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Birch Broadcasting, Inc. v. Capitol Broadcasting Corporation, Inc.

Superior Court of New Hampshire

July 30, 2011

Birch Broadcasting, Inc., and Nassau Broadcasting I, Inc.
v.
Capitol Broadcasting Corporation, Inc., Concord Broadcasting, LLC, and Vox Radio Group, LP

ORDER

Richard B. McNamara, Presiding Justice

Plaintiffs Birch Broadcasting, Inc. ("Birch") and Nassau Broadcasting I, Inc. ("Nassau") move for approval of the attorney's fees that this Court ordered that the Defendants Capitol Broadcasting, Inc. ("Capitol") and Concord Broadcasting, LLC ("Concord") are required to pay, pursuant to the contract between the parties. Plaintiffs also move for reconsideration of the Court's Order that none of the Defendants are obligated to pay attorney's fees based upon the alleged bad faith conduct of the Defendants. For the reasons stated in this Order, the Court APPROVES the fees submitted to date by Birch and Nassau in the amount of $414, 395.57 at trial and $62, 280.19 on appeal, and DENIES the Plaintiff s Motion to Reconsider.

I

After this Court's decision was affirmed by the New Hampshire Supreme Court and remanded to this Court, Plaintiffs moved for attorney's fees against the Defendants Capitol, Concord, and Vox Radio Group, LP ("Vox") pursuant to the contract between the parties. The Court found in its Order of May 10, 2011 that Plaintiffs are entitled to an award of reasonable attorney's fees and costs from Capitol and Concord pursuant to Paragraph 13.2 of the Stock Purchase Agreement between them, but because Vox was not a party to the agreement, they were not entitled to fees based on the contract against it. The Court also found that the Plaintiffs were not entitled to fees against any of the Defendants on the theory that the Defendants had acted in bad faith.

The Court rejected Capitol and Concord's objection that the Plaintiffs fees were not reasonable, based on their arguments that the cases were excessively staffed, and that the work may have been done on a case which was eventually severed. Order, May 10, 2011, pp. 5-6. But, because the Defendants objected to the Plaintiffs submission on the ground that they could not determine whether or not the fees were reasonable based on the many redactions, the Court ordered that the Plaintiffs would have thirty (30) days to submit the equivalent of a Vaughn index identifying the date, name of the attorney, recipient of the correspondence (if any), and subject to the entry so Defendants could properly review the records.

In compliance with the Court's Order, Plaintiffs submitted replacement copies of their invoices which were revised to remove the vast majority of the redactions identifying all the information called for by the Court's Order. None of the Defendants have filed a further objection to the new submission. Nonetheless, the Court has reviewed the submission to determine the reasonableness of the fees awarded in accordance with the standards required by New Hampshire law. McCabe v. Arcidy. 138 N.H. 20, 28-29 (1993)..

Defendants' primary objection is that the total fees in the case of $414^395-57 at trial and $62, 280.19 are unreasonable because the radio station at stake in this case, WWHK, is only worth between $350, 000 and $400, 000. While the value of the radio station may have declined since the contract, the fact is, the circumstances of this case involved a one million dollar transaction and a property that the parties did not dispute was unique. Moreover, the plaintiffs did not seek damages for a breach of contract, but specific performance of the agreement. While it is true that some of Plaintiffs counsel's fees were in the $600.00 per hour range, Defendant produced nothing to suggest that these fees do not constitute a fair market value fee for attorneys skilled in FCC law practicing in Washington, D.C. The Court observes that both parties consulted with, or used as expert witnesses, Washington D.C. attorneys with experience in FCC law at trial. Under the circumstances, after the Court's review of the file, the billing records and the applicable standards, the Court finds the fees submitted by Plaintiffs reasonable and orders that they be paid by the Defendants Capitol Broadcasting, Inc. and Concord Broadcasting Group, LLC.

II

In the May 10, 2011 Order holding that the Plaintiffs are entitled to recover attorney's fees against Capitol and Concord, the Court denied the Plaintiffs' request to recover fees against the Defendant Vox Radio Group, LP on the ground that Vox acted in bad faith in litigating this case. The Order stated that the Plaintiffs have not produced any affirmative evidence that the Defendants knew, or should have known, that they were acting in bad faith:

The Court finds that the Plaintiffs have not shown by a preponderance of the evidence that Vox acted in bad faith in litigating this case or forced the Plaintiffs to litigate a clearly defined right. Plaintiffs have not produced any affirmative evidence that that Defendants knew, or should have known, they were acting in bad faith. Moreover, it does not appear that the Plaintiffs were forced to litigate against entities whose position was patently unreasonable. The Defendants' position that the time to close the agreement had expired was based on the advice of counsel. Plaintiffs have not alleged or shown that the advice was given in bad faith or that Defendants relied on the advice in bad faith. In fact, the New Hampshire Supreme Court found the contractual provision relied upon by the Defendants to support their claim at the time the agreement had expired to be ambiguous. Birch Broadcasting, et al. v. Capitol Broadcasting. Inc. et ah, 161 N.H. 192, 198 (2010). Thus, the Court cannot find that the Plaintiffs were forced to litigate a clearly defined right or that the Defendants' position was patently unreasonable.

Order of May 10, 2011, page 7.

Plaintiffs move to reconsider the Order on the ground that that Court overlooked or misapprehended the fact that Plaintiffs did prove bad faith and the New Hampshire Supreme Court affirmed the ruling. Plaintiffs reason that after hearing the evidence at trial, this Court expressly found that the Defendants violated the implied obligation of good faith and fair dealing by abandoning obligations that they had undertaken and led Plaintiffs to believe that they would honor, based on a last minute alternative reading of the contract, inconsistent with the intent of the parties. Order of December 15, 2009, page 8. Plaintiffs correctly point out that the finding that the Defendants violated the implied covenant of good faith and fair dealing was affirmed by the New Hampshire Supreme Court on appeal and therefore it constitutes the law of the case. Plaintiffs argue that therefore they should "not be required to prove the Defendant's bad faith a second time in moving for attorney's fees when that conduct has already been established at trial". Motion for Partial Reconsideration at 3.

The flaw in Plaintiffs' argument is the proposition that the breach of the implied covenant of good faith and fair dealing is equivalent to the bad faith conduct which will result in attorneys' fees. The Restatement of Contracts, Section 205 states that there is a duty of good faith and fair dealing in every contract. However, comment A notes that:

"The phrase "good faith" is used in a variety of contexts and its meaning varies somewhat with the context. Good faith performance over enforcement of a contract emphasizes faithfulness to an agreed common purpose and consistency with the justified expectations of the parties; it excludes a variety of types of conduct characterized as "bad faith" because they violate community standards of decency, fairness and reasonableness. The ...

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