Court Opinion

ID: 4709066
Source: CourtListenerOpinion
Date Created: 2021-08-04 17:00:34.062186+00
Date Added: 2024-06-11T08:06:54.139471
License: Public Domain

NOT RECOMMENDED FOR PUBLICATION
                               File Name: 21a0376n.06

                                          No. 20-3608

                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT
                                                                                      FILED
                                                                                Aug 04, 2021
NOVIA COMMUNICATIONS, LLC,                         )                        DEBORAH S. HUNT, Clerk
                                                   )
       Plaintiff-Appellant,                        )
                                                   )       ON APPEAL FROM THE UNITED
v.                                                 )       STATES DISTRICT COURT FOR
                                                   )       THE NORTHERN DISTRICT OF
JESSE WEATHERBY; COMMUNITY                         )       OHIO
BROADCAST GROUP, INC.,                             )
                                                   )
       Defendants-Appellees,                       )
                                                   )
ORION MEDIA MANAGEMENT, LLC,                       )
                                                   )
       Defendant.                                  )

       BEFORE: BATCHELDER, WHITE, and MURPHY, Circuit Judges.

       MURPHY, Circuit Judge. Novia Communications, LLC, contracted to buy a television

station from Community Broadcast Group, Inc, a company that goes by “CBG.” Before closing,

CBG rescinded the deal. Novia sued for breach of contract and alternatively argued that the

doctrine of “equitable estoppel” should prevent CBG from terminating the agreement under New

York law. Yet the parties’ agreement unambiguously gave CBG the termination right it exercised.

And Novia has not made the demanding showing required to sidestep the contract’s terms with its

calls to equity. As Judge Learned Hand long ago explained, “in commercial transactions it does

not in the end promote justice to seek strained interpretations in aid of those who do not protect
No. 20-3608, Novia Communications v. Weatherby

themselves” through the contract. James Baird Co. v. Gimbel Bros., Inc., 64 F.2d 344, 346 (2d

Cir. 1933). We thus affirm the district court’s grant of summary judgment to CBG.

                                                 I

       On October 1, 2014, Novia entered into an Asset Purchase Agreement (Purchase

Agreement) with CBG to pay $400,000 for the assets of Channel 48, a local television station in

Toledo, Ohio.     The Purchase Agreement required the parties to apply with the Federal

Communications Commission (FCC) for its consent to the transfer of the station’s broadcast

license to Novia. The agreement conditioned the sale on the FCC’s consent and required the

closing to occur within ten days of that consent. It also granted either party a right to terminate

the deal if the closing did not happen within 270 days unless the terminating party’s failure to

fulfill a material obligation under the agreement had caused the delay.

       The parties quickly applied for the license transfer with the FCC. According to Novia,

FCC consent for such a transfer typically takes about 60 days. But the parties soon hit a snag.

CBG’s minority shareholders petitioned the FCC to deny the application.             Two minority

shareholders then sued Novia, CBG, and CBG’s majority shareholder, Jesse Weatherby. Their

suit alleged that the Purchase Agreement had underpriced the station’s assets because the FCC was

about to hold a reverse spectrum auction, which allegedly increased the value of the station’s

license.

       The FCC sat on the parties’ application. By March 2015, Novia and CBG had agreed to a

separate Local Marketing Agreement (Marketing Agreement) for the station’s operations in the

meantime. CBG would continue to run the station for a monthly fee, but Novia would provide the

programming and advertising and collect the revenue.

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No. 20-3608, Novia Communications v. Weatherby

       In June 2015, 270 days passed since the Purchase Agreement. Each side thus gained the

right to terminate the agreement from then on. Neither party invoked the right at that time. Yet

the shareholders’ suit remained pending, and the FCC had still not consented to the transfer.

According to Novia’s president, Weatherby (CBG’s majority shareholder) repeatedly assured him

that CBG intended to close once the FCC consented.

       In late 2015, Novia negotiated a settlement with the minority shareholders that released

their claims against it. CBG and Weatherby were not parties to this settlement, but they asked

Novia to add a term to its release agreement requiring the shareholders to surrender their stake in

CBG. In December 2015, the shareholders agreed to that term in a release with Novia. The

shareholders also agreed to a stipulated dismissal that dismissed their suit with prejudice against

all parties, including CBG and Weatherby. The shareholders’ counsel later alleged that he had

wrongly dismissed the claims against CBG and Weatherby with prejudice because they were not

parties to the release. He moved to make the dismissal without prejudice. The court found that

this claimed mistake did not justify reopening the judgment. We affirmed. A Renewed Mind v.

Weatherby, 675 F. App’x 572, 573–75 (6th Cir. 2017).

       Novia believed that this settlement paved the way for the closing even though the FCC still

had not consented to the license transfer. CBG thought differently. On the day that the parties

dismissed the suit, it exercised its right to terminate the deal. Weatherby asserted that CBG decided

to end the deal at this time because the deadline to enter the FCC auction was looming and CBG

worried about its ability to do so if the station owner remained uncertain.

       Unhappy with the sale’s late-in-the-day collapse, Novia brought this diversity suit against

CBG, Weatherby, and a third entity called Orion Media Management, LLC. Novia alleged, among

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No. 20-3608, Novia Communications v. Weatherby

other claims, that CBG had breached the Purchase Agreement, that CBG and Orion had breached

separate promissory notes, and that CBG and Weatherby had committed various torts.

         Both sides moved for partial summary judgment on Novia’s contract claim. The district

court agreed with CBG’s reading of the Purchase Agreement and held that CBG had the right to

terminate the deal. Yet the court then invoked “equitable estoppel,” which it interpreted as barring

parties from waiting too long to exercise their contract rights. Here, the court held, CBG waited

too long to exercise its termination right because Novia had agreed to the Marketing Agreement

and settled the lawsuit in the interim.

         On CBG’s motion for reconsideration, the district court reversed its estoppel decision. For

estoppel to apply, the court explained, CBG must have had a “duty to speak” about its reservation

of the termination right. The court could find no such duty simply because the parties had entered

into the Marketing Agreement. It thus granted summary judgment to CBG on Novia’s contract

claim.

         After this ruling, the court entered a consent judgment at the parties’ request. It found for

Novia in specific dollar amounts on the promissory-note claims, dismissed Novia’s tort claims

without prejudice, and certified Novia’s contract claim for immediate appeal under Federal Rule

of Civil Procedure 54(b).

         Novia appealed. We dismissed for lack of appellate jurisdiction. The appeal did not arise

from a final judgment because of the without-prejudice dismissal of Novia’s tort claims. Novia

Commc’ns, LLC v. Weatherby, 798 F. App’x 890, 892 (6th Cir. 2020). And the Rule 54(b)

certification could not justify an early appeal because the district court gave no reasons why such

an appeal made sense. Id. at 892–93. Novia also had not properly established diversity jurisdiction

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No. 20-3608, Novia Communications v. Weatherby

under 28 U.S.C. § 1332 because it was a limited liability company that took the citizenship of its

members but had not identified any of those members. Id. at 893–94.

       On remand, Novia cured its defective jurisdictional allegations. The district court entered

a final judgment by dismissing Novia’s remaining claims with prejudice. With our jurisdiction

now secure, Novia again appeals the district court’s grant of summary judgment on its contract

claim. It argues that CBG breached the Purchase Agreement by terminating the sale and that

equitable estoppel barred CBG from exercising this termination right six months after it vested.

We address each argument in turn, reviewing the district court’s decision de novo. See Lossia v.

Flagstar Bancorp, Inc., 895 F.3d 423, 428 (6th Cir. 2018).

                                       II. Breach of Contract

       The parties agree that New York law applies because the Purchase Agreement contains a

forum-selection clause choosing that law. Cf. Masco Corp. v. Wojcik, 795 F. App’x 424, 427 (6th

Cir. 2019). Under New York contract law (as under the contract law in most states), a court must

enforce the plain terms of an unambiguous contract. See Omni Quartz, Ltd. v. CVS Corp., 287

F.3d 61, 64 (2d Cir. 2002). We thus may resolve a dispute about an unambiguous contract at this

summary-judgment stage. Id. And here, the unambiguous terms of the Purchase Agreement

allowed CBG to terminate the agreement in December 2015.

                                                  A

       Section 12.1 listed the ways in which one or both parties could terminate the Purchase

Agreement. Section 12.1(b) stated that a party could terminate it after 270 days so long as that

party’s failure to fulfill an obligation had not caused the delay in closing:

       This agreement may be terminated at any time prior to Closing . . . by Seller or
       Buyer if the Closing shall not have occurred on or before 270 days following the
       date of this Agreement; provided, however, that the right to terminate this
       Agreement under this Section 12.1(b) shall not apply to any party whose failure to

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No. 20-3608, Novia Communications v. Weatherby

       fulfill any material obligation under this Agreement shall have been the cause of,
       or shall have resulted in, the failure of the closing to occur prior to such date[.]

Agreement, R.16-2, PageID 221. The parties agree that this section created a right to terminate

after 270 days. And they agree that the 270-day period had run. They part ways only over whether

CBG’s “failure to fulfill” a “material obligation” was the “cause of” the failure to close.

       Novia claims that CBG failed to “fulfill” three “obligations.” Two “obligations” on which

Novia relies (in Sections 4.6 and 4.11) were in the agreement’s Article 4. In that article, CBG

issued a series of “representations and warranties.” Section 4.6 warranted that the “Seller has

good, valid and marketable title to all of the Station Assets, and such title will be delivered free

and clear of all Liens at the Closing.” Id., PageID 212. Section 4.11 warranted that:

       Seller is not subject to any order, writ, injunction, judgment, arbitration decision or
       decree having binding effect and affecting the Station or the Station Assets or which
       restrains or enjoins the transactions contemplated hereby, and no such proceeding
       is pending. There is no material litigation pending by or against, or to the best of
       Seller’s knowledge, threatened against Seller which relates to the Station or could
       affect any of the Station Assets.

Id., PageID 214. The third “obligation” on which Novia relies (in Section 9.5) was in Article 9.

This article made Novia’s own obligations under the agreement “subject to the fulfillment of”

certain “conditions prior to or on the Closing Date[.]” Id., PageID 217. Section 9.5 conditioned

Novia’s obligations on the following: “There shall not be any Liens on the Station Assets (other

than Permitted Liens) or any financing statements of record with respect to the Station Assets

except those to be released at the Closing.” Id., PageID 218.

       Novia claims that the CBG shareholders’ lawsuit and FCC petition violated the two

warranties in Sections 4.6 and 4.11 and the condition in Section 9.5 because those filings qualified

as pending “litigation” or “liens.” Yet Novia’s reliance on these three sections fails for an

unambiguous reason: timing. The text of the three sections (in contrast to the text of nearby

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No. 20-3608, Novia Communications v. Weatherby

sections) shows that they made commitments about the state of the world at two discrete dates: the

date of the agreement and the date of closing. The shareholders’ suit and FCC petition existed at

neither time because they arose after the agreement date and because the closing never occurred.

       We begin with each section’s text. Start with Section 4.6. It issued a warranty about the

facts that existed as of the date of the Purchase Agreement and a warranty about the facts that

would exist at a concrete future date. The section warranted that CBG “has” (in the present tense)

“good, valid and marketable title to all of the Station Assets.” Id., PageID 212. Novia has not

claimed that CBG lacked valid title on the agreement date. It instead relies on the second forward-

looking warranty: that the “title will be delivered free and clear of all Liens at the Closing.” Id.

(emphasis added). According to Novia, the shareholders’ suit and FCC petition were “liens” under

the agreement’s broad definition of that term (any claim or encumbrance on the station assets).

Yet even if these filings were “liens” (CBG disputes the point), this warranty did not pledge that

CBG’s title would be free of liens every day in between the agreement date and the closing date.

It promised only to deliver a lien-free title “at the Closing.” CBG thus could not have failed to

fulfill this date-specific obligation because the closing never took place.

       Turn to Section 4.11. In this section, CBG again issued a warranty about the facts that

existed as of the date of the Purchase Agreement. It warranted that, on that date, there “is” (in the

present tense) “no material litigation pending” or “threatened” against CBG relating to the station.

Id., PageID 214. That warranty was true. The minority shareholders did not file their suit until

three months later. And Novia has identified no evidence suggesting that the shareholders had

threatened CBG with this suit on or before the agreement date.

       End with Section 9.5. It gave Novia the right to avoid its contract obligations if there were

“any Liens on the Station Assets[.]” Id., PageID 218. But Article 9 of the Purchase Agreement

                                                  7
No. 20-3608, Novia Communications v. Weatherby

allowed CBG to meet this condition “prior to or on the Closing Date.” Id., PageID 217 (emphasis

added). So again, CBG could violate this no-lien duty only if liens existed at the closing. Because

the closing never happened, CBG did not fail to fulfill the duty.

       The “context of the entire agreement” confirms this reading. Sayers v. Rochester Tel. Corp.

Supplemental Mgmt. Pension Plan, 7 F.3d 1091, 1095 (2d Cir. 1993) (quoting W.W.W. Assocs.,

Inc. v. Giancontieri, 566 N.E.2d 639, 643 (N.Y. 1990)). Other sections show that the warranties

in Sections 4.6 and 4.11 and the condition in Section 9.5 applied at discrete points—either when

made or at closing. Another condition in Article 9 made this point expressly. Section 9.1(a) told

the parties that CBG’s “representations and warranties” (including those in Sections 4.6 and 4.11)

must “have been true and correct in all material respects as of the date when made and shall be

deemed to be made again on and as of the Closing Date and shall then be true and correct in all

material respects.” Agreement, R.16-2, PageID 217 (emphases added). This provision shows that

CBG’s initial representations were made on a discrete date—the date of the Purchase Agreement.

Indeed, Section 9.1(a) would serve no purpose under Novia’s view that those representations were

made (and had to remain true) on each and every day of the entire “executory period”—from the

agreement date through the closing date.

       When, by contrast, the parties intended to impose this type of ongoing duty during the

entire executory period, they did so in clear language. In Article 6, for example, CBG issued a

series of covenants that it must follow “from the date hereof until the completion of the Closing.”

Id., PageID 215 (emphasis added). Section 6.1 obliged CBG to “operate the Station consistent

with past practice.” Id. Even more notably, Section 6.1 indicated that CBG “shall not, by any act

or omission, knowingly cause any of the representations and warranties” in Article 4 “to become

untrue or incorrect in any material respect,” and it required CBG to “use commercially reasonable

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No. 20-3608, Novia Communications v. Weatherby

efforts to cause the conditions” identified in another article to be met. Id. Likewise, Section 6.2

stated that CBG must notify Novia “promptly upon learning of the occurrence of any event . . . that

would have caused a material breach” of CBG’s representations “had such event occurred or been

known to [CBG] prior to” the date of the Purchase Agreement. Id.

       Novia makes no claim that CBG violated these continuing duties. Novia, for example,

does not claim that CBG knowingly caused its minority shareholders to sue in violation of Section

6.1. And Novia does not claim that CBG failed to give Novia notice of that suit in violation of

Section 6.2. Novia instead seeks to transform Sections 4.6, 4.11, and 9.5 into similar continuous

duties because it cannot rely on the agreement’s specific provisions imposing those duties. By

doing so, Novia would render these other provisions superfluous in violation of basic contract

principles. Sayers, 7 F.3d at 1095; see Antonin Scalia & Bryan A. Garner, Reading Law: The

Interpretation of Legal Texts 174 (2012).            Why bar CBG from knowingly causing its

representations to become untrue after the agreement date if Sections 4.6 and 4.11 already made

CBG strictly liable for any post-agreement event that rendered those representations untrue?

       All told, the text of Sections 4.6, 4.11, and 9.5 as well as surrounding provisions show that

those three sections made representations or imposed a condition on discrete dates. Because CBG

did not violate the representations or the condition on those dates, it did not fail to fulfill its

obligations under the agreement. That fact, in turn, allowed it to exercise its termination right.

                                                 B

       Novia’s responses fail to persuade us otherwise. First, Novia begins with the agreement’s

text. Novia’s brief offers no reading of the language in Sections 4.6, 4.11, or 9.5 that would turn

them into continuing duties. It instead relies on other provisions for its claim that these three

sections should be read in that atextual way. Novia initially alleges that Section 9.1(a) required

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No. 20-3608, Novia Communications v. Weatherby

CBG’s representations in Article 4 “to be true not only as of the Effective Date of the Agreement,

but up to and including the Closing Date[.]” Appellant’s Br. 13. Its brief misstates Section 9.1(a)’s

text. That section says that these representations are made at two distinct points (on the agreement

date and the closing date), not including the entire period in between.

       Novia next cites the covenants in Article 6, which did apply between the agreement and

closing dates. Section 6.2 required CBG to notify Novia of any event that either (1) “would cause

or constitute a material breach” of its warranties in Article 4 or (2) “would have caused a material

breach [of those warranties] had such event occurred or been known to [CBG] prior to” the

agreement date. Agreement, R.16-2, PageID 215. If CBG’s warranties only concerned the facts

existing as of the agreement date, Novia asks, when could a post-agreement event “cause or

constitute a material breach” of those warranties under the first of these clauses? The answer:

some of CBG’s warranties were future-looking, such as CBG’s warranty that it would deliver good

title at closing. If CBG took an action that categorically prohibited it from being able to deliver

good title at closing, it could breach this future-looking guarantee.        In fact, it is Novia’s

interpretation that renders one of these clauses a nullity: Why would the parties add Section 6.2’s

second clause (about an event hypothetically occurring as of the agreement date) if all of Article

4’s warranties already covered any event that occurred after that date?

       Novia also looks to Section 9.6. It imposes the following condition on Novia’s contractual

obligations: “Since the date of this Agreement, there shall have not occurred a Material Adverse

Effect” (defined as an event that could negatively affect the station). Id., PageID 218. Section

9.6’s use of “[s]ince the date of this Agreement,” according to Novia, shows that the

representations and conditions in sections other than Section 9.6 apply throughout the entire

executory period too. The opposite is true. Section 9.6 reiterates that the parties knew how to

                                                 10
No. 20-3608, Novia Communications v. Weatherby

impose continuing obligations when they wanted to. The parties did so in Section 9.6. But they

did not do so in the sections on which Novia relies for its claimed breach.

       Second, Novia turns to precedent. It argues that Project Gamma Acquisition Corp. v. PPG

Industries, Inc., 934 N.Y.S.2d 671 (Sup. Ct. 2011), interpreted a warranty in a similar agreement

to apply continuously between the agreement and closing dates. Not so. The court found a breach

of that warranty on a date-certain closing. The seller had agreed to sell its glass business to the

buyer in September 2007 and represented that no customer had threatened to reduce its glass

purchases. Id. at 672–73. The agreement included a term (like Section 9.1(a) here) stating that

the seller’s “representations and warranties . . . shall be true and correct in all material respects

. . . when made and at and as of the Closing[.]” Id. at 673–74 (emphasis omitted). The agreement

also stated that the closing would occur by December 31 and allowed either side to terminate if it

had not. Id. at 674–75. In between the September agreement and December closing, a customer

threatened to reduce purchases. Id. The buyer terminated the agreement and sued the seller for

breaching the warranty based on that threat. Id. The court found a breach, reasoning that the seller

had warranted that, “as of the Closing, which would be no later than December 31, 2007 absent

written agreement, [the seller] would not have received a writing by [a customer] expressing a

threat or intention to reduce” its purchases. Id. at 675. Yet the customer had not “rescinded its

threat as of December 31, 2007, the outside Closing Date,” so the court found a breach based on

the facts that existed on that date. Id. Here, by contrast, the Purchase Agreement identifies no

similarly concrete closing date (except perhaps ten days after the FCC’s final consent). That is

why Novia is forced to argue that CBG’s warranties covered the entire executory period.

       Third, Novia turns to policy. Novia suggests that our reading of the agreement renders it

“commercially nonsensical” because the reading would have forced Novia to close even if CBG’s

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No. 20-3608, Novia Communications v. Weatherby

warranties about the station became false in between the agreement and closing dates. Novia is

mistaken. If a post-agreement event would have caused CBG’s pre-agreement warranties to no

longer be true, CBG agreed to notify Novia. And the agreement left Novia in the driver’s seat

from then on. If Novia thought that this event had a “material adverse effect” on the station,

Section 9.6 allowed it to avoid its obligations. Agreement, R.16-2, PageID 218. And a separate

termination provision in Section 12.1 allowed it to terminate the deal if that event would also

prohibit Section 9.6’s no-adverse-event condition from being met. Id., PageID 221.

       Fourth, and finally, Novia argues that CBG cannot benefit from its own breach under New

York law. Maybe so. But CBG did not breach. So we must enforce the Purchase Agreement’s

terms as written. They unambiguously confirm the district court’s decision.

                                      III. Equitable Estoppel

       Novia also argues that even if CBG properly terminated the Purchase Agreement under the

agreement’s terms, it should be estopped from doing so six months after the termination right

vested. Novia cannot establish the elements of equitable estoppel under New York law.

       Equitable estoppel has deep roots in New York’s common law of contracts. The doctrine

arose from situations in which a contracting party told the other side that it need not comply with

a contract provision but then reneged by attempting to use the other side’s resulting noncompliance

against it. See Imperator Realty Co. v. Tull, 127 N.E. 263, 264–65 (N.Y. 1920); Thomson v. Poor,

42 N.E. 13, 14–15 (N.Y. 1895). Suppose, for example, that a contract for the sale of property

noted that the seller must get the property into compliance with local building codes before closing,

but the purchaser stated that the seller could simply provide the funds needed for compliance at

closing. See Imperator Realty, 127 N.E. at 263–64. If the purchaser then refused to proceed with

the deal on the ground that the seller had breached the contract by not getting the property into

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No. 20-3608, Novia Communications v. Weatherby

compliance, equitable estoppel would bar the purchaser from “tak[ing] advantage of an omission

induced by his unrevoked consent.” Id. at 265; see id. at 266–67 (Cardozo, J., concurring).

       Courts applying this equitable doctrine must balance competing concerns. The doctrine

has after-the-contract benefits by allowing courts to prevent inequities arising from the parties’

course of performance. “It is imposed by law in the interest of fairness to prevent the enforcement

of rights which would work fraud or injustice upon the person against whom enforcement is sought

and who, in justifiable reliance upon the opposing party’s words or conduct, has been misled into

acting upon the belief that such enforcement would not be sought.” Nassau Tr. Co. v. Montrose

Concrete Prods. Corp., 436 N.E.2d 1265, 1269 (N.Y. 1982). Yet the doctrine has before-the-

contract costs—namely, transaction costs. If courts haphazardly invoke the doctrine, it creates

uncertainty for transacting parties over whether (and when) courts will enforce their contract terms.

That uncertainty could stop beneficial exchanges. After all, “[u]nless pacts are enforced according

to their terms, the institution of contract, with all the advantages private negotiation and agreement

brings, is jeopardized.” Kham & Nate’s Shoes No. 2, Inc. v. First Bank of Whiting, 908 F.2d 1351,

1357 (7th Cir. 1990). New York courts have thus hesitated before using equitable doctrines that

would “rewrite the agreement to relieve a sophisticated contracting party from terms that it later

deems disadvantageous.” John Doris, Inc. v. Solomon R. Guggenheim Found., 618 N.Y.S.2d 99,

100 (App. Div. 1994); see Gaia House Mezz LLC v. State St. Bank & Tr. Co., 720 F.3d 84, 91 (2d

Cir. 2013); James Baird Co. v. Gimbel Bros., Inc., 64 F.2d 344, 346 (2d Cir. 1933) (Hand, J.).

       To strike the proper balance, courts have stated that “[t]he doctrine of equitable estoppel is

to be invoked sparingly and only under exceptional circumstances.” Mahuson v. Ventraq, Inc.,

988 N.Y.S.2d 309, 311 (App. Div. 2014) (quoting Townley v. Emerson Elec. Co., 702 N.Y.S.2d

728, 729 (App. Div. 2000)). Generally, the party to be estopped must have knowingly made a

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No. 20-3608, Novia Communications v. Weatherby

statement or engaged in conduct that amounts to a false representation (or concealment of material

fact) with intent that the other side would rely on the statement or conduct. And the party invoking

estoppel must have, in fact, detrimentally relied. See Airco Alloys Div., Airco Inc. v. Niagara

Mohawk Power Corp., 430 N.Y.S.2d 179, 187 (App. Div. 1980); 57 N.Y. Jur. 2d Estoppel §§ 8,

35, Westlaw (updated Nov. 2020); cf. Gaia House, 720 F.3d at 90.

       Specifically in this contract setting, contracting parties often seek to use estoppel to prevent

the other side from invoking a contract right based on that side’s conduct (not its statements) during

the course of performance.       When a party argues that the other side’s conduct impliedly

“represented” that it would not invoke a contract right, not just any conduct will do. Rather, the

New York courts have adopted a clear rule to govern this type of claim: The other side’s conduct

must be plainly incompatible with the contract’s terms and so signal its intent to depart from those

terms. See 57 N.Y. Jur. 2d Estoppel § 16; Rose v. Spa Realty Assocs., 366 N.E.2d 1279, 1283–84

(N.Y. 1977). If, by contrast, the other side’s conduct is “compatible with the agreement as

written,” the conduct cannot establish estoppel because it provides no basis to infer that the party

intends to disavow a contract right. 57 N.Y. Jur. 2d Estoppel § 16; see Towers Charter & Marine

Corp. v. Cadillac Ins. Co., 894 F.2d 516, 522 (2d Cir. 1990); Town of Hempstead v. Incorporated

Village of Freeport, 790 N.Y.S.2d 518, 520 (App. Div. 2005); Ford Motor Credit Co. v. Sawdey,

730 N.Y.S.2d 611, 612 (App. Div. 2001). This clear equitable-estoppel rule—that a party’s

conduct must be incompatible with the contract as written—permits the contracting parties to

predictably order their affairs during the contractual relationship without worrying that a court will

later conclude that the party has forfeited reliance on a contract right.

       Two examples illustrate the scope of the rule. Compare 335 Second St. Hous. Corp. v.

Fridal Enters., Inc., 830 N.Y.S.2d 173, 173–74 (App. Div. 2007), with Flushing Unique Homes,

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No. 20-3608, Novia Communications v. Weatherby

LLC v. Brooklyn Fed. Sav. Bank, 954 N.Y.S.2d 606, 609 (App. Div. 2012). In 335 Second Street,

the court held that estoppel applied when a lender had long charged a borrower a low interest rate

because this charged rate conflicted with the one authorized by the contract. 830 N.Y.S.2d at 173–

74; cf. First Union Nat’l Bank v. Tecklenburg, 769 N.Y.S.2d 573, 576–77 (App. Div. 2003). In

Flushing, by contrast, the court held that estoppel did not apply when a lender belatedly exercised

a contractual right to demand full repayment because the delayed request for that repayment

comported with the contract as written. 954 N.Y.S.2d at 609; cf. Towers, 894 F.2d at 522.

       This rule dooms Novia’s estoppel claim here. Novia does not argue that anyone at CBG

made false statements about CBG’s intent to terminate the contract. Although Novia’s president

averred that Weatherby told him that CBG intended to close, the president did not offer specific

dates for Weatherby’s statements (other than that they came before CBG’s termination). And

Weatherby testified that CBG did intend to close through December 2015. Novia instead relies on

CBG’s conduct to justify estoppel. Novia focuses on two CBG actions: (1) its acceptance of

Novia’s payments under the Marketing Agreement and (2) its acquiescence to Novia’s settling of

the minority shareholders’ suit. These actions, according to Novia, impliedly signaled that CBG

would not later assert its termination right.        But Novia’s claim fails because “[n]one of

the . . . conduct attributed to [CBG] was inconsistent with its rights under the agreements as

written.” Towers, 894 F.2d at 522; see Flushing, 954 N.Y.S.2d at 609.

       To begin with, CBG’s acceptance of payments under the Marketing Agreement did not

conflict with its termination right. The Marketing Agreement was a separate contract arising from

separate consideration. Novia agreed to pay CBG a monthly fee. In return, Novia received

programming rights, advertising revenues, and CBG’s day-to-day operation of the station.

Benefits and burdens flowed both ways. And although the Marketing Agreement referenced the

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No. 20-3608, Novia Communications v. Weatherby

Purchase Agreement, it did not eliminate the parties’ rights under the Purchase Agreement. That

includes the right to terminate that agreement after 270 days. In fact, Novia nowhere suggests that

the Marketing Agreement’s plain language abrogated the parties’ right to terminate. It instead asks

us to add that term after the fact. But equitable estoppel does not permit us to “rewrite the

agreement to relieve” Novia of terms it now regrets. John Doris, 618 N.Y.S.2d at 100; Gaia

House, 720 F.3d at 91. Because CBG’s performance under the Marketing Agreement (including

its acceptance of payments) was “compatible with” its retention of a termination right under the

Purchase Agreement, estoppel cannot arise from this conduct. Flushing, 954 N.Y.S.2d at 609.

       Likewise, CBG’s acquiescence to Novia’s settlement of the shareholders’ suit did not

conflict with its termination right. Novia negotiated a settlement with the minority shareholders

in which they gave up their stake in CBG and released their claims against Novia for undisclosed

consideration. And (accidentally or not) these minority shareholders stipulated to a dismissal of

the suit against all parties, including CBG and Weatherby. Novia again fails to identify anything

in this course of conduct that conflicts with CBG’s retention of its termination right. The release

agreement, for example, nowhere includes a provision eliminating that right (and did not include

CBG as a party in any event). The dismissal likewise contained no concession that CBG was

giving up its termination right as a condition of dismissal. Instead, Novia asks us to add such a

term to these items. But equitable estoppel does not allow us to do so because CBG’s alleged

acceptance of Novia’s settlement efforts was again “compatible with” its ability to later invoke its

termination right. Id. (Indeed, Novia retained the same termination right and could have ended

the deal if its business outlook changed in a way that made the deal unprofitable.)

       Novia’s responses do not change things. It initially relies on irrelevant caselaw. New York

courts often base estoppel on “the acceptance and retention by one having knowledge or notice of

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No. 20-3608, Novia Communications v. Weatherby

the facts, of benefits derived from a transaction, contract, instrument, regulation, or statute, that

such party might have rejected or contested.” 57 N.Y. Jur. 2d Estoppel § 23. This “acceptance-

of-benefits” principle often arises when a contract term is ambiguous. See, e.g., Savasta v. 470

Assocs., 579 N.Y.S.2d 167, 169 (App. Div. 1992). In that setting, a party cannot accept the benefits

associated with one reading of the ambiguous term but argue for the opposite reading when

attempting to avoid the burdens associated with its initial interpretation. See id.; cf. R.A.C.

Holding, Inc. v. City of Syracuse, 684 N.Y.S.2d 740, 741 (App. Div. 1999). This law has no

relevance here. CBG has kept to the same interpretation of the relevant contract terms throughout:

The Marketing Agreement’s payments were for separate consideration and both sides retained

their termination rights during the course of their dealings.

       This “acceptance-of-benefits” principle also often arises after a party’s breach. If the

nonbreaching party continues to accept the contract’s benefits after that breach, the nonbreaching

party cannot later invoke an absolute right to terminate the contract based on the breach. See, e.g.,

ESPN, Inc. v. Off. of Comm’r of Baseball, 76 F. Supp. 2d 383, 391–92 (S.D.N.Y. 1999). This law

also has no relevance here. CBG did not invoke a right to terminate the Purchase Agreement based

on Novia’s breach. It invoked the right based on the agreement’s plain terms.

       Novia next relies on irrelevant factual claims. It suggests that the Marketing Agreement

was premised on the parties’ anticipation that the asset sale would close. Perhaps so. But the

Marketing Agreement did nothing to abrogate the Purchase Agreement’s termination right. That

fact bars Novia’s reliance on this agreement. As a matter of contract law, we must enforce the

contract’s expressed terms, not the parties’ unexpressed hopes. As a matter of estoppel law, CBG’s

conduct was fully consistent with its adherence to the contract terms, which bars Novia’s claim to

estoppel based on its conduct. Flushing, 954 N.Y.S.2d at 609. In all events, Novia’s own conduct

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No. 20-3608, Novia Communications v. Weatherby

rebuts its claim that performance under the Marketing Agreement hinged on the expectation that

the asset sale would close. For months after CBG exercised its termination right and Novia knew

that the sale would not close, Novia continued to participate in the Marketing Agreement despite

its ability to end it.

        Novia also implies that CBG intended to terminate the Purchase Agreement for the entire

six months it had the right to do so. Whether or not this allegation is true, Novia’s claim lacks

merit for a separate reason: Novia “failed to establish that the conduct upon which [it] relied to

establish the estoppel was ‘incompatible with the agreement as written, a requisite for applying

equitable estoppel’” under New York law. Ford Motor Credit Co., 730 N.Y.S.2d at 612 (citation

omitted). Regardless, Novia offers no proof for its allegation. And CBG’s undisputed testimony

shows the opposite: Weatherby swore that CBG decided to terminate only in December because

of the approaching FCC auction.

        Lastly, Novia argues that even if the district court could have rejected its equitable-estoppel

argument as an initial matter, the court wrongly did so through CBG’s motion for reconsideration.

Yet the Federal Rules of Civil Procedure make clear that an interlocutory order “may be revised

at any time before the entry of a judgment adjudicating all the claims and all the parties’ rights and

liabilities.” Fed. R. Civ. P. 54(b). So “a district court may always reconsider and revise its

interlocutory orders while it retains jurisdiction over the case.” In re Life Invs. Ins. Co. of Am.,

589 F.3d 319, 326 n.6 (6th Cir. 2009) (citing Rodriguez v. Tenn. Laborers Health & Welfare Fund,

89 F. App’x 949, 959 (6th Cir. 2004)). The rules generally permit district judges, no less than

Supreme Court Justices, to follow Justice Jackson’s astute advice: “I see no reason why I should

be consciously wrong today because I was unconsciously wrong yesterday.” Massachusetts v.

United States, 333 U.S. 611, 639–40 (1948) (Jackson, J., dissenting). And Novia identifies no

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No. 20-3608, Novia Communications v. Weatherby

prejudice from the way in which the court resolved this claim. The court thus did not commit

procedural error by reconsidering its earlier estoppel ruling.

       At day’s end, we would not “promote justice” if we retroactively revised the parties’

agreement to eliminate CBG’s termination right simply because Novia (a sophisticated business)

did “not protect” itself by adding such a term to an agreement during the parties’ extended

negotiations. See James Baird, 64 F.2d at 346. By enforcing contract terms except in rare

circumstances, New York law adopts a clear rule for future transacting parties over how they may

protect themselves: negotiate over the desired term and include it in the contract.

       We affirm.

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No. 20-3608, Novia Communications v. Weatherby

       HELENE N. WHITE, Circuit Judge, concurring in part and dissenting in part.

       I join the majority’s opinion except as to the equitable estoppel claim. I would hold that

issues of fact preclude summary judgment on the question whether CBG and Weatherby were

estopped from terminating the Asset Purchase Agreement.

       “The purpose of equitable estoppel is to preclude a person from asserting a right after

having led another to form the reasonable belief that the right would not be asserted, and loss or

prejudice to the other would result if the right were asserted.” Shondel J. v. Mark D., 853 N.E.2d

610, 613 (N.Y. 2006). Here, the Asset Purchase Agreement provided that either party could

terminate the agreement 270 days after execution, which was June 28, 2015. After that right

accrued, Weatherby watched as Novia spent months negotiating a settlement with the minority

shareholders—a settlement of great value to Weatherby and of no value to Novia should

Weatherby terminate the Asset Purchase Agreement—without offering Novia a hint that he was

going to terminate the sale on Christmas Eve, mere minutes after Novia successfully negotiated

for the final dismissal of the minority shareholders’ claims against CBG and Weatherby. To the

contrary: in late September 2015, Weatherby asked Novia to include language in the Mutual

Release Agreement that would terminate the rights of the minority shareholders in CBG—again,

of great benefit to Weatherby personally, whose majority stake in CBG would immediately grow

ahead of the forthcoming 2016 FCC spectrum auction, but of no value to Novia should the Asset

Purchase Agreement be terminated, as it was months before the auction.

       Under New York law, the estopped party’s conduct must have been incompatible with the

contract’s terms as written. See Rose v. Spa Realty Assocs., 366 N.E.2d 1279, 1283–84 (N.Y.

1977). Weatherby claims in his affidavit to have not made the decision to terminate the sale with

Novia until the end of December 2015, but given the suspicious timing, a reasonable juror could

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No. 20-3608, Novia Communications v. Weatherby

doubt the veracity of Weatherby’s assertion. A juror could, quite reasonably, believe that

Weatherby planned to exercise the right to terminate the contract with Novia but nevertheless

solicited (and later accepted) favorable terms from Novia in the Mutual Release Agreement with

the intent to terminate the Asset Purchase Agreement the minute he received the benefit of Novia’s

settlement with the minority shareholders. In that case, his solicitation of favorable terms from

Novia, and subsequent acceptance of the benefits of those terms, was incompatible with his later

reliance on the Asset Purchase Agreement’s 270-day-termination provision to nix the sale to

Novia. Accordingly, I would hold that a jury must decide whether CBG and Weatherby were

estopped from terminating the Asset Purchase Agreement.

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