Beer Wholesalers, Inc. v. Miller Brewing Co.

426 N.W.2d 438, 1988 Minn. App. LEXIS 597, 1988 WL 61149
CourtCourt of Appeals of Minnesota
DecidedJune 21, 1988
DocketC5-88-285
StatusPublished
Cited by11 cases

This text of 426 N.W.2d 438 (Beer Wholesalers, Inc. v. Miller Brewing Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Beer Wholesalers, Inc. v. Miller Brewing Co., 426 N.W.2d 438, 1988 Minn. App. LEXIS 597, 1988 WL 61149 (Mich. Ct. App. 1988).

Opinion

OPINION

LANSING, Judge.

When Miller did not renew its beer distributorship, Beer Wholesalers, Inc. (BWI), brought this action alleging various statutory violations and common law claims. The trial court entered summary judgment dismissing all claims, and BWI appeals. We affirm.

FACTS

On October 8, 1973, Miller Brewing and BWI signed a distributorship agreement which provided that

[1] Miller would sell beer to the distributor “in such quantities as Distributor shall order and Miller shall accept.”

[2] the contract would automatically be renewed “[ujnless either party hereto shall, not less than ninety (90) days prior to the end of the initial term of this Agreement, give written notice to the other party of election not to renew this Agreement.” No reason was required for nonre-newal of the contract.

[3] the distributor’s rights were fully set forth in the written contract.

[4] the distributor got unrestricted, nonexclusive territory in which to distribute, unless limited by state law.

[5] the agreement could be modified only by a writing signed by two Miller officers, although specific provisions could be waived by conduct of the party waiving compliance.

On June 28, 1978, more than 90 days before the expiration of the contract, Miller *440 notified BWI of its intention not to renew the contract, citing various deficiencies in BWI’s operation. BWI responded to the list of dissatisfactions item by item. During the final 90 days of the contract, BWI made several attempts to explain and correct the listed deficiencies, but Miller did not change its decision and the distributorship agreement expired on October 8, 1978.

BWI then brought this suit against Miller and East Side Beverage Company, a BWI competitor, alleging violations of the Beer Brewers and Wholesalers Act, contract law, tort law and antitrust law, and requesting compensatory damages of $26.6 million and punitive damages of $5 million plus costs and attorney’s fees. East Side settled and was dismissed in 1985.

BWI appeals the entry of summary judgment dismissing its claims against Miller and also challenges the trial court’s taxation of costs.

ISSUES

1. Did the trial court err in granting summary judgment for Miller?

2. Did the trial court abuse its discretion in taxing costs?

ANALYSIS

I

BWI and Miller do not dispute the existence or terms of the October 1973 distributorship agreement. BWI contends, however, that the agreement was modified by the notice of termination and Miller’s subsequent conduct and that Miller breached the modified contract and an implied covenant of good faith; tortiously interfered with BWI’s customers; fraudulently induced it to improve its distributorship in the hope of having it renewed; and violated Minnesota antitrust and beer wholesalers statutes.

A. Breach of contract.

The written agreement expressly provided that it could be modified only by a writing signed by two Miller officers, and there is no evidence that Miller waived either its right not to renew the agreement or the provision requiring a writing for modification. BWI argues that Miller’s July 1978 notice of intention not to renew, which was signed by two Miller officers, gave rise to a new contract between the parties, the terms of which were established by a course of dealing between the parties during July, August and September 1978.

Although BWI does not state specifically the terms of the alleged modification, BWI appears to argue that Miller offered to renew if BWI remedied the listed deficiencies and that BWI accepted that offer by continuing to distribute Miller beer and even adding new accounts. BWI further asserts that this modified agreement was breached by Miller’s bad faith conduct after the notice of nonrenewal by failing to specify deficiencies, failing to stop another distributor selling beer in BWI’s territory, failing to deliver beer orders, discontinuing manufacture of a brand of beer, and not renewing the agreement.

Whether a pre-existing agreement has been modified depends on the parties' objective manifestations, not their subjective understanding. See Pine River State Bank v. Mettille, 333 N.W.2d 622, 626 (Minn.1983). In this case, as the trial court pointed out in its memorandum, Miller’s conduct accorded with the terms of the written agreement. Although the nonre-newal letter listed BWI’s alleged deficiencies, nothing in its language implies a promise to renew BWI if the deficiencies were corrected. Miller’s conduct in reviewing BWI’s attempts to correct the deficiencies also does not imply a promise to renew the distributorship in the absence of objective evidence that Miller offered to change its decision. On this evidence, the trial court did not err in granting Miller summary judgment on the breach of contract claim.

B. Beer Brewers and Wholesalers Act.

In 1977 the Minnesota legislature passed the Beer Brewers and Wholesalers Act, Minn.Stat. § 325B.01-.17 (1977). The Act provides, in pertinent part, that con *441 tracts between brewers and distributors will automatically renew unless good cause exists for termination or nonrenewal; a distributor will have 90 days after written notice to rectify any deficiencies; and a brewer may not sell beer to a distributor who intends to distribute that beer in a territory already covered by another distributor. The Act was expressly made applicable to all contracts in existence on May 28, 1977.

The trial court determined, on the basis of the Minnesota Supreme Court’s decision in Jacobsen v. Anheuser-Busch, Inc., 392 N.W.2d 868 (Minn.1986), that the Act did not govern the contract between Miller and BWI. In Jacobsen the provisions of the Act directly contradicted specific provisions of the contract between Jacobsen and An-heuser-Buseh, and the court held that the Act, “applied retroactively to a preexisting agreement between a brewer and a wholesaler as mandated by Minn.Stat. § 325B.15 does unconstitutionally impair the parties’ rights and obligations set forth in that preexisting agreement.” Id. at 875.

The Jacobsen court’s holding was not limited to the facts of the case before it nor to the specific provision of the act dealing with ownership transfers, and it precludes retroactive application of the Act to the October 8,1973, contract between BWI and Miller. Because Miller’s notice of nonre-newal did not extend the contract by modification, BWI cannot bring the distributorship agreement within the governance of the Act. The trial court did not err in finding that it could not constitutionally apply the Act to the parties in this case.

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426 N.W.2d 438, 1988 Minn. App. LEXIS 597, 1988 WL 61149, Counsel Stack Legal Research, https://law.counselstack.com/opinion/beer-wholesalers-inc-v-miller-brewing-co-minnctapp-1988.