Angelo Broadcasting, Inc. v. Satellite Music Network, Inc.

Court of Appeals of Texas
836 S.W.2d 726, 1992 WL 172214 (1992)

ELI5:

Rule of Law:

Recovery for unjust enrichment is generally unavailable where a valid, express contract fully covers the services rendered and the only outstanding obligation is a liquidated sum. A judgment notwithstanding the verdict (JNOV) on a fraud claim is improper if there is some evidence to support the jury's finding, and a trial court errs by refusing a 'puffery' instruction when evidence supports both actionable misrepresentation and mere opinion. Strict compliance with the Deceptive Trade Practices Act's (DTPA) pre-suit notice requirement is mandatory, and a post-trial abatement and amendment typically cannot cure this defect.

Facts:

In 1975, O.P. Bobbitt and a partner formed Angelo Broadcasting, Inc., acquiring KTEO-AM in San Angelo, Texas.
In 1976, Angelo Broadcasting acquired KWLW-FM (later KTEO-FM) in the same city.
From 1975 to 1982, Angelo Broadcasting operated both stations as country and western music stations, with ratings and gross receipts declining by 1982 despite increased profits.
In 1981, John Tyler and investors formed Satellite Music Network (SMN) to provide high-quality, around-the-clock, live, market-tested programming to radio stations via satellite, offering formats and claiming to reduce personnel/equipment costs and increase ratings.
O.P. Bobbitt and Joe Rushing (Angelo Broadcasting's general manager) learned about SMN through advertisements in Broadcasting magazine in 1981-1982, which made claims about increasing ratings and lowering costs, and contacted SMN for more information.
In Fall 1982, SMN representative David Garrity met with the Bobbitts and Rushing, discussing SMN's services, changing the FM station's format, and using ads that claimed SMN affiliates were benefiting financially and in ratings; Garrity reiterated assurances about increased ratings.
On November 10, 1982, Angelo entered into two-year contracts with SMN for adult contemporary programming for the FM station and country and western for the AM station, beginning January 1983.
Beginning in May 1984, Angelo Broadcasting refused to pay SMN the monthly service fees, after using SMN's services for most of the contract period, during which the stations' ratings continued to fall.
The Bobbitts eventually sold the radio stations in 1988.

Procedural Posture:

On February 11, 1985, Satellite Music Network, Inc. (SMN) sued Angelo Broadcasting, Inc. (Angelo) in a Dallas trial court for approximately $15,000 in past-due monthly license fees, alleging breach of contract or, alternatively, unjust enrichment.
Later that same day, Angelo sued SMN in an Austin trial court alleging Deceptive Trade Practices Act (DTPA) violations.
SMN filed an exception to Angelo’s failure to give the required statutory DTPA notice and moved to transfer venue to Dallas.
On June 22, 1987, the Austin trial court ordered the transfer of Angelo's suit to Dallas.
On February 15, 1989, Angelo filed a counterclaim in the Dallas case.
On February 22, 1989, the two cases were consolidated in the Dallas trial court.
On March 20, 1990, Angelo moved to realign the parties.
On April 12, 1990, the Dallas trial court ordered the parties realigned, designating Angelo as the plaintiff and SMN as the defendant.
SMN again specifically excepted to Angelo’s failure to give the required statutory DTPA notice and moved to abate the case; the trial court denied SMN’s motion.
On August 22, 1990 (thirteen days before trial), Angelo sought to amend its pleadings to assert the discovery rule as a defense to SMN’s limitations defense to Angelo’s DTPA claim.
Six days later, a visiting judge overruled Angelo’s motion to amend.
On the day before trial, the court reconsidered and granted Angelo’s motion to amend its pleadings; SMN sought a continuance, which the court denied.
Trial began on September 4, 1990, and the jury returned a verdict finding in favor of Angelo on its DTPA and fraud claims, and in favor of SMN on its unjust enrichment claim and Angelo’s negligence claim, finding Angelo sixty percent negligent, and awarding damages to Angelo.
On November 20, 1990, SMN moved for a judgment notwithstanding the verdict (JNOV), citing Angelo’s failure to give the requisite statutory DTPA notice and insufficient evidence to support the jury’s fraud finding.
On November 26, 1990, the trial court abated the case to permit Angelo to give notice.
On November 27, 1990, Angelo gave notice and made a demand on SMN; SMN offered to settle, but Angelo rejected the offer.
The trial court subsequently reduced the judgment to reflect SMN’s rejected settlement offer.
On February 27, 1991, the trial court entered judgment for Angelo on its DTPA claim and for SMN on unjust enrichment, and granted SMN’s motion for judgment notwithstanding the verdict on Angelo’s fraud claim.

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Issue:

1. Is recovery for unjust enrichment available when a written contract fully covers the services rendered and the only remaining obligation is a liquidated debt? 2. Did the trial court err in granting a judgment notwithstanding the verdict on a fraud claim and in refusing a 'puffery' instruction to the jury, when there was some evidence supporting both actionable misrepresentation and mere puffery? 3. Did the trial court err in awarding DTPA damages when the plaintiff failed to provide the statutory pre-suit notice, and instead allowed a post-trial abatement and amendment to cure the defect?

Opinions:

Majority - Kinkeade, Justice

1. No, recovery for unjust enrichment is not available when a written contract fully covers the services rendered and the only remaining obligation is a liquidated debt. The court reasoned that SMN had fully performed its part of the contracts by providing satellite programming, and Angelo Broadcasting's only remaining obligation was the payment of the fixed monthly service fees, which constituted a liquidated debt. Restitution (including quantum meruit, which is founded on unjust enrichment) is generally not available when a plaintiff has fully performed an express contract and the only consideration due from the defendant is a liquidated sum of money, as the plaintiff's compensation should be measured by the agreed contract amount. Since SMN had fully performed and the debt was liquidated, the trial court erred in awarding SMN recovery for unjust enrichment. 2. Yes, the trial court erred in granting a judgment notwithstanding the verdict on the fraud claim, because there was some evidence to support the jury's finding of actionable fraudulent misrepresentation. However, the trial court also erred in refusing to submit a 'puffery' instruction to the jury, as there was evidence to support such an instruction. The court found that some evidence supported the jury's fraud finding, including SMN's superior knowledge about satellite technology, its false ad claims about the number of affiliates and their financial/ratings benefits, and Garrity's reiteration of these assurances, which a reasonable fact-finder could infer were known to be false by SMN. Therefore, the trial court improperly granted a JNOV because there was some evidence of actionable misrepresentation. However, the court also found that evidence existed to support a 'puffery' instruction, considering factors like the Bobbitts' experience in broadcasting, Garrity's limitations in making guarantees, and the reasonable nature of SMN's affiliate projections given publication lead times. The absence of a puffery instruction left the jury with an insufficient framework to properly evaluate the statements, presenting only a dichotomy of 'misrepresentation or no misrepresentation' when 'puffery' was also a possibility supported by evidence. Therefore, the case needs to be remanded for further proceedings where a puffery instruction can be given. 3. Yes, the trial court erred in awarding DTPA damages because Angelo Broadcasting failed to give the requisite statutory pre-suit notice, and the post-trial abatement and amendment were an abuse of discretion. The court determined that Angelo had no right to rely on the 'counterclaim exception' to the DTPA notice requirement, as Angelo initiated the suit as a plaintiff and continued to pursue its claims as a plaintiff after realignment, only raising the counterclaim argument post-trial. Furthermore, SMN consistently denied receiving the required notice throughout the litigation, thus not waiving its right to notice. The DTPA's notice requirement is designed to encourage pre-suit negotiation and settlement to avoid costly litigation. Allowing a post-trial abatement and amendment to cure the complete lack of pre-suit notice, and then entering judgment for full DTPA damages based on the original trial verdict, defeats this fundamental purpose of the statute. Therefore, the trial court abused its discretion.

Analysis:

This case provides crucial guidance on the interplay between contract and quasi-contract remedies, specifically limiting unjust enrichment claims where express contracts govern. It also clarifies the high bar for granting a judgment notwithstanding the verdict (JNOV) in fraud cases, emphasizing that any 'some evidence' is sufficient to defeat a JNOV, and highlights the importance of comprehensive jury instructions (e.g., puffery) for proper fact-finding. Furthermore, the decision reinforces the strict nature of statutory pre-suit notice requirements under the DTPA, severely limiting a party's ability to cure such defects after trial and underscoring the necessity of fulfilling procedural prerequisites before litigation.

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