Frank Brunckhorst Co., L.L.C. v. Coastal Atlantic

• Decision Date: 29 January 2008
• Docket Number: Civil Action No. 2:07cv314.
• Citation: 542 F.Supp.2d 452
• Parties: FRANK BRUNCKHORST CO., L.L.C., Plaintiff, v. COASTAL ATLANTIC, INC., Defendant. Coastal Atlantic, Inc., Counterclaim Plaintiff, v. Frank Brunckhorst Co., L.L.C., and Boar's Head Provisions Co., Inc., Counterclaim Defendants.
• Court: U.S. District Court — Eastern District of Virginia

542 F.Supp.2d 452

FRANK BRUNCKHORST CO., L.L.C., Plaintiff, v. COASTAL ATLANTIC, INC., Defendant.

Coastal Atlantic, Inc., Counterclaim Plaintiff, v. Frank Brunckhorst Co., L.L.C., and Boar's Head Provisions Co., Inc., Counterclaim Defendants.

Civil Action No. 2:07cv314.

United States District Court, E.D. Virginia, Norfolk Division.

January 29, 2008.

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Dennis Thomas Lewandowski, Stephen Evans Story, Kaufman & Canoles PC, Norfolk, VA, Laura Sulem, Martin Stuart Hyman, Golenbock Eiseman Assor Bell & Peskoe LLP, New York, NY, for Plaintiff.

Mark J. Krudys, Mark J. Krudys PLC, Richmond, VA, for Defendant/Movants.

Richard Johan Conrod, Jr., Stephen Edward Noona, Kaufman & Canoles PC, Norfolk, VA, for Plaintiff/Counterclaim Defendants.

ORDER AND OPINION

JEROME B. FRIEDMAN, District Judge.

Pending before the court are motions to dismiss filed by the counterclaim defendants, Frank Brunckhorst, Co., L.L.C. (hereinafter "Brunckhorst") and Boar's Head Provisions Co., Inc. (hereinafter "Boar's Head"). The counterclaim defendants seek dismissal of the Amended Counterclaim pursuant to Federal Rule of Civil Procedure 12(b)(6). After examination of the briefs and record, this court determines oral argument is unnecessary because the facts and legal arguments are adequately presented, and the decisional process would not be significantly aided by oral argument. The court, for the reasons set out fully herein, GRANTS Brunckhorst's and Boar's Head's motions to dismiss.

I. Factual Background

Brunckhorst is the national distributor of Boar's Head Brand deli products, and sells those products to independent distributors across the country. The defendant and counterclaim plaintiff Coastal Atlantic, Inc. (hereinafter "Coastal") is a former distributor of Boar's Head products, which would purchase the products from Brunckhorst and resell them to supermarkets and delicatessens.¹ Although Brunckhorst and Coastal had a distributorship arrangement for more than twenty years, they never entered into a written distribution agreement, nor did they have any agreement of a definite duration. Instead, they had an at-will relationship, in which Coastal was permitted at any time to cease purchasing Boar's Head products from Brunckhorst, and Brunckhorst was likewise free to stop selling products to Coastal for any or no reason. Geri Meyers is Coastal's sole shareholder. Richard Meyers is the husband of Geri Meyers, and is Coastal's corporate secretary and treasurer. Coastal Real Estate, L.L.C., is a separate entity owned by Geri and Richard Meyers which operates a warehouse in which Coastal and other businesses owned by the Meyerses lease space.²

On or about June 29, 2007, citing problems relating to product integrity, Brunckhorst ceased all shipments of Boar's Head products to Coastal. After negotiations between Brunckhorst and the Meyerses in an effort to salvage the distribution relationship broke down, Coastal began distributing Thumann's brand deli meats and cheeses.

II. Procedural History

On July 10, 2007, Brunckhorst filed the instant complaint against Coastal in this court, alleging trademark infringement and violations of the Lanham Act as well as a claim for recovery of over $400,000 worth of deli products that had allegedly been delivered to Coastal but for which Brunckhorst was never paid. Coastal filed a counterclaim and then an amended counterclaim, alleging actual and constructive fraud, tortious interference with contract and with business expectancy, business conspiracy, breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment.³ On September 24, 2007, Brunckhorst filed the instant motion to dismiss the amended counterclaim. Coastal filed a response brief on October 15, 2007, and Brunckhorst filed a reply brief on October 25, 2007.

Likewise, Boar's Head filed a separate motion to dismiss on September 24, 2007, to which Coastal responded on October 15, 2007. Boar's Head filed a reply brief on October 25, 2007. The court notes that the Amended Counterclaim fails to allege any claims against Boar's Head, and that Brunckhorst and Boar's Head are legally distinct entities.⁴ Further, the briefs filed in support and in opposition to the motions to dismiss seem to conflate Boar's Head and Brunckhorst, leading to the briefs that are related to Boar's Head's motion to dismiss serving, essentially, as page-limit extensions to the briefs on Brunckhorst's motion to dismiss. The court notes that this enlargement would appear to be in violation of a strict reading of Rule 7(F) of the Local Rules of the United District Court for the Eastern District of Virginia. However, considering that neither party appears to have gained a clear advantage from incorporating briefs by reference, the court notes that it has considered all of the arguments set forth by the parties. Accordingly, the motions to dismiss are ripe for consideration.

III. Standard of Review

Federal Rule of Civil Procedure 12(b)(6) permits the defendant to request dismissal if the plaintiff has filed a claim upon which relief cannot be granted. FED.R.CIV.P. 12(b)(6). In assessing a motion to dismiss for failure to state a claim upon which relief can be granted, "a count should be dismissed only where it appears beyond a reasonable doubt that recovery would be impossible under any set of facts which could be proven." America Online, Inc. v. GreatDeals.Net, 49 F.Supp.2d 851, 854 (E.D.Va.1999). The court must "assume the truth of all facts alleged in the complaint and the existence of any fact that can be proved, consistent with the complaint's allegations." Eastern Shore Markets, Inc. v. J.D. Associates Ltd., 213 F.3d 175, 180 (4th Cir.2000) (citations omitted).

While the court must take the facts in the light most favorable to the plaintiff, the court is not bound with respect to the complaint's legal conclusions. See Schatz v. Rosenberg, 943 F.2d 485, 489 (4th Cir. 1991). Dismissal pursuant to Rule 12(b)(6) is appropriate when upon considering the facts set forth in the complaint as true and construing the facts in the light most favorable to the non-moving party, there is no basis on which relief can be granted. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). Dismissal should not be granted unless the moving party can demonstrate that no set of allegations will support the complaint. Rogers v. Jefferson-Pilot Life Ins. Co., 883 F.2d 324, 325 (4th Cir.1989); District 28, United Mine Workers of Am., Inc. v. Wellmore Coal Corp., 609 F.2d 1083 (4th Cir. 1979).

IV. Analysis

A. Breach of Contract

To state a valid claim for breach of contract under Virginia law, a plaintiff must claim that the defendant owed it a legal obligation, the defendant violated that obligation, and, as a consequence, injury or damage inured to the plaintiff. See, e.g., Caudill v. Wise Rambler, Inc., 210 Va. 11, 13, 168 S.E.2d 257 (1969). Virginia courts have repeatedly held that, where a distributorship arrangement has no definite duration, it is "at will" and may be terminated by either party at any time, with or without cause. See, e.g., Stutzman v. C.A. Nash & Son, Inc., 189 Va. 438, 446, 53 S.E.2d 45 (1949) (holding that, where a contract to distribute floor cleaner contained no provision as to duration, either party was at liberty to terminate the contract at will).

Count VI of the Amended Counterclaim alleges that Brunckhorst breached the oral distribution agreement it had with Coastal by terminating Coastal's distributorship rights after having assured Coastal that it would continue with the relationship as long as Coastal complied with certain requirements. Coastal specifically claims that, more than twenty-three years ago, Richard Meyers had a conversation with a Brunckhorst employee who told him that as long as the Meyerses "(1) promoted the Boar's Head brand and, (2) built brand identification, they would have the exclusive right to distribute Boar's Head products in the Tidewater, Virginia area." Amended Counterclaim at ¶ 13. Coastal therefore argues that this statement provides an "agreed-upon" duration for the contract between it and Brunckhorst, to wit: for as long as Coastal satisfied the conditions.

In support of this contention, Coastal cites the case of Alpha Distrib. Co. v. Jack Daniel Distillery, 454 F.2d 442 (9th Cir. 1972), in which the Ninth Circuit, citing Burgermeister Brewing Corp. v. Bowman, 227 Cal.App.2d 274, 38 Cal.Rptr. 597 (1964), indicated that "where parties expressly agree that the exclusive distributorship shall continue while the distributor exercises his best efforts, the contract is terminable only for cause." Alpha Distrib., 454 F.2d at 448. However, the Alpha Distrib. court held that the oral contract between the parties was terminable at will where the supplier had indicated the relationship would last "as long as [the distributor] performed its undertakings." Id. at 447. Even further, to the extent that California law transforms an at-will relationship into one that can be terminated only for cause if one party agrees to use its best efforts to promote a brand, this is contrary to the law of Virginia, which governs this case. See, e.g., Stutzman, 189 Va. at 446, 53 S.E.2d 45; Stonega Coke & Coal Co. v. Lousville & Nashville R.R. Co., 106 Va. 223, 226, 55 S.E. 551 (1906).

Coastal cites no decision from a court interpreting Virginia law that would support the application of the Burgermeister ruling to this case. In Addison v. Amalgamated Clothing & Textile Workers Union of Am., 236 Va. 233, 372 S.E.2d 403 (1988), the Supreme Court of Virginia held that the promise of employment to an individual for "as long as he wanted one and as long as one existed" was sufficient only to create an at-will relationship of employment. Id. at 235, 372 S.E.2d 403. Coastal claims that, in dicta, the court left open the possibility that the...