Last Time Beverage Corp. v. F & V Distribution Co.

98 A.D.3d 947, 951 N.Y.S.2d 77
CourtAppellate Division of the Supreme Court of the State of New York
DecidedSeptember 12, 2012
StatusPublished
Cited by1 cases

This text of 98 A.D.3d 947 (Last Time Beverage Corp. v. F & V Distribution Co.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Last Time Beverage Corp. v. F & V Distribution Co., 98 A.D.3d 947, 951 N.Y.S.2d 77 (N.Y. Ct. App. 2012).

Opinion

In two related actions, inter alia, to recover damages for breach of contract, the defendants appeal from (1) an order of [948]*948the Supreme Court, Nassau County (Driscoll, J.), dated February 25, 2010, which, after a hearing, granted the plaintiffs’ motion pursuant to CPLR 4403 to confirm the report of a referee dated June 17, 2009, and (2), as limited by their brief, from so much of an order of the same court dated July 15, 2010, as, upon reargument, adhered to its original determination.

Ordered that the appeal from the order dated February 25, 2010 is dismissed, as that order was superseded by the order dated July 15, 2010, made upon reargument; and it is further,

Ordered that the order dated July 15, 2010 is affirmed insofar as appealed from; and it is further,

Ordered that one bill of costs is awarded to the plaintiffs.

The plaintiffs in action No. 1 (hereinafter the Last Time Beverage plaintiffs) and the plaintiffs in action No. 2 (hereinafter the J.C. Tea plaintiffs) commenced these separate actions, inter alia, to recover damages for breach of contract against the defendants, F & V Distribution Co., LLC (hereinafter F & V), and Hornell Brewing Co., Inc. (hereinafter Hornell), which are both solely owned and operated by Don Vultaggio. Pursuant to orders dated February 14, 2007 and February 16, 2007, respectively, the Supreme Court referred the issue of liability in both actions to a referee to hear and report.

The Last Time Beverage plaintiffs were experienced distributors of Coca-Cola and Pepsi products in the New York City metropolitan area. After the Coca-Cola Company purchased the distribution routes of the Last Time Beverage plaintiffs in 1995, some of the former Coca-Cola distributors, including the Last Time Beverage plaintiffs, formed the corporation MetBev, Inc. (hereinafter MetBev), to sell Royal Crown soft drinks and other non-alcoholic beverages primarily in the geographic areas where they had previously distributed Coca-Cola products. Using their experience and knowledge of the soft drink industry, as well as the good will they had developed with the customers on their routes over the years, MetBev and the Last Time Beverage plaintiffs created a distribution system for the beverages they sold and, accordingly, executed Route Distribution Agreements (hereinafter the distribution agreements). These distribution agreements provided, inter alia, that MetBev would operate as a franchisor and the Last Time Beverage plaintiffs as individual distributors. Pursuant to paragraph 2.01 of the distribution agreements, each distributor’s right to operate its franchise was restricted to a geographic area or “territory,” which was delineated in the contract. Pursuant to paragraph 2.02, so long as the distributor was not in default under the distribution agreements, MetBev would not operate a company-owned [949]*949distributorship or award a franchise for the operation of a similar or competitive business within the distributor’s territory. Also, pursuant to paragraph 9.04, the distributor had the right to sell, assign, or transfer the franchise conveyed by the distribution agreements, or all or part of the territorial rights, or any interest in these territorial rights, to a third party with the prior written consent of the franchisor, and that consent was not to be unreasonably withheld.

On December 31, 1996, MetBev executed an agreement, whereby it assigned to F & V its exclusive rights to distribute Royal Crown Cola and certain other non-alcoholic soft drinks in 12 counties in New York State (hereinafter the assignment agreement). Pursuant to the assignment agreement, F & V assumed MetBev’s rights and obligations under the distribution agreements with the Last Time Beverage plaintiffs. The J.C. Tea plaintiffs were former distributors for, or employees of, F & V, who were promised that, upon the assignment of MetBev’s rights to F & V, they would receive the same rights that the Last Time Beverage plaintiffs had acquired.

Thereafter, the business relationships between the two groups of plaintiffs and F & V began to deteriorate. Accordingly, the two groups of plaintiffs commenced separate actions against F & V and Hornell. Both the Last Time Beverage plaintiffs and the J.C. Tea plaintiffs alleged, inter alia, causes of action to recover damages for breach of contract, based on promissory estoppel, and for unjust enrichment. The plaintiffs also asked the Supreme Court to pierce F & V’s limited liability company veil and hold Hornell liable for F & V’s alleged wrongdoing on the ground, inter alia, that F & V and Hornell operated as one business entity under the control of their mutual principal owner, Don Vultaggio. The crux of the plaintiffs’ complaints was that the defendants allegedly breached the distribution agreements by, among other things, changing or eliminating existing distribution rights without additional compensation, directly selling products to distributors’ customers in violation of the distribution agreements, improperly transhipping products, and unreasonably withholding consent to the sale of a franchise by a distributor.

Pursuant to orders of reference made in open court on February 14, 2007 and February 16, 2007, respectively, the Supreme Court directed the referee, in relevant part, “to hear and report in this case on all issues relating to liability that underlie this matter.” The referee presided over a comprehensive hearing that continued intermittently for approximately 17 months and included approximately 40 days of testimony. In a 57-page [950]*950report, dated June 17, 2009, the referee meticulously set forth his proposed findings of fact and conclusions of law. In essence, the referee recommended that the reviewing court should hold both of the defendants jointly and severally liable to both groups of plaintiffs on the theory of breach of contract or the theories of promissory estoppel and unjust enrichment. The report further recommended that the limited liability company and corporate veils, respectively, be pierced upon the ground, inter alia, that F & V and Hornell were alter egos of Vultaggio and, accordingly, of one another. The Supreme Court granted the plaintiffs’ motion to confirm the referee’s report. Upon reargument, the Supreme Court adhered to its original determination. The defendants appeal.

Contrary to the defendants’ contention, the Supreme Court did not err, upon reargument, in adhering to its original determination confirming the referee’s report. As a general rule, courts will not disturb the findings of a referee as long as they are substantially supported by the record and the referee has clearly defined the issues and resolved matters of credibility (see Stone v Stone, 229 AD2d 388 [1996]; Kaplan v Einy, 209 AD2d 248, 251 [1994]). A referee’s credibility determinations are entitled to great weight because, as the trier of fact, he or she has the opportunity to see and hear the witnesses and to observe their demeanor (see Galasso, Langione & Botter, LLP v Galasso, 89 AD3d 897, 898 [2011]).

Here, the referee concluded that the plaintiffs presented 27 “highly credible fact witnesses,” plus three expert witnesses who were familiar with the customs and practices in the soft drink industry. In contrast, the defendants presented only two witnesses, who had little or no experience in the soft drink industry.

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Cite This Page — Counsel Stack

Bluebook (online)
98 A.D.3d 947, 951 N.Y.S.2d 77, Counsel Stack Legal Research, https://law.counselstack.com/opinion/last-time-beverage-corp-v-f-v-distribution-co-nyappdiv-2012.