Nature of the Case
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Facts
(Sorry but all the facts are necessary) Ds formed International News Network, Inc. to distribute a British news and information channel in the United States. Ds brought in P, a founder and former President of Cable News Network ('CNN') - initially as a consultant, and later as a shareholder - to help INN negotiate with the British Broadcasting Corporation (the 'BBC') for a programming license. INN also retained Daniels & Associates ('Daniels'), the nation's leading financial services company for the cable industry, to prepare a business plan and to drum up investors. In February 1994, P and Ds executed a written Shareholders' Agreement whereby each became a one-third shareholder in INN in return for a $10,000 capital contribution. Ds who had each already lent $300,000 to INN, agreed to lend up to another $350,000 to INN if necessary to meet its obligations to the BBC. P agreed to invest his time and effort. INN itself would not operate the Channel. Instead, INN would invest in a yet-to-be-formed operating entity. INN's shareholders, if they chose, could increase their personal stakes in the Channel by making additional cash investments in the separate operating entity. The agreement said nothing about the percentage of profits that INN, or any other equity investor, would receive from the Channel's operation. P assumed the three roles of director, President, and CEO of INN. As for Ds, Russ Hilliard acted as the other director and Les Hilliard apparently played no role in INN, other than investor. On March 4, 1994, when the BBC granted INN a 20-year exclusive license to distribute its news and information programming in a 24-hour format, commencing no later than February 1995 (the 'March Supply Agreement'). The agreement provided for INN's assignment of the benefits and privileges of the agreement to the yet-to-be-formed operating entity upon written consent of the BBC, whose consent would not be unreasonably withheld. The BBC retained its right, however, to withhold consent to any delegation of INN's duties under the contract. Cox Cable Communications entered the picture. Cox wanted to launch two BBC channels in the United States - one with news and the other with entertainment programming. Cox offered to purchase INN's contract rights for $1.7 million cash ($700,000 at closing and $100,000/year for ten years thereafter), plus a 5% equity interest in both of Cox's proposed BBC channels. INN entered into a letter agreement with Cox on June 2, 1994, accepting the proposed terms of sale. Cox retained the right to buy out INN's 5% interest in the BBC channels in their tenth year of operations. The price that Cox agreed to pay for that interest was 20% of the tenth-year gross revenues of both channels. In light of the Cox negotiations, INN and the BBC agreed to temporarily suspend the March Supply Agreement. This, in turn, required a postponement in the Channel's launch date for several months. In August 1994, the BBC, on behalf of Cox, requested an extension of time to work out certain editorial issues concerning the proposed entertainment channel. Having decided to pursue the profits from the Channel themselves rather than selling out to Cox, Ds denied this request. P reluctantly agreed to abort the Cox deal. In October 1994, the FCC promulgated a new rule allowing cable operators to charge an increased per-channel monthly rate for up to six new channels as of January 1, 1995. To take advantage of this window of opportunity, INN asked the BBC to accelerate the launch date of the Channel. In consideration for the interim programming feed, INN agreed to pay the BBC approximately $20 million in installments beginning January 3, 1995. The BBC retained the right to terminate the Interim Agreement if, by January 31, 1995, INN had failed to get letters indicating an intent to carry the Channel from cable systems with an aggregate of at least 500,000 subscribers. The December Supply Agreement also: (1) capped INN's initial capital contribution to the operating entity at 15%; and (2) gave the BBC a non-dilutable 20% equity interest in the operating entity. Ds said they would personally fund the Interim Agreement. INN did not yet have the cash available to make the necessary payments to the BBC. There is no oral or written agreement memorializing the precise amount promised, or defining the liabilities and remedies of the parties in the event of Ds' failure to fund. By mid-January 1995, Ds were in default under the Interim Agreement. In exchange for the dissolution of both the Interim and December Supply Agreements, the BBC agreed to release Ds and INN from any and all claims arising out of their breach of the oral agreement and Interim Supply Agreement. P commenced this diversity action on behalf of INN for: (1) fraud; (2) breach of contract; (3) promissory estoppel; (4) breach of the fiduciary duties of loyalty and care; and (5) mismanagement and waste of corporate assets. He also advanced personal claims for: (1) breach of contract; (2) promissory estoppel; and (3) breach of the fiduciary duties of loyalty and care. P alleged that Ds induced him and INN to abandon the March Supply Agreement and enter into the Interim and December Supply Agreements by falsely representing their intention to personally fund the Interim Agreement. This lead directly to the loss of the December Supply Agreement. P wants lost profits that INN would have received had the Channel been successfully launched; or (2) in the alternative, the market value of the lost supply agreements ('lost asset' damages); and (3) punitive damages (solely in connection with his fraud and breach of fiduciary duty claims). Ds moved for summary judgment in that P could not establish lost profits or lost asset damages, and was not entitled to punitive damages. Ds also contended that the oral promise to fund the Interim Agreement was unenforceable because it was too indefinite and not in writing. To prove lost profits, P relied on: (1) INN's Business Plan; (2) the revenues projected by Cox; (3) the BBC's, Ds' and P's 'belief' that the proposed operating entity would be profitable; and (4) the reports and deposition testimony of two damage experts. The experts estimated lost profits to be from $112 to $269 million. For lost asset damages, P relied entirely on the purchase price contained in the Cox Agreement to establish the market value of the March and December Supply Agreements. Calculating a present value for the portion of the purchase offer that comprised a 5% equity interest in the Cox channels, and adding this amount to the cash portion of the offer, the expert concluded that the total purchase price agreed to in the Cox Agreement was $17.13 million. The district court ruled that P could not prove lost profits or lost asset damages with reasonable certainty. It also held that as a matter of law P was not entitled to punitive damages. Except for an out of pocket fraud claim, Ds were granted summary judgment on the basic inability to prove damages with a reasonable certainty. This appeal resulted.
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