Opinion
19-P-534
05-12-2020
SUSAN MEDDAUGH v. WGBH EDUCATIONAL FOUNDATION & others.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
In her Superior Court action, the plaintiff, Susan Meddaugh, prevailed on her claim that defendant WGBH Educational Foundation (WGBH) violated its contract with her, but she obtained only $100 in nominal damages. On appeal she alleges that her additional claims that WGBH violated G. L. c. 93A and the implied covenant of good faith and fair dealing were improperly dismissed on summary judgment. She also asserts various errors in the evidentiary hearing through which contractual damages were determined. We affirm.
Background. Meddaugh is the author of a series of children's books known as "Martha Speaks." The series is about a dog that eats a bowl of alphabet soup and then is able to talk. In 2005, Meddaugh entered into a contract with WGBH regarding the development of an animated, public educational television (TV) program based on the series. The contract also gave WGBH the right to "exploit" Martha Speaks through developing merchandise and such. Through extraordinarily complicated provisions in the contract, WGBH was to pay Meddaugh specified royalties to the extent that the Martha Speaks TV show or related ventures turned a profit. WGBH also was required to provide Meddaugh semiannual accounting reports.
Meddaugh's publisher, Houghton Mifflin was also a party to the contract and named as a nominal defendant in Meddaugh's action. Houghton Mifflin brought a cross claim against WGBH, which eventually was dismissed.
While the parties agree that the TV show that WGBH developed based on the Martha Speaks series was highly successful in achieving its educational mission, they dispute the extent to which it made any profit on which royalties would be due to Meddaugh. WGBH made assessing that issue frustratingly difficult for Meddaugh, because from 2006 to 2013, it did not provide her with the semiannual accounting reports that the contract required. It did pay her more than $864,000 in royalties and fees over the life of the contract, including profits generated through the exploitation of Martha Speaks (e.g., through the development of various merchandising and the like).
Meddaugh brought the current action in Superior Court in 2013. In her second amended complaint -- the operative complaint -- Meddaugh alleged seven counts: 1) a demand for an accounting, 2) breach of contract, 3) breach of the implied covenant of good faith and fair dealing, 4) unjust enrichment, 5) conversion, 6) intentional or negligent misrepresentation, and 7) a violation of G. L. c. 93A, § 11. All but the contract claim were resolved in WGBH's favor on summary judgment. The motion judge also significantly narrowed the contract claim by ruling that most of the specific acts that Meddaugh alleged violated the contract in fact were allowed by it (a ruling that is not challenged on appeal).
Meddaugh voluntarily withdrew her demand for an accounting shortly before summary judgment (presumably because the demand had become moot over the course of the litigation). In his initial ruling, the motion judge ruled that Meddaugh's claim for a violation of the implied covenant of good faith and fair dealing could not be resolved on summary judgment, but the judge reversed course on this count after WGBH filed a motion for reconsideration. The unjust enrichment claim was against defendant DHX Media, Ltd., not WGBH. The motion judge ruled that this claim failed as a matter of law, and it is no longer at issue.
As a result of the summary judgment proceedings, what was left of Meddaugh's case involved WGBH's undisputed failure to produce timely semiannual accounting reports pursuant to the contract. WGBH defaulted on this claim, leaving Meddaugh to prove her damages. A second Superior Court judge held an eight- day evidentiary hearing on damages. Prior to the hearing, a different judge clarified that Meddaugh could claim damages if she could demonstrate that the accounting statements that WGBH produced were not just late, but also inaccurate.
The motion judge's thoughtful and otherwise comprehensive memorandum and order on WGBH's motion for summary judgment had left this somewhat ambiguous.
After Meddaugh had rested her damages case, the judge ruled that she had failed to demonstrate any actual damages and instead ordered WGBH to pay only $100 in nominal contractual damages. Claiming to have prevailed in the litigation, both parties sought their attorney's fees pursuant to a provision in the contract. The judge denied the cross motions, aptly noting that "there are no winners." The net result of years of extensively contested litigation was a judgment in Meddaugh's favor on the contract claim for $100 in damages and the dismissal of all other claims, with the parties bearing their own attorney's fees and costs.
Discussion. 1. Chapter 93A claims. The motion judge ruled in WGBH's favor regarding the c. 93A claims on two separate grounds. First, he ruled that, as a matter of law, the contractual relationship between the parties was not subject to the statute. Second, he ruled that Meddaugh had failed to point to evidence in the summary judgment record that WGBH committed actions that rose to the level of a violation of G. L. c. 93A, § 11. See Duclersaint v. Federal Nat'l Mtge. Ass'n, 427 Mass. 809, 814 (1998) (ordinary breaches of contract not actionable under § 11). Because we agree with the judge as to the first ground, we have no occasion to review Meddaugh's arguments as to the second.
We do, however, note that Meddaugh faces an additional hurdle with respect to her c. 93A claim, namely, the difficulty in showing what damages she suffered as a result of any violation of c. 93A. Based on cases that rely on Leardi v. Brown, 394 Mass. 151, 158 (1985), Meddaugh appears to assume that if she obtained even nominal damages under c. 93A, she necessarily would be entitled to her attorney's fees pursuant to that statute. This is not correct. See Tyler v. Michaels Stores, Inc., 464 Mass. 492, 501-503 (2013) (clarifying import of Leardi).
As the motion judge accurately observed, "There is no dispute that WGBH is a Massachusetts nonprofit corporation that creates educational television programs." Contrary to Meddaugh's suggestion on appeal, the judge also recognized that WGBH's status as a charitable organization is not by itself dispositive of whether c. 93A applies to particular actions it takes. Linkage Corp. v. Trustees of Boston Univ., 425 Mass. 1, 23 (1997). The motion judge accurately referenced the two-part test that the Supreme Judicial Court set forth in Linkage, and we discern no error in his applying that test. Simply put, the judge's conclusion that WGBH developed the Martha Speaks program as part of its core mission to produce educational TV programs for children is sound. All Seasons Servs., Inc. v. Commissioner of Health & Hosps. of Boston, 416 Mass. 269, 271 (1993) (charitable entity not engaged in trade or commerce when it takes actions incidental to its primary purpose). Although Meddaugh protests that the question of whether the Linkage standard had been met should have been reserved for trial, she is unable to point to disputed facts that bear on that question. We discern no error in the motion judge's ruling that the c. 93A count failed as a matter of law.
Meddaugh also argues that her count alleging a violation of the covenant of good faith and fair dealing was improperly dismissed on summary judgment. She has not shown, however, what evidence in the summary judgment record shows "a dishonest purpose, consciousness of wrong, or ill will in the nature of fraud." Equip. & Sys. for Indus., Inc. v. Northmeadows Constr. Co., 59 Mass. App. Ct. 931, 932 (2003). Moreover, with Meddaugh unable to demonstrate that WGBH turned a profit on the Martha Speaks show, she has not shown how the dismissal of her contract claim based on a violation of the covenant of good faith and fair dealing mattered.
2. Assessment of damages. Meddaugh alleges that the judge who held the evidentiary hearing on damages made several errors that warrant reversal. Her lead argument is that because WGBH failed to provide her the semiannual accounting reports on a timely basis, the judge should have placed on it the burden of proving that it did not make a profit on Martha Speaks. Viewed in the abstract, that argument is not without some force. However, it fails to take into account the reality that WGBH painstakingly sought to document its accounting after the fact and the judge found both its calculations and the recordkeeping on which they were based reliable.
For example, the judge made the following findings:
"After several hours of testimony from the person who compiled the information from the business records of WGBH into compilations, with references to the sources, and to reports on the amounts owing or not owing to [Meddaugh] during six month periods, I have no . . . doubt that the figures compiled in Exhibits B and C were accurately recorded from the business records made and retained by . . . WGBH in the ordinary course of business."
For similar reasons, Meddaugh's argument that the judge should not have admitted the accounting statements as business records fails. Meddaugh argues that the judge erred because WGBH's accounting reports were created in anticipation of litigation. The timing of these reports does not per se disqualify them as business records. See American Velodur Metal, Inc. v. Schinabeck, 20 Mass. App. Ct. 460, 468-469 (1985). Where the judge made express findings that the information WGBH provided was reliable, Meddaugh has not demonstrated how the judge abused his discretion in admitting the accounting statements.
Meddaugh also claims that because WGBH's attorneys had some role in the completion of its accounting reports, the judge should not have admitted the reports without deeming WGBH to have effected an "at issue" waiver of attorney-client privilege that would have allowed examination of the topic. This argument comes up short on both the facts and the law. Meddaugh's assumption that material was redacted from the accounting statements based on privilege is not supported by the record, and she is unable to demonstrate how the assertion of any privilege in fact materially interfered with her ability to explore the process through which the reports were generated. Moreover, in concluding that there was no at issue waiver, the judge explained as follows:
"I do not believe that the fact that counsel gave WGBH advice on the methodology triggers the . . . at issue waiver of the attorney-client privilege. This is not by way of injecting certain claims or defenses into a case. It's simple advice concerning the completion of a contractual duty."These conclusions are consistent with the case law. See Darius v. Boston, 433 Mass. 274, 277-278 (2001).
Meddaugh's final claim -- that the judge erred in not crediting her expert -- requires little discussion. The judge characterized that witness as "barely qualified and poorly prepared," and "unable to testify that Meddaugh was owed money, let alone how much." It was well within the judge's purview as fact finder to draw such conclusions.
To be clear, we do not rely on the suggestion in WGBH's brief that the judge rejected the testimony of Meddaugh's expert based on the judge's assessment that he was not telling the truth. Indeed, the expert's frank admissions about his inability to draw conclusions favorable to Meddaugh were perhaps most damaging of all.
3. Appellate attorney's fees. WGBH has requested the award of appellate attorney's fees on two separate grounds. We address these in order.
Section 20(g) of the contract states that "[t]he prevailing party in any litigation relating hereto shall be entitled to recover reasonable attorneys' fees and court costs from the other party." It was this provision under which both sides unsuccessfully sought attorney's fees in the trial court.
WGBH's claim to being entitled to fees as a "prevailing party" on appeal is somewhat stronger than its claim in the trial court where, as the judge put it, there were "no winners." Nevertheless, in light of the severity of WGBH's noncompliance with the reporting obligations to which it freely agreed, we decline to narrow our focus only to the appellate portion of this case in a manner required to consider WGBH "the prevailing party in [the] litigation."
In the alternative, WGBH seeks its fees and double costs on the grounds that at least a portion of the appeal was frivolous. Mass. R. A. P. 25, as appearing in 376 Mass. 949 (1979). In particular, WGBH focuses on Meddaugh's argument that the judge erred in discrediting her expert's testimony without apparently appreciating that much of that testimony, including all of the cross-examination, had not been included in the portions of the transcript that Meddaugh had filed. We are indeed troubled by this lapse, but ultimately conclude that Meddaugh's arguments were not so frivolous to warrant fee shifting under rule 25.
Judgment affirmed.
By the Court (Milkey, Lemire & McDonough, JJ.),
The panelists are listed in order of seniority.
/s/
Clerk Entered: May 12, 2020.