Television Events & Marketing v. Amcon Distrib.

Decision Date25 April 2006
Docket NumberNo. Civ. 05-00259 ACK/KS.,Civ. 05-00259 ACK/KS.
Citation484 F.Supp.2d 1124
CourtU.S. District Court — District of Hawaii
PartiesTELEVISION EVENTS & MARKETING, INC., a Hawaii Corporation, Plaintiff, v. AMCON DISTRIBUTING CO., a Delaware Corporation; the Beverage Group, Inc., a Delaware Corporation; the Beverage Group aka AMCON Beverage Company; AMCON Corporation, a Delaware Corporation; and William F. Wright, Defendants.

David A. Nakashima, Jessica M. Horiuchi, Paul Alston, Alston Hunt Floyd & Ing, Honolulu, HI, for Plaintiff.

Gary G. Grimmer, Steven M. Egesdal, Carlsmith Ball, Robert A. Marks, Price Okamoto Himeno & Lum, Honolulu, HI, Michael J. Holmes, Allen Matkins Leek Gamble & Mallory LLP, San Diego, CA, for Defendants.

ORDER DENYING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT; GRANTING IN PART AND DENYING IN PART DEFENDANTS WILLIAM F. WRIGHT'S AND AMCON CORPORATION'S MOTION FOR SUMMARY JUDGMENT; DENYING DEFENDANT THE BEVERAGE GROUP, INC.'S MOTION FOR PARTIAL SUMMARY JUDGMENT; AND GRANTING IN PART AND DENYING IN PART DEFENDANT AMCON DISTRIBUTING COMPANY'S MOTION FOR SUMMARY JUDGMENT

KAY, Senior District Judge.

PROCEDURAL BACKGROUND

On March 8, 2005, Television Events & Marketing, Inc. ("Plaintiff" or "TEAM") filed a Complaint in the Circuit Court of the First Circuit of the State of Hawaii against AMCON Distributing Company The Beverage Group, Inc.; and Trinity Springs, Inc. (collectively "Original Defendants") alleging (1) breach of license agreements and (2) fraudulent transfer under Hawaii Revised Statutes ("HRS") §§ 651C-4 and 651C-5. The Complaint was removed to this Court on April 12, 2005.

On May 5, 2005, Original Defendants filed a Motion to Dismiss and for Summary Judgment and to Transfer Venue ("Original Defendants' Motion for Dismissal and Summary Judgment").

On September 1, 2005, Plaintiff filed a First Amended Complaint adding Defendants The Beverage Group aka AMCON Beverage Company and William F. Wright (collectively "Additional Defendants") and an Opposition to Original Defendants' Motion to Dismiss and for Summary Judgment.

On September 27, 2005, a hearing on Original Defendants' Motion was held.

On September 29, 2005, the Court issued a written Order Denying AMCON Distributing Company's Motion To Dismiss for Lack of Personal Jurisdiction; Granting Defendants' Request to Amend their May 5, 2005 Motion; Denying Defendants AMCON Distributing Company's and The Beverage Group, Inc.'s Motion for Summary Judgment as to Plaintiff's First Claim for Relief and Not Addressing the Motion as to The Beverage Group, William F. Wright, and AMCON Corporation; Denying Defendants AMCON Distributing Company's and The Beverage Group, Inc.'s Motion for Summary Judgment as to the Plaintiffs Second Claim for Relief and Not Addressing the Motion as to William F. Wright and Trinity Springs, Inc.; and Denying Defendants' Motion To Transfer Venue. ("September 29, 2005 Order").

On October 5, 2005, Additional Defendants filed a Motion to Dismiss or to Transfer Venue.

On December 2, 2005, Plaintiff filed a Motion for Leave to File a Second Amended Complaint.

On December 15, 2005, Original Defendants filed a Joinder to Additional Defendants' Motion for Dismissal or Transfer.

On December 19, 2005, the parties stipulated to the filing of a Second Amended Complaint. On December 21, 2005 Plaintiff filed a Second Amended Complaint (hereafter "Complaint") against AMCON Distributing Company, The Beverage Group, Inc., The Beverage Group aka AMCON Beverage Company, AMCON Corporation, and William F. Wright (collectively "Defendants"). Trinity Springs Inc. was removed as a defendant from the Second Amended Complaint.

A hearing was held on Additional Defendants' Motion for Dismissal or Transfer on January 9, 2006.

On January 10, 2006, Defendants AMCON Distributing Company and The Beverage Group, Inc. filed an Answer to the Second Amended Complaint.

On January 18, 2006, the Court issued a written Order Denying AMCON Corporation's and William F. Wright's Motion to Dismiss for Lack of Personal Jurisdiction; Denying AMCON Corporation's and William F. Wright's Motion to Transfer for Lack of Personal Jurisdiction or Improper Venue; and Denying AMCON Corporation's and William F. Wright's Motion to Transfer for Convenience ("January 18, 2006 Order").

On January 25, 2006, the Court approved a joint stipulation to extend the deadline for filing dispositive motions to February 13, 2006.

On January 27, 2006, Defendants AMCON Corporation and William F. Wright filed an Answer to the Second Amended Complaint.

On February 13, 2006, the following four dispositive motions, each with an accompanying Separate Concise Statement of Facts, were filed: 1) Plaintiffs Motion for Partial Summary Judgment against Defendant AMCON Distributing Company ("Motion 1"); 2) Defendants AMCON Corporation's and William F. Wright's Motion for Summary Judgment ("Motion 2"); 3) Defendant The Beverage Group, Inc.'s Motion for Partial Summary Judgment ("Motion 3"); and 4) Defendant AMCON Distributing Company's Motion for Summary Judgment ("Motion 4"). AMCON Distributing Company also filed a Joinder to Motion 3.

On March 23, 2006, Defendants AMCON Distributing Company and The Beverage Group, Inc. filed a Memorandum in Opposition to Plaintiff's Motion for Partial Summary Judgment ("Opposition to Motion 1") and a Separate Concise Statement of Facts in support of their Opposition ("Opposition to Motion 1 CSF"). Plaintiff filed a Memorandum in Opposition to: (1) Motions for Summary Judgment of Defendants William F. Wright, AMCON Corporation and AMCON Distributing Company; and (2) Motion for Partial Summary Judgment of Defendant The Beverage Group, Inc. ("Plaintiffs Opposition") and a Separate Concise Statement of Facts ("Plaintiffs Opposition CSF").

On March 30, 2006, Plaintiff filed a Reply Memorandum in Support of Plaintiffs Motion for Partial Summary Judgment ("Reply to Motion 1"). Defendants William F. Wright and AMCON Corporation filed a Reply Memorandum in Support of Motion for Summary Judgment ("Reply to Motion 2") and a Separate Concise Statement of Facts ("Reply to Motion 2 CSF"). Defendant The Beverage Group, Inc. filed a Reply Memorandum in Support of Motion for Partial Summary Judgment ("Reply to Motion 3"). Defendant AMCON Distributing Company filed a Reply Memorandum in Support of Motion for Summary Judgment ("Reply to Motion 4") and a Separate Concise Statement of Facts ("Reply to Motion 4 CSF").

On April 10, 2006, a hearing was held before the Court regarding the four motions for summary judgment.

FACTUAL BACKGROUND1

The Court has laid the facts of this case out in great detail in its September 29, 2005 Order and January 18, 2006 Order, and provides a summary of the most pertinent facts at this time. The lawsuit in question stems from Television Events & Marketing, Inc.'s ("Plaintiff' or "TEAM") allegations that the following Defendants are liable for the breach of two License Agreements and misrepresentations: (1) AMCON Distributing Company ("Distributing") (2) The Beverage Group, Inc. ("TBG, Inc."); (3) The Beverage Group ("Group"); William F. Wright ("Wright"); and (5) AMCON Corporation ("AC").

In May 2002, Tom Kiely, the President of TEAM entered into informal talks with William F. Wright2 regarding the possibility of a license agreement regarding an energy food and drink line. After the initial discussions in the fall of 2002, Wright hired three men to pursue the possibility of entering into such license agreements with TEAM. Wright hired and paid Stephen Sparks ("Sparks"), Richard Parsons ("Parsons"), and Archie Thornton ("Thornton") (collectively "Consultants") for this purpose. At this time the negotiations between the Consultants and TEAM intensified and two License Agreements were drafted. The agreements grant permission to a licensee to use Plaintiffs registered trademark "XTERRA" ("the Mark") in connection with the manufacture, promotion, and sale of Products. (Motion 1 CSF, Exs. J & K, at 1). One License Agreement covered food Products such as energy bars, and a second License Agreement covered beverage Products, such as a line of energy drinks. (Motion 1 CSF, Ex. J at 15; Motion 1 CSF, Ex. K at 15). The numerous drafts of the agreements named the following entities as the potential licensee: "__________ corporation"; AMCON Corp. (AC); and AMCON Beverage Company. (Motion 4 at 2-3).

Throughout this entire process, Wright deposited approximately $300,000 of his personal funds into the AC's bank account and then used the money to fund the pursuit of the business venture. (Plaintiffs Opposition, Ex. V (Wright Deposition) at 49:18-23; 118:7-12). Ultimately, Wright was reimbursed for "post-December disbursements [and] pre-December disbursements that had a post-December benefit," but remains personally "out of pocket" for over $70,000. (Plaintiff's Opposition, Ex. V (Wright Deposition) at 52:21-53:3, 54:4-10).

On December 13, 2002, Sparks, Thornton, and Parsons presented the business opportunity outlined in the License Agreements to the Board of Directors of Distributing, who approved the venture. (Motion 4 at 3; Motion 1 CSF at 3). On December 20, 2002, TBG, Inc. was formed as a Delaware Corporation. (Motion 4 at 3). Between December 21 and 23, 2002, Sparks signed the License Agreements as the President and CEO of The Beverage Group, which was listed as the licensee for the first time.3 (Motion 2 CSF at 2; Motion 1 CSF, Ex. J at 13; Motion 1 CSF, Ex. K at 13). Between January 12 and 15, 2003, Kiely signed the License Agreements on behalf of Television Events & Marketing, Inc. (Motion 2 CSF at 4). Both License Agreements state that they "are entered into as of October 1, 2002." (Motion 1 CSF, Ex. J at 1; Motion 1 CSF, Ex. K at 1).

AC made the first two payments pursuant to the License Agreements to TEAM on December 27, 2002. (Plaintiffs Opposition CSF, Ex. O). The following two payments, dated January 6,...

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