Virginia Lawyers Weekly VA Lawyers Weekly
Where a food manufacturer prevailed on its breach of contract counterclaim because its contract with a food buyer was unambiguous, the decision was affirmed. The decision found that even if the contract was ambiguous, it led to the same result, and the food buyer did not challenge the alternative ruling on appeal.
Background
Gregory Packaging Inc. manufactures juice cups. Foodbuy LLC is a group purchasing organization which pools institutional purchasers so that their aggregated buying power can be used as leverage to negotiate favorable pricing with manufacturers. From 2011 through 2015, GPI and Foodbuy were engaged in a nonexclusive commercial relationship, which was memorialized in a supplier agreement
Under its terms, GPI agreed to pay Foodbuy a volume allowance based on the quantity of its products purchased “through the Foodbuy program at the Foodbuy price” by committed customers through Foodbuy distributors. GPI also contracted to pay Foodbuy various “growth incentives” based on incremental increases in GPI’s products purchased by committed customers through Foodbuy distributors.
In early 2015, GPI discovered that throughout the duration of the agreement, Foodbuy had been charging it a volume allowance for every case of juice its committed customers purchased, not just for those cases bought through the Foodbuy program. GPI refused to make allowance payments for July and August 2015 (after the amendment’s expiration date). Foodbuy filed a complaint against GPI alleging, among other claims, breach of contract for overcharging its committed customers. GPI counterclaimed, asserting, in relevant part, breach of contract for overinvoicing and violations of North Carolina’s Unfair and Deceptive Trade Practices Act, or UDTPA.
The district court dismissed Foodbuy’s claim for lack of standing. After the bench trial, for GPI’s breach of contract claim, the court initially determined that the agreement was unambiguous and, under its plain language, required GPI to pay a volume allowance only for purchases made through Foodbuy’s program. Alternatively, the court found that even if the agreement was ambiguous, rules of contractual interpretation led to the same result.
Turning to the UDTPA claim, the court determined that the economic loss rule, or ELR, barred the claim. The court also found that GPI failed to provide any competent evidence at trial of any aggravating circumstances. As a result, the court dismissed the claim.
Standing
Foodbuy presents two theories for why it has standing. First it argues that a party that has privity to a contract has standing to make a claim for breach of that contract. Second, Foodbuy maintains that GPI’s conduct deprived it of the benefit of the bargain.
Foodbuy’s first argument fails because “simply being a party to the contract does not alone establish Article III standing.” As to Foodbuy’s second argument, Foodbuy never alleged that any actual or potential payment from committed customers to Foodbuy was reduced or eliminated because of GPI’s alleged overcharging.
Damages
The district court denied Foodbuy’s motion in limine to exclude GPI’s damages calculation. Foodbuy argues here, as it did below, that GPI failed to timely disclose its damages computation or damages witness, despite repeated requests for it to do so. Even if the court agreed with Foodbuy’s argument, the district court nevertheless responded appropriately and cured any surprise by allowing the weeklong recess.
Defense
The district court denied Foodbuy’s request for leave to amend its answer to add a statute of limitations defense. The record indicates that Foodbuy was undoubtedly aware of the agreement’s effective dates at the time if filed its answer. As such, the district court was well within its discretion in denying Foodbuy’s motion.
Merits
On appeal, Foodbuy assumes the language of the agreement is plain, unambiguous and should be interpreted in its favor. The court, however, finds the agreement to be ambiguous. Therefore, the proper framework for resolving the breach of contract claim involves the tools for interpreting ambiguous contracts.
The district court undertook that analysis in its alternative holding. Foodbuy failed to present any argument in its opening brief taking issue with this facet of the district court’s holding. As a result, it has waived any challenge to the district court’s judgment on that ground.
UDTPA
GPI contends the court wrongly concluded that the ELR precluded its UDTPA claim by conflating it with GPI’s tortious interference claims. GPI further argues the district court incorrectly concluded that it failed to prove sufficient aggravating circumstances to sustain a UDTPA claim. The court agrees with GPI on both points.
Affirmed in part, vacated in part and remanded.
Foodbuy LLC v. Gregory Packaging Inc., Appeal Nos. 19-1613, 19-1692, Feb. 1, 2021. 4th Cir. (Agee), from WDNC at Charlotte (Whitney). William Clifford Wood Jr. for Foodbuy LLC. Thomas Russell Ferguson for Gregory Packaging Inc. VLW 021-2-045. 32 pp.
