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Radio Networks LLC v. Baisden Enterprises Inc.

United States District Court, N.D. Texas, Dallas Division

November 7, 2017

RADIO NETWORKS, LLC, Plaintiff/Counter-Defendant,
v.
BAISDEN ENTERPRISES, INC., and MICHAEL BAISDEN, Defendants/Counter-Plaintiffs,
v.
CUMULUS MEDIA, INC., Counter-Defendant.

          MEMORANDUM OPINION AND ORDER

          SAM A. LINDSAY UNITED STATES DISTRICT JUDGE

         Before the court are: Plaintiff Radio Networks, LLC's Motion to Enter Judgment as a Matter of Law as to Damages Consistent with the Evidence Adduced at Trial (Doc. 289); and Plaintiff Radio Network, LLC's Motion Regarding Recovery of Punitive Damages (Doc. 292). Having considered the motions, responses, replies, record, evidence adduced at trial, jury verdict rendered on July 19, 2017, and applicable law, the court denies in part and grants in part Plaintiff Radio Networks, LLC's Motion to Enter Judgment as a Matter of Law as to Damages Consistent with the Evidence Adduced at Trial (Doc. 289), and grants to the extent herein set forth Plaintiff Radio Network, LLC's Motion Regarding Recovery of Punitive Damages (Doc. 292).

         I. Background

         A. The Lawsuit and the Parties' Contentions

         This civil action was brought by Plaintiff Radio Networks, LLC (“Radio Networks” or “Plaintiff”) against Defendants Michael Baisden (“Baisden”) and Baisden Enterprises, Inc. (“BEI”) (collectively, “Defendants”) on May 21, 2014. The lawsuit arose from a contractual dispute between the parties as to whether Radio Networks overpaid BEI and Baisden by approximately $1, 000, 000 under an agreement entered into by Radio Networks and BEI on November 12, 2008, for the production and delivery of radio programs featuring Baisden (the “Agreement”). The Agreement was amended by the parties three times. Radio Networks contended that, because of an accounting error, it overpaid Defendants under the terms of the Agreement by approximately $1, 000, 000, and that Defendants were required by law to return the overpayment. Radio Networks brought claims for money had and received, breach of contract, and fraudulent transfers from BEI to Baisden under the Texas Uniform Fraudulent Transfer Act (“TUFTA”).

         Defendants contended that Radio Networks could not establish that it overpaid Defendants under the Agreement. Defendant BEI further contended and counterclaimed that Radio Networks and its parent company, Cumulus Media, Inc. (“Cumulus”), which was joined as a third-party Defendant, breached the Agreement by obstructing its ability to conduct an audit permitted under the Agreement and by failing to use efforts consistent with normal commercial practices to market and distribute the Michael Baisden show. According to Defendants, a proper audit would have revealed they were not overpaid, and may have been underpaid. Further, BEI contended that, had Radio Networks and Cumulus used efforts consistent with normal commercial practices to market and distribute the Michael Baisden show, Defendants would have reached or exceeded the threshold amount in the Agreement which would have entitled them to the $1, 000, 000. Radio Networks and Cumulus asserted several defenses to BEI's breach of contract counterclaims. Defendants asserted several defenses to Radio Networks' three claims.

         B. The Trial and Jury Verdict

         This civil action was tried over a period of twelve days from June 22, 2017, to July 19, 2017. The jury rendered its verdict on July 19, 2017. See Court's Charge to the Jury (“Jury Charge”) (Doc. 281).

         As to Plaintiff's breach of contract claim, the jury found (in response to Question Nos. 1 through 4 of the Jury Charge) that Defendants breached the Agreement by failing to return an overpayment of “approximately one million dollars.” See Doc. 281 at 11-12. The jury also found (in response to Question No. 5 of the Jury Charge) that Baisden was personally liable for BEI's obligations under the Agreement pursuant to a guaranty. Id. at 13. Finally, the jury found (in response to Question No. 10 of the Jury Charge) that $800, 000 would fairly and reasonably compensate Plaintiff for its damages resulting from Defendants' breach of the Agreement. Id. at 21.

         With respect to Plaintiff's claim for restitution and money had and received, which Plaintiff pled in the alternative to its breach of contract claim, the jury found in response to Question No. 6 of the Jury Charge that BEI or Baisden received money from Plaintiff that in equity and good conscience belonged to Plaintiff. Id. at 14. The jury also found (in response to Question No. 11 of the Jury Charge) that the amount Defendants received that in equity and good conscience belonged to Plaintiff was $1, 000, 000. Id. at 22.[2] The jury's findings with regard to Plaintiff's claim for restitution and money had and received are not the subject of the pending motion.

         As to Plaintiff's fraudulent transfer claim, the jury found (in response to Question Nos. 7 through 9 of the Jury Charge) that BEI fraudulently transferred money to Baisden, at Baisden's direction, and that these transfers were made when BEI was insolvent. Id. at 15-17. The undisputed evidence produced at trial, including Defendants' bank records and interrogatory answers, showed that the transfers made after March 1, 2013-when Plaintiff first demanded that Defendants return the $1, 000, 000-totaled $700, 000. See Ex. 1 to App. in Supp. of Pl.'s Brief in Supp. of Mot. for J.M.O.L. (Doc. 291) (Pl.'s Ex. 50, Resp. to Interr. No. 3). At trial, Defendants disputed liability, arguing that the transfers were made in good faith, but they never denied or challenged the amount of the transfers. Defendants did not object to the admission of Plaintiff's Exhibit 50, insofar as it lists the amount of each transfer after March 1, 2013, which transfers total $700, 000. Moreover, Defendants did not produce any evidence to dispute the amount of the transfers, which the jury found to be fraudulent. Notwithstanding these findings, the jury found (in response to Question No. 12 of the Jury Charge) that the amount of money or property transfers found to be fraudulent was “$0.00.” Id. at 23.

         As to exemplary damages to be awarded in connection with the fraudulent transfer claim, the jury found (in response to Question No. 14 of the Jury Charge) that Plaintiff had established, by clear and convincing evidence, that it suffered harm resulting from Defendants' malice or fraud and awarded Plaintiff $1, 000, 000 in exemplary damages jointly against Defendants. Id. at 24-25.[3]

         Following the jury's verdict, Defendants requested that the court vacate the jury's award of exemplary damages because, in response to Question No. 12 of the Jury Charge, with respect to the amount of fraudulent transfers, the jury answered “$0.00.” Under Texas law, exemplary damages may only be awarded if actual damages are awarded relating to a claim for which exemplary damages are recoverable. Tex. Civ. Prac. & Rem. Code §41.004(a); Mullins v. TestAmerica, Inc., 564 F.3d 386, 417 (5th Cir. 2009). In light of the jury's response to Question No. 12, and Defendants' request that the court vacate the jury's award of exemplary damages, the court directed the parties to submit legal briefs addressing the issue of exemplary damages raised by the jury's answer to Question No. 12 of the Jury Charge. See Order (Doc. 285).

         On July 26, 2017, Plaintiff filed its Motion to Enter Judgment as a Matter of Law as to Damages Consistent with the Evidence Adduced at Trial (Doc. 289) and brief in support (Doc. 290), asking the court to: (1) increase the jury's damages award on its breach of contract claims from $800, 000 to $999, 999.95; and (2) increase the jury's damages award on its fraudulent transfer claim from $0 to $700, 000. Radio Networks also filed a Motion Regarding Recovery of Punitive Damages (Doc. 292), asking the court to enforce the jury's award of exemplary damages ...


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