Stroh Brewery Co v. Western Maryland

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
THE STROH BREWERY COMPANY,
Plaintiff-Appellee,
v.
WESTERN MARYLAND DISTRIBUTING
COMPANY, INCORPORATED,
Defendant-Appellant,
and No. 96-2705
ALLEGANY BEER DISTRIBUTORS,
INCORPORATED,
Defendant,
v.
FREDERICK P. WINNER, LIMITED,
Third Party Defendant.
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Benson E. Legg, District Judge.
(CA-95-2211-L)
Argued: October 28, 1997
Decided: December 3, 1997
Before NIEMEYER, WILLIAMS, and MOTZ, Circuit Judges.
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Affirmed by unpublished per curiam opinion.
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COUNSEL
ARGUED: Stephen Carroll Wilkinson, WILKINSON & MILLER,
P.C., Cumberland, Maryland, for Appellant. Thomas Matthew Wil-
son, III, TYDINGS & ROSENBERG, L.L.P., Baltimore, Maryland,
for Appellee. ON BRIEF: Joseph F. Miller, WILKINSON & MIL-
LER, P.C., Cumberland, Maryland, for Appellant. J. Hardin Marion,
Michael H. Tow, TYDINGS & ROSENBERG, L.L.P., Baltimore,
Maryland, for Appellee.
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Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
PER CURIAM:
This case arises out of a diversity declaratory judgment action
brought by The Stroh Brewery Company against Western Maryland
Distributing Company, Inc., and its co-defendant, Allegany Beer Dis-
tributors, Inc. Western Maryland appeals from the district court's
grant of summary judgment in favor of Stroh. We affirm.
Stroh brews beer. In 1993, Stroh and Allegany entered into a fran-
chise agreement whereby Allegany became the exclusive distributor
of Stroh products in Allegany County, Maryland. This agreement
required Allegany to obtain prior written consent from Stroh before
Allegany could effect any significant "control change," including the
transfer of Allegany's rights under the franchise agreement to another
party. The franchise agreement provided that Allegany must notify a
prospective transferee about the agreement and the consent provisions
therein. By its terms, the franchise agreement would automatically
terminate upon the occurrence of a control change to which Stroh had
not given its prior written consent. Although Stroh agreed not to
unreasonably withhold its approval, it reserved the right to disapprove
any control change that it believed, in good faith, was adverse to its
business interests.
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On June 9, 1995, Allegany notified Stroh of its intention to transfer
its assets, including its rights under the franchise agreement, to West-
ern Maryland. On June 16, Stroh responded to Allegany by requesting
information about Western Maryland. For the approval process to
move forward, Allegany would have to provide the requested infor-
mation to Stroh. On June 27, Allegany and Western Maryland signed
an acquisition agreement that called for closing on July 15, but
expressly allowed that date to be pushed back until approval was
obtained from the breweries with which Allegany had franchise
rights. Finally, on July 14, Western Maryland and Allegany went to
closing on the acquisition agreement without Stroh's written consent,
Western Maryland never having read the franchise agreement
between Stroh and Allegany.
Between June 9 and July 14, Western Maryland had several con-
tacts with Stroh employees, including Stroh's local representative, its
credit manager, and a records coordinator at Stroh's headquarters.
None of the Stroh personnel stated that Stroh had decided to approve
Western Maryland. At most they stated that they knew of no prob-
lems, or that they had recommended approval. Relying on its past
experience in the industry, and thinking that these conversations sig-
naled forthcoming approval, Western Maryland closed the deal with
Allegany. Stroh thereafter terminated its review process and treated
the control change as having terminated any rights under the franchise
agreement. Stroh eventually contracted with Frederick P. Winner,
Ltd., a third-party defendant, as its new distributor for Allegany
County.
Stroh filed this action against Allegany and Western Maryland,
seeking a declaration that Allegany's distributorship had terminated
under the terms of the franchise agreement, that Western Maryland
had no rights thereunder, and that Allegany had no rights under the
Maryland Beer Franchise Fair Dealing Act, Md. Ann. Code art. 2B,
§ 17-101 et seq. (1996) (the "Beer Franchise Act"). Allegany asserted
no counterclaims. Western Maryland, however, did counterclaim,
asserting breach of contract, estoppel, fraudulent and negligent mis-
representation, malicious interference with contract, and violation of
the Beer Franchise Act.*
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*Additional claims by Stroh involving Lanham Act violations and
additional counter-claims by Western Maryland involving antitrust viola-
tions were dismissed without prejudice pursuant to a consent order dated
December 4, 1996.
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In a careful, well-reasoned opinion, the district court granted sum-
mary judgment to Stroh on its claims and Western Maryland's coun-
terclaims. Western Maryland appeals only from the district court's
order with regard to its claims of estoppel, fraudulent and negligent
misrepresentation, and violation of the Beer Franchise Act. The dis-
trict court concluded that: (1) the estoppel, fraudulent and negligent
misrepresentation claims failed because no fair-minded jury could
find that Western Maryland reasonably relied on the statements or
conduct of Stroh's employees in closing its deal with Allegany; (2)
the fraudulent misrepresentation claim also failed because no evi-
dence existed that Stroh's statements were false when made or
reflected false intentions; (3) the negligent misrepresentation claim
also failed because no duty of care ran from Stroh to Western Mary-
land; and (4) the Beer Franchising Act claim failed because Western
Maryland lacked standing to pursue it -- an agreement between Stroh
and Western Maryland never existed -- and the Act does not address
the transfer of franchise rights. Having reviewed the record, briefs,
and relevant statutes and case law, and having had the benefit of oral
argument on the matter, we conclude that the district court's rulings
were correct. Accordingly, we affirm on the reasoning of the district
court opinion. See Stroh Brewery Co. v. Allegany Beer Distributors,
Inc., Civil Action No. L-95-2211 (D. Md. Oct. 15, 1996).
AFFIRMED
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