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Television Capital Corp. of Mobile v. Paxson Communications Corp.

March 16, 2006; as amended July 5, 2006


Appeal from the Superior Court of the District of Columbia (CA-1131-02) Hon. Michael L. Rankin, Trial Judge.

The opinion of the court was delivered by: Pryor, Senior Judge

Argued January 31, 2006

Before FARRELL and FISHER, Associate Judges, and PRYOR, Senior Judge.

This litigation stems from a contractual dispute between appellant Television Capital Corporation of Mobile ("TCCM") and appellee Paxson Communications Corporation ("Paxson"). On the basis of an unpaid promissory note in which TCCM was the maker, and Paxson the payee, and notwithstanding an array of defenses asserted by appellant, a partial summary judgment was entered against appellant. The trial judge also dismissed four of appellant's counter-claims, without prejudice, because they were deemed premature at the time of the dismissal order. Lastly, the trial judge dismissed a tort action against appellees Dow, Lohnes & Albertson, PLLC, et al. ("DLA") on the grounds of an evidentiary deficiency. Upon review of these questions, we conclude that the trial judge did not commit reversible error, and therefore affirm.


On January 13, 1998, TCCM and Paxson executed a Letter Agreement that provided that TCCM would attempt to acquire the exclusive rights for Paxson to obtain a construction permit for an analog television station to operate on Channel 61 in Mobile, Alabama. TCCM, in 1996, had previously filed an application with the Federal Communications Commission ("FCC") to obtain this permit. Two other companies, who are not parties in this matter, had also previously applied for the construction permit for that frequency. The Letter Agreement provided that Paxson would lend TCCM up to $6.0 million to bid at a private auction for the channel among all of the applicants or acquire exclusive rights to the channel via a private settlement agreement with the two other competing applicants. If TCCM was the successful bidder at auction or obtained the consent of the other two competing applicants to relinquish their rights to the construction permit, Paxson would pay TCCM $750,000 plus the difference between the winning bid and $6.0 million.

On January 29, 1998, TCCM and the two competing applicants executed a Settlement Agreement that would leave TCCM as the sole applicant for the construction permit in return for the payment of $400,000 to each of the other two applicants. The terms of the Settlement Agreement further stated that TCCM would place $800,000 into an escrow account pending the FCC's issuance of a final order granting the construction permit. As provided by the terms of the Letter Agreement, Paxson loaned TCCM $800,000, which was placed into the escrow account. TCCM executed a Promissory Note, the terms of which are governed by Florida law, agreeing to repay Paxson the $800,000 by January 29, 2000. Interest accrued on the note at the prime rate as listed in the WALL STREET JOURNAL. If the Promissory Note was not paid when due, interest accrued at a higher rate equal to the lower of eighteen percent or the highest rate allowed by law.

At or near the time that these documents were executed, the FCC issued a ruling that prohibited the grant of construction permits for any new television stations that would operate on Channels 60 through 69 throughout the United States. As a result, Paxson sought to amend TCCM's application to substitute a construction permit for Channel 50 in lieu of Channel 61. FCC regulations, however, did not allow the filing of such amendments until the FCC permitted such filings for a brief interval in July 2000. The FCC ultimately did not approve this amended application because of conflicts with another broadcaster's plans for use of that frequency. Further delays ensued while Paxson tried to find a substitute channel that would satisfy its needs and still comply with FCC regulations.*fn1

On April 13, 2001, Paxson sent a letter to TCCM demanding the repayment of the Promissory Note including the $800,000 principal amount, accrued interest at the prime rate through the maturity date and default interest at the rate of eighteen percent for the period commencing after the maturity date. Paxson subsequently sent another demand letter on May 24, 2001 after TCCM failed to make any payments as required by the Promissory Note.

On February 15, 2002, Paxson filed an action in the Superior Court of the District of Columbia against TCCM alleging that TCCM had failed to pay the Promissory Note when it became due. On March 18, 2002, TCCM filed its answer and counterclaims.*fn2 On April 9, 2004, Paxson moved for summary judgment with respect to the non-payment of the Promissory Note and dismissal of TCCM's counterclaims as unripe for consideration based on the FCC's inaction regarding the application for the Channel 18 construction permit. The trial judge heard oral arguments from the parties on May 20, 2004 and issued a final order on September 2, 2004 granting Paxson's motion for summary judgment and dismissing TCCM's counterclaims without prejudice because, without final action by the FCC, they were not ready for final adjudication. The trial judge denied TCCM's motion to amend its order on September 27, 2004.

TCCM also filed a third-party complaint against the law firm of Dow, Lohnes & Albertson, PLLC and three of its attorneys, John R. Feore, Michael D. Basile, and Scott S. Patrick (collectively "DLA") for malpractice in connection with DLA's role in the transaction involving TCCM and Paxson, which included among other tasks, the preparation of the Promissory Note.*fn3 During discovery, DLA opposed TCCM's requests for answers to interrogatories and documents citing attorney-client privilege. The trial judge, with some reservation, denied TCCM's pre-trial motion to compel discovery. DLA filed two motions for summary judgment asserting that TCCM's failure to provide an expert witness was fatal to its malpractice claims. The judge denied both motions and, sua sponte, severed the third-party claims for a separate trial.

A non-jury trial was held on September 29-30, 2003. At the close of TCCM's evidence, DLA moved for judgment pursuant to Super. Ct. Civ. R. 52 (c). After hearing argument from both parties, the judge granted DLA's motion because TCCM did not: (1) offer expert testimony to establish the standard of care required to prove negligence; and (2) demonstrate that it had suffered any damages. The judge issued an order dismissing TCCM's complaint against DLA on October 7, 2003. This timely appeal followed.


A. Standard Of ...

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