# FILED

Au gust 19, 1997 Cecil Crowson, Jr . App ellate C ou rt Clerk IN THE COU RT OF A PPEA LS OF TENN ESSEE WESTERN SECT ION A T JA CKSON
AD AM S TV OF MEM PHIS, INC., ) ) Plaintiff/Appellant, ) Shelby Chancery

No. 105944-3 ) VS. ) A ppeal No. 02A 01-9606-CH- 00142 ) COMCORP O F TENNESSEE, INC., ) and THOMAS R. GALLOWAY, ) ) Defendants/Ap pellees. )
APPEAL FROM THE CH ANCER Y COU RT OF S HELBY COUN TY AT MEMPHIS, TEN NESSEE THE HONORABLE D. J. ALISSAN DRATOS, CHAN CELLOR

LUCIAN T. PERA CA NNON F. A LLEN MA RY A . McNEIL AR MSTRONG A LLEN PREWIT T GENTRY

JOHNSTON & HOLMES Memphis, Tennessee Attorneys for Appellant
HENRY L . KLEIN APPERSON, CRUMP, DUZA NE & MA XWELL, PLC Memphis, Tennessee Attorney for Appellee

AF FIRMED

ALAN E. HIGHERS , J.

CONCUR: W. FRA NK CRA

WFORD, P.J., W.S. DAVID R. FA RMER, J. In this breach of contr

act ac tion, Adams TV of Memph is, In c. (“ Plain tiff” or “Adams2

TV”) filed suit agai nst ComCorp of Tenness ee, Inc. (“C omCorp”) and Thomas R. Gallow ay forbreaching several p rovisi ons of their contr act (hereinafter

the “Adams TV- Co mCorp contract”), which prov ided for the sa le of WHBQ-TV

(hereinafter the “Station ”). ComCorp filed a motion to dismiss a sserting that even if ComCorp had br eached certain provisi ons o f the Adam s TV-ComCorp contract, such breaches w ere not material breaches, and Adams TV incurred no damage as a result. The trial court granted ComCorp’s motion to dismiss, holdi ng that AdamsTV receive d the entire benefit of its bargai n under the Adams TV-ComCorp contract, that ComCorp did not materially breach any part of the Adams TVComCorp contract, and thatthe damages soug ht by Adams TV were merely consequential and thereb y preclud ed by secti on 9.2(c) of the Ad ams TV-ComCorp contract. For the
reas ons s tate d her eaf ter, we af firm the j udgm ent o f th e cou rt be low.

FACTS On March 8, 1994, Ada ms TV and ComCorp executed the Adams TV-ComCorp contract whereby

Adams TV agreed t o sell and ComCorp agr eed to purchase t he Station forapproximatel y $57,000,000.00. Pursuan t to the terms of the Ad ams TV-ComCorp contr act, Adams TV and ComCorp ag reed to keep confiden tial the informati on obtained from each other duri ng the cours e of completing t he transaction. Under parag raph 6.11 of the Ada ms TV-ComCorp con tract, the par ties agreed not to divu lge the ex istence ofthe contract or the transa ctions contempl ated by it wit hout the prior

consent of the othe r part y, exceptto the ext ent requ ired by l awor regul ation. Parag raph 6.11 of the Adams TVComCorp contract provides as follows:

6.11 Public announcement . Seller shall publish and broadcast a pub lic notice concerning the filing of the application for assignment

of the Licenses i n accordance w ith the re quir ements of Section 73.3580 of the F CC’s Rul es. As to any other announcement s, neither party hereto shall issue any press release or public announcement or otherw ise divul ge the existence of this Agreement or the transacti ons contemplated hereby without pr ior

approval of the other party hereto (which shall not be unreas onabl y wi thheld), ex cept as and to the extentthat such part

y shall be obligated b y law or regulati on, in which c ase the oth er party shal l be so advi sed and the parties shall use the ir best efforts to cause a mutual l y agreeable release or announc ement to be issued.
Simi larly, under paragr

aph 11.9(a) of

the Adams TV-ComCor p contract, ComCorp3

agreed not to discloseany informati on concerning the Station and Ada ms TV during t he course of completing the tran saction. Paragraph 11.9(a) provides, in part, as f ollows:

11.9 Conf iden tial ity. (a) Buyer agre es that prior to Clo sing, Buyer and its resp ective ag ents and representati ves shall not use for its or their own bene fi t (except when req uired by l aw and except for

use in connecti on with Buyer’s financing of the transaction and Buyer’ s investi gation of the Stati on an d its assets in connection with thi s Agreement) , and s hall hold in strict confidence a nd not disclos e: (i) any data or informati on relating to Seller and GTH-103, their affiliates, or t he Station obtained from Seller or G TH-103 or any of their directors, officers, employees, agents or representativ es in connecti on with this Agreement; or (ii) any data and information relating to the business, cust omers , financial stat ements, condition s or operations of the Station which is confidential in nature and not generally known to the public.
Pursuantto par

agrap h 11.8 o f the Ada ms TV-ComCorp contract, ComCorp agreed not to assign any

rights, obligations

or liabilit ies under the contract w ithout the pri or wri tten consent of Adams TV.
ComCorp further promise d under section 5.8 of theAdams TV-ComCorp contract that all wr itten statements furnished by i t to Adams TV were true and accurate an d that it had not omitted to state an y material facts to Adams TV which w ou ld make its oth er statements misle ading . Para graph 5.8 of th e AdamsTV-ComCorp contract pr ovides as follows: 5.8 D isclosure . To the knowl edge of Buyer, no statement o f

material fact by Buy er contained i n this Agreement and no written statement of m aterial fact furnished by Buyer toSeller pursuantto this Ag reement contains any untrue s tatement of a material fact or

omits to state a material fact necessa ry in order to make the statem ents herein or therein contained not mislead ing. ComCorp, likewi se, warr anted that all rep resentations madeby it to Adams TV were true and correct in all materi al respects as of the parties’ closing date under the contract. Paragraph 8.3 of the Ad ams TV-ComCorp contract provides as f ollows:

8.3 Repr es entations and Warranties . The representat ions and warrantie s made b y Buyer shall be true and correct in all material respects as of the Closing Date wi th the same for c e and effe ct as tho ugh such repres entations and warr anties had been made on the Closi ng Date, except forchanges permi tted or contemplated by

this Agreement.4

Moreover, para graph 9.2 o f th e par ties ’ Ada ms T V-Co mCor p con trac t, wh ic h pro vides f or indemnificati on to Adams TV for various breac hes of the contract by ComCorp, states that Adams TV’s “recov

ery under

Section 9.2(a) shall in noevent incl ude any special, indirect, incidental or consequential da mages.”

On August 11, 1994, ComCorp executed a second co ntract, the “ ComCorp-Fox contract”whereby

ComCorp agr

eed to sell, and FTS Investments, Inc. (hereinaf ter, “Fox”) agreed to purchase the Station for approximatel y $80,000,000.00. This agre ement was executed on behalf of Com Corp by Thomas Galloway, who was the chief executive officer, chairman of the board of direc tors and sole stockholder o f ComCorp. Adams TV al leged that prior to th e execution of the ComCorp-F ox contract that ComCorp disc losed significant amounts of confidential informat ion concernin g th e Stati on to Fox for the purpose of negotiating a sale of the Stati on to Fox. ComCorp allegedly disclosed more information to Fox than was necessaryfor fina ncing the transaction under the Ad ams TV-ComCorp contract.

On August 18, 1 994, Adams TV and ComCorp closed the Adams TV-Com Corp contract whereby A dams TV receive d the $57,000,000.00 purchase price fr om ComCorp, and ComCorp rec eived titl e to the Station fro m Adams TV. ComCorp also furnished Adams TV with a doc ument entitled “Buyer’s Performance Certif icate” which was executed byThomas Galloway for ComCor p. That documentstated that ComC orp had “performed and complied w ith all of its oblig ations under the [Adams TV -ComCorp contract] which are to be performed or complied wi th by it pr ior to or on the date hereof.”

Althou gh Adams TV was aware that Fox had agreed to finance the purchase of the Station under the Adams T V-ComCorp contract, Adams T V did not know that ComCorp had agreed to se ll the Station to Fox pursuant to the ComCorp-Fox contract unti l after the Augu s t 18, 1994, closing. Ultimately, ComCorp and Fox closed on the ir contract concerning the Station on Jul y 5, 1995, and F ox now o wns the Stat ion.5

Someti me before the August 18, 1994, closing of the Adams TV-ComCor p contract, Adams TV negotiated a contingent cont ract to sell the Station to another entit y in the event that Adams TV and ComCorp failed to close the Adams TV-ComCorpcontract. Pursuant to the terms of the cont ingent contr act, the other pu rchaser ag reed to pay Adams TV approximatel y $63,444,000.00 for the Station.

Adams TV brought thi s action asser ting that C omCorp and Gall oway breached the Adams TV-ComCorp cont ract in four material ways: 1) by breachi ng the nondi sclos ure and confidential ity prov isions contai ned in paragraphs 6.11 and 11.9(a) b y discl osing informati on protected under thos e pro vision s to Fo x; 2) by bre achi ng the repre sent atio ns an d wa rranties that ComCorp ha d complied with the contract’s nondisclosure a nd confidentiality provisions; 3) by violating the prohibition on ass ignment of any rig hts, oblig ations or liabiliti es under the contra ct contained i n paragraph 11 .8 by assi gning Defendants’ inte rest unde r the cont ract to Fo x w ithou t Adams TV’s knowledg e or consent; and 4) by breachi ng the representati ons and war ranties that C omCorp had complied wi th the agreement’ s nonassignment provisi on. ComCorp and Thomas Galloway each filed mot ions to dismiss the complaint, a nd Adams TV filed a motion for par tial summary

judgment. F ollowinga hearing on December 12, 1995, the trial court entered an order on January 10, 199 6, in w hich i t gra nted Ad ams TV’s moti on toamen d thecomp lai nt, d enie d Ada ms TV ’s m otio n fo r part ial summary judgmentand granted D efendants’ motionsto dismiss t he cause. Adams TV ti mely filed
a notice of appeal on F ebruary 8, 1996, and the appeal has been perfected to this Court.

ISSUES The issues before this Court are as follows: 1) Whet he r the trial court erred in granting ComCorp’s motion to dismiss Adams TV’s cause of ac tion; 2) Whether the trial court er red in dismi ssing as moot Adams TV’s motion for partial summar

y judgment; 3) W hether Adams TV was obligated to co nsumma te the Adams TVCo mCo rp contract, regardless of the extent of its knowledg e of the6

impe ndin g sale by Def end ants to Fo x; 4) W hether Adams TV’s damage claims are barred because of its failure to sati sfy the conditions

precedentunder the Adams TV-ComCorp contract in bringing an action for in demnification; and 5) Whether the ComCorp-Fox transaction was an ass ignment or s ale.
DISCUSSION D e fendants filed their motions to dismiss the complaint on July 28, 1995. The se motions to dismiss w

ere supported by

an affidavit an d by the record on appeal which contained responses to i nterrogator ies and req uest s for admissions and responses t o a request for production of documents. The Chan cellor recited in the order dismissing this
cause that he had considered the en tire record filed in this cause. Therefore, we conclude that because th e tr ial court considered items outside th e pleadings, the Defend ants’ motions to dismiss were converted to motions for summar y judgment, and we shal l treat them according ly. Ru le 12.02 Tenn. R. Civ . P.; Pacific E. Cor p. v. Gulf Li fe Holding Co. , 902 S.W.2d 946 (Tenn. App. 1995).
No presumption of correctness attaches todecisions g ranting summar y judgment because such moti ons i nvolve only qu esti ons o f law. Thus, on ap peal, the Court must make a fresh determination concerning wheth er th e requ irem ents of Ru le 56 Ten n. R. Civ. P. have been met. Cowde n v. Sovran Bank/Central South , 816 S.W.2d 741, 744 (Tenn. 1991). We begin ouranalysis of the issue of summ ary judgment by noting that a trial court should grant a motion fo r summary judgment only if the movant demon strates that there
are no genuine iss ues of material fact a nd that the movi ng party is entitled to judgment as
a matter of law. Rule 56.03 Ten n. R. Civ. P. ; Byrd v. Hall , 847 S.W.2d 208, 210 (Tenn. 1993). The party moving for summa ry judgment bears

the burden of demonstrati ng that
no genuine iss ues of material fact e xist. Byrd , 847 S.W.2d at 211. In Byrd , the Tennessee Supreme Court s tated:

Once it is show n by the mov ing party that there is

no genuine issue of material fact, thenonmoving party must t he n demonstrate, by affidavits or discovery materials, that there is a genuine, mater ial fact disputeto warr ant a trial. (Citations omitted). In this reg ard, Rule 56.0 5 pro vides that the nonmoving part y ca nnot simply rely upon his pleading s but must set forth specif

ic facts showing that there is

a genuine7 issue of material fa ct for trial. Id. at 211. (Emphasis in original). Considering the evidence in the light most favorable to Ad ams TV, we are left to determine whether D efendants were en titled to summar y judgment as a matter of law

.

I n addre ssing the mot ion for summary judgment, the court must consi der the eviden ce in the same manner as a motion for dir ected verdi ct made at the cl ose of plai ntiff’s proof. Therefore, the “ court must take the stronges t legiti mate view of th e evidence in favor of the nonm oving party, allow all reasonable inferences in favor of that part y, and discard al l countervailing ev ide nce.” Byrd at 21 0-11 . Aft er exh aust ive examination of the record in this caus e, we find that the trial c ourt’s deci sion granti ng summary judg ment should be affirmed.

Adams TV’s argument is founded on its as sertion that it w ould have refused to perform th e c ontract had it known of the ex istence of the ComC orp-Fox contract. Underlyi ng t his arg ument is Adams TV’s assertion th at ComCorp dis closed informati on about Adams TV and the Station to Fox i n violati on of the Adams TV-ComCor p contract. Adams TV further aver

s that ComCorpbreached its agreement w ith Adams TV and did not disclo s e to Adam s TV theexistence o f the Co mCorp- Fox contrac t. Therefore, A dams argues that it is entitled to damag es equal tothe difference betw een its contract price of $57,000,000 and the $80,000, 000 contract pr ice of the ComCor p-Fox cont ract.
Upon considerati on of the motions to dismiss, the trial court found, and we ag ree, that any breach of the terms of the Adams TV-ComCorpcontract was not a material breach so as to war ran t non-performance of the contract by Adams TV. In determi ning whether a breach of contract is mate rial such that the non-breaching party co uld av oid performance, Ten ness ee co urts have adopted the criter ia establish ed in the Restat ement (Second) of Contracts, § 241 (1981), which enumerates the following factors to consider:

(1) The extent to w hich the injured par ty wi ll be depriv

ed of the expected benefit o f his contract; (2) The extent to w hich the injur ed party ca n be adequate l y compensated for the part of that be nef i t of which he will b e8 deprived; ( 3) The extent to w hich the party failing to pe rform or to offer to perform wi ll suffer forfeiture; (4) The likelihood that the party failing to perform or to offer to p erform w ill cure his failure, t aking accoun t of all the circumstances

including any reasonab le assurances ; and (5) T he extent to w hich the behav ior of the party failing to perform or

to offer to perform compor ts with standards of good faith and fair deali ng. See, McClain v. Kimbrough Constr. Co., Inc. , 806 S.W .2d 194, 199 (Tenn . App. 1990).
The considerati on applicable t o this case i s whether the non-breaching party obtained the benefit expec ted under the ter ms of thecontract. I n the i nstant case, Adams TV was not deprived of the expected benefit of its bargai n. In fact, Adams TV received the full contract price of $57,00 0,000. It appears to the Court that the breach, if any, was not material. The objectives of the agreement were effectuated in that Adams TV received from ComCo rp thecontract pr ice i n exc hange for w hich C omCorprecei ved from Adams TV its interest in the Statio n.

An injured party is onlyentitled to be placed in the s ame position it would have been had the contract b een performed and shoul d not profit from a defenda nt’s breach. Hennessee v. Wood Group E nt erprises, Inc. , 816 S.W .2d 35, 37 (Tenn. Ct. Ap p. 1991). Althou gh Adams TV argues that it is enti tled to damages based upon the contract/mar ket price differential of the St ation at th e time of the partie s’ August 1 8, 1994, closi ng under the Adams TV-ComCorp contract because of the Defendants’ alleged breach of contract, it is well settled in Tennessee that an injured pa rty may not profit from a def endant’s breach. Action Ads, I nc. v. Willia m B. Tanner Co. , 592 S.W.2d 572, 575 (Tenn. App. 1975). Adams TV received the contract p rice it bar gained for; thus , Adams TV woul d not be entitled to an award of damages . Furthermore, it does not app ear that the all eged breach of contract

was materi al under the McClain criteri a.

In Fleet Nationa l Bank v. An chor Media Television, Inc., et al. , 831 F. Supp. 16 (D.R.I. 1993), aff’d. , 45 F.3d 546 (1st Cir 1995) , a feder al court addressed an alleg ed breach of co ntract ari sin g from th e purchas e of a television station. Fleet National Bank, the plaintiff, moved f or a directed verdict followin g a jury verdict in favor of the defendants9

and asserted, inter alia , that the motion be granted because Anchor Med ia, a defendant, had failed to comply

with the exact dis pute resoluti on procedures pr ovided by

the contract. However, the trial court looked tothe total oblig ations imposed by the parties’ contract and found t hat Anchor Media’s failure to fo llow the precise contours of the agreeme nt were “slight or unimportant omissions” a nd not a material breach of the contract when vi ewed in the contex

t of its total obl igations. Id. at 33-34.

In reviewing the award of summary judgment, it is incumbent upon this Court to take the strongest legitimate view of the evidence in favor of Adam s TV, to allow all reasonable inferences in favor of Adams TV, and to discar d all counter

vailingevidence. In the instant case, the non-discl osure and confidenti ality pr ovisions of the Adams TV-Com Corp contract permitted ComCorp to make certain dis closures of “Seller’s Information” in order to obtain financing for the purcha se of the Station. Spe cifically, § 11.9(a) provides:

11.9 Co nfid enti alit y. (a). Buyer a grees tha t prior to Closing, Buyer and its respec

tive age nts and repres entatives s hall not us e for its or th eir own b enefit ( except when requir ed by la w and except for use in connection w ith Buyer’ s financing of the trans ac tion and Buyer’ s investi gation of the Stati on and its asse ts in connection with this Agreement), and shall hold in strict confidence and no t discl os e: (i) any data or informati on relating to Seller and GTH-103, their affiliates, or t he Station obtai ned fro m Seller or GTH-103 or any of their directors, officers, employees, ag ents or represent ati ves in con nection with this Agreement; or (ii) any data and information relating to the business, customers, finan cial statements, condi tions or operations of the Station which is confidential in nature and not generally known to the public. (Emphasis added). Adams TV concedes that i t knew pr ior to the August 18, 1994, closing that Fox had agreed to finance ComCorp’ s purchase of th e Stat ion. Pursuant to the terms of the contract, ComCorp had the right to make disclosur es about Adams TV so l ong as those di sclosures related to financing. W hat is not contemplate d by the contract is the situ ation that arose in the instant case wherein the lender ultima tely became the purchaser. The fact that prior to the closure of the Adam s TV-C omC orp sale, ComC orp entered int o a separate sal es agreementwith Fox

for the Station does

not change the fact that Fox was the lender that provided the financing for ComCorp to p urchase the Stat ion from Adams TV. Exami nation of the Adams TV-ComCorp con tract reveals nothing that prohibits resale of the Station in the manner so accomplished i n this case. Further, we find no contract pr ovision r equiring10

ComCorp to discloseeither the ex istence ofa resale agr eement or the prov isions thereof to Adams TV, just as we f ind n o pro vision requi ring A dam s TV t o have disclosed ei ther the existence or provi sions of the conti ngent sales agreement it h ad entered intowith anothe r purchaser.

In the present case, Ad ams TV an d ComC o rp entered int o a contract w hereby Adams TV agreed to s ell and ComCor p agreed to buy th e a ssets of WHBQ-TV for approximatel y $57,000,000. On Augu st 18 , 199 4, th e par ties perf orme d the ir res pect ive obligations

under the contract; Adams

TV receive d the $57,000,000 purc hase price from ComCorp, and ComCorp received ti tle to the Stat ion from Adams TV. In examining the evidence in the light most favorable to Adams T V, as we must in summary judgment cases,
we do not find that ComCorp’s disclosure of information to Fox was inc onsistent w ith the preservat ion of confidentiality . As a resul t, we find that such di sclosure was not a material breach of the Adams TV-C omCorp contrac t.

The judgment of the tr ial court i s hereby affirmed. Costs on app eal are t axed to Appellant for w hich execut ion may iss ue if necessary

.

HIGHERS, J.

CONCUR:

CRAWFORD, P.J., W.S.11

FARMER, J.