Court Opinion

ID: 813771
Source: CourtListenerOpinion
Date Created: 2012-12-18 16:00:18+00
Date Added: 2024-06-11T15:36:42.644536
License: Public Domain

RECOMMENDED FOR FULL-TEXT PUBLICATION
                        Pursuant to Sixth Circuit I.O.P. 32.1(b)
                               File Name: 12a0410p.06

              UNITED STATES COURT OF APPEALS
                            FOR THE SIXTH CIRCUIT
                              _________________

                                                X
         Plaintiff-Appellee/Cross-Appellant, -
 REMARK, LLC,
                                                 -
                                                 -
                                                 -
                                                     Nos. 11-2349/2442
          v.
                                                 ,
                                                  >
 ADELL BROADCASTING CORPORATION, d/b/a/ -
                                                 -
        Defendant-Appellant/Cross-Appellee. --
 WADL-TV,

                                                 -
                                                N
                   Appeal from the United States District Court
                 for the Eastern District of Michigan at Detroit.
            No. 2:10-cv-12767—George C. Steeh, III, District Judge.
                             Argued: October 10, 2012
                     Decided and Filed: December 18, 2012
             Before: SUTTON, GRIFFIN and WHITE, Circuit Judges.

                               _________________

                                    COUNSEL
ARGUED: William J. McHenry, Farmington Hills, Michigan, for Appellant. Todd
Rhys Mendel, BARRIS, SOTT, DENN & DRIKER, PLLC, Detroit, Michigan, for
Appellee. ON BRIEF: Mark A. Cantor, Robert C.J. Tuttle, Chanille Carswell,
BROOKS KUSHMAN P.C., Southfield, Michigan, for Appellant. Todd Rhys Mendel,
BARRIS, SOTT, DENN & DRIKER, PLLC, Detroit, Michigan, for Appellee.
       SUTTON, J., delivered the opinion of the court, in which GRIFFIN, J., joined,
and WHITE, J., joined in the result. WHITE, J. (pp. 8–9), delivered a separate
concurring opinion.

                                         1
Nos. 11-2349/2442       Remark, LLC v. Adell Broadcasting Corp.                   Page 2

                                 _________________

                                      OPINION
                                 _________________

       SUTTON, Circuit Judge. Remark advertises radio stations with television
commercials featuring women lip-syncing radio content. When Adell ran similar ads for
television station WADL, Remark threatened to sue. The parties appeared to resolve this
initial tempest through a settlement. Adell tried to back out of the settlement, however,
prompting Remark to follow through on its threat and to sue to enforce the settlement.
The district court determined that Adell had breached the settlement and granted Remark
summary judgment. We affirm.

                                           I.

       Remark, a California corporation, produced a distinctive series of television
commercials for radio stations known by some as the “remarkable mouth” or “hot lips”
commercials. The commercials begin with a shot of a classically attractive woman. The
camera then focuses on the woman’s mouth as she begins lip-syncing content from the
advertised station. The camera zooms back, and a male voice says, “You have a
remarkable mouth.” The woman responds that the advertised radio station “is a
remarkable station.” The camera zooms in once more, and the woman lip-syncs a final
segment. R.19 ¶ 9. The United States Copyright Office issued a copyright for a version
of this commercial in 1980. U.S. Reg. No. PA 64-936. The original holder of the
copyright assigned it to Remark, which registered it with the Copyright Office in 2002.

       WADL, a Detroit television station, broadcast two commercials that resemble the
copyright. After the commercials aired, Remark sent a cease-and-desist letter to Adell,
the producer of the commercials. R.19-8 at 2. After some negotiation, the parties agreed
that Adell would pay $50,000 to settle Remark’s claims. Remark drafted a settlement
agreement, and Adell produced a revised version, which the parties exchanged through
e-mail. Remark’s counsel e-mailed Adell’s counsel saying that Remark “agree[d] to all
of your proposed changes” and asking Adell to create “a final version for execution.”
Nos. 11-2349/2442          Remark, LLC v. Adell Broadcasting Corp.                      Page 3

R.35 at 3. Adell forwarded a final version. R.19-9 at 3–7. Remark signed and returned
the originals to Adell, but Adell never signed the agreement. It instead retained new
counsel and for the first time balked at the $50,000 figure, offering to settle for a more
“reasonable”—lower—amount. R.26-6 at 3.

          Remark filed this lawsuit, claiming among other things that Adell breached the
settlement agreement. The district court granted Remark’s motion for summary
judgment but denied its request for attorney’s fees. The parties appeal their respective
losses.

                                               II.

          The question in this case is straightforward: Did the parties settle their dispute?
And the standard of review of the district court’s decision is equally straightforward:
We give a fresh look to its summary-judgment decision. Gecewicz v. Henry Ford
Macomb Hosp. Corp., 683 F.3d 316, 321 (6th Cir. 2012).

          If parties to a pending or threatened lawsuit settle their dispute, the failure of one
party to adhere to the terms of the settlement—a type of contract—gives rise to a breach
of contract action. As it turns out, there are two potentially enforceable contracts here.
One arises from the parties’ initial e-mails expressing a meeting of the minds about the
material terms of a settlement: Remark would drop its copyright (and other) claims for
$50,000, and Adell would stop airing “remarkable mouth” commercials.                        On
December 11, 2009, Adell’s counsel e-mailed Remark’s counsel with “proposed
revisions to the settlement agreement.” R.35 at 3. On December 14, 2009, Remark’s
counsel wrote back, saying, “Because we’d like to get this wrapped up, we will agree to
all of your proposed changes.” Id. The former was a written offer, the latter a written
acceptance. No one complains that one lawyer or the other lacked authority to bind his
client. And no one complains that the December 11 version of the agreement is different
from the one Remark ultimately signed.               Taken together, the e-mails reflect an
agreement with respect to all material terms of the settlement. See Kloian v. Domino’s
Pizza, L.L.C., 733 N.W.2d 766, 770–71 (Mich. Ct. App. 2006).
Nos. 11-2349/2442        Remark, LLC v. Adell Broadcasting Corp.                      Page 4

        The other agreement arises from the next exchange of e-mails and documents.
In the same December 14, 2009 e-mail, Remark asked Adell to create a final version of
the agreement for execution. On December 22, 2009, Adell complied and sent Remark
a final version of the agreement. Remark signed the agreement that day and returned
two copies on January 5, 2010. Adell’s counsel responded, saying it had forwarded the
documents to Adell for signature. This last exchange—a settlement document offered
by Adell and accepted by a Remark representative’s signature—also constituted a
binding offer and an acceptance. Once again, the agreement contained simple terms and
basic objectives. The five-page agreement said that Remark would settle its claims for
$50,000, and that Adell would take the offending commercials off the air. And once
again, no one alleges that the agents of either company lacked authority to bind their
principals. Taken together, the e-mails conveyed an objective meeting of the minds as
to each of the material terms, and as such they meet all of the requirements of an
enforceable contract under Michigan law. See Kloian, 733 N.W.2d at 770–71.

        To all of this, Adell offers one retort: It did not sign the final version of the
written settlement agreement. Yet a prior meeting of the minds is not undone by the
decision of one party to back out of the last version, even if it is the most formal version,
of a settlement agreement.        See Scholnick’s Importers-Clothiers, Inc. v. Lent,
343 N.W.2d 249, 253 (Mich. Ct. App. 1983). The question is whether the parties
reached agreement on the material terms of the contract/settlement. If they did, the later
decision of one party not to sign a formal memorialization of that agreement does not by
itself retroactively change the agreement already reached. Id.

        The Restatement of Contracts lays out the basic rule and the exception to it. The
rule: “Manifestations of assent that are in themselves sufficient to conclude a contract
will not be prevented from so operating by the fact that the parties also manifest an
intention to prepare and adopt a written memorial thereof.” Restatement (Second) of
Contracts § 27. The exception: “[B]ut the circumstances may show that the agreements
are preliminary negotiations.”      Id.; see Klapp v. United Ins. Grp. Agency, Inc.,
663 N.W.2d 447, 455–56 (Mich. 2003) (relying on the Restatement of Contracts in
Nos. 11-2349/2442        Remark, LLC v. Adell Broadcasting Corp.                       Page 5

resolving a contract dispute); Customized Transp., Inc. v. Bradford, 114 F.3d 1186 (6th
Cir. 1997) (unpublished table decision) (applying Michigan law and relying on § 27 to
find an enforceable contract notwithstanding failure to execute); cf. Lansing Pavilion v.
Eastwood, Nos. 281811 et al., 2009 Mich. App. LEXIS 1666, at *11 (Mich. Ct. App.
Aug. 6, 2009) (quoting § 27 cmt. b).

        The comments to § 27 elaborate on the rule and the exception. As to the former,
they say:

        Parties who plan to make a final written instrument as the expression of
        their contract necessarily discuss the proposed terms of the contract
        before they enter into it and often, before the final writing is made, agree
        upon all the terms which they plan to incorporate therein. This they may
        do orally or by exchange of several writings. It is possible thus to make
        a contract the terms of which include an obligation to execute
        subsequently a final writing which shall contain certain provisions. If
        parties have definitely agreed that they will do so, and that the final
        writing shall contain these provisions and no others, they have then
        concluded the contract.

Restatement (Second) of Contracts § 27 cmt. a.

        As to the latter, they say:

        Among the circumstances which may be helpful in determining whether
        a contract has been concluded are the following: the extent to which
        express agreement has been reached on all the terms to be included,
        whether the contract is of a type usually put in writing, whether it needs
        a formal writing for its full expression, whether it has few or many
        details, whether the amount involved is large or small, whether it is a
        common or unusual contract, whether a standard form of contract is
        widely used in similar transactions, and whether either party takes any
        action in preparation for performance during the negotiations. Such
        circumstances may be shown by oral testimony or by correspondence or
        other preliminary or partially complete writings.

Id. cmt. c; see also Mich. Broad. Co. v. Shawd, 90 N.W.2d 451, 456 (Mich. 1958)
(listing similar factors).

        The problem with Adell’s theory of the case is that it invokes one, and only one,
reason to apply the exception—that Adell never signed the last version of the agreement,
Nos. 11-2349/2442       Remark, LLC v. Adell Broadcasting Corp.                    Page 6

no matter how many times the company assented to the material terms of it. Everything
else cuts against it. Adell offers no written evidence, whether in the form of letters or
e-mails, that the company reserved its right to back out of the agreement until a final
signature appeared. It offers no oral evidence that the company reserved its right to back
out of the agreement until a final signature appeared. It indeed offers no evidence of any
kind that the settlement agreement is inconsistent with prior oral and written exchanges
between the parties. It does not argue that the deal was a complex one that normally
would not be completed until the final document was signed. Nor could it. This was a
simple five-page agreement that could have been completed in four fewer pages: Adell
would pay $50,000 and drop the commercials in return for Remark dropping its lawsuit.
And Adell does not complain that the agreement required authorization by other officers
of the company.

       All Adell argues is that it reserved assent until the final writing had been
signed—that the execution of the formal agreement was a material term of the contract,
and thus unmet so long as the document remained unsigned.               Yet there is no
contemporaneous, or for that matter later, evidence to support such a reservation,
whether in the form of oral or written communications between the parties. All we have
is unexceptional language in the agreement saying the contract would be “effective as
of the date the parties sign the Agreement.” Like the district court, we think this
boilerplate provision amounts to a reference point for the date upon which payment
would be due, not a material term of the agreement. Were it otherwise, a subsequent
decision to reduce an agreement to a more formal writing always would give the parties
one last chance to back out of (i.e., undo) the agreement, making oral agreements and
informal written agreements a relic and reversing the Restatement’s rule and exception.
At oral argument, Adell confirmed as much, acknowledging that under its theory of the
case Adell could back out of this agreement at the time of signing (with no other
reservation of rights), offer to pay $40,000 to settle the case, proceed to make a deal,
then repeat the exercise at the next time of signing, make a new deal for $30,000, and
so on. Parties who wish to dicker in such sharp-elbowed fashion and in the context of
Nos. 11-2349/2442       Remark, LLC v. Adell Broadcasting Corp.                    Page 7

such a simple, straightforward settlement must reserve their rights to do so. Adell did
no such thing.

       Adell persists that the question at hand—whether the parties intended to require
an executed document—is a factual issue, precluding the entry of summary judgment
against it. But Adell offers no competing forms of evidence for a jury to consider. On
this record, “[t]he only questions of contract interpretation in this case are matters of
law,” Royal Ins. Co. of Am. v. Orient Overseas Container Line Ltd., 525 F.3d 409, 422
(6th Cir. 2008), and the district court properly answered those questions, see Skycom
Corp. v. Telstar Corp., 813 F.2d 810, 815 (7th Cir. 1987) (noting that relevant evidence
regarding contract formation “often will be undisputed, making summary judgment
appropriate”).

       One more thing. The district court did not abuse its discretion in failing to award
attorney’s fees to Remark. The court reasoned that Adell’s litigation position was not
the product of bad faith. See Shimman v. Int’l Union of Operating Engineers, Local 18,
744 F.2d 1226, 1229 (6th Cir. 1984).         It may be that Adell’s arguments were
unconvincing in the end, but that does not make them sanctionable. They were
colorable, if flawed, arguments, or at least the district court permissibly could so
conclude.

                                          III.

       For these reasons, we affirm.
Nos. 11-2349/2442      Remark, LLC v. Adell Broadcasting Corp.                   Page 8

                                 _________________

                                 CONCURRENCE
                                 _________________

       HELENE N. WHITE, Circuit Judge, concurring. Because I view the case
somewhat differently than the majority, I write separately.

       The record is devoid of attorney or party depositions or affidavits in support or
defense of the motion for summary judgment; no one testified that after some
negotiation, the parties agreed that Adell would pay $50,000 to settle Remark’s claim.
The parties offered no evidence in support of their positions other than portions of the
written correspondence of the attorneys. Thus, the evidence of negotiation and
agreement must be found in this correspondence, and we cannot know whether the case
was settled without examining the letters, emails and attachments. The majority
opinion’s factual statement that after some negotiation the parties agreed to settle the
matter for $50,000 is actually a legal conclusion, and answers the ultimate question
presented.

       The initial letter from CMI (Remark) to WADL (Adell), dated August 12, 2009,
provides no evidence of agreement or settlement. The next document in the record is a
December 11, 2009 email from WADL’s counsel, Robin Asher, to Larry Stein, CMI’s
counsel. This email simply states: “Attached is a redline version of our proposed
revisions to the settlement agreement between CMI Films and WADL. Please contact
me to discuss at your convenience.” No redline version made its way into the record,
however. We do not know what the original proposed agreement provided, only that the
parties agree that it was drafted by CMI’s counsel in early December. Nor do we know
what discussions or communication led to the drafting of that agreement, or what
changes WADL proposed. Thus, as of December 11, we only know that WADL
provided CMI with proposed revisions to an agreement the content of which is unknown.

       On December 14, Stein responded to Asher that “We’ve reviewed your proposed
revisions. Because we’d like to get this wrapped up, we will agree to all of your
Nos. 11-2349/2442       Remark, LLC v. Adell Broadcasting Corp.                    Page 9

proposed changes. Please incorporate them into a final version for execution. As a
reminder, payment is due to CMI within 7 business days of execution. I will follow up
with method and address, etc. Thank you.” Although the December 11 and 14 emails
may indeed be evidence of an offer and acceptance, nothing can rest on this because the
record provides no information regarding the terms offered or accepted. The emails tell
us nothing about the proposed settlement, except that apparently it contemplated that
WADL would pay some undisclosed sum to CMI. Thus, I cannot agree on this record
that a breach of contract action can be maintained based on this first exchange of emails.

       On December 17, Stein again emailed Asher asking: “When can we expect a
copy of the agreement for our execution? Let’s get this fully resolved, with payment,
before the Christmas holiday.” On December 22, Asher sent an email to Stein stating:
“Attached is a Final Version of the CMI v. WADL Settlement Agreement. Please have
your clients execute the Agreement and return two originals to me for execution by
WADL. Once the Agreement has been fully executed, we will return one of the original
fully executed Agreements and arrange for payment of the settlement.” Attached to the
copy of the December 22 email that is part of the record is a copy of the only version of
the Agreement in the record. This copy of the Agreement has been signed by CMI and
Remark and dated December 22. Obviously, although the partially executed Agreement
is attached to the copy of Asher’s December 22 email found in the record, it was not an
attachment to that email when sent. The Agreement that was actually attached would
have been blank. We can fairly assume, however, that a copy of that Agreement was
executed later that same day by CMI and Remark.

       The terms offered by WADL were in the Agreement attached to Asher’s
December 22 email, and do not suggest that WADL’s agreement was contingent on its
own execution. The Agreement contained all the essential terms and was signed
immediately by CMI and Remark. This acceptance was communicated to WADL on
January 5, well before WADL attempted to withdraw from the Agreement on
January 17. I therefore concur.