Freebirds LLC v. Coca-Cola Company

• Docket Number: A23A0010
• Decision Date: 18 January 2023
• Citation: 366 Ga.App. 443,883 S.E.2d 388
• Parties: Tavistock FREEBIRDS LLC v. The COCA-COLA COMPANY.
• Court: Georgia Court of Appeals

366 Ga.App. 443

883 S.E.2d 388

Tavistock FREEBIRDS LLC

v.The COCA-COLA COMPANY.

A23A0010

Court of Appeals of Georgia.

January 18, 2023

Joseph Matthew Maguire Jr., James Daniel Cole, for Appellant.

Stacey Godfrey Evans, Tiffany Nicole Watkins, for Appellee.

Phipps, Senior Appellate Judge.

Plaintiff Tavistock Freebirds LLC d/b/a Freebirds World Burrito appeals from the dismissal of its complaint against defendant The Coca-Cola Company. Freebirds contends that the trial court erred when it determined that Freebirds failed to state a claim as to each of its causes of action. For the reasons that follow, we disagree and affirm.

A motion to dismiss for failure to state a claim upon which relief may be granted should not be sustained unless (1) the allegations of the complaint disclose with certainty that the claimant would not be entitled to relief under any state of provable facts asserted in support thereof, and (2) the movant establishes that the claimant could not possibly introduce evidence within the framework of the complaint sufficient to warrant a grant of the relief sought.

Hendon Properties v. Cinema Dev. , 275 Ga. App. 434, 435, 620 S.E.2d 644 (2005) (citation and punctuation omitted). We review de novo a trial court's ruling on a motion to dismiss for failure to state a claim, "construing the pleadings in the light most favorable to the plaintiff and with any doubts resolved in the plaintiff's favor," Babalola v. HSBC Bank, USA, N.A. , 324 Ga. App. 750, 750, 751 S.E.2d 545 (2013) (citation and punctuation omitted), and viewing all well-pled allegations in the complaint as true, Carter v. Cornwell , 338 Ga. App. 662, 662, 791 S.E.2d 447 (2016).

So viewed, the record shows that Freebirds is a restaurant with more than 70 locations in Texas. In 2015, it entered into a Beverage Marketing Agreement that gave Coca-Cola the exclusive right to provide nearly all beverage products to Freebirds locations.¹ The agreement identified certain core fountain beverages to be provided and stipulated that additional beverages would be jointly selected by the parties.

In a 2017 meeting, representatives of each party discussed "which beverages would optimize sales for Freebirds." During that meeting, Coca-Cola representatives told Freebirds representatives that two Coca-Cola beverages — "Barrilitos" and "Limeade"² — "were staples in the Texas market" and recommended that Freebirds test them along with a third beverage. According to Freebirds, it "ultimately decided to test only the Barrilitos and Limeade," which it did in ten locations for eight weeks in 2018.

Following the testing, Coca-Cola presented Freebirds with the test results in April 2018 and reported that, based on the results, "implementing Barrilitos and Limeade across all Freebirds locations would lead to 12,080 incremental gallons of fountain beverage syrups sold and a boost of $812,500 in annual profits." As a result, Freebirds authorized implementation of Barrilitos and Limeade sales in all of its locations, to begin in August 2018 based on Coca-Cola's representation that the rollout would take no longer than three months. Coca-Cola, however, did not complete the rollout until March 2019.

According to Freebirds, the delayed rollout cost it $68,000 per month (based on Coca-Cola's April 2018 test projections). Moreover, "[c]ustomers’ fountain beverage purchases for the dispenser slots for Barrilitos and Limeade" thereafter "dropped to an alarming rate." Freebirds subsequently discovered that the two beverages were not widely distributed in Texas despite Coca-Cola's prior assurances that they were "dominant products" in that state. In addition, a Coca-Cola executive told Freebirds in June 2019 that "the test results and projections presented by Coca-Cola in April 2018 and relied upon by Freebirds were ‘never possible’ and that Barrilitos and Limeade were incapable of developing the sales represented in the test projections."

Freebirds further alleged that, because Barrilitos and Limeade were not widely distributed in Texas, it had to pay approximately $74,000 in yearly "slotting fees," which, it asserted, are charged by distributors to stock products that are not widely sold in a state.

According to Freebirds, Coca-Cola induced it to sell the two beverages to enable Coca-Cola to "remove the proprietary slotting fee for all other Coca-Cola customers in Texas and make it easier for Coca-Cola to sell Barrilitos and Limeade to other customers."

Based on these allegations, Freebirds asserted claims for fraud, negligent misrepresentation, breach of contract, OCGA § 13-6-11 attorney fees, and a declaratory judgment. The trial court thereafter granted Coca-Cola's motion to dismiss Freebirds's complaint for failure to state a claim, and this appeal followed.

1. (a) Freebirds first challenges the dismissal of its claims for fraud and negligent misrepresentation. It primarily contends that the trial court erred by applying an unduly rigorous pleading standard to those claims, particularly to the element of justifiable reliance. We discern no error.

[T]o prove fraud, the plaintiff must establish five elements: [1] a false representation by a defendant, [2] scienter, [3] intention to induce the plaintiff to act or refrain from acting, [4] justifiable reliance by plaintiff, and [5] damage to plaintiff. In turn, the essential elements of negligent misrepresentation are: (1) the defendant's negligent supply of false information to foreseeable persons, known or unknown; (2) such persons’ reasonable reliance upon that false information; and (3) economic injury proximately resulting from such reliance.

DaimlerChrysler Motors Co. v. Clemente , 294 Ga. App. 38, 50 (3), 668 S.E.2d 737 (2008) (citations and punctuation omitted). "Reliance is an essential element of both fraud and negligent misrepresentation, and that reliance must be justified." Hicks v. Sumter Bank & Trust Co. , 269 Ga. App. 524, 527 (1), 604 S.E.2d 594 (2004). Consequently,

[m]isrepresentations are not actionable unless the complaining party was justified in relying thereon in the exercise of common prudence and diligence. And when the representation consists of general commendations or mere expressions of opinion, hope, expectation and the like, the party to whom it is made is not justified in relying upon it and assuming it to be true; he is bound to make inquiry and examination for himself so as to ascertain the truth.

Anderson v. Atlanta Committee for the Olympic Games , 261 Ga. App. 895, 900 (2), 584 S.E.2d 16 (2003) (citation and punctuation omitted).

Thus, because "[t]he law does not afford relief to one who suffers by not using the ordinary means of information, whether the neglect is due to indifference or credulity," a plaintiff's lack of due diligence bars a claim for fraud as a matter of law. Artzner v. A & A Exterminators , 242 Ga. App. 766, 771 (1), 531 S.E.2d 200 (2000) (citation and punctuation omitted); accord EduCap, Inc. v. Haggard , 341 Ga. App. 684, 687, 801 S.E.2d 611 (2017) ("[F]raud cannot be the basis of an action if it appears that the party alleging the fraud had equal and ample opportunity to prevent it and yet made it possible through the failure to exercise due diligence.") (citation and punctuation omitted). The same is true of a claim for negligent misrepresentation. Artzner , 242 Ga. App. at 771-772 (2), 531 S.E.2d 200. As a result, one may not justifiably rely on statements that constitute mere "sales puffing" without independently inquiring into their veracity. Hicks , 269 Ga. App. at 527 (1), 604 S.E.2d 594 (citation and punctuation omitted); accord Community Music Centers of Atlanta v. JW Broadcasting , 323 Ga. App. 757, 760-761 (2), 748 S.E.2d 127 (2013) (physical precedent only) (a plaintiff's duty of due diligence arises "when the representation relied upon is a general commendation of the thing to be sold, which amounts to mere puffing") (citation and punctuation omitted).

For those reasons, "in an action for fraud and deceit, the complaint must show that one who relied upon the representations of another used the means available to him in the exercise of diligence to discover the truth." Spikes v. Citizens State Bank , 179 Ga. App. 479, 482 (2), 347 S.E.2d 310 (1986) ; accord Blanchard v. West , 115 Ga. App. 814, 815 (2), 156 S.E.2d 164 (1967) (same); Cosby v. Asher , 74 Ga. App. 884, 888, 41 S.E.2d 793 (1947) (the trial court properly dismissed a complaint for fraud because the complaint alleged neither that the plaintiff exercised due diligence nor that the defendant prevented the plaintiff from discovering the information at issue). Finally, promises as to future events generally cannot constitute fraud unless they are "made with a present intent not to perform or where the promisor knows that the future event will not take place." TechBios, Inc. v. Champagne , 301 Ga. App. 592, 594 (1) (a), 688 S.E.2d 378 (2009) (citation and punctuation omitted); accord Greenwald v. Odom , 314 Ga. App. 46, 52 (1), 723 S.E.2d 305 (2012) ("[M]ere opinions, predictions, and conjectures relating to future events cannot form the basis of a fraud claim.") (citation and punctuation omitted).

In Freebirds's complaint, it identified with particularity³ two allegedly fraudulent statements by Coca-Cola upon which it purportedly relied: (i) that Barrilitos and Limeade "were staples in the Texas market" (made in 2017, before testing); and (ii) that, based on the 2018 test results, implementing the two beverages across all Freebirds locations "would lead to 12,080 incremental gallons of fountain beverage syrups sold and a boost of $812,500 in annual profits."⁴ Neither statement is capable of supporting a claim for fraud or negligent misrepresentation on the facts of this case.

(i) Because Coca-Cola's representation that Barrilitos and Limeade were "staples in the Texas market" was in the nature of general commendations and "sales puffing," Freebirds's allegation in its complaint that it ultimately...