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Oxford Media Group, Inc. v. Family Worship Center Church, Inc.

United States District Court, N.D. Illinois, Eastern Division

September 20, 2017

OXFORD MEDIA GROUP, INC., Plaintiff/Counter Defendant,
v.
FAMILY WORSHIP CENTER CHURCH, INC. Defendant/Counter Plaintiff.

          MEMORANDUM OPINION AND ORDER

          JORGE ALONSO United States District Judge

         This dispute concerns several contracts between plaintiff/counter defendant Oxford Media Group, Inc. (“Oxford Media”) and defendant/counter plaintiff Family Worship Center Church, Inc. (“FWCC”). The parties entered into two contracts regarding the distribution of FWCC's religious television programming. When negotiating the third contract, discussions soured between the parties, and Oxford Media stopped distributing FWCC's programming. Oxford Media then filed suit against FWCC, seeking declaratory relief as well as damages resulting from breach of contract. FWCC counterclaimed, alleging breach of contract (Count I), fraud (Count II), money had and received (Count III), and account stated (Count IV). Before the Court is Oxford Media's motion to dismiss FWCC's counter-complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, the motion is granted in part and denied in part.

         BACKGROUND

         FWCC alleges the following facts in its counter-complaint, which this Court accepts as true for purposes of the instant motion and draws all reasonable inferences in FWCC's favor. Oxford Media is a corporation licensed to broadcast television signals in Chicago, Illinois. (Id. ¶ 2.) Oxford Media uses the call letters WJYS; WJYS operates as the Prism Channel. (Id.) Family Worship Center Church, Inc. (“FWCC”) is a non-profit religious corporation based in Louisiana. (Countercl. ¶ 1.) FWCC produces and distributes religious television programming worldwide under the SonLife Broadcasting Network (“SBN”) banner. (Id. ¶ 3.)

         In 2014, FWCC was airing its programming in the Chicagoland area through cable and over-the-air broadcast distribution. (Id. ¶¶ 5, 9.) In early 2014, Oxford Media and FWCC representatives met to discuss the possibility of expanding FWCC's reach through Oxford Media by airing its programming on the Prism Channel around-the-clock (twenty-four-hours-a-day, seven-days-a-week) on Comcast cable systems in Indiana, Wisconsin, Michigan, and elsewhere in Illinois. (Id. ¶¶ 6, 9, 10.) Additionally, the parties discussed airing FWCC programming with a greater over-the-air broadcast range to allow FWCC to reach non-cable/satellite households in areas outside of FWCC's existing signal. (Id.) During the meeting, Oxford Media provided FWCC with written marketing materials that identified the Prism Channel's reach (coverage of 4.2 million households in the Chicago market, which translates to nearly 11 million people). (Id. ¶ 6, Ex. 1.) The marketing materials indicated that the Prism Channel could be found on certain channels offered in Chicago and elsewhere in Illinois, as well as Wisconsin, Indiana, and Michigan. (Id.)

         Negotiations soon commenced, and the parties modified Paragraph 1(d) of the Contract, entitled “Right to Modify Terms of Payment, ” to include, in pertinent part, the following underlined language:

It is understood by all parties to t1his contract that Agency's acceptance of the rate stated herein is based solely upon the total number of households to which Oxford Media Group, Inc. will provide distribution, calculated as of the date identified as the “Start Date” on page one of this contract and including, but not limited to, all over-the-air households as well as those subscriber households on Comcast Cable in the Chicago DMA[1] including Comcast Chicago (Channel 385 and 687), Comcast Illinois, Comcast Wisconsin, Comcast Northwestern Indiana and Comcast Michigan. The loss of any and/or all of the cable subscriber households shall result in a reduction in Agency's rate by $.42 per household lost.

(Id. ¶ 11.) FWCC indicated that it was entering the agreement based upon Oxford Media's confirmation that Comcast carried the Prism Channel in all of the areas listed in Paragraph 1(d), as stated in the Prism Marketing Materials. (Id. ¶¶ 14-15.)

         On May 16, 2014, the parties executed a contract, effective June 1, 2014 to May 31, 2015, (the “2014 Contract”). (Id. ¶ 17, Ex. 4.) Pursuant to the agreement, FWCC purchased round-the-clock distribution of its programming on the Prism Channel (through over-the-air broadcasting and the Comcast cable systems described in the Prism Marketing Materials) and at an annual rate of $1.8 million. (Id. ¶¶ 8, 20.)

         On April 22, 2015, the parties renewed the contract, effective June 2015 to May 2016, with identical terms and conditions to the 2014 Contract (the “2015 Contract”). (Id. ¶ 21; Ex. 5.)

         On February 25, 2016, the parties met to discuss renewal of the contract. (Id. ¶¶ 22-23.) During negotiations, Oxford Media sought a rate increase, which FWCC rejected. (Id. ¶ 23.) In late May 2016, the parties continued to negotiate and focused their discussions on a proposed rate increase as well as the scope of the Prism Channel's coverage. (Id. ¶¶ 41-49; Exs 15-16.) On May 31, 2016, Oxford Media sent FWCC two draft contracts to memorialize a purported agreement. (Id. ¶ 53; Ex 27.) FWCC did not sign the contracts, and the 2015 Contract expired.[2](Id. ¶ 54.)

         Around this time, FWCC conducted an independent investigation and determined, based on SNL Kagan reports, that the Prism Channel was not distributed on Comcast in Wisconsin, Michigan or Indiana (aside from areas receiving the Comcast Chicago channel line-up) and that the Prism Channel's over-the-air audience was significantly less than promised. (Id. ¶¶ 57-59.) Based on these figures, FWCC concluded that it had overpaid Oxford Media by more than two million dollars. (Id. ¶ 60.)

         On June 7, 2016, FWCC notified Oxford Media that it was not going to renew the Prism contract for 2016-2017, demanded Oxford Media to stop distributing its programming, and requested a final invoice. (Id. ¶¶ 62, 62; Ex. 31.) The following day, Oxford Media stopped distributing SBN on the Prism Channel.

         On July 14, 2016, Oxford Media sent FWCC a credit statement showing that it owed FWCC a credit in the amount of $186, 437.44. (Id. ¶¶ 64, 65; Ex. 32.) On July 15, 2016, FWCC sent Oxford Media a letter demanding a refund of $2, 040, 175.21 pursuant to the rate adjustment clause in the 2014 and 2015 Contracts and for unused airtime for June 2016. (Id. ¶ 66; Ex. 33.)

         STANDARD

         To survive a motion to dismiss pursuant to Rule 12(b)(6), a pleading that purports to state a claim for relief must “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim satisfies this standard when its factual allegations “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555-56; see also Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010) (“[P]laintiff must give enough details about the subject-matter of the case to present a story that holds together.”). For purposes of a motion to dismiss, the court takes all facts alleged by the plaintiff as true and draws all reasonable inferences from those facts in the plaintiff's favor, although conclusory allegations that merely recite the elements of a claim are not entitled to this presumption of truth. Virnich v. Vorwald, 664 F.3d 206, 212 (7th Cir. 2011). When ruling on a Rule 12(b)(6) motion, the court considers “the complaint itself, documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice.” Cohen v. Am. Sec. Ins. Co., 735 F.3d 601, 604 (7th Cir. 2013) (citing Geinosky v. City of Chicago, 675 F.3d 743, 745-46 n. 1 (7th Cir.2012)).

         A complaint alleging fraud must satisfy Federal Rule of Civil Procedure 9(b), pursuant to which a party “alleging fraud or mistake…must state with particularity the circumstances constituting fraud or mistake.” This is often described as requiring a plaintiff to plead “the who, what, when, where and how” of the alleged fraud. United States ex rel. Garst v. Lockheed-Martin Corp., 328 F.3d 374, 376 (7th Cir. 2003). For purposes of a motion to dismiss for failure to comply with Rule 9(b), the court takes the allegations in the ...


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