Bergen Beverage Distribs. v. E. Distribs.

• Decision Date: 21 March 2022
• Docket Number: Civ. 2:17-cv-04735 (WJM)
• Court: U.S. District Court — District of New Jersey
• Parties: BERGEN BEVERAGE DISTRIBUTORS LCC, et al. Plaintiffs, v. EASTERN DISTRIBUTORS, INC., et al, Defendants.

BERGEN BEVERAGE DISTRIBUTORS LCC, et al. Plaintiffs, v. EASTERN DISTRIBUTORS, INC., et al, Defendants.

Civ. No. 2:17-cv-04735 (WJM)

United States District Court, D. New Jersey

March 21, 2022

OPINION

WILLIAM J. MARTINI, U.S.D.J.:

Presently pending in this breach of contract and tort action are two motions for summary judgment pursuant to Fed.R.Civ.P. 56: 1) Plaintiffs Bergen Beverage Distributors, LLC and George Lawler (jointly "Bergen") and David Johnson, Joann Young, and Yojo Corp. (jointly "Yojo") (collectively "Plaintiffs") move for partial summary judgment on liability against Defendants Eastern Distributors I, Inc. ("Eastern") and The Route Brokers ("Rte. Brokers"), ECF No. 123; 2) Defendant Eastern moves for summary judgment dismissing the claims against it and for judgment on its counterclaim against Bergen, ECF 124. The Court decides these motions without oral argument. Fed.R.Civ.P. 78(b). For the reasons set forth below, Plaintiffs' motion for partial summary judgment is denied. Eastern's motion for summary judgment is denied in part and granted in part.

I. BACKGROUND AND PROCEDURAL HISTORY

Eastern is a reseller of exclusive routes for distribution of specific Coca-Cola beverage products in certain territories in New Jersey and in other states in the tristate region. Compl., ¶ 11, ECF No. 1. Bergen and Yojo are unrelated parties that each purchased new beverage distribution routes from Eastern. Id. at ¶ 14. Rte. Brokers brokered the transaction. Id. at ¶ 17.

A. Rte. Brokers

Plaintiffs initially learned about territories being offered for sale by Eastern through an advertisement placed by Rte. Brokers that offered the opportunity to buy a distributorship that included a "Protected, Metro NY/NJ Territory" as well as "200 Target Accounts / Territory," "Newly Decaled Refrigerated Truck," and "Training by Simply Orange/Coca-Cola Sales Team," by "investing] as little as $119, 000 total," and that "after all expenses you can net $2, 000/week." George Lawler Deck ("Lawler Decl"), ¶ 3, Ex. A, ECF No. 101-7; David Johnson Decl. ("Johnson Decl"), ¶ 5, ECF No. 101-6.^[1]

Rte. Brokers verbally made the same representations to Plaintiffs described in the advertisement. Lawler Decl., ¶ 7; Johnson Decl., ¶ 9. Subsequently, Rte, Brokers entered into a broker agreement with Bergen on June 12, 2015 and with Yojo on June 15, 2015 ("Broker Agreements") authorizing Rte. Brokers to submit an offer to Eastern for the purchase of a "new route distributorship" defined by specified zip codes in northern New Jersey. As part of the purchase price, Plaintiffs were to receive a "2005 or newer refrigerated truck" and a promise that a "Third Party Sales Team . . . will solicit at least 200 Target Accounts in the Buyer's territory" for certain branded products. Lawler Decl, ¶ 6, Ex. B; Johnson Decl., ¶ 8, Ex. A.

B. Eastern

Plaintiffs met with Ed Marinaccio, the owner of Eastern, who purportedly represented that: they would receive an additional 100 accounts in their respective territories, Lawler Decl., ¶ 21, Johnson Decl, ¶ 23; Yojo would earn $2000 per week, Johnson Decl., ¶ 11; and Coca-Cola would be "part of the deal," Lawler Decl., ¶ 40. Defendants did not provide Plaintiffs any financial records or projections specific to the territories that they were to purchase, Lawler Decl, ¶ 10; Johnson Decl., ¶ 13. Because the routes were new, there were no pre-existing customers. Bergen and Yojo selected the zip codes for their respective territories. Eastern's Separate Stmt. Of Undisputed Facts ("SSUF"), ¶ 15, ¶ 45; Declaration of Harry Tilis ("Tilis Decl."), Ex. C (Lawler Dep.), 19:9-15, ECF 124-6; Tilis Decl., Ex. F (Johnson Dep.), 36:5-7, ECF No. 124-9.

On July 8, 2015, Bergen entered into a ten-year term Independent Operator Distribution Agreement with Eastern to purchase territory in certain New Jersey zip codes for $129, 000 ("Bergen Agreement"). Lawler Decl., ¶ 8; Bergen Agreement attached to Lawler Decl. as Ex. C. Bergen paid $79, 000 directly to Eastern at the time of the purchase and was to pay the remaining $50, 000 balance pursuant to a promissory note ("Promissory Note"). Id; Promissory Note, Tilis Decl, Ex. B, ECF No. 124-5. In addition to the $79, 000 initial payment, Bergen paid Eastern a $6, 000 deposit plus $104, 944 during the life of the territory. Lawler Decl., ¶ 39.

On August 6, 2015, Yojo entered into a ten-year term Independent Operator Distribution Agreement with Eastern to buy the territory in certain New Jersey zip codes for $119, 000 ("Yojo Agreement"). Johnson Decl, ¶ 11; Yojo Agreement attached to Johnson Decl. as Ex. B. The territory purchased by Yojo differs from that purchased by Bergen. Johnson Decl., ¶ 12.

The Bergen and Yojo Independent Operator Distribution Agreements (jointly "Distribution Agreement" or "Agreement")^[2] state in the Preamble that Eastern has the "exclusive rights to establish Independent Operator Routes," and cannot enter into "any agreement inconsistent with the distribution appointment of the Independent Operator . . . including any agreements with other entities which sell or distribute Competitive Products." Agrmt, ¶ 8.2.3(b), The "Territory" in which Plaintiffs may distribute Products are "small format stores, markets and retailer sellers of the products under this agreement" that are within the specified Northern New Jersey zip codes in which "Independent Operator [Plaintiffs] will distribute Products on its Approved Route" and in the unassigned "Gray Zone." Id. at ¶ 4.5. "Approved Routes" are defined as the distribution route "within the five boroughs of New York City and Long Island as described in Exhibit A" although Exhibit A references the "Zip Codes listed in [¶] 4.5," which are Northern New Jersey zip codes. Notably, ¶ 4.9.2 requires Plaintiffs "to supply refrigerated trucks in proper working order."

The Agreement mandates that Eastern "assist Independent Operator [Plaintiffs] with the marketing of Products on the Approved Routes and will use good faith efforts to honor all reasonable requests for promotional support." Id., at ¶ 7, 5. Coca-Cola is also to "assist each driver with development, marketing and sales as listed in Exhibit C." Id. at ¶ 4.7. Exhibit C states that the assistance Plaintiffs are to receive include:

- "A protected primary territory from other Independent Operator's - that includes a minimum of 200 target retail outlets - as defined by zip codes in Brooklyn, Bronx, Manhattan, Queens, Staten Island, Long Island or West Chester County."

- "Support of a 3^rd party retail team, to assist Independent Operator's [sic] under contract with market development, new account penetration, and training. This includes a sales blitz whereby all target accounts in the Primary Territory will be solicited, in person, to secure new distribution."

- "NEW retail accounts will be supported with new distribution incentive . . ."

- "An annual promotional program, whereby discounts will be offered a) periodically on select items, b) through an everyday low cost program on select brand pack(s), and/or c) on an everyday basis for select brand pack(s); collectively to be provided if volume purchase requirements are met."

- "Depending on availability, re-purposed refrigerated trucks will be made available to Independent Operators ..."

Id. at Ex. C. Paragraph 2.7 states that Eastern "shall (if applicable) provide a Volume-Based Incentive to reward [Plaintiffs] for achieving the Volume Target in each Agreement Year." According to ¶ 2.8, a "reasonable annual volume goal for the Approved Route will be mutually agreed upon by Distributor and Independent Operator by January 31, of each Agreement Year during the Term." The Agreement's integration clause provides in part, that "neither of the parties is entering into this Agreement on the basis of any representation or promise not expressly contained herein." Id. at ¶ 26.1, Bergen ceased operating the territory in about July 2017 after losing a purported substantial sum of money from the routes. Lawler Decl., ¶¶ 34, 39. Similarly, by the summer of 2016, Yojo decided it needed to sell its territory because it could not afford to continue. Johnson Decl., ¶ 39. Yojo contends that it paid Eastern "tens of thousands" in addition to the $119, 000 it initially paid for the territory. Id. at ¶ 44.

Plaintiffs filed suit against Eastern and Rte. Brokers on June 27, 2017^[3] alleging: 1) breach of contract against Eastern (First Count) and against Rte. Brokers (Second Count); 2) breach of implied covenant of good faith and fair dealing against Eastern (Third Count) and against Rte. Brokers (Fourth Count); 3) fraud and negligent misrepresentation against Eastern and Rte. Brokers (Fifth Count); and 4) negligence and breach of duty against Eastern and Rte. Brokers (Sixth Count). Plaintiffs attribute their financial losses to Eastern's failure to provide an exclusive or "protected" distribution route or 200 minimum target outlets, allowing other sellers of Eastern products in their territories by the time the Agreements were executed, unilaterally setting unachievable volume targets, not providing trucks in working order, giving little marketing support, and offering promotional programs such as taste tests that were only available in New York. Eastern disputes that it breached any portions of the Agreement and instead, believes that Plaintiffs did not use their "best efforts to aggressively develop accounts" within their territories as required by ¶ 7.4 of the Agreement, and that Plaintiffs' efforts were short-lived.

Plaintiffs now move for summary judgment against Eastern and Rte. Brokers on liability and for damages to be determined at trial. Eastern moves for a judgment of dismissal as to Plaintiffs' claims arguing that there are no genuine...