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SAGE v. BROADCASTING PUBLS.

March 10, 1998

RICHARD W. SAGE, Plaintiff,
v.
BROADCASTING PUBLICATIONS, INC., and KIRLIN ENTERPRISES, INC., Defendants.



The opinion of the court was delivered by: HARRIS

 Before the Court are defendants' motion for summary judgment, plaintiff's opposition thereto, and defendants' reply. Upon careful consideration of the entire record, defendants' motion for summary judgment is granted in part and denied in part. Although findings of fact and conclusions of law are unnecessary in ruling on a summary judgment motion, the Court nonetheless sets forth its analysis. See Fed. R. Civ. P. 52(a).

 Background

 In 1981, defendants Broadcasting Publications, Inc. ("Broadcasting"), and Kirlin Enterprises, Inc. ("Kirlin"), along with five other companies (collectively, the "equipment lessors"), invested in petroleum services equipment. The companies leased the equipment to OTI, Inc. ("OTI"), a Texas corporation engaged in the inspection of oilfield tubular and pipeline products.

 In late 1982, OTI began to experience financial difficulties. By early 1993, OTI was delinquent on its monthly equipment lease payments. The equipment lessors appointed Broadcasting as their agent with regard to their dealings with OTI.

 Plaintiff purchased OTI in February 1984. OTI's business continued to decline. By the fall of 1984, OTI was behind in lease payments to the equipment lessors, in its medical insurance premium payments, and in its payment of local and state property taxes in addition to federal taxes.

 On January 24 and 25, 1985, plaintiff met with Broadcasting to determine what course of action would be in the best interest of OTI and the equipment lessors. Prior to the execution of any written agreement, plaintiff requested that Broadcasting reimburse him for expenses he had incurred while running OTI. On January 25, 1985, plaintiff and Broadcasting executed a written agreement (the "1985 Agreement"). Under the 1985 Agreement, plaintiff agreed to assist Broadcasting in exercising the equipment lessors' rights under certain security documents, including possibly winding down OTI. *fn1" In exchange, Broadcasting agreed to pay a number of things, including plaintiff's monthly $ 6,000 salary, a $ 36,000 severance pay if plaintiff were dismissed for any reason other than good cause, OTI's liability for certain federal withholding taxes, and plaintiff's personal liability on an insurance policy purchased by OTI for the personal property in its custody and control. No discussion of plaintiff's oral agreement for reimbursement of personal expenses appears in the written contract. The 1985 Agreement also contains a merger clause that expressly precludes any prior agreements.

 In February 1985, Broadcasting sent three representatives to OTI's headquarters in New Mexico to review OTI's affairs. During their visit, the representatives discovered a number of facts that defendants allege plaintiff had failed to disclose prior to the execution of the 1985 Agreement, including OTI's state and local property tax arrearages and OTI's continued deduction of health insurance premiums from its employees' paychecks after cancellation of its health insurance policy.

 While Broadcasting's representatives were still at OTI's headquarters, plaintiff approached OTI's client, Armco Steel Company ("Armco") in Ambridge, Pennsylvania. OTI had a lucrative contract with Armco that was up for renewal. Defendants contend that when Armco expressed concern about OTI's ability to perform the new contract, plaintiff made no attempt to negotiate on behalf of OTI; instead, he proposed that he would form a new company, Pennsylvania Tubular Inspections ("PTI"), that would replace OTI as the pipe inspector at Armco's Ambridge plant. *fn2"

 Thereafter, Broadcasting informed plaintiff orally of its decision to rescind the 1985 Agreement because he had made fraudulent misrepresentations before execution of the agreement. On February 26, 1985, Broadcasting gave plaintiff written notice of rescission. Following the rescission, the equipment lessors acted to protect and foreclose upon their collateral.

 On May 19, 1986, plaintiff filed suit alleging breach of the written 1985 contract (Count I) and breach of the alleged prior oral contract (Count II). Defendants filed a counterclaim for breach of the 1985 written contract (Count I), fraud/negligent misrepresentation of OTI's status (Count II), and intentional interference with the business expectancy concerning Armco (Count III). Defendants seek summary judgment on both counts of plaintiff's complaint and on counts II and III of their counterclaim on the grounds that (1) they did not breach a written contract, (2) plaintiff made fraudulent misrepresentations in the inducement of a contract, (3) they did not breach an oral contract, and (4) plaintiff intentionally interfered with a business expectancy.

 Standard of Review

 Summary judgment may be granted only if the pleadings and evidence "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). In considering a motion for summary judgment, all evidence and inferences must be viewed in a light most favorable to the non-moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). Summary judgment cannot be granted "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).

 Discussion

 I. Breach of the Written Contract

 Count I of plaintiff's complaint and Count I of defendants' counterclaim allege breach of the written contract. Defendants, in Count II of their counterclaim, assert that they did not breach the written agreement because plaintiff's fraudulent and ...


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