Frederick P. Winner, LTD v. Pabst Brewing Co.

249 Md.App. 402

245 A.3d 242

FREDERICK P. WINNER, LTD

v.PABST BREWING COMPANY

No. 1882, Sept. Term, 2019

Court of Special Appeals of Maryland.

January 29, 2021

Argued by Robert S. Brennen (Erinn M. Maguire, Michael B. Brown and Miles & Stockbridge P.C., on the brief) Baltimore, Maryland, for Appellant.

Argued by Paul W. Hughes (Michael S. Nadel and McDermott Will & Emery LLP, on the brief) Washington D.C., for Appellee.

Panel: Kehoe, Berger, Reed, JJ.

Berger, J.

This is the second time this case has been before us on appeal. This appeal arises from the termination by Pabst Brewing Company, Inc. ("Pabst Brewing") of distribution rights that it had previously granted to beer distributor Frederick P. Winner, Ltd. ("Winner"). After Pabst Brewing came under new ownership in 2014, it terminated Winner's distributorship. Winner filed suit against Pabst Brewing in the Circuit Court for Baltimore County, alleging, inter alia , that the termination of Winner's distribution rights violated the Maryland Beer Franchise Fair Dealing Act ("BFFDA").¹ Winner subsequently filed an amended complaint in the circuit court. Pabst Brewing moved to strike the amended complaint, and the circuit court granted Pabst Brewing's motion to strike. On appeal, we vacated the trial court's order striking Winner's amended complaint and remanded for further proceedings. On remand, the circuit court granted Pabst Brewing's motion for summary judgment and denied Winner's motion for partial summary judgment. Winner again appealed.

In this appeal, Winner presents four questions for our review.² We shall address only the following single issue because it is dispositive of the appeal:

Whether the circuit court erred by determining that Pabst Brewing and its parent and grandparent companies satisfied the definition of "successor beer manufacturer" set forth in the BFFDA and, accordingly, that Pabst Brewing's termination of Winner's distributorship was permitted as a matter of law.

As we shall explain, we shall reverse the judgment of the circuit court and remand for further proceedings.

FACTS AND PROCEEDINGS

We previously set forth the relevant underlying facts in Frederick P. Winner, Ltd. v. Pabst Brewing Co. , No. 1165, Sept. Term 2016, 2017 WL 5593529 (filed Nov. 21, 2017) (unreported opinion), as follows:

Factual Circumstances

On April 30, 2014, Winner entered into a distributorship agreement ("2014 Agreement") with Pabst [Brewing], a supplier of malt beverages operating in Maryland as a non-resident dealer. Under the 2014 Agreement, Winner had the right to sell twenty-two brands of Pabst [Brewing] products. The 2014 Agreement supplanted a previous distributorship agreement that Pabst had made with an earlier incarnation of Winner on January 31, 1994 ("1994 Agreement").³

When the parties entered into the 2014 Agreement, Pabst [Brewing] was a Delaware corporation and a wholly-owned subsidiary of Pabst Holdings Inc., which was, in turn, a wholly-owned subsidiary of Pabst Corporate Holdings, Inc. On November 13, 2014, Pabst [Brewing] became a Delaware limited liability company. On the same day, Pabst Corporate Holdings, Inc. sold its interest in Pabst Holdings, Inc. to Blue Ribbon, LLC. In the wake of the acquisition, Pabst [Brewing] replaced all of its directors and officers.

On March 9, 2015, Pabst [Brewing] informed Winner that it was terminating Winner's distribution rights effective May 8, 2015. In Pabst [Brewing]’s view, Pabst [Brewing] had become a "successor beer manufacturer" as defined by the BFFDA and was, therefore, entitled to terminate its agreement with Winner. In response, Winner's attorney sent a letter to Pabst [Brewing] asserting that Pabst [Brewing] was not a "successor beer manufacturer" and that, consequently, Pabst [Brewing] had no legal right to terminate the 2014 Agreement. Despite Winner's protest, Pabst [Brewing] refused to rescind its termination letter.

Winner , supra , slip op. at 3-4.

In its brief, Pabst Brewing provided a helpful chart illustrating the change in the Pabst Brewing Corporate Structure, which we have reproduced below:

Pabst Ownership Structure April 2014

Pabst Corporate Holdings, Inc.

Pabst Holdings, Inc.

Pabst Brewing Company

Pabst Ownership Structure November 13, 2014

Blue Ribbon, LLC

Pabst Holdings, Inc.

Pabst Brewing Company

We previously set forth much of the relevant procedural history of this case in our previous unreported opinion in this case as follows:

Procedural History

On May 4, 2015, Winner filed a complaint in the Circuit Court of Baltimore County asserting two causes of action:

(1) an action for declaratory judgment; and (2) an action for breach of contract. The Initial Complaint sought the following forms of relief: (a) a declaration that Pabst [Brewing] had no basis to terminate Winner's franchise; (b) a permanent injunction prohibiting Pabst [Brewing] from terminating Winner's distributorship; (c) an order preliminarily and permanently enjoining Pabst [Brewing] from contracting with other distributors for Winner's territories; (d) an order preliminarily and permanently enjoining Pabst [Brewing] from interrupting delivery of Pabst [Brewing] products to Winner, and (e) an award of damages Winner sustained as a result of Pabst [Brewing]’s violations of the BFFDA.

Winner's Initial Complaint, however, contained a few mistakes. Although Winner's relationship with Pabst [Brewing] was governed by the 2014 Agreement, the Initial Complaint referred to the 1994 Agreement as the basis for Winner's claims. The Initial Complaint did not explicitly mention the 2014 Agreement at all, although it contained language consistent with an ongoing contractual relationship. Winner also attached the 1994 Agreement, rather than the 2014 Agreement, to the Initial Complaint.

On June 19, 2015, Pabst [Brewing] notified Winner that it was terminating product deliveries to Winner effective July 24, 2015, at which point the successor distributors would take over distribution of the Pabst [Brewing] brands. On July 21, 2015, the circuit court issued a scheduling order. Under the scheduling order, discovery was to be closed by ... January 9, 2016, and all motions (excluding motions in limine), were to be filed on or before January 24, 2016.

On August 3, 2015, Pabst [Brewing] sent a letter to Winner reiterating that Winner's distribution rights had been terminated and that henceforth its brands could only be distributed by the successor distributors. On August 4, 2015, Winner filed a request for a temporary restraining order ("TRO") against Pabst [Brewing]. The circuit court denied the request. Thereafter, Pabst [Brewing] completed the termination of Winner's rights and entered into distribution agreements with seven local distributors.

On January 21, 2016, Winner filed the Amended Complaint without leave of the circuit court. The Amended Complaint left the basic claims of the Initial Complaint intact. It corrected the Initial Complaint, however, by referring to the 2014 Agreement as the basis for Winner's contractual claims. The Amended Complaint also anticipated a [potential] finding that Pabst [Brewing] was, indeed, a "successor beer manufacturer," arguing that such a finding would actually entitle Winner to an award of the fair market value of the distribution rights. Finally, the Amended Complaint revised the request for injunctive relief by seeking an order requiring Pabst [Brewing] to reinstate Winner and terminate the successor distributors.

On February 4, 2016, Pabst [Brewing] filed a motion to strike the Amended Complaint. On January 27, 2016, Winner filed a motion for partial summary judgment. The same day, Pabst [Brewing] filed its own motion for summary judgment. On March 3, 2016, the clerk of the circuit court issued a notice setting a trial date for October 17, 2016.

On April 26, 2016, the circuit court entertained a hearing on the open motions. Thereafter, on June 28, 2016, the Circuit Court for Baltimore County issued a Memorandum Opinion on the parties’ motions. The circuit court granted Pabst [Brewing]’s motion to strike the Amended Complaint on the grounds that allowing it to stand would result in prejudice to Pabst [Brewing]. The circuit court then granted Pabst [Brewing]’s motion for summary judgment, finding that the Initial Complaint's request for declaratory judgment was moot and that the contractual claim failed because the 1994 Agreement was no longer in force. Although the circuit court had stricken the Amended Complaint, it nonetheless proceeded to address Pabst [Brewing]’s arguments concerning the Amended Complaint. Finally, the circuit court considered Winner's motion for partial summary judgment, which it understood to be based on the contract claim in the Amended Complaint. The Circuit Court, siding with Pabst [Brewing] on the merits, denied Winner's motion for partial summary judgment.

Winner , supra , slip op. at 4-6.

Winner appealed to this Court. On appeal, we vacated the trial court's order striking Winner's amended complaint and remanded for further proceedings. On remand, Winner filed a Second Amended Complaint on January 16, 2018. Count I of the Second Amended Complaint claimed a violation of the BFFDA and sought an injunction reinstating Winner's distribution rights as well as damages "including, but not limited to, the loss of the value of the ... distributorship rights and a loss [of] the value of ... Winner's enterprise." Count II of the Second Amended Complaint alleged a breach of contract and sought monetary damages. Winner moved for partial summary judgment on the Second Amended Complaint on February 6, 2018. Winner also produced supplemental interrogatory responses providing calculations of damages including the fair market value of Winner's distribution rights, as well as details regarding how the termination of the distribution rights resulted in additional negative financial consequences for Winner. Pabst Brewing filed its own Motion for Summary Judgment on August 7, 2019.

On November 22,...