A&E - Flip This House

An appellate court recently has found that the creator of a TV show reasonably interpreted a producer’s informal statement “OK, OK, I get it,” as an acceptance of his offer and that an agreement the parties reached was not indefinite as to the categories included in determining net royalties. The case turned on comments made during negotiations by Richard C. Davis, founder of Trademark Properties Inc., a company specializing in buying, remodeling and selling houses for profit. He discussed whether his business could be the fodder for a reality television series with Charlie Nordlander, an A&E Executive.  Their negotiations led the parties to agree to jointly develop and produce the television series “Flip This House.”  The parties agree specifics of their agreement were never written down.  Still, the series pilot and thirteen episodes of Flip This House were filmed.  Then Davis and A&E disputed how to divide the show’s net revenues. And from there sprang a lawsuit.  Davis claimed he and A&E should split all net revenues 50-50; A&E denied it had agreed to the terms claimed by Davis. He filed a state-court action against A&E for breach of oral contract.  A&E got the action moved to federal court. A jury found in Davis’ favor, awarding $4 million in damages for half of all net revenues from the show. A&E appealed to the Fourth Circuit Court of Appeals, contending the evidence was insufficient to support a finding of a binding oral contract.

In his ruling, in which he also upheld the jury’s damage award, senior circuit Judge Bobby Baldock stated in his opinion [ Trademark Properties Incorporated v. A&E Television Networks (4th Cir. 2011) 422 Fed.Appx. 199]:

Plaintiff’s testimony reveals that he and Nordlander extensively negotiated, discussing production costs, production crew, production credits, real estate risk, raising revenue, and splitting revenue, among other things. Nordlander stated his deal-breaker — bearing any risk for the real estate — and the one condition on going forward with production of the series — [was] board approval. And, Plaintiff stated his deal-breaker– splitting all revenue equally — numerous times in various ways, even illustrating this term of his offer with a lengthy recounting of a prior deal. To this, Plaintiff testified Nordlander said “OK, OK, I get it.” He also testified Nordlander said their making the television series was contingent on board approval. Tellingly, accordingly to Plaintiff, Nordlander did not indicate their deal was contingent on anything else or give any indication that Defendant would not accept a 50-50 split of revenue, only that such a split would likely not be a beneficial arrangement for Plaintiff. Furthermore, no evidence suggests Nordlander explained that the board would only approve the series and the money to produce the series without approving the agreement to split net profits equally. And, Defendant eventually notified Plaintiff that “[t]he board approved the money for our series.” J.A. at 625. Though the board approved the making of the show, it seems undisputed that the board neither considered nor approved any revenue sharing agreement. Nothing in the record suggests that any of Defendant’s representatives conveyed to Plaintiff that the board approved “money for our series,” but did not approve a 50-50 agreement. From this evidence, a reasonable jury could conclude a reasonable person in Plaintiff’s position after such extensive bargaining could plausibly interpret “OK, OK, I get it,” in conjunction with the statement that the only condition is board approval, as acceptance.