and was not "a
misrepresentation of a material fact."  WKRG further argues
that The McCutchen Company's fraud claim fails because The
McCutchen Company did not show that Cosgrove intended to
deceive The McCutchen Company at the time she allegedly made
the statement and The McCutchen Company did not show that it
reasonably relied on the statement.
This Court has stated that "[a] mere statement of opinion
or prediction as to events to occur in the future is not a
statement of a 'material fact' upon which individuals have the
right to rely and, therefore, it will not support a fraud
claim." Crowne Invs., Inc. v. Bryant, 638 So. 2d 873, 877
1060211
9
(Ala. 1994).  "Where the representation of an opinion is
involved, a person must prove not only that there was an
intent to deceive, but also that his reliance was reasonable."
Reynolds v. Mitchell, 529 So. 2d 227, 231 (Ala. 1988) (citing
Bedwell Lumber, Inc. v. T & T Corp., 386 So. 2d 413 (Ala.
1980)). 
We agree with WKRG that Cosgrove's statement was not a
misrepresentation of a material fact but was a statement of
opinion or a prediction of future events.  When asked by
McCutchen how many new customers he could expect as a result
of the advertising campaign, Cosgrove responded, according to
The McCutchen Company, by telling McCutchen that he could
expect at least 50 new customers per month.  Cosgrove's
statement has every appearance of an opinion or a prediction
of future events.  See Crowne Invs., 638 So. 2d at 877
("'Ordinarily a prediction as to events to occur in the future
is to be regarded as a statement of opinion only, on which the
adverse party has no right to rely.'" (quoting Lawson v.
Cagle, 504 So. 2d 226, 227 (Ala. 1987))); Fincher v. Robinson
Bros. Lincoln-Mercury, Inc., 583 So. 2d 256, 259 (Ala. 1991)
(statement that the purchaser's car "would perform in
1060211
10
accordance with his expectations" amounted "to nothing more
than 'puffery' or predictions concerning the anticipated
performance of the Mercury Sable line of automobiles"); and
D.H. Holmes Dep't Store v. Feil, 472 So. 2d 1001, 1003 (Ala.
1985) ("The alleged representation that defendants would
effect a permanent removal of plaintiffs' facial hair" was not
a material fact because it "related to a future event.").
The McCutchen Company argues that even if the statement
was a statement of opinion or a prediction of future events,
it can still recover for fraud because, it says, Cosgrove
intended to deceive The McCutchen Company and The McCutchen
Company reasonably relied on that statement because the
McCutchens perceived Cosgrove to be an expert in the
advertising field.  The McCutchen Company argues that
Cosgrove's testimony that the statement attributed to her
could induce an individual into entering into a contract and
Warren Fihr's testimony that he could think of no reason for
making such a statement other than to induce a customer into
entering into an advertising contract demonstrate that
Cosgrove acted with an intent to deceive The McCutchen
Company.  However, WKRG contends, and we agree, that these
1060211
11
statements alone are not substantial evidence that Cosgrove
had an intent to deceive. 
First, McCutchen admitted that he thought Cosgrove
believed the statement when she made it.  This concession
contradicts the argument that Cosgrove intended to deceive the
McCutchens.  Vance v. Huff, 568 So. 2d 745, 750 (Ala. 1990)
(business associate failed to show present intent to deceive
when he "testified during his deposition that he believed that
Huff was 'sincere' when he made these alleged promises, but
decided at a later date not to honor them"); Beaulieu v.
Wynfrey Hotel, Ltd., 718 So. 2d 83, 85 (Ala. Civ. App. 1998)
(employee did not present substantial evidence that employer
intended to deceive employee when employee testified that "he
believed that [his supervisor] was not lying when he made the
statements" that employee's wage increase was awaiting
approval").  
Second, the two pieces of evidence that The McCutchen
Company argues constitute substantial evidence of Cosgrove's
intent to deceive do not demonstrate that Cosgrove in fact had
the present intent to deceive the McCutchens when she
allegedly made the statement.  The admission by Fihr that he
1060211
12
could think of no other reason to make such a statement except
to induce a customer into entering into an advertising
contract does not indicate what Cosgrove's motivation was or
whether she believed the statement to be true or false.
Fihr's statement shows only what it says -- that he could not
think of any reason to make such a statement except to induce
someone to enter into a contract. Goodyear Tire & Rubber Co.
v. Washington, 719 So. 2d 774, 776 (Ala. 1998) (party alleging
fraud did not provide substantial evidence of Tire Pro's
intent to deceive when the evidence did "not include direct
documentary evidence, or direct testimony, indicating that
Tire Pro's manager ... intended not to fulfill the promises
made to Washington"); Crowne Invs., 638 So. 2d at 877 (summary
judgment was proper when "the plaintiffs offered no evidence
that Bryant intended to deceive Crowne and Monroeville as to
[insurance company's] future performance" even though Bryant
told Crowne and Monroeville that "the insurance was a
'guaranteed issue'"). 
Although Cosgrove admitted that the statement that an
individual could expect at least 50 new clients per month
could induce a customer into entering into an advertising
1060211
13
contract, her statement proves only that she believes that
such a statement could be an inducement.  It does not
demonstrate that Cosgrove thought the statement was untrue or
that she had a present intent to deceive when she made the
statement.  Speculation is insufficient to prove that a party
had a present intent to deceive. Moncrief v. Donohoe, 892 So.
2d 379, 383 (Ala. Civ. App. 2003) (evidence did not constitute
substantial evidence of present intent to deceive because the
"evidence is speculative as to her intent at the time the
alleged promise, if any, was made").  Therefore, we conclude
that the trial court properly entered a summary judgment in
favor of WKRG because The McCutchen Company has not provided
substantial evidence that Cosgrove intended to deceive the
McCutchens.
B. Breach-of-Contract Counterclaim  
The McCutchen Company argues that the trial court erred
in entering a summary judgment for WKRG on its breach-of-
contract 
counterclaim 
because 
the 
industry 
standard 
associated
with advertising contracts allows a party to cancel an
advertising contract with two weeks' notice.  WKRG contends
that industry standards do not apply to The McCutchen
1060211
14
Company's 
advertising 
contract 
because 
that 
contract 
specifies
that it is an annual contract and that it is noncancellable.
WKRG argues that a court should not use industry standards to
construe a contract when the contract is not ambiguous.
"'A plaintiff can establish a breach-of-contract claim by
showing "(1) the existence of a valid contract binding the
parties in the action, (2) his own performance under the
contract, 
(3) 
the 
defendant's nonperformance, and (4)
damages."'" Winkleblack v. Murphy, 811 So. 2d 521, 529 (Ala.
2001) (quoting State Farm Fire & Cas. Co. v. Slade, 747 So. 2d
293, 303 (Ala. 1999), quoting in turn  Southern Med. Health
Sys., Inc. v. Vaughn, 669 So. 2d 98, 99 (Ala. 1995) (emphasis
omitted)).  The parties do not dispute that The McCutchen
Company and WKRG executed a valid advertising contract or that
WKRG performed under the contract.  The dispute is whether, as
The McCutchen Company argues, it had the right to cancel the
contract by giving WKRG two weeks' notice.
We conclude that The McCutchen Company failed to support
its argument that the advertising contract was governed by the
industry standard for cancellation notice because it fails to
cite the record or any legal authority in support of its
1060211
15
argument.  "'Where an appellant fails to cite an authority, we
may affirm, for it is neither our duty nor function to perform
all the legal research for an appellant.'" Henderson v.
Alabama A & M Univ., 483 So. 2d 392, 392 (Ala. 1986) (quoting
Gibson v. Nix, 460 So. 2d 1346, 1347 (Ala. Civ. App. 1984)).
Moreover, The McCutchen Company's argument that the two-week
cancellation standard applies to this contract appears to be
without merit because this Court has stated that "'evidence of
custom is admissible only to explain an ambiguous contract or
to add to it an element not in contravention of its terms; but
such evidence is never admissible to contradict the plain
unambiguous covenants and agreements expressed in the contract
itself.'" Mall Gift Cards, Inc. v. Wood, 288 Ala. 355, 358,
261 So. 2d 31, 34 (1972) (quoting Miller v. Gray, 136 Tex.
196, 200, 149 S.W.2d 582, 583 (1941)).  The advertising
contract at issue in this case clearly specifies that it is a
noncancellable annual contract, and industry standards do not
apply to alter these unambiguous terms.  The summary judgment
entered 
in 
favor 
of 
WKRG 
on 
the 
breach-of-contract
counterclaim, therefore, was proper.
The McCutchen Company argues finally that the trial court
1060211
16
erred in awarding WKRG $48,300 in damages because, it argues,
WKRG had a duty to mitigate its damages; therefore, it argues,
WKRG was entitled only to damages for the advertising services
it did not sell to other parties after The McCutchen Company
canceled its contract.  The McCutchen Company points out that
WKRG was able to sell all the promotional spots and the five-
minute segment after the 9 a.m. to 10 a.m. news broadcast but
was unable to sell the billboard advertisements that appeared
during the 6 a.m. and 6 p.m. news broadcasts.  This is a
facially 
persuasive 
argument; 
however, 
The 
McCutchen 
Company's
brief contains no citation to any relevant legal authority to
support its contention that WKRG had a duty in these
circumstances to mitigate its damages from the loss of
advertising revenues.  Therefore, we affirm the trial court's
damages award. Henderson, 483 So. 2d at 392 ("'Where an
appellant fails to cite an authority, we may affirm, for it is
neither our duty nor function to perform all the legal
research for an appellant.'" (quoting Gibson v. Nix, 460 So.
2d at 1347)).  Because The McCutchen Company has not provided
substantial evidence showing that the trial court erred in
entering a summary judgment on WKRG's breach-of-contract
1060211
17
counterclaim, we affirm that judgment.
Conclusion
The McCutchen Company has not presented substantial
evidence demonstrating that there is a genuine issue of
material fact.  Therefore, the trial court's summary judgment
in favor of WKRG on The McCutchen Company's fraud claim and
WKRG's breach-of-contract counterclaim was proper, and we
affirm the summary judgment.
AFFIRMED.
Cobb, C.J., and Woodall, Smith, and Parker, JJ., concur.