Related Attorneys
In this contract dispute, Horvitz & Levy obtained a reversal of a judgment and fee award in excess of $6 million.
Horvitz & Levy client FIJI Water Company entered into a contract with distributor Carolina Beverage Corporation granting Carolina the right to distribute FIJI water bottles to retailers within its territory (North Carolina, South Carolina and Georgia). The agreement also (1) granted FIJI the right to invade Carolina Beverage’s territory by selling and delivering its product directly to retailers in that territory as long as it paid the “invasion fee,” and (2) granted the FIJI the right to terminate the contract “for any reason in its sole discretion” upon giving written notice as long as it paid a higher “termination payment.” With just three months remaining on the contract, FIJI ended up invading around 85 percent of the territory but never invoked its right to terminate under the contract. Carolina Beverage sued and went to trial on two contract-related claims on the theory that the FIJI had constructively terminated the contract and sought only termination fees as damages. Carolina expressly waived the right to seek invasion fees or lost profits as damages. The jury returned a verdict for Carolina Beverage on its claims for breach of contract and breach of the implied covenant, and awarded as damages the termination payment of $1.9 million. The trial court later awarded Carolina over $4.3 million in attorney fees. FIJI appealed.
Horvitz & Levy briefed and argued the appeal on FIJI’s behalf. The Court of Appeal held that “constructive termination” of a distribution contract is not a viable theory of recovery under California common law and that the contract here was not constructively terminated because the FIJI continued to operate under the contract, and thus did not satisfy one of the prerequisites of constructive termination in other contexts (employment law and landlord/tenant law). In a partially published opinion, the Court concluded that the trial court erred in allowing the constructive termination theory to go to the jury and therefore reversed the judgment, vacated the trial court’s award of attorney fees, and remanded the case for the trial court to enter judgment in FIJI’s favor and for further proceedings regarding FIJI’s right to recover contractual attorney fees.
