Geary Distributing Co., Inc. v. All Brand Importers, Inc.

• Decision Date: 22 May 1991
• Docket Number: No. 89-3593,89-3593
• Citation: 931 F.2d 1431
• Parties: GEARY DISTRIBUTING COMPANY, INC., Plaintiff-Appellee, Cross-Appellant, v. ALL BRAND IMPORTERS, INC., Defendant-Appellant, Cross-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1431

931 F.2d 1431

GEARY DISTRIBUTING COMPANY, INC., Plaintiff-Appellee, Cross-Appellant, v. ALL BRAND IMPORTERS, INC., Defendant-Appellant, Cross-Appellee.

No. 89-3593.

United States Court of Appeals, Eleventh Circuit.

May 22, 1991.

Richard M. Blau, Stacy D. Blank, Holland & Knight, Tampa, Fla., for defendant-appellant, cross-appellee.

David H. Simmons, Thomas F. Neal, Drage, deBeaubien, Knight & Simmons, Orlando, Fla., for plaintiff-appellee, cross-appellant.

Appeals from the United States District Court for the Middle District of Florida.

Before KRAVITCH and COX, Circuit Judges, and RONEY, Senior Circuit Judge.

PER CURIAM:

This appeal involves the retroactive application of Florida's beer distribution statute, Fla.Stat. Sec. 563.022, to an existing alcoholic beverage distribution contract between All Brand Importers, Inc. (All Brand) and Geary Distributing Company, Inc. (Geary). The district court held that the beer distribution statute could be retroactively applied to the contract between All Brand and Geary and that All Brand had violated the statute by unreasonably withholding its consent to a proposed assignment by Geary of its rights under the contract. The court awarded Geary compensatory damages, interest and attorneys' fees totalling $114,351.22. Both All Brand and Geary appeal.

I. FACTS AND PROCEDURAL HISTORY

All Brand is a New York corporation in the business of supplying alcoholic beverages at wholesale to distributors in several states including Florida. Geary is a Florida corporation that did business as a distributor of alcoholic beverages in Orange, Volusia and Brevard Counties in Florida. In 1978, Geary and All Brand entered into an oral agreement that authorized Geary to distribute All Brand products, including Foster's Lager and Moosehead beer. The distribution agreement was in effect until 1987, when the present dispute arose. There was no written agreement evidencing the terms of the oral agreement. In 1984, All Brand signed a proposed written agreement, but Geary refused to sign. Both parties maintain that this written document reflects the content of their oral agreement, except for a provision concerning exclusivity of the distributorship. A copy of the 1984 document is attached as Appendix A to this opinion.

In 1985, Geary ceased its operations in Orange County and sought to assign its distributorship rights for Orange County to Jim Taylor Corporation. Geary, pursuant to its oral agreement with All Brand, asked All Brand to consent to the assignment of distributorship rights. All Brand, after reviewing Taylor's qualifications, eventually consented to the assignment.

Later, Geary sought to assign its distributorship rights for Volusia County to Central Florida Distributors. Geary asked that All Brand consent to the assignment. All Brand, after reviewing Central Florida Distributors' qualifications, consented to this assignment also.

Then in September 1987, Geary requested All Brand's consent to Geary's assignment of the distribution rights for Brevard County to Grantham Distribution Company. According to the terms of an agreement between Geary and Grantham, Geary would receive an additional $75,000 if Geary could ensure Grantham that it would be designated All Brand's distributor for Brevard County. All Brand refused to consent to the assignment to Grantham. All Brand maintains that it had a number of valid business reasons for refusing to consent to this assignment.

After All Brand refused to consent to the assignment to Grantham, Geary filed this action in the Circuit Court of Orange County, Florida. Geary alleges that All Brand unreasonably withheld consent to the assignment. Geary relies upon a recently enacted Florida statute, Fla.Stat.Ann. Sec. 563.022 (West Supp.1990) (the beer distribution statute), as the principal basis for its cause of action. ¹ The beer distribution statute provides that a manufacturer may not unreasonably withhold consent to the assignment of distribution rights. See Fla.Stat.Ann. Sec. 563.022(5)(b)(7) (West Supp.1990).

All Brand removed the case to federal court and answered Geary's complaint by asserting that Florida's statute of frauds, Fla.Stat.Ann. Sec. 725.01 (West 1988), precludes this cause of action and that retroactive application of the beer distribution statute would violate the Florida Constitution's contract clause, ² and the United States Constitution's contract clause. ³ Geary maintains that the beer distribution statute supersedes the statute of frauds and controls this cause of action.

The district court agreed with Geary and held that the beer distribution statute supersedes the Florida statute of frauds and is the controlling statute in the case. In making that determination the district court concluded that the beer distribution statute could be applied retroactively without violating the United States Constitution's contract clause. The court, however, failed to explicitly address All Brand's contention that the retroactive application of the beer distribution statute would violate the Florida Constitution's contract clause.

After a bench trial, the district court found that All Brand had unreasonably withheld consent to the assignment. The court awarded Geary $75,000 in compensatory damages, $14,351.22 in interest, and $25,000 in attorneys' fees. No evidentiary hearing was held on Geary's request for attorneys' fees. Both parties appeal.

II. CONTENTIONS OF THE PARTIES ON APPEAL

All Brand contends that the district court erred by retroactively applying the beer distribution statute, Fla.Stat.Ann. Sec. 563.022, to the contract at issue in this case. Geary contends that the district court erred by failing to conduct an evidentiary hearing to determine the amount of attorneys' fees to be awarded in this case.

III. DISCUSSION

The district court ruled that retroactive application of the beer distribution statute does not violate the United States Constitution's contract clause. We need not address this question because we hold that retroactive application of the beer distribution statute violates the Florida Constitution's contract clause. ⁴

The Florida Constitution provides that "[n]o ... law impairing the obligation of contracts shall be passed." Fla. Const. art. I, Sec. 10. The correct interpretation of this provision of the Florida Constitution is a question of Florida law. "Therefore, federal courts are required to construe the [Florida Constitution] ... as would the Supreme Court of Florida." Royal Health Care Servs., Inc. v. Jefferson-Pilot Life Ins. Co., 924 F.2d 215, 216 (11th Cir.1991). Where the Supreme Court of Florida has not addressed a particular issue, federal courts are then bound by the decisions of the Florida district courts of appeal that address the disputed issue, unless there is an indication that the supreme court would not adhere to the district court's decision. Maseda v. Honda Motor Co., 861 F.2d 1248, 1257 n. 14 (11th Cir.1988); Rabon v. Automatic Fasteners, Inc., 672 F.2d 1231, 1235 n. 7 (5th Cir. Unit B 1982). ⁵

We now turn to the substantive question at hand: whether the beer distribution statute can be applied retroactively to a contract entered into before the statute's enactment. The Supreme Court of Florida has not addressed the retroactivity of this particular statute, but an intermediate appellate court in Florida has. In Gans v. Miller Brewing Co., 560 So.2d 281 (Fla. 4th Dist.Ct.App.1990), the Florida Fourth District Court of Appeal held that retroactive application of the beer distribution statute violates the Florida Constitution's contract clause.

In Gans, the Miller Brewing Company and Douglas Kerr had entered into a contract that authorized Kerr's company, the Huber Distributing Company, to distribute Miller's products. The contract provided that Kerr could not assign the distributorship rights without the written consent of Miller. Thereafter Kerr agreed to assign his distribution rights under the contract to Robert Gans. Miller refused to consent to the assignment and Kerr's distribution rights were not assigned to Gans. Gans, relying upon the beer distribution statute, Fla.Stat. Sec. 563.022, sued Miller for unreasonably withholding consent to the assignment. The court held that the "suit would violate the Florida Constitution, Article I Sec. 10. The written contract in question predated the enactment of section 563.022 and said contract gave Miller the right to approve any sale of the Huber distributorship." Gans, 560 So.2d at 283. Because Gans is a decision of a Florida district court of appeal, we are bound by that decision unless there is an indication that the Supreme Court of Florida would decide the issue otherwise. Maseda, 861 F.2d at 1257 n. 14; Rabon, 672 F.2d at 1235 n. 7.

Any review of the Supreme Court of Florida's interpretation of the Florida Constitution's contract clause must begin with Yamaha Parts Distribs., Inc. v. Ehrman, 316 So.2d 557 (Fla.1975). In rejecting the contention that the legislature may retroactively lengthen the notice required to terminate a franchise agreement, the court noted that "[v]irtually no degree of contract impairment has been tolerated in this state." Id. at 559. The court stated that "the state's interest in policing franchise agreements and other manifestations of the motor vehicle distribution system is not so great as to override the sanctity of contracts." Id.

The supreme court expanded upon Yamaha in Pomponio v. Claridge of Pompano Condominium, Inc., 378 So.2d 774 (Fla.1979). The Pomponio court stated that "our conclusion in Yamaha that 'virtually' no impairment is tolerable necessarily implies that some impairment is tolerable, although perhaps not so much as would be acceptable under traditional federal contract clause analysis." Id. at 780. The court went on to develop a balancing test similar to the one used in federal contract clause analysis. The court stated that "we must weigh the degree to...