Southland Distributors Marketing Co. v. S&P Co., No. 01-12321.

• Decision Date: 03 July 2002
• Docket Number: No. 01-12321.
• Citation: 296 F.3d 1050
• Parties: SOUTHLAND DISTRIBUTORS MARKETING CO., INC., a Florida corporation, d.b.a. Southland Marketing, Bernard Kanner, a.k.a. Barry Kanner, Plaintiffs-Appellants, v. S&P COMPANY, a foreign corporation, Pabst Brewing Co., a Delaware corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

296 F.3d 1050

SOUTHLAND DISTRIBUTORS MARKETING CO., INC., a Florida corporation, d.b.a. Southland Marketing, Bernard Kanner, a.k.a. Barry Kanner, Plaintiffs-Appellants, v. S&P COMPANY, a foreign corporation, Pabst Brewing Co., a Delaware corporation, Defendants-Appellees.

No. 01-12321.

United States Court of Appeals, Eleventh Circuit.

July 3, 2002.

Henry A. Stein, Gary M. Schaaf, Phyllis J. Towzey, Stein, Ford, Schaaf & Towzey, L.L.P., St. Petersburg, FL, for Plaintiffs-Appellants.

J. Pablo Caceres, Butler Burnette Pappas, Tampa, FL, Leo D. Figueroa, James L. Walker, Jackson Walker, L.L.P., San Antonio, TX, for Defendants-Appellees.

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

Before WILSON, RONEY and FAY, Circuit Judges.

PER CURIAM:

Plaintiff-appellant Southland Distributors Marketing Co., Inc. d.b.a. Southland Marketing, a Florida corporation ("Southland"), sued defendants-appellees S&P Company and Pabst Brewing Co., a Delaware corporation ("Pabst"), for $3,000,000 in liquidated damages, alleging that Pabst breached their agreement to make Southland its exclusive master wholesaler in six states when Pabst terminated the contract in May 1998. A magistrate judge, following a bench trial, conducted with the consent of the parties pursuant to 28 U.S.C. § 636(c) and Fed.R.Civ.P. 73, entered judgment against Southland, finding that Southland had previously breached its contract with Pabst by selling and marketing products not produced by Pabst, a complete defense to Southland's breach of contract claim. We vacate and remand.

After a full bench trial, the magistrate judge entered detailed "Findings of Fact and Conclusions of Law" which need not be totally repeated here. Generally, the evidence showed that in February 1991, Southland and Pabst entered into an oral agreement where Southland would serve as Pabst's "exclusive master wholesaler" for North Carolina, South Carolina, Tennessee, Alabama, Georgia, and Florida. The duration of the agreement was five years, with options to renew for at least two additional and consecutive five-year terms. Subsequently, Southland and Pabst exercised the first of the five-year options extending the contract to February 2001. As an exclusive master wholesaler, Southland acted as Pabst's representative or salesperson for the southeastern region of the United States and received a commission for its sales of Pabst products to retailers.

In 1997 Southland wrote a letter to Pabst memorializing their 1991 oral agreement. The letter is backdated to the date of their 1991 oral agreement. The relevant portion reads as follows:

Specifically, in exchange for my [Southland's] full time commitment to the sales and marketing of Pabst/S&P Company brands, you [Pabst] have agreed to make Southland Marketing an "Exclusive Master Distributor" and/or Exclusive Sales and Marketing Representative of Pabst/S&P Company brands in the southeast region of the United States (specifically North & South Carolina, Georgia, Florida, Alabama and Tennessee). This exclusive agreement shall have a duration of five (5) years with options to renew for at least two (2) additional consecutive five-year terms and provide Southland marketing with a commission of at least 10 cents per case, based on 24/12 oz. equivalents, consistent with our arrangement since 1986, for any brand of S&P Company brands... [t]his exclusive arrangement shall be binding upon the successors and assigns of the S&P Company, Pabst Brewing Company, or any other subsidiary of S&P Company.

On May 13, 1998, Pabst informed Southland that effective June 1, 1998, Pabst would terminate the agreement with Southland in five of the six states in the Southeast region, leaving Southland serving only Florida.

When Southland and its president, Barry Kanner, sued Pabst individually for breach of contract because of that termination, seeking the agreed-upon liquidated damages, Pabst asserted numerous grounds of defense:

(1) Barry Kanner was not a party to the alleged agreement and had no standing to enforce it. The district court upheld this argument. Because Kanner is not a party to this appeal, the holding is unchallenged here.

(2) Lutz Issleib, Pabst's president/chairman/CEO, was not authorized to enter into any agreements with the plaintiffs on behalf of S&P or Pabst. The district court held that Issleib was authorized to enter into the contract and there is no appeal from that decision.

(3) The agreement lacked consideration and was so vague as to be unenforceable. The district court held that the contract was not vague and had ample consideration. There is no appeal from that decision.

(4) The agreement was procured by fraud and is a "sham agreement." The district court held that the agreement is valid and there is no appeal from that decision.

(5) The liquidated damages provision is unenforceable. The district court did not reach this issue because it found that Southland breached its contract with Pabst.

(6) The agreement was oral, not written, and thus invalid. The district court's decision effectively held against this argument and there is no appeal on this issue.

(7) Southland was at fault for rejecting Pabst's new strategy. The district court ruled that Southland did not breach the agreement when it rejected Pabst's new strategy and there is no appeal from that decision.

(8) Pabst had the right to terminate the contract because from 1994 to 1997 Southland itself breached the contract by selling the following non-Pabst products: Brewski, Dunks, and Saranac, all premium priced beers, and Power Rangers, a children's soft-drink.

This last allegation presents the key question before the district court: was Southland's self-admitted selling of these non-Pabst products a breach of its agreement with Pabst for the "full time commitment to the sales and marketing of Pabst/S&P Company brands?" The district court held that that activity was a breach of the agreement by Southland and a reason for the defendants to terminate the contract. This appeal focuses on the correctness of that decision.

A district court's interpretation of an original contract is a question of law which we review de novo. Gymco Const. Co., Inc. v. Architectural Glass & Windows, Inc., 884 F.2d 1362, 1364 (11th Cir. 1989) (citing Brewer v. Muscle Shoals Bd. of Educ., 790 F.2d 1515, 1519 (11th Cir. 1986)). We will not disturb a trial court's findings of fact unless they are clearly erroneous. Media Servs. Group, Inc. v. Bay Cities...