Digiorgio Corp. v. Mendez and Co., Inc.

Decision Date08 October 2002
Docket NumberNo. CIV.A. 99-3520.,CIV.A. 99-3520.
Citation230 F.Supp.2d 552
PartiesDiGIORGIO CORPORATION, Plaintiff, v. MENDEZ AND CO., INC., Defendant/Counterclaim Plaintiff, v. A. Cordero Badillo, Inc., d/b/a Supermercados Grande Counterclaim/Third Party Defendant.
CourtU.S. District Court — District of New Jersey

Liza M. Walsh, Connell, Foley & Geiser, Roseland, NJ, for Plaintiff.

Christina H. Wang, Porzio, Bromberg & Newman, PC, Morristown, NJ, Jacqueline Greenberg, Duane, Morris, LLP, Newark, NJ, for Defendant/Counterclaim Plaintiff.

OPINION

WALLS, District Judge.

Plaintiff DiGiorgio Corporation ("DiGiorgio") and third party defendant A. Cordero Badillo, Inc. ("Grande") move for summary judgment on the counterclaims of defendant Mendez and Co., Inc. ("Mendez"). In its counterclaims, Mendez alleges tortious interference by DiGiorgio and Grande with Mendez's alleged relationships with certain grocery suppliers and seeks declaratory judgment that certain contracts between DiGiorgio and Grande are void. Mendez also brings a cross-motion seeking additional discovery. For the reasons below, DiGiorgio's and Grande's motions are granted, and Mendez's cross-motion is denied.

FACTUAL AND PROCEDURAL BACKGROUND

DiGiorgio, a distributor of grocery products in the United States and Puerto Rico, is located in New Jersey. Grande owns and operates a chain of close to 30 supermarket grocery stores in Puerto Rico. Its stores stock about 30,000 food and other items, most of which Grande purchases from a variety of independent distributors, including Mendez and DiGiorgio. Beginning in December 1998, DiGiorgio has sold grocery store products and other merchandise to Grande. All sales between DiGiorgio and Grande are F.O.B. New Jersey, meaning that title to the goods passes in New Jersey and Grande is responsible for shipping the goods to Puerto Rico.

Mendez, a corporation organized under the laws of Puerto Rico, is a distributor of goods to retail supermarkets located in Puerto Rico. Mendez claims to have contracts with a number of food suppliers under which it serves as the suppliers' exclusive distributor in Puerto Rico. These alleged agreements are discussed at length below.

On May 26, 1999, Mendez wrote a series of letters which give rise to this lawsuit. In a letter to DiGiorgio's Chairman and CEO, Mendez demanded that DiGiorgio "cease and desist" sale to Grande of those goods for which Mendez claimed to be the exclusive distributor in Puerto Rico. Mendez also sent letters to each of ten suppliers with whom Mendez claimed to have exclusive distributor rights. Eight of those ten suppliers are relevant to this lawsuit: Bumble Bee Seafoods, Inc.; Dole Packaged Foods Company; General Mills, Inc.; Unilever de Puerto Rico, Inc.; Fort James Corporation; Church & Dwight Co., Inc; Riviana Foods, Inc.; and McIlhenny Company (collectively, the "Suppliers"). In each letter, Mendez claimed that Grande and DiGiorgio were involved in a "diversion scheme" that caused Mendez damages, and demanded that the Supplier "honor" its "contractual obligations" to Mendez by taking action to end the alleged diversion scheme.

DiGiorgio learned of Mendez's letters to the Suppliers and filed the complaint in this action, alleging tortious interference with business relations and defamation. DiGiorgio seeks, among other things, declaratory judgment that Mendez has engaged in tortious interference with DiGiorgio's business relationships and an injunction. Mendez moved to dismiss the complaint for lack of personal jurisdiction and/or improper venue, and alternatively to transfer the case to the District of Puerto Rico. The Court denied these motions on April 25, 2000.

Mendez filed an answer and counterclaim against DiGiorgio, naming Grande as a thirdparty defendant. In its counterclaim, Mendez alleges that it is the "exclusive distributor in Puerto Rico" for certain products manufactured by the Suppliers and claims that DiGiorgio and Grande were aware of this fact. In count one of the counterclaim, Mendez asserts a cause of action for tortious interference against DiGiorgio and Grande. In count two of the counterclaim, Mendez seeks a declaratory judgment that the sales contract between DiGiorgio and Grande is for an "illegal purpose" and is null and void.

DiGiorgio and Grande now move for summary judgment on Mendez's counterclaims. Each disputes that Mendez has "exclusive" contracts with the Suppliers and that the contracts, to the extent that they are exclusive, grant Mendez any right to restrict sales outside Puerto Rico.

The Agreements

Central to this dispute are the alleged contracts between Mendez and the Suppliers. Mendez claims that the contracts grant it exclusive rights to distribute the Suppliers' products in Puerto Rico. In response to DiGiorgio's interrogatories, Mendez identified the documents on which it bases its assertion of such exclusive rights. Because the contents of these documents are central to DiGiorgio's and Grande's arguments, the Court will discuss each alleged contract individually.

1. Bumble Bee Seafoods, Inc. ("Bumble Bee")

Effective August 23, 1993, Bumble Bee and Mendez entered into a "Distributor Agreement" that provided, "[Bumble Bee] appoints Mendez as [Bumble Bee's] exclusive distributor" for certain products in Puerto Rico. According to Mendez, this contract formalized a distribution arrangement that had been in effect since 1984.

In 1997, Bumble Bee filed a Chapter 11 bankruptcy petition. As a result, Bumble Bee was purchased in 1997 by International Home Foods ("IHP"). Mendez claims that IHP assumed Bumble Bee's contract with Mendez. The only proof offered of the alleged assumption of the contract is a May 5, 1997 letter from Bumble Bee to its distributors announcing its Chapter 11 petition and sale to IHP. The letter stated that IHP "intends to purchase substantially all of Bumble Bee's assets, including the Bumble Bee brand name and the company's tuna production facilities in Puerto Rico, California, and Ecuador." The letter also stated, "The chapter 11 proceedings will have virtually no impact on the operation of the company and we anticipate the sale will be completed within 45 to 60 days. Our daily operations will continue uninterrupted, and we plan to be highly competitive in our markets." Finally, the letter stated, "[Y]ou will be pleased to know that [IHP] intends to assume ... pre-petition obligations and pay our suppliers in full shortly after the closing of the sale."

Mendez also offers as proof of its alleged exclusive distributorship with Bumble Bee a series of e-mails dated in 2000 in which Mendez purported to inform Bumble Bee of "diversion" of Bumble Bee products into Puerto Rico. Mendez allegedly received commissions for sales it lost because of these diversions. In the e-mails, Rafael Alvarez ("Alvarez"), Vice President of Mendez, refers repeatedly to Puerto Rico as the "exclusive territory" for Mendez's distributorship and to Mendez as Bumble Bee's "exclusive distributors." In its responses to these e-mails, Bumble Bee did not challenge Mendez's characterization of the relationship between the companies.

DiGiorgio asserts that, as of July 1, 1997, Mendez was no longer the distributor of Bumble Bee. It bases its assertion chiefly on a letter dated August 19, 1997, in which bankruptcy counsel for Bumble Bee wrote to Mendez, "[S]ubstantially all of the assets of [Bumble Bee] ... were sold on July 1, 1997. Hence, effective July 1, 1997, our client was no longer a supplier of Mendez & Co." (emphasis added). DiGiorgio also offers a letter dated August 20, 1999, in which IHF informed Mendez that it had decided to appoint another company as the distributor of its products. Mendez argues that the letter was referencing only IHF products, which did not include Bumble Bee products, and that the letter is in fact evidence that Mendez was Bumble Bee's exclusive distributor. The letter reads, in part: "We were very impressed ... with the success you have had distributing Bumble Bee products."

2. Dole Packaged Foods, Inc. ("Dole")

Mendez does not claim to have a written contract with Dole. Instead, Mendez claims that Dole verbally appointed Mendez as Dole's exclusive distributor in August 1994. On September 13, 1994, Alvarez wrote Dole a letter which stated in relevant part, "Thank you for your faxes ... regarding the introduction of Dole Packaged Foods into the Puerto Rico market. We are very happy, indeed, that you have chosen Mendez & Co., Inc. as your exclusive distributor and certainly look forward to a successful and profitable future for both our companies." Apart from statements in an affidavit from Alvarez, Mendez offers no evidence that Dole consented to retaining Mendez as its exclusive distributor. Mendez also asserts, again relying on the Alvarez affidavit, that the "course of dealings" between it and Dole since 1994 confirms that Mendez is Dole's exclusive distributor. Mendez offers no evidence of this alleged course of dealings beyond Alvarez's affidavit.

DiGiorgio proffers a different affidavit offered by Alvarez in a related litigation, which states that Mendez is the "sole" distributor in Puerto Rico for Dole. This affidavit does not use the word "exclusive."

3. Unilever de Puerto Rico, Inc. ("Unilever")

In a March 10, 1988 letter, Ragu Foods, Inc. wrote to Mendez purporting to memorialize a verbal agreement between the parties, and that Mendez "will be our `Master Distributor' in Puerto Rico." Mendez would be "entitled to a 3% Master distributor rebate on direct shipments to any other direct buying distributor located in Puerto Rico." Mendez asserts that, "upon information and belief," this letter agreement was later assumed by Unilever, which owned (or came to own) Ragu Foods, Inc. Mendez offers no evidence to prove the assumption of the purported letter agreement. Mendez also points to letters written by Unilever that it claims demonstrate Mendez's exclusive distributorship. One such letter,...

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