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KRAFT FOODS, INC. v. ALL THESE BRAND NAMES

July 29, 2002

KRAFT FOODS, INC., PLAINTIFF,
V.
ALL THESE BRAND NAMES, INC., DEFENDANT.



The opinion of the court was delivered by: William C. Conner, Senior District Judge.

OPINION AND ORDER

Plaintiff Kraft Foods, Inc. ("Kraft") brings the instant action against defendant All These Brand Names, Inc. ("ATBN") for breach of contract. Plaintiff seeks damages in the amount of $585,500 allegedly owed by defendant for the purchase of products from Kraft's Cheese Division. Defendant now moves for summary judgment pursuant to FED. R. Civ. P. 56, arguing that plaintiff executed a general release discharging all claims against defendant, including those asserted in this action. For the reasons that follow, defendant's motion is granted in part and denied in part.

BACKGROUND

The following facts are undisputed unless otherwise indicated. Kraft is a multinational corporation that manufactures and sells food products in several countries. (Pl. Mem. Opp. Summ. J. at 1.) Kraft is organized into a number of different divisions, each of which is responsible for a different market sector. (Def. Rule 56.1 Stmt. ¶ 2.) The divisions all operate under the Kraft name and do not function independently, nor do they act as separate businesses. (Id. ¶ 5.) ATBN is in the business of mail-order sample sales. (Id. ¶ 1.) Plaintiff and defendant conducted business for nearly a decade, during which time defendant purchased numerous Kraft products manufactured by several different Kraft divisions at deeply discounted prices. (Id. ¶¶ 10-11.) Of particular relevance here, ATBN conducted business with both the Beverage Division and the Cheese Division of Kraft.

In or about 1999, the relationship between the two companies began to sour. Kraft alleges that ATBN diverted some of the Kraft products into retail channels in violation of an agreement between the parties. (Pl. Rule 56.1 Stmt. ¶ 19.) After evaluating whether or not they desired to continue doing business with ATBN, and faced with internal pressure to achieve corporate financial goals, Kraft sought to collect on the outstanding debt owed by ATBN. (Def. Rule 56.1 Stmt. ¶ 19.) In return, and fearing that Kraft might bring suit on the diverting claim, ATBN insisted that Kraft release ATBN from all debts, obligations and claims between the parties. On February 18, 2000, the parties executed a document entitled "Notice of Cancellation & Mutual Release" (the "Release"). The relevant provision of the Release provides:

By Agreement between Kraft General Foods and . . . All These Brand Names, Inc. . . . this instrument shall constitute both notice of termination effective on the date hereof with respect to all agreements between the parties, and a mutual release as set forth below.
In consideration of the sum of $409,310.80 . . . to Kraft General Foods in hand paid by ATBN . . . [e]ach party does hereby remise release and forever discharge the other party and its past or present directors, officers, employees, servants, and agents of and from all debts, obligations, reckoning, promises, covenants, agreements, contracts, endorsements, bonds, specialties, controversies, disputes, suits, actions, causes of action, trespasses, variances, judgments, extents, executions, damages, claims or demands in law or in equity, which each party ever had, nor has or hereafter can, shall or may have against the other party, relating to or in any way connected with agreements between the parties which are canceled by this instrument.

(Def. Rule 56.1 Stmt., Ex. I.) The Release was signed by Howard Martin in his capacity as President of ATBN and by Martin Gorman in his capacity as Director of Legal Services for Kraft. (Id.) There is no dispute that Gorman had authority to bind Kraft to the terms of the Release. (Id. ¶ 31.) Kraft determined the amount of the consideration for the Release and was paid by ATBN on February 17, 2000. (Id. ¶ 30). The memo field of the check made payable to Kraft from ATBN states: "Payment In Full In Full — 589658/589693/589766/594026." (Pl. Rule 56.1 Stmt., Ex. 4.) Each number references a particular invoice; the four invoices reflect a total debt owed Kraft in the amount of $409,310.80. (Id.) Three invoices are for the sale of beverages and one is for the sale of Bacon Bits. (Id.)

Prior to executing the Release, Gorman, as Director of Legal Services for the Beverage Division, initially tried to limit the Release to the Beverage Division only. Gorman testified that when he first received the proposed release he "felt it was glaringly unacceptable . . . because it was listing as the party Kraft General Foods [a]nd [his] first reaction was to mark it up and make it a release for the beverage division of Kraft Foods." (Gorman Dep. at 45.) Gorman could not recollect what he did with the edited draft containing the limiting language, but he does not dispute that he never discussed limiting the scope of the Release with ATBN and that some time thereafter he abandoned his attempt to limit the Release. (Id. at 61.) However, because Gorman understood that the language of the Release could be construed as a general release, he conducted company-wide due diligence to determine any amounts owed by ATBN to any Kraft division. (Id. at 51; Def. Rule 56.1 Stmt. ¶ 36.) Specifically, Gorman sent email to six Kraft attorneys in the other Kraft divisions stating that ATBN "owe[s] Kraft $400,000 for recent Crystal Light and Bacon Bits purchases and [has] refused to pay us unless Kraft signs a general release protecting them from any breach of our agreements. . . . Obviously we can't sign for all of Kraft but I am interested to know if any other division is doing business with them beside Oscar Mayer and [the Beverage Division]." (Def. Rule 56.1 Stmt., Ex. K.) When questioned why he inquired about any debts owed to other Kraft divisions, Gorman testified that he "was concerned whether . . . there were other businesses that I would be signing away or precluding Kraft from any rights it had vis-a-vis [ATBN]." (Gorman Dep. at 50.)

Gorman received responses from all six Kraft attorneys. The division of Kraft that markets and sells Bacon Bits responded that ATBN owed money on an invoice for the purchase of Bacon Bits. (Id. at 83.) The other Kraft attorneys, including the Director of Legal Services for the Cheese Division, did not indicate that any money was due to Kraft from ATBN. (Def. Rule 56.1 Stmt. ¶ 40.)

After the Release was executed, the Cheese Division uncovered an invoice dated November 11, 1999 in the amount of $585,500 that has not been paid by ATBN. (Pl. Rule 56.1 Stmt. ¶ 1.) This action followed. In the face of ATBN's defense that the Release discharged the debt, plaintiff argues that the Release was never intended as a general release, but was limited to the Beverage Division. In the alternative, plaintiff argues that the release is invalid on the basis of the unilateral mistake doctrine.

DISCUSSION

I. Summary Judgment Standard

Defendant moves for summary judgment pursuant to FED. R. Civ. P. 56. Summary judgment may be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if 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 burden rests on the moving party to demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Ticali v. Roman Catholic Diocese of Brooklyn, 41 F. Supp.2d 249, 254 (E.D.N.Y. 1999). A genuine factual issue exists if there is sufficient evidence favoring the nonmovant for a reasonable jury to return a verdict in his favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Ticali, 41 F. Supp.2d at 254. In deciding whether summary judgment is appropriate, the court resolves all ambiguities and draws all permissible factual inferences against the movant. See Anderson, 477 U.S. ...


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