Bama Budweiser of Montgomery, Inc. v. Anheuser-Busch, Inc.

• Decision Date: 07 August 1992
• Docket Number: ANHEUSER-BUSC,INC
• Citation: Bama Budweiser of Montgomery, Inc. v. Anheuser-Busch, Inc., 611 So.2d 238 (Ala. 1992)
• Parties: BAMA BUDWEISER OF MONTGOMERY, INC. v., et al. 1910623.
• Court: Alabama Supreme Court

Page 238

611 So.2d 238

BAMA BUDWEISER OF MONTGOMERY, INC. v.ANHEUSER-BUSCH, INC., et al.

1910623.

Supreme Court of Alabama.

Aug. 7, 1992.

As Modified on Denial of Rehearing

Dec. 11, 1992.

James E. Roberts, Birmingham, and W. Stanley Gregory and Richard L. Pyper of Thorington & Gregory, Montgomery, for appellantBama Budweiser of Montgomery, Inc.

Sterling G. Culpepper, Jr. and Donald R. Jones, Jr. of Balch & Bingham, Montgomery, for appelleeAnheuser-Busch, Inc.

Philip S. Gidiere, Jr. of Carpenter & Gidiere, Montgomery, for appelleesNelson Daniel and Capital City Beverage Co., Inc.

Lee H. Copeland and George W. Walker III of Copeland, Franco, Screws & Gill, P.A., Montgomery, for appelleesHorn Beverage Co., Inc. and Bill Horn.

STEAGALL, Justice.

Bama Budweiser of Montgomery, Inc., owned by Frank Schilleci, sued Anheuser-Busch, Inc.; Horn Beverage Company, Inc., an Alabama corporation; Bill Horn, individually and as owner of Horn Beverage; Capital City Beverage Company, Inc.("CCB"), an Alabama corporation; and Nelson Daniel, sole owner and former president of CCB, alleging fraud and various torts and violations of certain statutes governing the business relations between wholesalers and suppliers of beer.After the defendants answered the complaint and extensive discovery was completed, Schilleci amended his complaint to further allege breach of contract, conversion, and the "tort of outrageous conduct."All of the defendants moved for a summary judgment on the various counts against them, and the motions were granted.The court's judgments did not dispose of all aspects of the case, but the court certified them as final under Rule 54(b), A.R.Civ.P. Bama Budweiser appealed.

We begin our review by noting the following undisputed facts: CCB, a licensed beer wholesaler of Anheuser-Busch products for approximately 23 years, was dissolved in December 1988.It began as a partnership between Paul Daniel and his father; it consisted of Capital City Beverage Company of Selma, Inc.("CCB Selma"); Capital City Beverage Company of Troy, Inc.("CCB Troy"); and Capital City Beverage Company of Montgomery, Inc.("CCB Montgomery").¹Each of these three businesses was licensed to sell the Anheuser-Busch products in certain specified areas of the state.

Prior to 1982, anti-trust laws prohibited Anheuser-Busch from granting exclusive territories to its wholesalers, so it merely assigned different areas of "primary responsibility."CCB Troy's geographic area was described by a map attached to the agreement; it included Bullock, Covington, Crenshaw, and Pike Counties.The map attached to the CCB Montgomery agreement defined its area as the counties of Autauga, Elmore, and Montgomery.Although CCB Troy was not assigned any portion of Montgomery County, it nonetheless sold Anheuser-Busch products out of its Troy warehouse to 23 retailers located in south Montgomery County along and between U.S. Highways 331 and 231.CCB Montgomery sold Anheuser-Busch products in these areas only on rare occasions.Because both wholesale companies were owned by Daniel and his father, it made no economic difference to them as to which company serviced Montgomery County.

In 1982, Horn Beverage acquired the assets of CCB Troy and sought to replace the company as the authorized seller of Anheuser-Busch products in that area.Bill Horn and Daniel had an unwritten informal agreement allowing Horn Beverage to make sales of Anheuser-Busch products in the south Montgomery area; Anheuser-Busch was not aware of this agreement.Anheuser-Busch approved the transfer and issued a change of ownership form describing the sales area of CCB Troy as "all of the counties of Pike, Bullock, Covington, and Crenshaw located within the State of Alabama."CCB Troy was dissolved, and Anheuser-Busch then executed a wholesaler agreement assigning those four counties to Horn Beverage.The agreement contained no authorization for sales in the southern portions of Montgomery County; however, Horn continued to service the same 23 accounts in south Montgomery that CCB Troy had always serviced.CCB Montgomery never serviced any of these accounts after Horn's purchase of CCB Troy's assets in 1982.

In late 1982, Anheuser-Busch revised its wholesaler agreements throughout the United States and, pursuant to changes in anti-trust laws, designated exclusive sales territories for individual wholesalers.Anheuser-Busch sent new wholesaler agreement forms to Horn Beverage and CCB Montgomery and instructed them to review the documents for accuracy and to furnish some additional information.With the new agreements, Anheuser-Busch assigned to the two wholesalers the same counties they had had under their previous agreements with the company.Horn Beverage was granted no authorization to service south Montgomery County, the area specifically assigned to CCB Montgomery.Horn and Daniel signed the documents on behalf of their respective companies and returned them to Anheuser-Busch for final approval.

In 1987, Schilleci approached Daniel about the possibility of purchasing CCB Selma and CCB Montgomery.At the time, Schilleci owned two other wholesale beer distributorships in Alabama.During the negotiations that ensued, Daniel provided financial and sales records to Schilleci and his representatives so that they could evaluate the business prior to the closing.All of these evaluations were based on the assets of CCB Montgomery and not the territory it serviced; thus, the 23 south Montgomery accounts were not factored into the business's estimated worth.Based on this information, Schilleci's advisors valued CCB Montgomery and CCB Selma from $3 million to $5.5 million.Schilleci subsequently offered Daniel $5 million for the businesses, which he accepted, contingent upon Anheuser-Busch's approval of Schilleci as a wholesaler.To gain Anheuser-Busch's approval, Schilleci was required to 1) demonstrate his financial ability to assume the business, 2) gain clearance from Anheuser-Busch's legal department, and 3) submit a five-year marketing plan.Schilleci sent Anheuser-Busch the documentation necessary for approval and thereafter awaited word of Anheuser-Busch's decision.

Sometime after June 1988, Horn learned that Daniel planned to sell CCB Troy and CCB Montgomery to Schilleci.Daniel informed Horn that Schilleci was having trouble getting approval from Anheuser-Busch and advised Horn to work the problem out with Schilleci if he was ultimately approved.

In September 1988, Horn told Schilleci at a wholesaler's meeting that Horn Beverage had been selling Anheuser-Busch products in the south Montgomery area for years and that he wanted to continue to do so after Schilleci acquired CCB Montgomery.Because he had not yet been approved by Anheuser-Busch to replace Daniel as its authorized wholesaler in the south Montgomery area, Schilleci made no commitment to Horn at that time.Soon thereafter, Anheuser-Busch officially refused to approve Schilleci as an assignee of Daniel's wholesale equity agreement, because his five-year marketing plan was inadequate; however, Anheuser-Busch did give Schilleci permission to submit a second plan.

During this time, Horn contacted two Anheuser-Busch sales officials and told them he had been selling Anheuser-Busch products in the south Montgomery area for many years and that he wished to continue selling in that area.The Anheuser-Busch district sales manager then initiated an investigation of the matter.

In November 1988, Schilleci submitted a second, more comprehensive marketing plan to Anheuser-Busch.At the same time, Daniel executed a second notice of intent to sell CCB Montgomery and CCB Selma to Schilleci, pending Anheuser-Busch's approval.

As part of the renewed approval process, two Anheuser-Busch representatives arranged a meeting with Schilleci on December 8, 1988.Prior to the meeting, the representatives prepared a written agenda that included the recommendation that Horn be allowed to continue servicing these accounts.At the meeting, however, Anheuser-Busch representatives told Schilleci that he would be expected to work all the accounts in Montgomery County and never discussed Horn's servicing of the 23 south Montgomery accounts.Schilleci was apprised of other requirements as a condition to approval, and he agreed to those terms.

Thereafter, Schilleci received a letter from Anheuser-Busch accepting him as a transferee of Daniel's wholesale beer distributorships.On December 30, 1988, the parties met to close the sale of CCB Montgomery and CCB Selma.In accordance with Anheuser-Busch's instructions, the parties executed a "Wholesaler Equity Assignment Document" and a "Supplemental Agreement," which expressly stated that Schilleci would "service the territory currently being serviced" by CCB Montgomery.The assignment of CCB Montgomery's agreement contained a map showing that company's territory, including all of Montgomery County.

Following the transfer of CCB Montgomery to Schilleci, Horn continued to service the 23 south Montgomery accounts.In March 1989, Schilleci confronted Daniel regarding Horn Beverage's activities, and Daniel told him for the first time about the unofficial agreement he had with Horn to allow Horn Beverage to service south Montgomery County.Schilleci thereafter sent a letter to Horn warning him to cease from these sales, but Horn continued.Schilleci then sent a letter to Anheuser-Busch requesting a resolution of this problem.

After discussions with its general counsel, Anheuser-Busch sent a copy of the memorandum recommending that Horn Beverage be allowed to continue selling Anheuser-Busch products in the south Montgomery area.In June 1989, Anheuser-Busch sent a registered letter to Schilleci and Horn notifying them that Anheuser-Busch was formally altering the territory of Horn Beverage to include the 23 south Montgomery accounts and including revised maps reflecting this official change.Schilleci...