Michael Reedy v. Armstrong-McCall, Inc. , 130 F. App'x 422 ( 2005 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
-------------------------------------------U.S. COURT OF APPEALS
No. 04-15114 ELEVENTH CIRCUIT
MAY 5, 2005
Non-Argument Calendar
-------------------------------------------- THOMAS K. KAHN
CLERK
D. C. Docket No. 03-00739-CV-1-BH-C
MICHAEL REEDY,
CYNTHIA REEDY,
Plaintiffs-Appellants,
versus
ARMSTRONG-MCCALL, INC.,
Defendant-Appellee.
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Appeal from the United States District Court
for the Southern District of Alabama
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(May 5, 2005)
Before EDMONDSON, Chief Judge, CARNES and MARCUS, Circuit
Judges.
PER CURIAM:
Michael and Cynthia Reedy appeal the district court’s order granting
summary judgment in favor of Armstrong-McCall, Inc. (“AM”), in this diversity
jurisdiction case alleging fraud and tortious interference with contractual relations.
No reversible error has been shown; we affirm.
This case arises out of the Reedys’ sale of their AM distributorship rights to
Andrew and Elizabeth Gorman. In 1986 the Reedys entered into a distribution
agreement with AM’s predecessor, AMCO Warehouse, Inc. (“AMCO”), to buy
cosmetic products from AMCO and to distribute these products in the southwest
Alabama region. The distribution agreement provided that the Reedys’ rights
under the agreement were not assignable unless the assignment was approved by
AMCO.
In spring 2000, Plaintiffs decided to sell their business -- and give up their
rights under the distribution agreement -- to the Gormans. In March 2000, the
Gormans submitted their franchise application to AM, which AM approved.
During this time, Plaintiffs had negotiated and drafted, but had not yet executed, a
sales contract to sell their business to the Gormans.
2
On 26 May 2000, AM and the Gormans entered into a distribution
agreement: the Gormans were to become the AM distributor for the Alabama
territory previously served by the Reedys. The Reedys were not a party to this
agreement, which provided that the Gormans could not assign their rights under
the agreement without the approval of AM.
The same day, the Reedys executed a release of any and all claims against
AM, in consideration of AM’s approval of the assignment of the Reedys’ interest
in the distribution agreement.1 AM’s approval of the assignment of distribution
rights was contingent on the Reedys executing the release. The Reedys admitted
that they executed the release with full knowledge of its contents and after
consulting their lawyer.
1
The release provided:
We, MIKE AND CINDY REEDY, in consideration of [AM]’s . . . approval of the
assignment of all or a portion of [the Reedys’] interest in [the distribution
agreement], . . . do hereby release and forever discharge [AM] and all of its
subsidiaries and affiliates and all of their employees, successors, and assigns, from
any and all claims, demands, damages, actions, causes of action, expenses, or other
matters, suits or attorney’s fees or court costs incurred or which might be incurred,
known or unknown, arising at law or in equity, based on statutory or common law
(including [AM]’s negligence) or contractual provisions, arising from or related to
any transactions between [the Reedys] and [AM], and arising at any time up to and
including the date hereof. This is intended to be, and shall be construed as a general
release by [the Reedys] of all possible persons who are, were or have been
employees, directors, officers, or independent contractors of [AM] or its affiliates or
subsidiaries.
3
On 31 May 2000, the Reedys and the Gormans executed a sales contract
where the Reedys agreed to “sell” their sales territory to the Gormans for
$225,000, payable over 10 years. The sales contract contained a provision that, if
the Gormans defaulted on their payments to the Reedys, the Reedys had the right
to assume control of the sales area. If the Gormans did not cure the default within
ten days of being notified by the Reedys, the Reedys would have “the discretion
[to] activate their right of reentry . . . and take over the business, including . . . all
the right title and interest therein as described in” the sales contract.
AM was not a party to the sales contract between the Reedys and the
Gormans. The contract was not supplied to AM for review or approval; AM was
not consulted about the contents of the contract. And AM did not make a
representation to the Reedys about permitting them to reenter the distribution area
and reinstate their distribution rights as set forth in the sales contract. Instead, Mr.
Reedy testified that, based on conversations he had over many years with members
of AM management, he acted on what he believed to be AM’s long-standing
policy of allowing former distributors to “re-enter” a franchise when the purchaser
defaulted.
The Gormans were not successful distributors of AM products; and, in April
2003, AM terminated their franchise and distribution rights. At some point, the
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Gormans defaulted on their contractual obligations to the Reedys and filed for
bankruptcy. The Reedys attempted to exercise their right to reenter the
distribution agreement. But AM refused to allow the Reedys to reinstate
themselves as AM’s distributors in southwest Alabama.
The Reedys filed the instant suit, alleging that AM committed fraud (1) by
representing that it had approved the sale of the distributorship to the Gormans,
including the sales contract containing the reentry provision, when AM in fact did
not approve of the terms of the sales contract, and (2) by concealing that it would
refuse to honor the terms of the sales contract. The Reedys further alleged that
AM intentionally interfered with the Reedy-Gorman contractual relationship. The
district court granted AM’s motion for summary judgment, determining that the
Reedys had released AM from the claims asserted in this suit; alternatively, the
district court rejected the substance of the Reedys’ fraud and tortious interference
claims.
We review the district court’s rulings on a motion for summary judgment de
novo; we view all evidence and factual inferences therefrom in the light most
favorable to the non-moving party. Miller v. King, 384 F.3d 1248, 1258-59 (11th
Cir. 2004). Summary judgment is appropriate “if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if
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any, show that there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c).
The Reedys argue that the release was unenforceable because of a lack of
consideration. They assert that the consideration for their release of claims against
AM was AM’s approval of and permission to sell their interest to the Gormans;
they claim that AM did not later “follow through” on its approval of the sale when
it refused to allow the Reedys the right to reenter as distributors. We disagree.
Alabama law provides that “[a]ll . . . releases . . . in writing . . . , must have
effect according to their terms and the intentions of the parties thereto.” Ala. Code
§ 12-21-109. “[A]bsent fraud, a release, supported by valuable consideration and
unambiguous in meaning, will be given effect according to the intention of the
parties from what appears in the four corners of the document itself; and parol
evidence is not admissible to impeach or vary its terms.” Wayne J. Griffin Elec.,
Inc. v. Dunn Constr. Co., 622 So. 2d 314, 317 (Ala. 1993).
The record, taken in the light most favorable to the Reedys, shows that they
executed the release with full knowledge of its contents and after consulting their
lawyer. And the terms of the release are unambiguous: the Reedys agreed to
release forever AM from all claims, known or unknown, related to any
transactions between the Reedys and AM, arising up to the date of the execution
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of the release. The scope of the release includes the Reedys’ claims in this suit.
As the district court wrote, “the release clearly expresses the parties’ intent to end
the distributorship and to release all claims arising out of that relationship, and
that contract must be given effect as a matter of law.”
We reject the Reedys’ argument about a lack of consideration. The release
states that the consideration, in exchange for the Reedys’ release of claims, was
“[AM]’s . . . approval of the assignment of all or a portion of [the Reedys’] interest
in [the distribution agreement].” Contrary to the Reedys’ argument, AM provided
the stated consideration: it approved the transfer of the Reedys’ interest under the
distribution agreement, which allowed the Reedys to sell their distributorship to
the Gormans.
The Reedys contend that the consideration consisted of AM’s approval of
the “sale or assignment from the Reedys to the Gormans.” And this, the Reedys
suggest, included AM’s implicit approval of the Reedy-Gorman sales contract
containing the reentry provision. But the release is unambiguous: it says nothing
of the sales contract and does not in any place mention the sale. And the release
does not reference a retained right of reentry exercisable in the sole discretion of
the Reedys. See Nix v. Henry C. Beck Co., 572 So. 2d 1214, 1216 (Ala. 1990)
(stating that a court must give the words of the release their ordinary meaning).
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To the contrary, the release evidences an intent to end completely the distributor
relationship between the Reedys and AM. To read the release language in the
manner suggested by the Reedys would have the effect of binding AM to a
contract that it was not a party to and had not reviewed, and the terms of which
were contrary to the distribution agreements, which required AM’s approval of the
assignment of distribution rights.
In sum, the Reedys executed a valid, unambiguous release of the claims
asserted in this lawsuit. The district court did not err in granting summary
judgment in favor of AM on this basis.2
AFFIRMED.
2
Because we agree that the release bars the Reedys’ underlying fraud and tortious interference
claims, we do not address the merits of those claims.
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