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Fenton Mchugh Prod. v. Wgn Cont. Prod.





APPEAL from the Circuit Court of Cook County; the Hon. PHILIP A. FLEISCHMAN, Judge, presiding.


Plaintiff Fenton McHugh Productions, Inc. (McHugh), filed a two-count amended complaint against defendant WGN Continental Productions Co. (WGN) based upon the theories of tortious interference with a literary property right (count I) and upon breach of fiduciary duties (count II). The trial court ordered count II stricken prior to trial. At the close of McHugh's case, the trial court granted WGN's motion for a directed verdict on count I.

In appealing these results, McHugh argues the trial court erred (1) in directing a verdict for WGN on count I; (2) in striking count II; and (3) in limiting the scope of evidence as to McHugh's possible damages.

McHugh is essentially a one-man company, named after its operator, Fenton McHugh (also referred to hereafter as McHugh). McHugh engages in the production of television and audiovisual programs. Since 1954, he has produced, among other things, television shows for CBS and NBC; documentary programs for Storer Broadcasting, RKO Television, and Time-Life Broadcasting; and industrial films for corporations such as Eastern Airlines. WGN is a wholly owned subsidiary of WGN Continental Broadcasting Co., which telecasts programs over station WGN in Chicago.

In January 1975, WGN, in conjunction with McHugh, undertook production and distribution of a national farm news show entitled "National Farm Digest." The program left the air in early April 1975, after an initial 13-week run. In July 1975, WGN began presentation of a new, nearly identical national farm news show called "U.S. Farm Report."

McHugh filed suit against WGN on May 12, 1976, for breach of contract. This complaint was followed by four amended complaints, the last being filed on the first day of trial, October 21, 1980. This fourth amended complaint pleaded the causes of action noted. The trial court struck count II upon WGN's objection to its filing.

At trial, McHugh testified on his own behalf. In the spring of 1974, he had seen the opportunity and market for production of a national farm news show. McHugh perceived that while there were numerous local farm news shows being broadcast in various locales throughout the country, no national show existed. McHugh believed this was due to the prohibitive distribution costs for a national broadcast.

McHugh was aware, however, that a new technique for duplicating a videotaped show, called high-speed dubbing, could dramatically reduce distribution costs and make a national farm show "economically feasible." In pursuit of this idea, he initially "informally" approached Storer Broadcasting Co. for its opinion as to the viability of the program. McHugh also inquired whether several businesses, including Ralston-Purina and International Harvester, might be interested in sponsoring the program.

In May or June 1974, McHugh talked with Bradley Eidmann, general manager of WGN, about the possibility of cooperative production of the show. Their meetings eventually resulted in an oral agreement to that effect. The duties were divided between the parties, with McHugh responsible for writing scripts, WGN for controlling technical production aspects of the show, and both (although mainly McHugh) for securing sponsorship. *fn1

A demonstration film was created to show potential sponsors. In August 1974, Massey-Ferguson Co. agreed to buy one minute of national advertising time per week for the show's first 13-week run. Later, two other sponsors were secured for the remaining two national advertising minutes. Both of these latter advertisers indicated they would not be renewing after the first 13-week run due to the seasonal nature of their products.

The show went on the air in January 1975. Although the parties had discussed the matter, no written agreement had been entered into at that point. Consequently, McHugh submitted a proposed contract. WGN countered with its own proposed agreement.

By mid-March 1975, no written agreement had been reached, a situation not unusual in the television industry. In the meantime, Massey-Ferguson had decided not to renew its sponsorship for the program's second 13-week run. The other two sponsors, as noted, had previously indicated they would not advertise during that period. Therefore, as of mid-March 1975, the parties had no sponsors for the show's second run which was set to begin in early April.

McHugh continued his efforts to secure new sponsors, focusing on International Harvester. In the meantime, the parties entered into a written joint venture agreement on March 19, 1975. Under that agreement, McHugh was to receive 30% of the net proceeds of the show. He was solely responsible for securing sponsors for the program. A contractual provision allowed WGN to terminate the agreement prior to the commencement of any 13-week period if national advertisers had not yet agreed to buy at least three minutes per week of advertising time.

On March 30, McHugh told WGN that International Harvester was interested in sponsoring "National Farm Digest," but he was having trouble reaching final agreement with them on the matter. The program's host, Orion Samuelson of WGN, told McHugh he ...

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