Case Title: Vineyard Brands v. Oak Knoll Cellar

Citation: 

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 1988-06-01T00:00:00Z

Document:
NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
as well as formal revision before publication in the Vermont Reports.
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
that corrections may be made before this opinion goes to press.


                                No. 87-325


Vineyard Brands, Inc.                        Supreme Court

     v.                                      On Appeal From
                                             Windsor Superior Court
Oak Knoll Cellar d/b/a
Rutherford Hill Winery                       June Term, 1988


Silvio T. Valente, J.

John C. Holme, Jr. of Dakin & Holme, Chester, and John R. Shuman, Jr. of
  Ware & Freidenrich, Palo Alto, California, for plaintiff-appellant

James F. Carroll and Timothy L. Taylor of Kelley, Meub, Powers & English,
  Ltd., Middlebury, for defendant-appellee


PRESENT:  Allen, C.J., Peck, Gibson, and Dooley, JJ., and Springer, D.J.
      (Ret.), Specially Assigned


     ALLEN, C.J.  This case arose after defendant Rutherford Hill Winery
terminated its marketing contract with plaintiff Vineyard Brands, Inc.
Plaintiff brought suit, claiming breach of contract and, in the alternative,
that the contract had been terminated without reasonable notice.  Defendant
counterclaimed, seeking, among other things, amounts owed by plaintiff on
account.  The case was tried before a jury, which brought in a verdict in
favor of plaintiff for $98,792 and, on the counterclaim, in favor of defend-
ant for $132,716.03 plus interest in the amount of $54,481.22.  Plaintiff
appeals the ensuing judgment, and defendant cross-appeals.  We affirm.
     Rutherford Hill is a California winemaker and distributor.  In 1977,
the parties reached a contractual agreement, renewable annually, under which
Vineyard Brands marketed and distributed Rutherford Hill wines in approxi-
mately sixteen eastern and central states.  In essence, plaintiff solicited
orders for the wine, while defendant arranged for direct shipments, accom-
panied by bills of lading, to the purchasers.  Purchasers paid plaintiff for
the wine and plaintiff had forty-five days from the date of shipment to pay
defendant these amounts less a 12% commission.  Defendant sent invoices to
plaintiff that included a "service charge" provision, that established an
18% annual interest rate on past-due amounts.
     In 1982, defendant sent plaintiff a letter proposing a modification of
the parties' agreement.  Under the proposal, certain performance standards
would be established and, if plaintiff met those standards, defendant would
continue the existing marketing arrangement through 1990.  A key portion of
the testimony at trial focused on that offer and the question of whether
plaintiff had ever effectively accepted the offer.
     On July 1, 1985, defendant terminated the contract.  Plaintiff then
filed suit in Windsor Superior Court, seeking $942,588.97 in lost profits
over the period starting with the date of termination and ending on December
31, 1990, the date that the contract would expire if the claimed modifica-
tion of the contract were effective.  In the alternative, plaintiff re-
quested $78,204 in damages for defendant's alleged failure to provide
adequate notice of termination.  Defendant counterclaimed for amounts owed
on wine already delivered, totaling $132,716.56, and for an unspecified
amount of interest.  Defendant also sought damages on grounds of conversion,
breach of fiduciary duty, and breach of contract. (FN1) The parties agreed that,
because the contract had been entered into in California, California law
should apply.
     At trial, defendant submitted into evidence its computation of interest
on the amounts owed by plaintiff based on the 18% annual interest rate
provided for in the invoices.  At the end of the fourth day of the five-day
trial, plaintiff filed a supplemental trial brief, arguing that the 18%
annual interest rate was usurious under California law.  The court ruled
that it would not instruct the jury on the usury issue.
     Defendant asked the court to charge the jury on the law of agency,
fiduciary duty, and breach of fiduciary duty.  Defendant also requested a
jury instruction to the effect that, under California law, an offer speci-
fying a particular manner of acceptance must be accepted in that manner.
The court refused both of these requests.
                                    I.
     On appeal, plaintiff does not contest the trial court's judgment with
respect to the bulk of the damages awarded, but instead argues that defend-
ant's interest rate is usurious and that the court erred in refusing to
charge the jury on the law of usury.  Defendant argues in response that
plaintiff waived the usury issue by raising it too late in the proceedings.
     Usury is an affirmative defense.  See Dyer v. Lincoln, 11 Vt. 300, 301
(1839).  "In pleading to a preceding pleading, a party shall affirmatively
set forth and establish . . . any . . . matter constituting an avoidance or
affirmative defense."  V.R.C.P. 8(c).  Generally, an affirmative defense
cannot be maintained either at trial or on appeal unless it was specifically
raised in the pleadings.  Brouha v. Postman, 145 Vt. 449, 452,