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EFCO IMPORTERS v. AB RAMLOSA HALSOBRUNN

October 22, 1980

EFCO IMPORTERS
v.
Ab Ramlosa HALSOBRUNN



The opinion of the court was delivered by: LORD, III

I. INTRODUCTION

This is a contract action to recover damages for alleged violations of a distribution agreement. Pursuant to Fed.R.Civ.P. 12(b)(6), defendant has moved to dismiss the complaint for failure to state a claim upon which relief can be granted. For the reasons which follow, defendant's motion is granted.

 II. FACTS

 On April 10, 1970, defendant named plaintiff as his exclusive sales agent for the United States to sell and distribute Ramlosa Mineral Water. Complaint, P 7. This agreement was to run for five years. Id. at P 8. The contract had an automatic renewal clause; unless notice of intent not to renew was given one year or more before the end of the five year period the contract was automatically renewed for another five year period. On March 18, 1974, defendant wrote plaintiff and stated that it intended to cancel the agreement on the date of the expiration, April 10, 1975. Id. at P 9. This letter, of course, was written more than one year before the date of expiration.

 During the final year of the contract, the parties negotiated regarding a new agreement. In September 1974, defendant delivered a draft of a new agreement to plaintiff. Id. at P 10. The draft proposed that plaintiff would be exclusive sales agent for the sale and distribution of Ramlosa Mineral Water solely in Pennsylvania. However, this was not agreeable to plaintiff because it desired to be the exclusive sales agent for the entire United States, and not just Pennsylvania. During the ensuing months the parties continued to discuss a new agreement, exchanging proposals and counterproposals. Id. at PP 11-14. Apparently negotiations came to a halt in May, 1975, for it was at that time that plaintiff expressly rejected defendant's proposed agreement. Id. at P 15.

 In February, 1978, defendant once again offered plaintiff the exclusive sales agency for Ramlosa Mineral Water in Pennsylvania. Id. at P 16. This precipitated an exchange of letters, id. at PP 17-22, none of which, however, directly dealt with the new proposal. Thus in March, 1978, plaintiff reminded defendant that both parties had been operating since 1975 under the terms of the original 1970 agreement. Id. at P 17. Defendant responded apparently by offering yet another draft proposal. In June and October of 1978, defendant informed plaintiff that it had been directly shipping its product to other distributors throughout the United States. Id. at P 19.

 Such information should not have caught plaintiff off guard, for it is consistent with the September, 1974 draft agreement in which defendant informed plaintiff that after expiration of the initial five year period he could be the exclusive sales agent for Pennsylvania only. Indeed all proposals offered an exclusive agency for Pennsylvania alone. Id. at PP 13-16. Finally, in December, 1978, defendant informed plaintiff that the Pennsylvania market could no longer be reserved for it in light of the fact that plaintiff had never accepted the exclusive sales agency for Pennsylvania which defendant had continually offered. Id. at P 21. Negotiations remained alive, however, for defendant did propose a special two year commission policy. Id. Plaintiff did not respond. Finally, in April, 1979, defendant wrote plaintiff informing it that an agreement had been reached with the Joseph Schlitz Brewing Company for the exclusive distribution of Ramlosa Mineral Water throughout the United States. Defendant told plaintiff that it could buy Ramlosa Mineral Water from Schlitz. Id. at P 22.

 Plaintiff asserts three counts in its complaint. First, it alleges a breach of contract. It argues that the agreement of April 10, 1970 continued to govern the rights and obligations of the parties; therefore defendant's sale of products to other distributors, in June and September, 1978, constituted a breach of this agreement. Second, under equitable principles, plaintiff alleges that even if the contract did terminate in 1975, it is entitled to restitution and reimbursement for expenses incurred in connection with its distribution of defendant's product. Third, plaintiff alleges tortious interference with contractual relations.

 III. DISCUSSION

 A. Breach of Contract Count

 Plaintiff's breach of contract count assumes that defendant did not effectively terminate the original April 10, 1970 agreement. Rather, plaintiff argues, this original agreement "continues to govern the rights and obligations of the parties," id. at P 26, despite defendant's clear written notice of his intention to terminate.

 The Maloney case is controlling. Indeed the facts in the present case are less favorable to a finding of "ambiguous" conduct.

 Maloney was an action in assumpsit by a former employee against his employer to recover commissions allegedly due under an employment contract. The contract was to run for five years, but it would be automatically renewed for one year periods until either party gave ninety days written notice of intention to terminate. Four months before the ...


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