The opinion of the court was delivered by: Kram, District Judge.
MEMORANDUM OPINION AND ORDER
Plaintiffs bring this diversity action to recover damages in
excess of $92 million arising out of an alleged contract with
defendants concerning the purchase and sale of certain bottling
companies and bottling licenses. In May 1989, the Court
dismissed the antitrust claims and all claims asserted by Deep
South Pepsi-Cola Bottling Company, for failure to state a claim
upon which relief could be granted in accordance with Rule
12(b)(6) of the Federal Rules of Civil Procedure. Dependants
now move, pursuant to Rule 56(b) of the Federal Rules of Civil
Procedure, for an order granting them summary judgment
dismissing plaintiff's remaining claims.
PepsiCo, Inc. ("PepsiCo") is a manufacturer of soft drink
concentrates. It owns a number of well-known trademarks,
including "Pepsi-Cola," "Pepsi," "Diet Pepsi," "Slice" and
"Mountain Dew." It licenses these trademarks to bottling
companies across the United States to manufacture and
distribute the trademarked soft drinks. Each bottling company
has been granted an exclusive license to sell the trademarked
products within a defined geographical territory.
Among the bottling companies licensed by PepsiCo in early
1985 were the Franklin Bottling Company ("Franklin"),
headquartered in Franklin, Pennsylvania, and Buchanan
Enterprises, Inc., headquartered in Texarkana, Arkansas.
Franklin was owned by members of the Deligiannis family — the
brothers Robert, Constantine and
Michael Deligiannis, and their parents, Aristomenis and Niki
Deligiannis — all of whom, with the exception of Michael, are
plaintiffs in this action.
Buchanan Enterprises was owned by Sam Buchanan. Although it
sold PepsiCo products, its largest sellers were Dr Pepper
products, for which it held a license from PepsiCo's rival, the
Dr Pepper Company. Buchanan Enterprises was licensed for three
adjoining territories — Texarkana, Arkansas ("Texarkana");
Camden, Arkansas ("Camden"); and Mount Pleasant, Texas ("Mount
Pleasant") — only two of which, Texarkana and Camden, were
licensed for Pepsi. In addition, Buchanan Enterprises was
licensed and produced 7-Up, Sunkist and Canada Dry soft drink
The Deligiannises' Southern Acquisitions
In 1983, the Deligiannis group was presented with an
opportunity to acquire an independent Pepsi-Cola bottling
company located in Natchez and McComb, Mississippi
("Natchez/McComb"). The Deligiannis group closed Natchez/McComb
on June 17, 1983, paying $6.25 million.
In late 1984-early 1985, the members of the Deligiannis
family began to consider the possibility of selling Franklin to
PepsiCo, an idea the Deligiannis group had previously
considered in 1981. (Deposition of Robert Deligiannis ["R.
Deligiannis Tr."],*fn2 at 209-11; M. Deligiannis Tr. Vol. III
at 12-14.) At about the same time, the Deligiannis group was
presented the opportunity to acquire a PepsiCo-licensed
bottling company in Jennings and Lake Charles, Louisiana
The Jennings/Lake Charles acquisition ultimately was closed
for approximately $9 million on April 19, 1985 at which time
the Deligiannis group assumed additional debt, bringing its
bank indebtedness (exclusive of installment payment obligations
to the sellers of the acquired companies) to $17.5 million.
While seeking financing to acquire the Jennings/Lake Charles
bottling company, the Deligiannises learned that Buchanan
Enterprises might also be for sale. In January 1985, Sam
Buchanan told PepsiCo's Mr. Mangold that he might be interested
in selling his business, but "[o]nly if there is an
entrepreneur who can accommodate our entire house, meaning all
of our brands." (Buchanan Tr. 10-11.) Mr. Mangold called Robert
Deligiannis and let him know that the Texarkana bottling
company might be for sale. (R. Deligiannis Tr. 543.) Robert
Deligiannis testified that Mr. Mangold told him to call Mr.
After Jim Mangold had talked with Sam Buchanan,
Jim Mangold called me and told me to call Sam to
set up a date because Jim thought it was fruitless
for him to set the date up and then have to call
me back and see if my schedule was right.
(R. Deligiannis Tr. 543.)
Robert Deligiannis subsequently contacted Mr. Buchanan and
arranged to meet with him. The two met in Texarkana on February
12, 1985. At that time Mr. Buchanan offered to sell "the stock
of Buchanan Enterprises" for total consideration of
approximately $20 million. On April 8, 9 and 10, Robert
Deligiannis again travelled to Texarkana, visited retail
outlets in the area and met once more with Mr. Buchanan.
Promptly thereafter he sent a letter, dated April 11, 1985, to
Mr. Buchanan, offering to pay $18 million on certain terms. Mr.
Buchanan responded by letter dated April 23, 1985, containing
a counter-offer of $18,450,000 on different terms. (R.
Deligiannis Ex. 23; R. Deligiannis Tr. 254; Buchanan Tr. 18;
Buchanan Ex. 4.)*fn3 Throughout the negotiations there were
repeated telephone calls between Mr. Deligiannis and Mr.
On June 6, 1985, according to Robert Deligiannis, Mr.
Buchanan called to arrange a further meeting later that month
because Mr. Deligiannis had been putting him off. Deligiannis
also recalled Mr. Buchanan saying, "Bob, if you do not sign the
letter of intent by the end of the month, then I am going to
pull it [Buchanan Enterprises] off the market."
On or about June 18, 1985, Mr. Deligiannis again spoke with
Mr. Buchanan over the telephone. During this conversation they
discussed a further offer by Buchanan. Following this telephone
call, Mr. Buchanan undertook to "write down what my final deal
would be on paper, and send it to him." (Buchanan Tr. 27.)
Buchanan's letter dated June 19, 1985, accompanied by a formal
letter of intent, offered to sell the stock of Buchanan
Enterprises for $18,536,748 on still different terms. (R.
Deligiannis Ex. 24; Buchanan Ex. 2.)*fn4
According to Mr. Deligiannis, Mr. Buchanan called him on June
21, and said that the "sale was off because I was dragging my
feet, I better sign the letter of intent by June 30th." (R.
Deligiannis Tr. 587.) Deligiannis testified that he did not
sign by June 30, however, because Jeff Cone of PepsiCo
cautioned him not to:
[T]here was [a] telephone conversation between us,
between Jeff and myself.
Q: What was nature of the communication?
A: We discussed this letter of intent proposal and
he had suggested to me that there was something
that needed to be added or subtracted, that there
was something that was not right, but I don't
Jeff said, "You cannot sign it because Sam
[Buchanan] has some things mixed up."
(R. Deligiannis Tr. 643-44.)
Mr. Deligiannis testified that at the time of this
conversation, he "understood what Jeff was telling him" (R.
Deligiannis Tr. 656), and that Cone sent him a handwritten note
that set forth "the reason why we should not sign the letter of
intent with Texarkana, for the acquisition of it." (R.
Deligiannis Tr. 33: R. Deligiannis Ex. 27.) As Mr. Deligiannis
understood the note, Mr. Cone was advising him that the assets
to be retained by Mr. Buchanan "should have been deducted" from
the purchase price rather than added to it. (R. Deligiannis Tr.
653.) Mr. Deligiannis agreed that this was sound advice and
testified that he would not sign the letter of intent "if there
was an error in it, I would not sign it the way it was." (R.
Deligiannis Tr. 658-59.)
Mr. Deligiannis never brought the error to Mr. Buchanan's
attention. Mr. Deligiannis testified that Mr. Buchanan called
him again, on July 1, reaching him in Pittsburgh where he was
attending the first of two closing meetings held in connection
with the Deligiannises' sale of the Franklin Bottling Company.
According to Deligiannis:
Sam called me up and . . . said if I didn't sign
the letter of intent, that you could consider that
I have taken Texarkana off the market.
(R. Deligiannis Tr. 675.) Mr. Deligiannis further testified
that in response to his query as to whether or not Buchanan
would place Buchanan Enterprises back on the market, Mr.
Buchanan responded "Yes, call my [sic] the first of September.
. . ." (R. Deligiannis Tr. 684.) According to Mr. Deligiannis,
Mr. Buchanan called him once again after July 1, on either July
10 or 11, to reiterate that because Deligiannis had failed to
sign the letter of intent his company was being taken off the
testified, "I just asked him if he would reconsider and he said
to me that `You have dragged this thing on long enough. You
have not in good faith kept this thing going and at this time
it is off the market,' and that was it." (R. Deligiannis Tr.
689-90.) Mr. Deligiannis again did not advise Buchanan that he
believed there was an error in the purchase price. Robert
Deligiannis' brother Michael testified that at the time of, and
prior to, the Franklin closing on or about July 15, 1985, it
was his understanding that Buchanan had taken Texarkana off the
market. (M. Deligiannis Tr. Vol. II at 209-10.)
Robert and Constantine Deligiannis both testified that,
notwithstanding Mr. Buchanan's pronouncements, they believed
that he would still sell to them at some future date and simply
dismissed the possibility that he might not. (C. Deligiannis
Tr. 330-31; R. Deligiannis Tr. 684-85.)
On March 28, 1985, while the Deligiannis group was in the
process of acquiring the Jennings/Lake Charles bottling
company, a meeting was held in Franklin, Pennsylvania, attended
by the Deligiannis family, their accountant/consultant Henry
Burkhalter, and three PepsiCo employees — James Mangold, Jeff
Cone and Richard Westelman. Among the topics discussed at the
meeting was the means for financing prospective acquisitions —
including the possibility of raising cash by selling Franklin.
(R. Deligiannis Tr. 222-23, 226-31; Burkhalter Tr. 16-17,
At this meeting, PepsiCo is alleged to have entered into a
binding contract with the Deligiannises to consummate one of
two transactions: Either (a) the Deligiannis group would sell
the Franklin Bottling Company to PepsiCo or to one of its
subsidiaries, and PepsiCo would assist the Deligiannis group in
arranging financing to enable them to acquire Buchanan
Enterprises directly from Sam Buchanan or (b) PepsiCo would
only acquire the business comprising the Texarkana territory of
Buchanan Enterprises, and swap it for the Franklin Bottling
Company, at which time the Deligiannis group would acquire the
business comprising Camden and Mount Pleasant directly from
Buchanan. (R. Deligiannis Tr. 4, 6; C. Deligiannis Tr. 39-45;
Burkhalter Tr. at 74-77; see also R. Deligiannis Ex. 26 at 29.)
Robert and Constantine Deligiannis and Mr. Burkhalter all
testified that the contemplated "swap" was a firm deal,
consummated during the discussions which took place at the
March 28, 1985 meeting. The two other plaintiffs, however, had
no such impression of a deal being struck. Niki Deligiannis,
mother of Robert, Constantine and Michael, testified that no
PepsiCo representative made any representation that the
Deligiannis family would get Texarkana. (Deposition of Niki
Deligiannis ["N. Deligiannis Tr."] at 154-55.) And Aristomenis
Deligiannis, the father, did not remember any PepsiCo offer for
Franklin at the March 28 meeting. (Deposition of Aristomenis
Deligiannis ["A. Deligiannis Tr."] at 69-70.) Despite earlier
testimony about how a "firm deal" had been struck, Mr.
Burkhalter later testified that after the March 28 meeting,
"[a] decision was to be made by the Deligiannis[es] whether
they wanted to do it or not" (Burkhalter Tr. 30).
In May 1985, the Deligiannis group entertained a competing
offer for the Franklin Bottling Company made by Santa Fe
Associates. Santa Fe's offer was higher than PepsiCo's offer,
but Robert Deligiannis, seeing a "bidding war" developing (R.
Deligiannis Tr. 382), subsequently went back to PepsiCo's James
Mangold, and PepsiCo responded by raising its offer. (C.
Deligiannis Tr. 286-87; Mangold Tr. 109; M. Deligiannis Tr.
Vol. II at 129.)
Constantine Deligiannis testified that the March 28
"agreement" with PepsiCo precluded dealings with Santa Fe. He
testified that, despite the absence of any agreement with
PepsiCo on financial terms, he could not have accepted the
Santa Fe offer by virtue of a prior "commitment" to PepsiCo.
(C. Deligiannis Tr. 206, 216-17.) His brother, Robert, in
contrast, maintained that he and PepsiCo only had a "proposed
deal" at that time. Robert Deligiannis testified:
Q. Did you understand before you went back to
Mr. Mangold that you and PepsiCo had a deal?
A. We had a proposed deal.
(R. Deligiannis Tr. 322-23.) Plaintiff Aristomenis felt free to
accept the Santa Fe offer despite the "promises" that had gone
Q. Did you regard yourself as free to accept the
Santa Fe offer if PepsiCo had not met it or
Q. Were there any promises between you and
PepsiCo before the Santa Fe offer regarding
Franklin and Texarkana?
(A. Deligiannis Tr. 64-65.) Plaintiff Niki testified:
Q. At the time of this meeting with your family,
in connection with the Santa Fe offer, did you
have a point of view, whether you expressed it or
not, that you could not accept the Santa Fe offer
because you had a binding contract which you had
made previously with PepsiCo concerning Franklin
A. It wasn't really a binding contract we had
with them to ...