Dick Broadcasting Company, Inc. of Tennessee v. Oak Ridge FM, Inc.

Dick Broadcasting Company, Inc. (DBC) (plaintiff), a license holder for various radio stations, entered into three separate contracts: one with Oak Ridge FM, Inc. (Oak Ridge FM) (defendant); one with ComCon Consultants (ComCon) (defendant); and one with John Pirkle and Jonathan Pirkle (Pirkle) (defendants). The three contracts were related to DBC’s acquisition of the programming rights and equipment for a radio station licensed by Oak Ridge FM. Only DBC’s contract with Oak Ridge FM, which gave DBC a right of first refusal to purchase the radio station’s assets, contained a clause requiring the written consent of Oak Ridge in the event that DBC wished to assign its rights, interests, and obligations under the agreement to another entity. Subsequently, DBC executed a purchase agreement with Citadel Broadcasting Company (Citadel), whereby Citadel acquired most of DBC’s radio-station assets, including DBC’s agreements with the defendants, for $300 million. However, Oak Ridge FM refused to consent to DBC’s assignment of the contract to Citadel. Eventually, DBC finalized the deal with Citadel without the assignment of the agreements. DBC filed suit against the defendants, seeking a declaratory judgment that the ComCon and Pirkle contracts were assignable without the consent of Oak Ridge FM, and claiming breach of contract. DBC argued that the implied covenant of good faith and fair dealing applied to the Oak Ridge FM contract and that the defendants had breached the agreement by failing to act reasonably. The trial court disagreed and granted summary judgment to the defendants. DBC appealed. The court of appeals reversed. The Supreme Court of Tennessee granted certiorari to review.