Television Events & Marketing v. Amcon Distrib.

• Decision Date: 21 May 2007
• Docket Number: Civ. No. 05-00259 ACK/ESC.
• Citation: 526 F.Supp.2d 1118
• Court: U.S. District Court — District of Hawaii
• Parties: TELEVISION EVENTS & MARKETING, INC., a Hawaii Corporation, Plaintiff, v. AMCON DISTRIBUTING CO., Delaware Corporation; Beverage Group, Inc., Delaware Corporation; Beverage Group aka Amcon Beverage Company; Amcon Corporation, a Delaware Corporation; and William Wright, Defendants. Amcon Distributing Co., Delaware Corporation; The Beverage Group, Inc., a Delaware Corporation, Counter Claimants, v. Television Events & Marketing, Inc., a Hawaii Corporation; Archie J. Thornton; and the Thornton Works, Inc., a California Corporation, Counter Defendants.

526 F.Supp.2d 1118

TELEVISION EVENTS & MARKETING, INC., a Hawaii Corporation, Plaintiff, v. AMCON DISTRIBUTING CO., Delaware Corporation; Beverage Group, Inc., Delaware Corporation; Beverage Group aka Amcon Beverage Company; Amcon Corporation, a Delaware Corporation; and William Wright, Defendants.

Amcon Distributing Co., Delaware Corporation; The Beverage Group, Inc., a Delaware Corporation, Counter Claimants, v. Television Events & Marketing, Inc., a Hawaii Corporation; Archie J. Thornton; and the Thornton Works, Inc., a California Corporation, Counter Defendants.

Civ. No. 05-00259 ACK/ESC.

United States District Court, D. Hawai`i.

May 21, 2007.

COPYRIGHT MATERIAL OMITTED

Clyde J. Wadsworth, David A. Nakashima, Paul Alston, Alston Hunt Floyd & Ing, Honolulu, HI, for Plaintiff.

Gary G. Grimmer, Steven M. Egesdal, Carlsmith Ball, Honolulu, HI, for Defendants.

ORDER DENYING DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT ON SECOND AMENDED COMPLAINT AND COUNTERCLAIM

ALAN C. KAY, Senior District Judge.

PROCEDURAL BACKGROUND

Television Events & Marketing, Inc. ("Plaintiff" or "TEAM") allege that the following Defendants are liable for the breach of two License Agreements and for misrepresentations: (1) AMCON Distributing Company ("Distributing"); (2) The Beverage Group, Inc. ("TBG, Inc."); (3) The Beverage Group ("Group"); (4) William F. Wright ("Wright"); and (5) AMCON Corporation ("AC")(collectively, "Defendants").

On July 5, 2006, Distributing and TBG, Inc. ("Counter Claimants") filed an Amended Answer to the Second Amended Complaint along with a Counterclaim against TEAM, Archie J. Thornton ("Thornton"); and The Thornton Works, Inc. ("Thornton Works") (collectively, "Counter Defendants"). The Counterclaim alleges the following: (1) Thornton breached his fiduciary duty; (2) TEAM tortiously assisted Thornton in breaching his fiduciary duty; (3) unjust enrichment/restitution; (4) TEAM breached its duty of good faith and fair dealing; (5) TEAM and Thornton's failure to disclose Thornton's agency relationship with TEAM constituted fraud and misrepresentation; and (6) punitive damages.¹

The Court has issued the following four substantive written Orders in this case:

(1) Order Denying Distributing's Motion To Dismiss for Lack of Personal Jurisdiction; Granting Defendants' Request to Amend their Motion to Dismiss and for Summary Judgment and to Transfer Venue; Denying Defendants Distributing and TBG, Inc.'s Motion for Summary Judgment as to Plaintiff's First Claim for Relief and Not Addressing the Motion as to Group, Wright, nor AC; Denying Defendants Distributing and TBG, Inc.'s Motion for Summary Judgment as to the Plaintiff's Second Claim for Relief and Not Addressing the Motion as to. Wright; and Denying Defendants' Motion To Transfer Venue (hereafter "September 29, 2005 Order");

(2) Order Denying AC and Wright's Motion to Dismiss for Lack of Personal Jurisdiction; Denying AC and Wright's Motion to Transfer for Lack of Personal Jurisdiction or Improper Venue; and Denying AC and Wright's Motion to Transfer for Convenience (hereafter "January 18, 2006 Order"); and (3) Order Denying Plaintiff's Motion For Partial Summary Judgment; Granting in Part and Denying in Part Defendants AC and Wright's Motion for Summary Judgment; Denying Defendant TBG, Inc.'s Motion for Partial Summary Judgment; and Granting in Part and Denying in. Part Defendant Distributing's Motion for Summary Judgment (hereafter "April 25, 2006 Order").

(4) Order Granting in Part and Denying in Part Counter Defendants' Motion to Dismiss Counterclaim (hereafter "September 12, 2006 Order").

On November 27, 2006, Defendants and Counter Claimants Distributing and TBG, Inc. filed a Motion for Summary Judgment on the Second Amended Complaint and Counterclaim² ("Distributing & TBG, Inc. Motion") and a Concise Statement of Facts ("Distributing/TBG, Inc.CSF"). The same day, Defendants Wright and AC filed a Motion for Summary Judgment on the Second Amended Complaint ("Wright/AC Motion") and a Concise Statement of Facts ("Wright/AC CSF").

On March 13, 2007, TEAM filed an Opposition to Distributing/TBG, Inc. and Wright/AC's Motions for Summary Judgment ("TEAM Opp.") as well as a Concise Statement of Facts ("TEAM CSF").³

On March 15, 2007, Thornton and Thornton Works filed an Opposition to the Distributing/TBG, Inc. Motion ("Thornton Opp.") and a Concise Statement of Facts ("Thornton CSF").

On April 2, 2007, Distributing and TBG, Inc. filed a Reply ("Distributing/TBG, Inc.Reply"), and Wright and AC also filed a Reply ("Wright/AC Reply").

A hearing on Defendants' and Counter Claimants' Motions was held on Wednesday, May 16, 2007 at 10:00 a.m.

FACTUAL BACKGROUND⁴

The Court presented the facts that gave rise to the Complaint and Counterclaim in great detail in the four preceding orders. The following factual allegations are pertinent to the instant Motions for Summary Judgment.

Since the Court's April 25, 2006 ruling on the parties' previous motions for summary judgment, Defendants obtained documents they allege demonstrate that during the negotiation of the License Agreements in the fall of 2002 and at the time Kiely signed the License Agreements for TEAM on or around January 15, 2003, Thornton was an undisclosed dual agent of both TEAM and Distributing/TBG, Inc. Namely, Defendants point to a check dated May 27, 2003 from TEAM payable to Thornton for $25,000. Plaintiff and Counter-Defendants dispute the allegation that Thornton was an undisclosed dual agent.⁵

In May of 1997, TEAM executed a Letter Agreement contracting with Thornton to be TEAM's sales representative to negotiate and secure licensing agreements for TEAM's various events and logos, including the XTERRA brand. See Distributing/TBG, Inc. CSF Exh. "10." The agreement provided that "Archie Thornton will carry a TEAM Unlimited business card, and the title will be Vice President." Id. Under the agreement, Thornton would be compensated via commission set at 25% of net revenue for business generated for TEAM and monthly advances on commission of $1,000. The agreement provided for cancellation by 30 day written notice, and amendment of the agreement needed to be in writing. Id. Counter Defendants admit the existence of the May 13, 1997 agreement, but argue that Thornton was never an employee of TEAM and that the contractual relationship with Thornton was effectively terminated upon mutual agreement after September 28, 1998 when TEAM ceased paying $1000 monthly advances to Thornton. See TEAM Opp. at p. 6; Thornton 3/15/07 Decl. at ¶ 8. Thornton states that he was not retained by TEAM to perform any services between September 28, 1998 and April 21, 2003⁶ and did not receive any money from TEAM between September 1, 1999 and May 27, 2003. See Thornton 3/15/07 Decl. at ¶¶ 10-12, 16. Counter Defendants argue that after September 28, 1998, Thornton was paid final commissions on several transactions in which he had acted as a finder during the term of the 1997 agreement. Id. at ¶¶ 9-11. Counter Claimants point out that neither TEAM nor Thornton present any evidence of a written notification terminating their May 1997 agreement, and thus argue the agreement continued to be in effect through May, 2003. See Distributing/TBG, Inc. Reply at pp. 3-4. Counter Claimants also point to a document dated May 26, 2006 that appears to list Thornton as Director of Licensing and Sponsorship Sales for TEAM. See Distributing/TBG, Inc. CSF, Exh. "11."

In the fall of 2001, Thornton was retained by Distributing to conduct due diligence relating to its planned acquisition of Hawaiian Natural Water Co. See Thornton 3/15/07 Decl. at ¶ 13; TEAM CSF at ¶ 3. In or around late 2001, Thornton learned from Kiely that the existing licensee for the XTERRA trademark, Tom Moody, was having financial difficulties and was seeking new investors or partners. See TEAM Addit. CSF at ¶ 6. Thornton introduced Wright to Moody, but the discussions were unsuccessful. Id. at ¶ 8. Thornton claims that when he introduced Wright and Moody, this was done by his own initiative, not at the request of TEAM, and that he did not expect any compensation for the introduction from anyone. See Thornton 3/15/07 Decl. at ¶ 14. Thornton states that he then introduced Wright and Kiely to explore the possibility of licensing the XTERRA mark and did not have an expectation that he would be compensated by TEAM or anyone else for the introduction. See Thornton 3/15/07 Decl. at ¶ 14.

Counter Defendants argue that at all relevant times, Wright knew that Thornton had worked with TEAM in the late 1990s to find licensees for the XTERRA brand. See TEAM CSF ¶ 5; Exh. "13" Wright Depo. at pp. 19-20. In the late 1990s, Wright states that he and Thornton were friends and acknowledges leasing Thornton office space when Thornton was working for TEAM on XTERRA licensing. Id. at p. 17. Wright's son worked for Thornton on XTERRA matters during that time, and Wright acknowledges that he assumed Thornton was being paid for his work for TEAM. Id. Wright testifies in his deposition that he assumed Thornton was working' for Kiely "to this day" due to their friendship. See TEAM CSF, Exh. "13" at p. 19. In addition to his long-standing relationship with Kiely and TEAM, Thornton avers that he is and has been a significant shareholder in Distributing for a number of years with investments amounting to approximately $40,000. See Distributing/TBG, Inc. CSF Exh. "4", Thornton Depo. at p. 21.

On February 18, 2002, Thornton, Wright, and Kiely met, at which meeting Kiely gave Wright an overview of TEAM's XTERRA business. See Kiely Decl. at ¶ 11. Thornton then arranged a meeting between Kiely and Wright in July, 2002 to discuss the XTERRA brand. See Kiely Decl. at ¶¶ 13-14. Thornton was present for a portion of the meeting and facilitated communications, but asserts he did not engage in substantive discussion or negotiation of the terms of the License Agreements. See TEAM Additional CSF at ¶ 9...