Coca-Cola Co. v. Babyback's Intern., Inc.

Citation806 N.E.2d 37
Decision Date08 April 2004
Docket NumberNo. 49A02-0308-CV-703.,49A02-0308-CV-703.
PartiesThe COCA-COLA COMPANY, Coca-Cola Enterprises, Inc., Appellants-Defendants, Hondo Incorporated d/b/a Coca-Cola Bottling Company Indianapolis, and Coca-Cola Bottling Company Indianapolis, Inc., Defendant, v. BABYBACK'S INTERNATIONAL, INC., Appellee-Plaintiff.
CourtIndiana Appellate Court

Gary P. Price, Peter S. French, Matthew S. Tarkington, Lewis & Kappes, P.C., Indianapolis, IN, Attorneys for Appellant, The Coca-Cola Company.

Kent M. Frandsen, Carol Sparks Drake, Parr Richey Obremskey & Morton, Lebanon, IN, Attorneys for Appellant, Coca-Cola Enterprises, Inc.

Marvin Mitchell, Richard J. Dick, Stephen P. Kenley, Mitchell Hurst Jacobs & Dick, LLP, Indianapolis, IN, Attorneys for Appellee.

OPINION

BARNES, Judge.

Case Summary

Coca-Cola Enterprises, Inc. ("CCE") and the Coca-Cola Company ("Coke USA") appeal the trial court's denial of their motions for summary judgment in response to Babyback's International, Inc.'s, ("Babyback's") complaint alleging breach of contract, tortious interference with a contractual relationship, and other tort claims. We affirm.

Issues

CCE raises several issues, which we consolidate and restate as whether the trial court properly denied its partial motion for summary judgment. Coke USA raises one issue, which we restate as whether the trial court properly denied its motion for summary judgment.

Facts1

Babyback's made ready-to-eat barbeque products, which were available in grocery stores. Coke USA owns the formulas to Coca-Cola soft drinks and licenses the rights to manufacture those beverages to various bottling companies, including Coca-Cola Bottling Company Indianapolis, Inc. ("Coke Indy") and CCE. Coke Indy bottles Coca-Cola products for the Indianapolis area. CCE is a large bottling company whose markets include Louisville and Atlanta.

In January 1997, Babyback's and Coke Indy entered into a written contract, which provided that Coke Indy and Babyback's would co-market their products to 300 area grocery stores. Under the contract, Babyback's made arrangements to provide freestanding double-door coolers to the grocery stores. Coca-Cola products were shelved on one half of the cooler and Babyback's products were shelved on the other half. In return, Coke Indy was to pay Babyback's $700 per year for five years. After the program began, Coke Indy experienced increased sales of its products.

In the spring of 1997, Babyback's met with CCE about expanding the co-marketing program to Louisville. Babyback's and CCE's Louisville division entered into an oral agreement to co-market their products in the Louisville area. The terms of the agreement were to be the same as Babyback's contract with Coke Indy. Although, this agreement was never reduced to a written contract, Babyback's supplied coolers to area grocery stores and CCE displayed Coca-Cola products in them.

In the fall of 1997, Babyback's and CCE discussed expanding the co-marketing concept to other markets, including Atlanta. Although the parties reached an oral agreement,2 they never entered into a formal written agreement. Regardless, Babyback's ordered and installed coolers in several Atlanta grocery stores and incurred marketing and placement fees and other expenses. Babyback's also ordered additional coolers, contacted many grocery store chains, and operated at a loss in Atlanta in an attempt to secure the placement of coolers in other areas.

In the meantime, Coke USA began to have concerns about the quality of Babyback's product. It had two inspectors visit Babyback's processing plant even though the USDA was monitoring the plant and no violations had been reported. Coke USA decided not to continue associating with Babyback's and, pursuant to the licensing agreements, refused to allow Coke Indy or CCE to bottle Coca-Cola if they continued to associate with Babyback's. Babyback's relationships with CCE and Coke Indy deteriorated, and soon thereafter Babyback's stopped production because of financial difficulties.

On January 4, 1999, Babyback's filed a complaint, which was amended on March 20, 1999. The complaint listed various claims that included breach of contract by Coke Indy, tortious interference with a contractual relationship by Coke USA regarding the Coke Indy contract, breach of contract by CCE, tortious interference of a contractual relationship by Coke USA regarding the CCE contract, and breach of fiduciary duties, misappropriation, constructive fraud, and bad faith by CCE. Coke Indy filed an answer, a counterclaim, and a cross-claim against Babyback's. CCE and Coke USA filed answers denying Babyback's allegations and asserting several affirmative defenses. On April 1, 2003, Coke Indy filed a partial motion for summary judgment. That same day, CCE and Coke USA also filed a joint motion for partial summary judgment.3 On July 11, 2003, the trial court denied all of the motions for summary judgment. CCE and Coke USA now proceed on an interlocutory appeal.4

Analysis5

"On appeal, the standard of review of a grant or denial of a motion for summary judgment is the same as that used in the trial court." F.B.I. Farms, Inc. v. Moore, 798 N.E.2d 440, 444 (Ind.2003). The party appealing from a summary judgment order has the burden of persuading us that the trial court's decision was erroneous. Owens Corning Fiberglass Corp. v. Cobb, 754 N.E.2d 905, 908 (Ind.2001). "Relying on specifically designated evidence, the moving party bears the burden of making a prima facie showing that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law." Baker v. Heye-America, 799 N.E.2d 1135, 1139 (Ind.Ct.App.2003)trans. denied; Ind. Trial Rule 56(C). All doubts as to the existence of material issues of fact must be resolved against the moving party, and all facts and reasonable inferences from those facts are construed in favor of the nonmoving party. Owens Corning, 754 N.E.2d at 909. "If there is any doubt as to what conclusion a jury could reach, then summary judgment is improper." Id.

I. CCE's Motion for Summary Judgment
A. Statute of Frauds6

CCE argues that the trial court improperly denied its motion for summary judgment because the parties' failure to reduce their agreement to writing violates the statute of frauds, rendering it unenforceable. The statute of frauds prohibits a person from bringing an action involving any agreement that is not to be performed within one year from the making of the agreement unless the "agreement on which the action is based, or a memorandum or note describing the promise, contract, or agreement on which the action is based, is in writing and signed by the party against whom the action is brought or by the party's authorized agent[.]" Ind.Code § 32-21-1-1(b)(5).

Whether a writing satisfies the statute of frauds is a question of law for the court. See Gibson County Farm Bureau Co-op. Ass'n. v. Greer, 643 N.E.2d 313, 320 (Ind.1994) (addressing sufficiency of a security agreement under the UCC). "Once the existence of the contract is established, the policy behind the statute is fulfilled, and the only remaining task is to ascertain the precise terms of the contract." Wehry v. Daniels, 784 N.E.2d 532, 536 (Ind.Ct.App.2003). If the parties dispute a contractual term, their dispute raises a factual issue for the trier of fact. Id. The purpose of the statute of frauds is to preclude fraudulent claims that would likely arise when the word of one person is pitted against the word of another and to remove the temptation of perjury by preventing the rights of litigants from resting wholly on the precarious foundation of memory. Brown v. Branch, 758 N.E.2d 48, 51 (Ind.2001).

For a writing to satisfy the statute of frauds, it must set out the agreement with such reasonable certainty that its terms may be understood from the writing itself, without recourse to parol evidence. National By-Products, Inc. v. Ladd, 555 N.E.2d 518, 520 (Ind.Ct.App. 1990). A writing that leaves some essential term to be shown by parol evidence, is only a "parol contract" not enforceable under the statute of frauds. Id. "All that is required is reasonable certainty in the terms and conditions of the promises made, including by whom and to whom." Johnson v. Sprague, 614 N.E.2d 585, 588 (Ind.Ct.App.1993). CCE argues that a fax from CCE to Babyback's summarizing a meeting between the two on November 18, 1997, is insufficient to satisfy the statute of frauds. Babyback's responds that the fax contained the essential terms of the contract and satisfied the statute of frauds. The fax provided in part:

We enjoyed our meeting today with you and believe we have made further strides toward coming to agreement on a `quiet partnership' with your company. Your objectives however to have absolute agreement by Friday may be difficult to achieve. Nonetheless, we will move as quickly as possible given the complexities which must be worked through. As we stated several times, we do agree that the complimentary merchandising of Babyback's with the #1 brand in the world, Coca-Cola, does make sense.
Attached is a recap on the discussion yesterday and also a copy of the directive sent out by Kroger—Atlanta to [its] stores. You will note, as did we, that the communication is a nice recommendation to the store managers, but certainly falls well short of being a mandate. We are also concerned that the memo does not indicate to the stores that they must maintain placement of the cooler for any length of time.
[Attached Memo]
* * * * *
•Conversation only pertains to CCE and Babyback's, not [Coke USA]. [Babyback's] should continue [its] dialogue and maintain his contacts with [Coke USA].
We discussed the need for our CCE divisions to be consulted up front by Babyback's regarding priority accounts which should be targeted in their respective markets. While we are interested in chain supermarkets and other high trafficked accounts, we are not
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