August 7, 2007
ALLIANCE MEDIA GROUP, INC., PLAINTIFF-APPELLANT,
GREAT OUTDOOR, INC., D/B/A GAESS OUTDOOR ADVERTISING, ANTHONY GAESS, AND JEFFREY GAESS, JOINTLY, SEVERALLY, AND IN THE ALTERNATIVE, DEFENDANTS-RESPONDENTS, AND CLEAR CHANNEL OUTDOOR, CLEAR CHANNEL COMMUNICATIONS, INC., UNIVERSAL OUTDOOR ADVERTISING, NEXT MEDIA, DEFENDANTS.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, MONL-2801-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
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:
POINT I --
The trial court erred in the assessment of credibility which formed the basis for its decision.
1) Was there an agreement between the parties for Alliance to sell advertising on behalf of the defendants, and to identify and locate sites for the development of outdoor advertising displays as the plaintiff alleges, or was the sole task of the plaintiff to sell advertising, as the defendants allege?
2) Did the defendants, in fact, knowingly make equity payments to the plaintiff consistent with the plain-tiff's claim that the agreement that plaintiff would receive 25% of equity in sites identified and worked upon by the plaintiff?
3) Was Alliance acting within the scope of the agreement between the parties?
POINT II --
The trial court erred in finding that no contract existed between the parties, and should have found the terms of the contract between the parties to be based upon and consistent with the actions of the parties during the relationship, as alleged by the plaintiff-appellant.
POINT III --
The defendants are liable to the plaintiff for breach of the implied covenant of good faith and fair dealing for failing to advise the plaintiff of the intended sale of the New York properties such that the plaintiff could protect its interests; in developing the sites produced by the plaintiff without compensation to the plaintiff; and for failing to give notice to the plaintiff of the abandonment of the New York City sites such that the plaintiff could take over the operation of these sites.
Our review of a trial judge's conclusions of law and their application to the facts is de novo. "A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalpan, 140 N.J. 366, 378 (1995). On the other hand, our review of a trial judge's findings of fact is deferential.
Considering first the scope of our appellate review of judgment entered in a non-jury case, as here, we note that our courts have held that the findings on which it is based should not be disturbed unless ". . . they are so wholly insupportable as to result in a denial of justice," and that the appellate court should exercise its original fact finding jurisdiction sparingly and in none but a clear case where there is no doubt about the matter. That the finding reviewed is based on factual determinations in which matters of credibility are involved is not without significance. Findings by the trial judge are considered binding on appeal when supported by adequate, substantial and credible evidence. It has otherwise been stated that "our appellate function is a limited one: we do not disturb the factual findings and legal conclusions of the trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice," and the appellate court therefore ponders whether, on the contrary, there is substantial evidence in support of the trial judge's findings and conclusions.
[Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 483-84 (citations omitted) (1974).]
Our Supreme Court explained that "[t]he rationale underlying that limited scope of appellate review is that a trial judge's findings are substantially influenced by his or her opportunity to hear and see the witnesses and to get a 'feel' for the case that the reviewing court can not enjoy." Twp. of W. Windsor v. Nierenberg, 150 N.J. 111, 132 (1997).
This Court has recognized that "[b]ecause a trial court 'hears the case, sees and observes the witnesses, [and] hears them testify,' it has a better perspective than a reviewing court in evaluating the veracity of witnesses." In practice, when the Rova Farms standard is applied and the reviewing court is satisfied that the trial court's findings could reasonably have been reached on sufficient credible evidence in the record, the decision below should not be disturbed. [Id. at 132-33 (alteration in original) (citations omitted).]
"Appellate review does not consist of weighing evidence anew and making independent factual findings; rather, our function is to determine whether there is adequate evidence to support the judgment rendered at trial." Cannuscio v. Claridge Hotel & Casino, 319 N.J. Super. 342, 347 (App. Div. 1999). "When the reviewing court is satisfied that the findings meet this criterion, its task is complete and it should not disturb the result, even though it has the feeling it might have reached a different conclusion were it the trial tribunal." State v. Johnson, 42 N.J. 146, 162 (1964).
Turning to the issues before us, it is readily apparent that we may not disturb the trial judge's determinations that were affected by the credibility of Andrew Naysmith and Jeffrey Gaess. Their testimony was directly in conflict respecting the claims made by Alliance in this case. Obviously, the judge had to credit one and not the other and expressed his reasons for believing Jeffrey Gaess. He determined that the two alleged equity payments, which were the only documentary evidence supporting the equitable interest claimed by Alliance in one of the sites, had been made in error. These findings are "supported by adequate, substantial and credible evidence," and are binding on appeal. Rova Farms, supra, 65 N.J. at 483-84.
We also do not find that the trial court erred in applying the law to the facts in concluding that there was no agreement between the parties respecting the claimed equity interest and trailing commissions. The law governing contract formation is well developed. In Trustees of the First Presbyterian Church in Newark v. Howard Company-Jewelers, 12 N.J. 410, 413 (1953), our Supreme Court was required to determine whether a binding contract arose from an offer and acceptance despite the contemplation of the parties that a written lease would be prepared.
The Court stated:
It is a well-established principle of contract law that to constitute a binding contract in such circumstances the proposition of one party must be met by an acceptance of the other, which corresponds with it entirely and adequately; and that until the actual completion of the bargain, either party is at liberty to withdraw his consent and put an end to the negotiation.
The question is primarily one of intention and an offer to constitute a contract must be in a form which is intended of itself to create legal relations on its acceptance. It must contemplate the assumption of legal rights and duties and must show a clear intention to assume liability. [Id. at 413-14 (citations omitted).]
See also 1 Williston on Contracts § 4:8 (4th ed. 1990); Restatement (Second) of the Law of Contracts, §§ 26, 58 (1981). Where an offer contains a requirement that any contract must be in writing, oral acceptance cannot form a binding contract. Morton, supra, 180 N.J. at 129-30. See also Panetta, supra, 378 N.J. Super. at 305. This is so because an oral acceptance does not meet the full terms of the offer.
Here, the letter of October 14, 1994, has "DRAFT" typed at the top and is a patently incomplete proposal that conditions any equity interest in newly developed sites on a capital contribution to the costs of development and construction equal to the percentage of equity ownership, not to exceed twenty percent. The December 11, 1995, letter proposed a joint venture and required "[e]ach party [to] have the joint venture agreement prepared and reviewed by an attorney of their own choice, and each party will pay its own attorneys' fees and costs associated with the preparation of the agreement." The trial judge's conclusion that these letters were not enforceable contracts finds substantial support in the evidence. Indeed, it was undisputed that no written agreement existed. And, as the trial judge found, attorney review "bespeaks a written agreement." We find no basis for disturbing the judge's ruling that there was no enforceable contract for an equity interest in new sites or for payment of trailing commissions.
Alliance also alleges that the trial judge erred when he found no breach of an implied covenant of good faith and fair dealing with respect to the development of sites it identified without paying compensation to Alliance and with respect to the sale or abandonment of some of those sites. It is, of course, well established that every contract contains "an implied covenant that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract; in other words, in every contract there exists an implied covenant of good faith and fair dealing." Bak-A-Lum Corp. of Am. v. Alcoa Bldg. Prods., Inc., 69 N.J. 123, 129-30 (1976) (quotations omitted); Wade v. Kessler Inst., 172 N.J. 327, 340 (2002). However, it is equally well established that "[i]n the absence of a contract, there can be no breach of an implied covenant of good faith and fair dealing." Noye v. Hoffmann-La Roche Inc., 238 N.J. Super. 430, 434 (App. Div.), certif. denied, 122 N.J. 146 (1990). Because there was no contract here relating to site development and trailing commissions, there was no implied covenant that could be breached.