Diageo Dominicana, S.R.L. v. United Brands, S.A., Nos. 3D18-1989
| Decision Date | 03 June 2020 |
| Docket Number | Nos. 3D18-1989,3D18-620 |
| Parties | DIAGEO DOMINICANA, S.R.L., et al., Appellants/Cross-Appellees, v. UNITED BRANDS, S.A., Appellee/Cross-Appellant. |
| Court | Florida District Court of Appeals |
Hunton Andrews Kurth LLP, and Samuel A. Danon, Gustavo J. Membiela, María Castellanos Alvarado, and Elbert Lin (Richmond, VA), for appellants/cross-appellees.
Akerman LLP, and Gerald B. Cope, Jr., Francisco A. Rodriguez, and Andrew J. Dominguez, for appellee/cross-appellant.
Before SALTER, LINDSEY, and HENDON, JJ.
Diageo Dominicana, S.R.L., Diageo plc, Diageo Brands, B.V., and Ketel One Worldwide, B.V. (collectively, "Diageo"), appeals from a final judgment arising out of United Brands’ Corrected Amended Counterclaim, in which the jury found in Count IV that Diageo breached the implied covenant of good faith and fair dealing in its agreement with United Brands, S.A. ("United Brands."). United Brands cross-appeals from the final judgment regarding its fraud and punitive damages claim. We reverse that part of the final judgment finding Diageo liable on Count IV of United Brands’ Corrected Amended Counterclaim. We affirm the remainder of the final judgment.
Diageo is one of the largest producers of alcoholic beverages worldwide. Beginning in 2009, United Brands became Diageo's exclusive distributor in the Dominican Republic. The parties executed a Resale Agreement that memorialized their respective duties, expectations, and obligations under their working agreement. The Resale Agreement also memorialized the terms under which the venture could be terminated, and included a provision excluding implied warranties. Both parties agreed to be bound by the Resale Agreement. From 2009 through 2013, United Brands managed five key accounts for Diageo. During this time, both companies continued to grow and prosper. In August of 2013, Diageo approached United Brands regarding an initiative called the "Route to Consumer" project. The goal of this project was to develop strategies aimed at reducing intermediaries in order to market more directly to retailers. Under Diageo's proposed initiative, United Brands would need to expand its capabilities in order to market and distribute Diageo's products on a broader scale, with the suggestion that undertaking this initiative would transform United Brands into a world-class distributor. United Brands’ decision to pursue the new initiative was made in reliance on documented statements made to United Brands by Jaime Graña, Diageo's managing director of the western Latin America and Caribbean division. These statements indicated that Diageo intended to continue the exclusive contractual relationship with United Brands if United Brands made the structural transformations necessary to implement the Route to Consumer project. In reliance on these reassurances, United Brands agreed to invest and restructure. Between March 2014 and February 2015, United Brands invested $5.7 million in hiring additional personnel, purchasing new capital equipment, acquiring larger office and operational space and promoting Diageo products.
In January 2014, Diageo made an internal decision to evaluate additional product distribution plans, and developed a relationship with a company named Mercasid, a direct competitor of United Brands. In September 2014, Diageo and Mercasid entered into a letter of intent to effectively replace United Brands as Diageo's exclusive distributor while continuing to allow United Brands to perform as usual under the Resale Agreement. In February 2015, Diageo gave United Brands timely notice of its intention to terminate the Resale Agreement. Because United Brands was bound by the Resale Agreement to market only Diageo products, its business suffered. As a result of Diageo's termination of the Resale Agreement, United Brands was forced to lay off employees and reduce its operations.
In August 2015, United Brands filed suit against Diageo Dominicana and Mercasid in the Dominican Republic. Diageo responded by filing this case in Miami-Dade County seeking declaratory relief and an anti-suit injunction to prevent United Brands from litigating its claims in the Dominican Republic pursuant to the forum selection clause in the Resale Agreement. The trial court entered an order granting Diageo's request and enjoined United Brands from pursuing its claims against Diageo in the Dominican Republic.1 On appeal, this Court affirmed. United Brands then filed a counterclaim in Miami-Dade County for breach of implied covenant of good faith and fair dealing, breach of contract, and fraud. The trial court denied the Diageo entities’ motion to dismiss the counterclaim.2 The trial court subsequently granted United Brands’ leave to amend its counterclaim to include a claim for punitive damages in connection with its fraud count. Diageo3 filed a petition for writ of certiorari challenging the grant of leave to amend the counterclaim to add punitive damages. Later, that petition was rendered moot.4
After a twelve-day trial, the jury determined that Diageo did not breach the Resale Agreement when it terminated United Brands in accordance with that contract's terms (Counts II and III of the Corrected Amended Counterclaim). On Count IV of United Brands’ Corrected Amended Counterclaim, the jury found that Diageo breached the implied covenant of good faith and fair dealing and awarded United Brands $2.3 million in damages. The trial court denied Diageo's motion to set this verdict aside. On Counts VI and VII, United Brands’ fraud counts, the jury found Diageo was not liable. The jury similarly found in Count VIII that Graña was not liable for negligent misrepresentation regarding the Route to Consumer project.
The trial court instructed the jury that it could award punitive damages under Count IX only if it found Diageo liable for fraud. The interrogatory verdict form for Count IX, however, shows that the jury found, in contrast to its prior verdicts in Counts VII and VIII, that Graña, on Diageo's behalf, was personally guilty of intentional misconduct or gross negligence that caused damage to United Brands in connection with its fraud claim. The jury awarded $2.3 million in punitive damages against Diageo plc.
Prior to discharge of the jury, United Brands argued that the jury's findings were inconsistent and contradictory. It argued that the jury's finding in Counts VI, VII, and VIII – that Diageo and Graña were not liable for negligent or intentional fraud and misrepresentation – was apparently contradicted by their finding in Count IX, the punitive damages count, that Graña was liable for intentional misconduct in connection with United Brands’ fraud claim, for which they awarded punitive damages. United Brands asked the trial court to return the fraud and punitive damage counts to the jury to deliberate further and resolve the apparent inconsistency. The trial court declined to submit the issue to the jury, and instead entered the final judgment against Diageo on the breach of implied covenant claim, and awarded $2.3 million to United Brands in compensatory damages. The trial court vacated the punitive damage award in Count IX.
On appeal, Diageo appeals from the trial court's denial of its motion to set aside the verdict, and seeks to vacate the final judgment. It argues that judgment should be entered in its favor with respect to United Brands’ claim for breach of the implied covenant of good faith and fair dealing. We agree, and reverse that portion of the final judgment finding Diageo liable for breach of implied covenant of good faith and fair dealing. On United Brands’ cross-appeal seeking a new trial on fraud and punitive damages, we affirm.
The standard of review of a trial court's grant or denial of a motion for directed verdict is de novo. See Contreras v. U.S. Sec. Ins. Co., 927 So. 2d 16, 20 (Fla. 4th DCA 2006) ; Publix Super Markets, Inc. v. Bellaiche, 245 So. 3d 873, 875 (Fla. 3d DCA 2018). However, "[a]n appellate court reviewing the grant of a directed verdict must view the evidence and all inferences of fact in the light most favorable to the nonmoving party, and can affirm a directed verdict only where no proper view of the evidence could sustain a verdict in favor of the nonmoving party." Owens v. Publix Supermarkets, Inc., 802 So. 2d 315, 329 (Fla. 2001) (citation omitted).
United Brands asserts that Diageo breached the implied covenant of good faith and fair dealing inherent in the Resale Agreement by striking a behind-the-back deal with a competitor while promising to continue the relationship with United Brands, thus violating the reasonable expectations of the parties. Florida contract law recognizes the implied covenant of good faith and fair dealing in every contract. Cty. of Brevard v. Miorelli Eng'g, Inc., 703 So. 2d 1049, 1050 (Fla. 1997) (); Ins. Concepts & Design, Inc. v. Healthplan Servs., Inc., 785 So. 2d 1232, 1234–35 (Fla. 4th DCA 2001). The...
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...movement We review the trial court's denial of a directed verdict de novo. Diageo Dominicana, S.R.L. v. United Brands, S.A., 314 So.3d 295, 299 (Fla. 3d DCA 2020). Importantly, "[a] motion for directed verdict must be denied if the evidence presented is conflicting or different conclusions ......
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