Court Opinion

ID: 627044
Source: CourtListenerOpinion
Date Created: 2012-04-11 14:24:54+00
Date Added: 2024-06-11T17:51:18.254415
License: Public Domain

[DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT           FILED
                     ________________________ U.S. COURT OF APPEALS
                                                                 ELEVENTH CIRCUIT
                                                                    APRIL 11, 2012
                            No. 11-14377                             JOHN LEY
                        Non-Argument Calendar                         CLERK
                      ________________________

                 D.C. Docket No. 1:10-cv-23477-KMM

BURGER KING CORPORATION,

                                                                                     Plaintiff
                               llllllllllllllllllllllllllllllllllllllllCounter Defendant
                                            llllllllllllllllllllllllllllllllllllllllAppellee,

                                  versus

BROAD STREET LICENSING GROUP, LLC,

                                           llllllllllllllllllllllllllllllllllllllllDefendant
                                llllllllllllllllllllllllllllllllllllllllCounter Claimant
                                          llllllllllllllllllllllllllllllllllllllllAppellant.

                     ________________________

               Appeal from the United States District Court
                   for the Southern District of Florida
                     ________________________

                            (April 11, 2012)

Before BARKETT, MARTIN and ANDERSON, Circuit Judges.
PER CURIAM:

      Broad Street Licensing Group, LLC appeals the district court’s grant of

Burger King Corporation’s (BKC) motion to dismiss its breach of contract

counterclaims.

      On March 24, 2006, Broad Street entered into a Representation Agreement

with BKC, in which Broad Street agreed to manage the licensing of BKC’s

intellectual property to third parties. Pursuant to the Agreement, Broad Street

would select qualified licensees and negotiate license agreements to manufacture

and sell products featuring BKC trademarks. In return, Broad Street would

receive thirty percent of any gross royalty revenues “collected and paid” to BKC

under such licensing agreements.

      The dispute in this case centers on two provisions in the Representation

Agreement. Paragraph 4(E) of the Agreement provides that “BKC’s rejection of

any Licensee proposal or License Agreement as set forth in this Agreement, does

not give rise to any claim by [Broad Street] to any compensation that such

proposed License Agreement may have produced for [Broad Street], whether

under an estoppel or any other theory.” Paragraph 4(G) of the Agreement further

provides that “BKC agrees to use reasonable efforts to notify [Broad Street] prior

to termination of a License Agreement . . . . Nothing herein shall give [Broad

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Street] any approval rights with respect to any such termination by BKC.”

      Pursuant to the Agreement, Broad Street found a third party, Pierre Foods,

to license BKC trademarks for frozen foods. Hundreds of hours of work

culminated in the execution of a licensing agreement between Pierre Foods and

BKC on July 7, 2010. On August 10, 2010, pursuant to this licensing agreement,

Pierre Food delivered a check to BKC in the amount of $250,000 as an advance on

royalties. On August 19, 2010, BKC repudiated the licensing agreement with

Pierre Foods and returned the $250,000 check uncashed. On September 1, 2010,

BKC sent Broad Street $75,000, which represented Broad Street’s thirty percent

commission on the $250,000 royalty advance.

      Following a dispute over additional monies alleged to be owed to Broad

Street under the Representation Agreement, BKC filed a complaint in district court

seeking a declaratory judgment that Broad Street was not entitled to any further

compensation. Broad Street responded with a counterclaim alleging that BKC had

breached the Agreement by “unilaterally and wrongfully” repudiating the licensing

agreement with Pierre Foods. On January 7, 2011, BKC filed a motion to dismiss

Broad Street’s breach of contract claim pursuant to Federal Rule of Civil

Procedure 12(b)(6).

      A number of months later, the parties began discovery in preparation for

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trial, having received no decision from the district court on the motion to dismiss.

However, on June 28, 2011, the court granted BKC’s motion to dismiss, finding

that under the unambiguous terms of the Representation Agreement, BKC’s

termination of the licensing agreement with Pierre Foods was not a breach under

paragraph 4(G). The court further ruled that paragraph 4(E) of the Agreement

barred Broad Street from seeking any remedies following BKC’s termination of a

licensing agreement. On July 19, 2011, Broad Street filed a motion for

reconsideration based on new facts that it had gathered during discovery. The

District Court denied the motion for reconsideration, and Broad Street appealed.

      We review an order granting a motion to dismiss de novo, taking as true the

facts alleged in the complaint. James River Ins. Co. v. Ground Down Eng’g, Inc.,

540 F.3d 1270, 1274 (11th Cir. 2008). “What a contract provision means, or

whether it is ambiguous, are questions of law, which we review de novo.”

Reynolds v. Roberts, 202 F.3d 1303, 1313 (11th Cir. 2000). We review a district

court’s denial of a motion for reconsideration for abuse of discretion. Cliff v.

Payco Gen. Am. Credits, Inc., 363 F.3d 1113, 1121 (11th Cir. 2004).

      On appeal, Broad Street argues that the district court erred in granting the

motion to dismiss, because paragraph 4(G) of the Representation Agreement does

not expressly foreclose a remedy to Broad Street if BKC repudiates a fully

                                          4
executed licensing agreement. Broad Street contends that paragraph 4(G) merely

grants BKC authority to terminate licensing agreements, but is otherwise silent as

to Broad Street’s remedies in the event of such a termination. However, we

conclude, as did the district court, that BKC’s unilateral termination of the

licensing agreement is not a breach of the express terms of the Representation

Agreement. Paragraph 4(G) of the Representation Agreement clearly

contemplates that BKC may terminate a licensing agreement, and it denies Broad

Street “any approval rights with respect to any such termination.” Broad Street

contends that any reading of paragraph 4(G) that permits BKC to unilaterally

terminate a licensing agreement would allow BKC “to enter into a License

Agreement with a third party recruited exclusively through the efforts of Broad

Street, breach [that agreement] by repudiating it at any time, and then deny Broad

Street the revenues it would be entitled to.” This concern overstates the

implications of the district court’s ruling. Although paragraph 4(G) permits BKC

to terminate licensing agreements at any time, BKC would still be obligated under

paragraph 5(A) of the Agreement to pay to Broad Street thirty percent of any

royalties it earned on that licensing agreement up to the point of termination.

      Broad Street also alleges that BKC’s repudiation of the licensing agreement

breached the implied duty of good faith and fair dealing under Florida law. Where

                                          5
a contract vests a party with discretion, but provides no standards for exercising

that discretion, Florida courts have held that the implied duty of good faith and fair

dealing attaches as a gap-filling default rule. Speedway SuperAmerica, LLC v.

Tropic Enter., Inc., 966 So. 2d 1, 3 (Fla. Dist. Ct. App. 2009); Publix Super

Markets, Inc. v. Wilder Corp. of Del., 876 So. 2d 652, 654–55 (Fla. Dist. Ct. App.

2004). This standard imposes a duty upon the party vested with discretion to act

in a commercially reasonable manner, or a manner that satisfies the reasonable

expectations of the other party. See, e.g., Publix Super Markets, 876, So. 2d at

655 (holding that exercise of discretion was reasonable based upon evidence of the

commercial needs of the party vested with discretion); Cox v. CSX Intermodal,

Inc., 732 So. 2d 1092, 1098 (Fla. Dist. Ct. App. 1999) (considering whether

exercise of discretion would unreasonably deprive other party of meeting its “costs

of operation”).

      We agree with Broad Street that paragraph 4(G) of the contract is governed

by the implied duty of good faith and fair dealing. This paragraph vests BKC with

discretion to terminate any licensing agreement without Broad Street’s approval.

But, it contains no standards for BKC’s exercise of that discretion. See Cox, 732

So. 2d at 1098. Further, Broad Street has alleged an expectation that

compensation for its services would consist of, in part, a percentage of any

                                          6
revenue collected and paid to BKC for any license agreement secured by Broad

Street.

       BKC argues in response that the implied duty of good faith and fair dealing

“may not be imposed to override express terms in a contract.” Burger King Corp.

v. Weaver, 169 F.3d 1310, 1316 (11th Cir. 1999) (quotation marks and alterations

omitted) (applying Florida law). While we agree with this generic statement of

law, we do not believe that imposing a duty of good faith and fair dealing in this

case would vary the terms of paragraph 4(G). As Florida courts have recognized,

where a discretionary clause is “silent with regard to the methodology or standards

to be used” in exercising that discretion, imposing a reasonableness standard of

good faith and fair dealing does not vary any express contractual terms.1 Cox, 732

So. 2d at 1098. Therefore, insofar as Broad Street alleges that BKC breached the

implied duty of good faith and fair dealing, we hold that it has successfully stated

a claim, notwithstanding BKC’s rights under paragraph 4(G).

       Turning finally to paragraph 4(E) of the Representation Agreement, this

clause provides, “BKC’s rejection of any Licensee proposal or License Agreement

       1
         We note that paragraph 4(G) does not expressly vest BKC with absolute discretion to
terminate a licensing agreement, so we cannot say that imposing good faith standards on how
BKC exercises that discretion violates any express terms of the contract. Cf. Cox, 732 So. 2d at
1098 n.2 (noting that an express grant of absolute discretion in a contract might abrogate the
implied duty of good faith and fair dealing).

                                                7
. . . does not give rise to any claim by [Broad Street] to any compensation that such

proposed License Agreement may have produced.” The district court ruled that

this clause unambiguously denied Broad Street any recourse to a claim for

compensation that a licensing agreement might have produced, even if BKC

terminated a fully executed licensing agreement. We agree. The Representation

Agreement defines “License Agreement” to mean “a written and fully executed

agreement.” As Broad Street recognizes, the contract between BKC and Pierre

Foods was a “fully executed agreement.” Given that paragraph 4(E) clearly refers

to “any . . . License Agreement,” we conclude that the clause unambiguously bars

any claims that Broad Street has relating to BKC’s termination of the licensing

agreement with Pierre Foods, including its claim for breach of good faith and fair

dealing.2

           In light of the unambiguous language of paragraph 4(E), we also hold that

the district court did not abuse its discretion by denying Broad Street’s motion for

reconsideration. The extrinsic evidence produced during discovery would not

have affected the clear language of paragraph 4(E), and was therefore irrelevant.

       2
           As noted above, the implied duty of good faith and fair dealing “may not be imposed to
override express terms in a contract.” Burger King Corp., 169 F.3d at 1316 (quotation marks and
alterations omitted). To allow Broad Street’s claim for breach of good faith and fair dealing to
proceed would undermine the express terms of paragraph 4(E), which bars any claim by Broad
Street relating to BKC’s rejection of a fully executed licensing agreement.

                                               8
See Corwin v. Walt Disney Co., 475 F.3d 1239, 1248 (11th Cir. 2007); United

Benefit Life Ins. v. U.S. Life Ins. Co., 36 F.3d 1063, 1065 (11th Cir. 1994).

      For the reasons stated above, we AFFIRM the district court’s order

dismissing Broad Street’s counterclaims.

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