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JOSEPH VICTORI WINES, INC. v. VINA SANTA CAROLINA

July 24, 1996

JOSEPH VICTORI WINES, INC., Plaintiff, against VINA SANTA CAROLINA S.A. and EMPRESAS SANTA CAROLINA S.A., Defendants.


The opinion of the court was delivered by: CONNER

 CONNER, Senior D.J.:

 Plaintiff Joseph Victori Wines, Inc. ("Victori") filed this diversity action on June 9, 1995. Plaintiff asserts claims against defendants Vina Santa Carolina S.A. and Empresas Santa Carolina S.A. (collectively, "Santa Carolina") for breach of contract, breach of the implied covenant of good faith, promissory estoppel and common law fraud. Santa Carolina has moved under Fed. R. Civ. P. 56(c) for summary judgment dismissing the complaint and under Fed. R. Civ. P. 9(b) for an order dismissing plaintiff's common law fraud claim for failure to plead fraud with particularity. Santa Carolina also seeks summary judgment in its favor on its counterclaim for a declaratory judgment that the contract between the parties terminated on May 16, 1996. Plaintiff has cross-moved for summary judgment in its favor on its claim for breach of contract. For the reasons set forth below, Santa Carolina's motions are granted in part and denied in part, and plaintiff's motion is denied.

 BACKGROUND

 The following facts are undisputed, unless otherwise noted. Santa Carolina produces and sells Chilean wines. Victori, a New York corporation, began importing Santa Carolina wines from Chile and distributing them in the United States approximately fifteen years ago. On January 14, 1991, the parties entered into a written agreement. The one-page document provides, in pertinent part, that:

 
1. Santa Carolina names Joseph Victori Wines as exclusive importer and distributor for the United States of all Santa Carolina Wines.
 
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3. Joseph Victori will promote and sell Santa Carolina Wines and will establish and manage this network in accordance with its current practice.
 
4. Santa Carolina and Joseph Victori will share equally in the advertising and promotional campaign as mutually agreed upon from time to time.
 
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6. This agreement will remain in effect until terminated by either party on 12 months written notice. Any disputes arising from the enforcement or interpretation of this agreement, will be governed by the laws of the State of New York in the United States.
 
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 This agreement was signed by John Umbach, Victori's Vice President, and by Diego Errazuriz, who was Santa Carolina's Export Manager at that time. Plaintiff contends that Umbach and Errazuriz agreed orally, prior to signing the agreement, that Santa Carolina would not terminate the parties' exclusive distribution arrangement unless sales in the United States ceased to grow. Santa Carolina disputes the existence of any such understanding.

 In 1993, Errazuriz left Santa Carolina, and Umbach began to work with Pedro Jaramillo, Santa Carolina's General Manager. According to Jaramillo, his responsibilities included reviewing Santa Carolina's relationships with its distributors with an eye toward increasing sales. In the fall of 1994, Jaramillo and Stephanie Billikopf, Santa Carolina's Export Manager for North America, had several meetings with Umbach. They asked Umbach to develop a proposal for a promotion and distribution program that would increase Santa Carolina's United States sales to 200,000 cases annually. On September 28, 1994, Umbach, Jaramillo and Billikopf met at Victori's offices in New York, and Umbach presented two written program proposals. According to plaintiff either of those proposals would have required a significant, multi-year commitment from Victori. Plaintiff contends that Jaramillo represented during the meeting that Santa Carolina would continue its relationship with Victori for the duration of whichever program Santa Carolina chose. Jaramillo asserts that he made no such assurances.

 On October 13, 1994, Billikopf wrote to Umbach that Santa Carolina wanted to proceed with "Program B," which specified sales targets for 1995, 1996 and 1997. Program B also outlined the advertising and promotional budget for 1995. Plaintiff contends that by choosing Program B, Santa Carolina was representing that it would not terminate its relationship with Victori until the end of 1997.

 Meanwhile, on September 29 and September 30, 1994, Santa Carolina met with two other United States distributors to begin exploring the possibility of reaching a distribution agreement with one of those companies. Santa Carolina did not inform Victori of these meetings or of the discussions with those companies that followed.

 In the fall of 1994, Umbach began hearing rumors that Santa Carolina was talking to other distributors. He contends that between October 1994 and January 1995, Jaramillo and Billikopf assured him on several occasions that Santa Carolina was not involved in discussions with other distributors that could affect Victori's exclusive distribution agreement with Santa Carolina. Santa Carolina disputes this assertion.

 In early February 1995, Umbach again heard rumors that Santa Carolina was negotiating with other distributors. On February 6, 1995, Umbach faxed a letter to Jaramillo seeking information about the rumors. On February 7, Umbach received, by fax, a letter from Claire Besanceney, Santa Carolina's Export Manager for Europe. That letter explained that she had spoken with Jaramillo, who was away from the office, and that he had asked her "to answer on his behalf that Santa Carolina will continue its long relationship with Joseph Victori Wines." Besanceney's letter also advised Umbach that Jaramillo was aware that Salvador Correa, another Santa Carolina executive, was travelling in the United States but that Jaramillo had no information about the meetings that Correa was attending. Plaintiff has submitted correspondence that it obtained in discovery that indicates that Correa and Jaramillo planned to attend meetings with another United States distributor on February 6 and 7. Jaramillo acknowledges that Santa Carolina did not inform Victori of these meetings but asserts that he told Besanceney to inform Umbach only that Santa Carolina had made no decision to terminate Victori and that the parties' relations were continuing.

 On February 21, 1995, Umbach sent a letter to Jaramillo stating that although the 1991 contract remained in effect, he would like to sign a new contract. The proposed agreement that he enclosed was quite similar to the 1991 written agreement, except that it provided for an initial five-year term that would be automatically renewed for successive one-year periods unless either party ...


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