Case Title: EAGLE PRODUCTS, INC. v. Glasscock

Citation: 882 So. 2d 280

Docket Number: 1020206

State: alabama

Court: Alabama Supreme Court

Date: 2003-10-03T00:00:00Z

Document:
882 So. 2d 280 (2003)
EAGLE PRODUCTS, INC.
v.
John GLASSCOCK.
1020206.

Supreme Court of Alabama.
October 3, 2003.
Rehearing Denied November 7, 2003.
*281 J. Michael Tanner of Ashe, Tanner & Wright, P.C., Tuscumbia, for appellant.
Gilbert P. Self of Self, Smith, Burdine & Burdine, Florence, for appellee.
HARWOOD, Justice.
John Glasscock sued Eagle Products, Inc. (hereinafter "Eagle"), alleging claims of breach of contract, misrepresentation of facts, and deceit.[1] Eagle filed a motion for a summary judgment, with supporting documents; after a hearing, the trial court denied the motion. The case proceeded to trial on June 17, 2002. At the close of Glasscock's case, Eagle moved for a judgment as a matter of law ("JML"). The trial court granted Eagle's motion for a JML "as it relate[d] to fraud and den[ied] as it relate[d] to the contract." Eagle rested its case without calling any witnesses and then renewed its motion for a JML on the breach-of-contract claim; the trial court denied the motion. The jury returned a verdict in favor of Glasscock and awarded him $500,000 in damages. Eagle filed a postverdict motion for a JML, or, in the alternative, a new trial, which it subsequently amended to request, in the alternative, a remittitur. The trial court denied Eagle's posttrial motion, and Eagle appeals, presenting three issues:
The standard of review of a ruling on a motion for a JML is well settled:
Bell v. T.R. Miller Mill Co., 768 So. 2d 953, 956 (Ala.2000) (footnote omitted). "[S]ubstantial evidence is evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So. 2d 870, 871 (Ala.1989).
The record shows that in January 1989 Glasscock contacted Joe Cocquyt, the general manager for Eagle, to discuss becoming a distributor of Eagle products. Eagle manufactures premium dog food and pet supplies. A few months later, Bill Lehr, a territory manager for Eagle, spoke with Glasscock and arranged an interview. After the personal interview, Lehr notified Glasscock by letter that he had been awarded the distributorship. The letter, dated June 14, 1989, stated, in relevant part:
After more negotiations, Glasscock sent Cocquyt a letter, dated July 12, 1989, which stated, in part:
Cocquyt mailed Glasscock a letter, dated July 26, 1989, finalizing the details of the distributorship agreement; that letter stated, in relevant part:
In January 1992, Glasscock moved his pet-supplies business into a larger warehouse, and, in order to help with overhead, he expanded his distributorship business to include a retail store, in which, in addition to Eagle products he sold products of Eagle's competitors. Glasscock testified that "at first when [he] opened the retail store it was predominately Eagle and over time [he] picked up some other lines.... In 1998, [he] had a larger mix."
In 1996, Glasscock received a letter from Lehr,[5] addressed to "All Eagle Customers," which explained that based upon Eagle's new distributor criteria, "all customers [would] be classified as a Distributor or Direct Buy account." The letter also stated that Glasscock's territorial sales manager would review the criteria and provide him "with an application for either Distributorship or Direct Buy." Attached to this letter was a list of 18 criteria, which stated, "[i]f you do not meet these criteria, you *284 will be classified as a Direct Buy Account." Glasscock testified at trial that after he received that letter, Lehr and Ronald Rankin, an Eagle sales representative, met with him at his office:
Glasscock testified that he did not meet several of the required criteria for distributors, including the minimum-purchase requirement; the requirement to "dedicate a key person to be responsible for sales"; the requirement that he be engaged in the "full-time business of distributing pet supplies"; the requirement that he "exclusively participate in the wholesale pet supply distribution business"; the requirement that he "have no direct involvement in the retail business"; and the requirement that "accounts must be maintained on current status."
Judi Hurst, vice president of administration for Eagle, explained at trial what type of account Eagle considered to be a direct-buy account:
*285 Hurst mailed Glasscock a letter, dated July 11, 1996, which stated:
(Emphasis supplied.)
Glasscock stated at trial that he understood that as a direct-buy account he could continue to purchase product from Eagle at the same price he paid when he was classified as a distributor. Hurst explained the benefits that were available to direct-buy accounts:
In regard to Hurst's July 11 letter, Glasscock testified at trial:
Glasscock testified further at trial:
Glasscock's attorney at the time, Rebecca A. Narmore, sent Eagle a letter, dated August 23, 1996, which stated, in pertinent part:
In reply, Jeffrey A. Johnson, Eagle's attorney, sent Narmore a letter, dated September 13, 1996; that letter stated, in relevant part:
Glasscock testified that at the time Narmore received Johnson's letter, he had new Eagle product in stock and had received an invoice, dated August 6, 1996, from Eagle. Glasscock also testified that Eagle never bought this product back and that he never asked them to buy it back or contacted them after receiving this letter. He stated:
Hurst testified that Eagle never contacted Glasscock about buying back the product for which Glasscock received an invoice in August.
In November 1996, Glasscock received a letter from Hurst and James Cocquyt, Sr., president and chief executive officer of Eagle, which stated:
Thereafter, Glasscock continued to receive letters from Eagle in regard to various Eagle programs and special offers. Hurst testified that Eagle maintained a customer list, and that all Eagle customers, regardless of whether they were classified as a distributor or a direct-buy account, received these letters. Glasscock stated at trial that he last made a purchase directly from Eagle in 1998. He testified specifically:
Glasscock testified that he did not have any knowledge of anyone distributing Eagle products in Alabama between July 1989 and July 1996, when he received Hurst's letter. Glasscock testified that in 1999, he learned that Mark Naro was a distributor for Eagle in Alabama. He stated:
Glasscock stated that "[he] would go to [his] accounts and hear someone has stopped by talking to them about Eagle, and that is basically how [he] found out" that Naro had been hired as a distributor for Eagle in Alabama. Specifically, Glasscock testified:
In June 1999, Glasscock received an e-mail from one of his customers; the e-mail stated that the customer had been contacted *289 by another Eagle sales representative, Naro, and that she was upset because based on Naro's cost structure it appeared that Glasscock had been overcharging her. Glasscock testified that he lost many of his accounts because Naro was underpricing him. Glasscock stated that from 1989 to 1998 he purchased approximately $424,000 of product directly from Eagle. Hurst testified that during that same period Glasscock had purchased approximately $393,929 of product from Eagle: $53,059 in 1990; $62,335 in 1991; $76,734 in 1992; $64,859 in 1993; $54,051 in 1994; $14,086 in 1995; $14,572 in 1996; $32,177 in 1997; and $22,056 in 1998. She stated that Eagle "would expect more" volume of product purchases by its distributors than the amount purchased by Glasscock either before or after the 1996 reorganization. She testified that Eagle expects their "distributors today and then" to buy approximately $150,000 to $200,000 of product a year. Hurst testified that Eagle no longer gave exclusive territories to distributors and that she knew of no one who still had an exclusive territory with Eagle.
Glasscock testified that he planned on continuing to work until he reached age 65. He testified specifically:
Naro testified by deposition that he was the Alabama distributor for Eagle from May 1999 until "between March and April of 2000," and that he was not aware of Glasscock at the time he started distributing for Eagle. According to Naro, he first became aware of Glasscock when several of the stores he approached to sell Eagle products informed him that Glasscock was their distributor. He stated that he asked Eagle about Glasscock and was informed that Glasscock's contract had been canceled. He stated that he got a representative from Eagle to go with him to those stores and explain that Glasscock was no longer a distributor for Eagle because he paid his invoices late, did not call on customers regularly, and did not order enough product. He testified that he serviced many of the counties that were originally part of Glasscock's geographic territory, including Jefferson County, Cullman County, Madison County, and Walker County. According to Naro, as an Eagle distributor, he sold a monthly average of "close to thirty thousand" dollars worth of product.
The dispositive issue argued by Eagle on appeal is "[w]hether Eagle is entitled to judgment as a matter of law in its favor on Glasscock's breach of contract claim." As noted, Glasscock contends only that Eagle breached its contract with him by appointing Naro as a distributor in his geographical area. Neither Glasscock nor Eagle presented testimony or other evidence as to what type of relationship they thought they had or otherwise attempted to analyze the legal nature of the relationship created by their contract. It is unnecessary to determine whether Glasscock was an independent contractor or an employee of Eagle, however, because under either classification the contract was terminable at will. "`Absent a contractual provision to the contrary, an independent contractor/principal agency relationship is terminable at any time at the will of the principal or the agent. See generally Restatement (Second) of Agency § 117 cmt. a (1958)....'" Ex parte Gardner, 822 So. 2d 1211, 1218 (Ala.2001), quoting Kaldi v. Farmers Ins. Exch., 117 Nev. 273, 21 P.3d 16 (2001); see also Ex parte Michelin North America, Inc., 795 So. 2d 674, 677 (Ala.2001) ("In Alabama, an employment *290 relationship is ordinarily `at will,' and the fundamental principle of employment at will is that the employment relationship is terminable by either party at any time and for any reason."), and Hickenbottom v. Preferred Risk Mut. Ins. Co., 514 So. 2d 881, 882 (Ala.1987) ("Contracts without a fixed term are terminable at the will of either party and may be terminated for any cause or for no cause.").
As noted, in 1996 Eagle notified Glasscock, initially by letter and then in person, that in order to retain his distributorship status, Glasscock would have to meet specified criteria. Glasscock testified that he did not meet many of the required criteria, and in July 1996 Eagle notified Glasscock that he was being classified as a direct-buy account, rather than as a distributor.
Glasscock argues in his brief to this Court that "Eagle desperately maintains, in hindsight, that [Judi] Hurst, Eagle's vice-president, severed its distributorship relationship with Glasscock on July 11, 1996." However, Glasscock conceded at trial that he knew at the time he received Hurst's letter that Eagle's opinion was that he was no longer their distributor, and his attorney stated in her reply letter to Hurst that "under your letter of July 11, 1996, it appears that Mr. Glasscock will no longer be a distributor, but will be a direct-buy account which will eliminate his classification as an exclusive distributor of Eagle Products, Inc." Glasscock argues that Hurst's letter "never informs [him] that he is no longer Eagle's exclusive distributor or that he cannot distribute on the wholesale [m]arket." In fact, her letter states, "Spring Creek Pet Supplies is what Eagle Products categorizes as a `direct-buy account.' In other words, Spring Creek Pet Supplies purchases product from Eagle Products for resale through its own retail outlet sources." She also stated in that letter that Eagle had not assigned a distributor for Alabama as of the date of the letter, but that it anticipated appointing a distributor "in the near future." Glasscock argues that Hurst continued to refer to him as Eagle's distributor in her next correspondence to him. That letter, as noted, is addressed to "Dear Valued Customers" and refers generally in its body to "you our distributors." Hurst explained that Eagle maintained a customer list, and that all of its customers, regardless of whether they were classified as a distributor or a direct-buy account, received that letter, as well as other mailings.
Glasscock also argues that "in 1996, 1997, 1998, and 1999, the parties continued their relationship as before." However, Hurst testified that "[d]irect-buy accounts also have the advantage of the frequent-feeder programs and our couponing program," and she stated that direct-buy accounts were able to purchase Eagle products for the same price as distributors. Hurst stated that the other distributors who were classified as direct-buy accounts continued to purchase from Eagle after the new classification and "still do today," so it was not unusual for Eagle to continue to receive orders from Glasscock. Glasscock testified at trial that he understood that, as a direct-buy account, he could continue to purchase products from Eagle at the same price he had paid as a distributor. He stated that the last year he purchased directly from Eagle was 1998.
Glasscock argues in his brief to this Court:
At trial, Glasscock did not dispute that Eagle had the right to sever the distributorship agreement, he argued only that in doing so it did not comply with the terms of the contract. Under the distributorship agreement between Glasscock and Eagle, in the event Eagle severed the distributorship relationship, Eagle was required to "pick up and pay for any product that [was] dated not more than 90 days old." Glasscock testified that he knew that Eagle could terminate the distributorship "if they bought back the product from [him]." Glasscock testified that he did not have any product less than 90 days old at the time he received the July 1996 letter. Glasscock stated that he had placed an order in August 1996 and therefore had new product on hand when he received a letter from Eagle's attorney, which he claims is the first time Eagle informed him that he could not distribute on the wholesale market. However, Hurst's July 11, 1996, letter clearly stated that Glasscock's account had been categorized as a direct-buy account and that Eagle anticipated appointing a distributor in Alabama "in the near future." The September 13, 1996, letter only reaffirmed Eagle's decision to terminate the distributorship agreement, and stated "Spring Creek Pet Supplies is classified as a direct-buy account as outlined in Ms. Hurst's letter of July 11, 1996." Therefore, at the time Eagle terminated the relationship, July 11, 1996, there was no product Eagle was required to buy back in conjunction with the termination of Glasscock's distributorship status, and Eagle effectively terminated the distributorship agreement by notifying Glasscock of his direct-buy classification in Hurst's July 1996 letter. In any event, even if Glasscock had product less than 90 days old at the time of the July 11, 1996, letter, it would not have prevented the termination. The agreement only states that "[i]n the event, Eagle Products, Inc. choos[es] to sever the distributorship agreement with Spring Creek Pet Supplies, Eagle Products will pick up and pay for any product that is dated not more than 90 days old"; it does not say that as a condition precedent to a legally effectual termination Eagle must pick up and pay for the product. Accordingly, the trial court erred by refusing to grant Eagle's motion for a JML.
For the foregoing reasons, the trial court's order denying Eagle's motion for a JML is due to be, and hereby is, reversed and a judgment rendered in favor of Eagle Products, Inc. Because we are rendering a judgment for Eagle on this issue, we need not address the other issues Eagle raises on appeal.
REVERSED AND JUDGMENT RENDERED.
SEE, LYONS, BROWN, and STUART, JJ., concur.
[1]  Glasscock also named Mark Naro, at one time a distributor for Eagle, as a defendant, but later voluntarily dismissed his claims against Naro.
[2]  Spring Creek Pet Supplies is a business formed by Glasscock, which he operates as a sole proprietorship.
[3]  The record does not contain a copy of the outline referenced in this letter.
[4]  The record contains no other reference to the parties' right of severance.
[5]  By the time of this letter, Lehr had become a national sales manager with Eagle.
[6]  Hurst stated that Eagle has a frequent-feeder program, so that "when you buy twelve bags ... [you] get the thirteenth bag free."
[7]  The distributorship agreement does not state that it is exclusive, but Eagle never contests this characterization of the contract.
[8]  Glasscock testified that he bought Eagle products from other distributors to resell to his customers; he stated that the other distributors were "charging [him] the handling charge for the product, but they were not charging [him] the normal wholesale mark-up."