Auburn Merchandise Distributors, Inc. v. Southland Corp.

9 Mass. L. Rptr. 568
CourtMassachusetts Superior Court
DecidedFebruary 16, 1999
DocketNo. 981020
StatusPublished

This text of 9 Mass. L. Rptr. 568 (Auburn Merchandise Distributors, Inc. v. Southland Corp.) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Auburn Merchandise Distributors, Inc. v. Southland Corp., 9 Mass. L. Rptr. 568 (Mass. Ct. App. 1999).

Opinion

McHugh, J.

UNDISPUTED FACTS

Based on the summary judgment record the parties have compiled and placed before the Court, it appears that AMD is a wholesaler of candy, tobacco products, and groceries in Massachusetts and other New England states. Southland is the owner of the 7-Eleven service mark and convenience store chain. 7-Eleven stores are operated by individual franchisees. In early 1994 Southland entered into a franchise agreement with Nevi Sabet under which Mr. Sabet, as franchisee, used the 7-Eleven service mark in the operation of a convenience store (“7-Eleven store”) at 460 Smith Street, Providence, Rhode Island. Mr. Sabet operated the store as a 7-Eleven from approximately April 1994 through December 1997.

In a letter dated January 23, 1995, Southland, through its Field Consultant, Jack Tibert, requested that AMD set up a charge account to sell cigarettes and other goods on credit to two 7-Eleven stores, including the store at 460 Smith Street, Providence, Rhode Island. Mr. Tilbet’s request stated that the “charge account [would be] paid out of our office” and his letter contained the address of a 7-Eleven facility in Middletown, CT, where AMD was to “[s]end [b]ills.”

AMD complied with Mr. Tilbert’s request and set up the charge account. AMD’s credit manager, Margaret Smith, did not understand or inquire into the relationship between Sabet and Southland. In setting up the charge account, AMD relied upon Southland’s credit, not Mr. Sabet’s. AMD was not a party to Mr. Sabet’s franchise agreement nor was it provided with a copy of that agreement. AMD’s Sales Representative, Dennis Costello, understood that Mr. Sabet operated the 7-Eleven store as a franchise, but Mr. Costello never discussed with Mr. Sabet anything about the details of Mr. Sabet’s relationship with Southland. No oral or written agreement between AMD and Southland exists in which AMD agreed that Southland was an agent for Mr. Sabet’s store. Indeed, Southland first explicitly told AMD that 7-Eleven franchisees are independent contractors, that the goods delivered by AMD were purchased by the 7-Eleven stores and not Southland and that Southland assumed no liability for the debts [569]*569of its franchisees in a letter dated January 9, 1998, after the present controversy.

From about January, 1995, until December, 1997, AMD received orders for cigarettes and other goods from Mr. Sabet in the name of his 7-Eleven store and delivered the ordered goods to the 7-Eleven store. Mr. Sabet or some employee of the 7-Eleven store inspected the goods when they were delivered and signed the AMD invoices tendered to him or her by the delivery person. Mr. Sabet or some other store employee then sent the invoices to Southland.

AMD’s Ms. Smith sent bills for goods delivered to the 7-Eleven store to a Southland office in Connecticut. Southland then paid AMD by checks drawn on a Southland bank account and charged the payment amounts to Mr. Sabet’s account with Southland. At the end of each business day, Mr. Sabet deposited the 7-Eleven store’s receipts into his Southland account, thus allowing Southland to reimburse itself for the payments it had made for goods delivered to his store. Periodically, Southland sent Mr. Sabet a check to pay him the difference between the goods for which South-land had paid and the receipts he had deposited into his Southland account.

When AMD had questions about invoices or statements, Ms. Smith typically resolved them by calling a woman named “Denise” in Southland’s accounts payable department in New Jersey, although Mr. Costello brought at least some invoice questions to the attention of Mr. Sabet, or one of his managers, at the 7-Eleven store.

Until approximately September or October, 1997, AMD received checks from Southland for goods AMD delivered to the 7-Eleven store. On December 31, 1997, the unpaid balance for those goods amounted to $49,275.61. Of that amount, $41,520.64 was for cigarettes and $7,754.97 was for other merchandise.

On or about January 5, 1998, Ms. Smith, the AMD Credit manager, called Denise to inquire about payment. Denise said that Southland would pay the debt in full within a few weeks. AMD, however, received no payment. Ms. Smith called Denise again on January 29, 1998. This time, Denise told Ms. Smith to call Paul Donahue, Southland’s market manager for Massachusetts and Rhode Island. Ms. Smith called Mr. Donahue the same day and inquired as to the status of payment. Mr. Donahue told Ms. Smith that South-land was not responsible for the debt, that Mr. Sabet owed the money to AMD and that AMD should look to him for payment.

DISCUSSION

A. Applicable Law

Until recently, the principles governing summary judgment in Massachusetts were those the Supreme Judicial Court had articulated in Pederson v. Time, Inc., 404 Mass. 14, 17 (1989). Under those principles,

[t]he party moving for summary judgment assumes the burden of affirmatively demonstrating that there is no genuine issue of material fact on every relevant issue, even if he [or she] would have no burden on an issue if the case were to go to trial. .. If the moving party establishes the absence of a triable issue, the party opposing the motion must respond and allege specific facts which would establish the existence of a genuine issue of material fact in order to defeat a motion for summary judgment.

(Footnote omitted).

In the recent case of Kourouvacilis v. General Motors Corp., 410 Mass. 706 (1991), however, the Court embraced the principles set forth by the Supreme Court of the United States in Celotex Corp. v. Catrett, 477 U.S. 317 (1986). Under those principles,

a party who moves for summary judgment has the burden of initially showing that there is an absence of evidence to support the case of the nonmoving party shouldering the burden of proof at trial.1 That burden is not sustained by the mere filing of the summary judgment motion or by the filing of a motion together with a statement that the other party has produced no evidence that would prove a particular necessary element of this case. The motion must be supported by one or more of the materials listed in rule 56(c) and, although that supporting material need not negate, that is, disprove, an essential element of the claim of the party on whom the burden of proof at trial will rest, it must demonstrate that proof of that element at trial is unlikely to be forthcoming.

Kourouvacilis, supra, 410 Mass. at 714. As a consequence, there are now two ways in which the party moving for summary judgment may meet the burden imposed by Mass.R.Civ.P. 56. The first of those follows traditional Massachusetts law:

[T]he moving party may submit affirmative evidence that negates an essential element of the nonmoving party’s claim.

Kourouvacilis, supra, 410 Mass. at715 quoting Celotex Corp. v. Catrett, supra, 477 U.S. at 331-32 (Brennan, J., dissenting).

Second, however,

the moving party may demonstrate to the court that the nonmoving party’s evidence is insufficient to establish an essential element of the nonmoving party’s claim ...

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Bluebook (online)
9 Mass. L. Rptr. 568, Counsel Stack Legal Research, https://law.counselstack.com/opinion/auburn-merchandise-distributors-inc-v-southland-corp-masssuperct-1999.