UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

FRANKLIN M. HALSEY, d/b/a Old
Dominion Capital; THE MEDIA
GROUP,
Plaintiffs-Appellees,

v.                                                                     No. 96-1298

URBAN TELECOMMUNICATIONS
CORPORATION; URBAN BROADCASTING
CORPORATION; THEODORE M. WHITE,
Defendants-Appellants.

Appeal from the United States District Court
for the Western District of Virginia, at Charlottesville.
James H. Michael, Jr., Senior District Judge.
(CA-95-35-3-C, BK-93-47-A, BK-93-461)

Argued: July 18, 1996

Decided: August 27, 1996

Before MURNAGHAN and ERVIN, Circuit Judges, and
PHILLIPS, Senior Circuit Judge.

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Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: Jeffrey Louis Squires, SQUIRES & CHOATE, P.L.C.,
Alexandria, Virginia, for Appellants. Melvin Earl Gibson, Jr., TREM-
BLAY & SMITH, Charlottesville, Virginia, for Appellees. ON
BRIEF: Andrew O. Reilly, SQUIRES & CHOATE, P.L.C., Alexan-
dria, Virginia, for Appellants. Patricia D. McGraw, TREMBLAY &
SMITH, Charlottesville, Virginia, for Appellees.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

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OPINION

PER CURIAM:

The instant case involves an alleged breach of an agreement to pay
a commission, or finder's fee, for the location of financing for the
construction and operation of a television station in Washington, D.C.
After several proceedings in the bankruptcy and district courts, two
companies and their principal were judged liable for commission pay-
ments in the amount of $1.26 million. On appeal, they challenge the
decision on several grounds. Finding no error in the district court's
findings and conclusions, however, we affirm its judgment and opin-
ion.

I

Theodore M. White is the president and sole shareholder of Urban
Telecommunications Corporation ("UTC"), a Virginia corporation he
organized in order to establish a television station to broadcast on
Channel 14 in Washington, D.C. After UTC received a construction
permit from the Federal Communications Commission ("FCC") in
1988, White sought financing for the project. He turned to Franklin
M. Halsey, an investment banker, for help. On June 8, 1988, UTC,
White and Halsey executed an agreement whereby UTC engaged Hal-
sey as its exclusive representative to raise the capital necessary for
building and operating the station.1 The agreement entitled Halsey to
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1 Articles II and III of the contract provide that during the nine months
from June 7, 1988, to March 7, 1989, Halsey "will attempt to raise at
least $2,000,000 (and such additional amount as may be necessary to put
the station on the air and operate for a period of one year) of debt or
equity funds for [UTC] . . . from investors."

                    2
12% of the funds raised. The contract also provided that, while any
party could terminate the agreement after a certain date, Halsey would
remain entitled to the commission if UTC completed a plan of capital-
ization with an investor Halsey had located during the term of the
agreement.2 Halsey executed the agreement on behalf of his company,
while White signed both as president of UTC and as an individual.

Halsey enlisted The Media Group and its principal, Dennis Rooker,
to assist him in his endeavors. Halsey and Rooker located HSN Silver
King Broadcasting Company, Inc., a wholly-owned subsidiary of
Home Shopping Network, Inc. (collectively "HSN"), which agreed to
finance Channel 14. During negotiations with HSN, UTC terminated
the exclusivity provision of the agreement with Halsey but promised
in writing that he would still receive his commission "if there is con-
summation of the proposal with Home Shopping Network that you
brought to our attention."3

In January 1989, White and UTC accepted HSN's financing pro-
posal. Subsequently, the deal began to take shape as agreed upon.
White incorporated Urban Broadcasting Corporation ("UBC") to own
and operate Channel 14. In addition to being president and sole direc-
tor of UBC, White also became the sole voting shareholder, exercis-
ing his option to own personally 55% of its stock. HSN held a 45%
ownership interest in the form of non-voting stock, but could not con-
vert that stock to voting shares until eighteen months after the station
started broadcasting. In addition, UBC gave HSN a security interest
in UBC's assets and White pledged all of his UBC stock to HSN.
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2 Article IX states in pertinent part:

          In the event that this Agreement is terminated or expires prior to
          the capitalization of [UTC] being completed, then Halsey shall
          still be entitled to receive his compensation as set forth in Article
          IV in the event that [UTC] completes a plan of capitalization
          with an [investor] that has been brought to[UTC] by Halsey or
          that has discussed the purchase of [UTC]'s debt or equity with
          Halsey, [UTC], or White during the term of this Agreement.

3 UTC terminated the agreement one day after the contract became ter-
minable by any party.

                     3
HSN, UBC and White executed several documents as part of the
financing deal, among them a loan agreement for $5.45 million, an
assignment agreement transferring the construction permit for Chan-
nel 14 from UTC to UBC, and a standard television affiliation agree-
ment committing Channel 14 to carry the programming of an HSN
affiliate. The parties amended the loan agreement twice during the
next three years to cover the increased costs and expenses associated
with the construction of Channel 14. The total loan amount from HSN
was $10.5 million.

Halsey and The Media Group never received any money for their
efforts in locating HSN. Consequently, they sued UTC, UBC and
White in state court for payment.4 After filing a voluntary bankruptcy
petition in Western District of Virginia, UTC removed the case to the
bankruptcy court.

II

The trial centered on three issues: (1) whether White was person-
ally liable for the commission payments; (2) whether UBC was liable
for UTC's obligations under the agreement with Halsey as its "suc-
cessor"; and (3) whether Halsey and The Media Group were entitled
to finder's fees based only on the original loan amount, not the final
sum. The bankruptcy court entered judgment for Halsey and The
Media Group against UTC in the amount of $654,000, or 12% of the
original loan amount of $5.45 million, but denied recovery against
White personally or against UBC as UTC's successor.

On appeal, the district court reversed the bankruptcy court's judg-
ment regarding White's individual liability and remanded the case for
further findings as to UBC's liability and the proper amount of the
commission. On remand, the bankruptcy court determined that UBC
was liable as UTC's successor and that Halsey and The Media Group
were entitled to a commission based on the full $10.5 million from
HSN plus interest. The district court affirmed, leading UTC, UBC and
White to appeal.
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4 Although originally named as a defendant, HSN was subsequently
dismissed from the suit.

                    4
III

Exercising our plenary review over bankruptcy matters but keeping
in mind that the bankruptcy court's findings of fact may not be set
aside unless clearly erroneous, see First Nat'l Bank of Maryland v.
Stanley (In re Stanley), 66 F.3d 664, 667 (4th Cir. 1995), we concur
with the district court's analysis and conclusions. Virginia law gov-
erns the substantive issues on appeal by virtue of the choice of law
clause in the June 8, 1988, agreement between Halsey, UTC and
White.

A

Appellants first contend that White cannot be held personally liable
for payment of the commission. Both the bankruptcy and district
courts appropriately turned to the June 8, 1988, agreement, found it
to be clear and unambiguous and proceeded to construe its terms as
a matter of law. See Burns v. Eby & Walker, Inc. , 308 S.E.2d 114, 116
(Va. 1983) (the court interprets a clear and unambiguous contract as
a matter of law and ignores parole evidence that introduces ambigu-
ity). They disagreed on the issue of White's personal liability, how-
ever.

We agree with the district court's finding that the contractual lan-
guage along with Whites dual signatures rendered him both person-
ally and professionally liable for the commission payments.5 See
Clinch Valley Physicians, Inc. v. Garcia, 414 S.E.2d 599, 601 (Va.
1992) (Virginia law requires the court to construe the contract in its
entirety to ascertain the intent of the contracting parties from the writ-
ten words). The court appropriately observed that in the absence of
language limiting Whites capacity or severing his liability, Virginia
common law renders a party to a contract responsible for its whole
performance. See Link v. Weizenbaum, 326 S.E.2d 667, 669 (Va.
1985) ("[W]here two or more parties jointly contract to do a single
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5 The agreement lists White as a party, then names him throughout. Not
only does White, a sophisticated businessman, gain substantially from
the arrangement, but the contract expressly provides that the agreement
benefits and binds both UTC and White.

                    5
act, each is bound for the whole performance."); see also Restatement
(Second) of Contracts §§ 288(2), 289(1) (1981).

B

Appellants next contend that UBC cannot be held liable for the
commission payments under principles of successor corporate liabil-
ity. Again, we find, however, that the district court correctly applied
the "mere continuation" exception to the general rule of non-successor
corporate liability to find UBC accountable for the fees.

While the basic rule in Virginia holds that a purchasing corporation
may not be held liable for obligations of the selling corporation, an
exception exists for a successor which is merely a continuation of its
predecessor. See Harris v. T.I., Inc., 413 S.E.2d 605, 609 (Va. 1992);
People's Nat'l Bank of Rocky Mount v. Morris, 148 S.E. 828, 829
(Va. 1929). In applying that exception, the district court properly
determined that absolute identity between the companies is not
required. Virginia precedent simply does not create that standard, but
instead calls for common identity of management, operation and
ownership.6 See Harris, 413 S.E.2d at 609 ("A common identity of
the officers, directors, and stockholders . . . is the key element of a
`continuation.'"); Pepper v. Dixie Splint Coal Co., 181 S.E. 406, 410
(Va. 1935) (finding continuation based principally on identity of own-
ership and management); see also Crawford Harbor Assocs. v. Blake
Constr. Co., 661 F. Supp. 880, 885 (E.D. Va. 1987) (construing Vir-
ginia law as having identified three continuity factors -- identity of
ownership and management and the absence of consideration for the
assets transferred -- as most important).

The district court correctly observed such shared identity between
UTC and UBC. Because ownership did not change hands and White
remained in control of both corporations, the court determined that
"actual and ultimate control and ownership of the property and busi-
ness of the . . . companies was lodged" in White. 7 Pepper, 181 S.E.
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6 We agree with Appellees' suggestion that imposing such an absolute
standard would invite manipulation to avoid liability.
7 White is president and sole shareholder of UTC and president and
majority shareholder of UBC. White holds a 55% ownership interest in
UBC, while HSN has a 45% non-voting interest.

                    6
at 410. The court further found inadequate consideration in connec-
tion with the relevant transactions and that, after transferring its
license to UBC, UTC, for all practical purposes, ceased to exist. In
addition, the court appropriately determined that, because the transac-
tions regarding UTC and UBC were not made at arms length, the
mere continuation exception remained applicable. See Harris, 413
S.E.2d at 609 (explaining that a "bona fide, arms-length transaction"
negates the exception).

In short, White and UTC needed to raise capital for the television
station. HSN agreed to provide that financing but insisted on owning
a portion of the venture. Thus, a new corporation-- UBC -- was
formed. White continued in complete voting-shareholder control, but
HSN received a 45% non-voting interest. That ownership interest
alone does not negate the continuity between UTC and UBC as it
resulted solely from the efforts of White and UTC to obtain financing.
The district court properly determined that UBC was a mere continua-
tion of UTC responsible for meeting its obligations.

C

Appellants last contention is that the commission cannot properly
be based upon the full amount of the HSN loan rather than upon the
initial agreed-upon sum. Again, the district court properly interpreted
the June 8, 1988, contract to provide otherwise.

Because Virginia law forbids courts from rewriting contracts, see
Wilson v. Holyfield, 313 S.E.2d 396, 398 (Va. 1984), the court strictly
construed the terms of the agreement to entitle Halsey to a commis-
sion on the full amount of capitalization. The contract provides that
Halsey is "entitled to receive 12% of the amount of money raised for
[UTC]." Furthermore, it guarantees that Halsey is to be paid despite
termination of the agreement, as long as UTC completes a plan of
capitalization with an investor he secured during the existence of the
contract.

That is precisely what happened. UTC and White terminated Hal-
seys contract soon after he told them about HSN, yet they went on to
consummate a capitalization agreement. We agree with the district
court's reading of the contract to mean that the capitalization plan

                    7
with HSN became complete when enough money had been secured
to cover the station's construction and first-year operation costs. The
agreement simply contains no language limiting the funds to be raised
or the amount to be paid Halsey in the event that he located a success-
ful source of financing for the station.8 Thus, as the district court con-
cluded, Halsey is entitled to a 12% commission on the full amount of
the HSN loans, or $1.26 million.

IV

For the foregoing reasons, the district court's order is

AFFIRMED.
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8 While Appellants argue that the commission must be circumscribed
by the parties' expectation regarding the financing required to construct
and then to operate the station for one year, there is no such limitation
contained in the agreement. Nor, as the district court found, is there any
evidence of cost forecasting at all by the parties. The agreement does
provide some target fund-raising figures, but those amounts are couched
in flexible terms.

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