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Alliance Media Group, Inc. v. Great Outdoor

August 7, 2007


On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, MONL-2801-04.

Per curiam.


Argued May 29, 2007

Before Judges S.L. Reisner, Seltzer and C.L. Miniman.

Plaintiff Alliance Media Group, Inc. (Alliance), appeals from the March 24, 2006, dismissal of various contractual claims*fn1 against defendant Great Outdoor Advertising (Great Outdoor) following a bench trial.*fn2 Alliance alleges that the trial judge made errors in his credibility assessments and factual determinations which led to incorrect legal conclusions. Alliance further alleges that the trial judge should have determined that a contract existed with terms granting Alliance various equity interests. Finally, Alliance alleges that Great Outdoor violated the implied covenant of good faith and fair dealing. Finding all of Alliance's contentions to be without merit, we affirm.

Alliance is a billboard sales company owned solely by Andrew James Naysmith, who was Alliance's only witness at trial. Great Outdoor is in the business of developing, maintaining and leasing billboard locations or sites. Defendants Anthony and Jeffrey Gaess are the principals of Great Outdoor. In October 1994 Andrew Naysmith discussed a business relationship with Great Outdoor and he formed Alliance for this purpose. Andrew Naysmith testified that his understanding of the financial relationship with Great Outdoor was that Alliance would receive a $1000 draw per week against commissions at ten percent and that it would also receive equity participation of twenty-five percent in five locations that Alliance introduced to Great Outdoor. He also testified that Alliance was to receive trailing commissions*fn3 at the same rate as the regular commissions. While a formal contract was never executed, drafts were created on October 14, 1994, and fourteen months later on December 11, 1995. During the time between drafts, Alliance had been working with Great Outdoor and billing them for commissions, which Great Outdoor paid.

Jeffrey Gaess testified on behalf of Great Outdoor. He handled the advertising sales for Great Outdoor, but developed cancer in 1994 and contacted Andrew Naysmith to take care of the advertising. Great Outdoor hired Alliance for this work, supplied a company car, and agreed to a $1000 per week draw against commissions. Alliance provided advertising services from 1994 until Great Outdoor was sold in 1997. Jeffrey Gaess admitted to discussing a future equity arrangement, but the parties never came to an agreement on the matter. He had no understanding that Alliance would be granted an equity interest in any site developed for billboard advertising. As to the December 11, 1995, document, he testified that it was a response to Andrew Naysmith's request "to draw up a draft of what might be in an agreement," but he considered its terms to be up for discussion. Andrew Naysmith never discussed the matter with Jeffrey Gaess, even though Jeffrey Gaess made several attempts to do so. He testified that Andrew Naysmith never indicated that he accepted the terms set forth in the December 11, 1995, draft agreement, which, like the earlier draft, required Alliance to make capital contributions for development costs in exchange for a twenty percent interest.

After all the proofs were presented, the judge issued a written decision. He found that the "parties intended to be bound only by a written contract" and that Alliance conceded in its answers to interrogatories that there were no written agreements. The judge based his finding as to the parties' intent on the attorney-review provision in the December 11, 1995, draft, which "bespeaks a written agreement," and on Alliance's refusal to accept the terms in either proposed draft. The judge then concluded that no oral contract could be found in such circumstances under the authority of Morton v. 4 Orchard Land Trust, 180 N.J. 118, 129 (2004), and Panetta v. Equity One, Inc., 378 N.J. Super. 298, 305 (App. Div. 2005), rev'd on other grounds, 190 N.J. 307 (2007). The judge also found the absence of any language in either draft addressing trailing commissions and new advertising locations to be significant and concluded that the parties never entered into a formal contract.

The judge then turned to the credibility of Andrew Naysmith and Jeffrey Gaess. He concluded that Andrew Naysmith's testimony was not credible because it was not realistic. He found that Alliance played only a peripheral, minimal role in the development of the advertising sites, foreclosing it from an equity stake in any of them. As to the alleged equity payments made with respect to one site, the judge concluded that those payments had been made in error based on the circumstances surrounding them, finding the explanation given by Jeffrey Gaess to be entirely believable:

He answered questions directly and to the point; his recall of events, some years removed and multi-faceted in scope, had remarkable clarity to it; and his demeanor on the witness stand reflected fairness and candor. This court believes Jeffrey Gaess when he declares that plaintiff did not have an equity interest in any of the five contested properties. This court concludes that any payment to plaintiff labeled as "equity" was done, but not done knowingly. Yes, the payments were made, but they were made in error. Mr. Gaess was confronted with a significant medical condition diagnosed in late 1995, leading to prostate removal surgery in early 1996 and follow up hormone and radiation therapy throughout 1996 and into 1997. He did not return to work full time until April 1997. During the early part of his illness some of plaintiff's invoices . . . , not in any way identified as an "equity" billing, were submitted to defendants and were paid. It was a mistake that they were paid, but only a mistake. This court rejects the position that these two payments are evidence of defendant's acceptance of plaintiff as an equity participant.

The judge also rejected the claim respecting trailing commissions. He found no evidence in the record that the parties ever negotiated this type of compensation. He also found no evidence that this type of commission was an industry-wide practice. Although he found that the parties did enter into an oral agreement to hire Alliance to sell existing outdoor space at $1000 per week as a draw against commissions, he found that all sums due had been paid. As a consequence, he dismissed Alliance's claims for breach of contract, unjust enrichment, breach of the covenant of good faith and fair dealing, and tortious interference with prospective economic advantage.

Alliance presents the following issues for our consideration:


The trial court erred in the assessment of credibility which formed the ...

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