6 Mash.Rep. 434, 2017 WL 3713098 (Mash. Pequot Tribal Ct.)
Mashantucket Pequot Tribal Court.
The GRANDMA GEBHARD CO.
MASHANTUCKET PEQUOT GAMING ENTERPRISE.
July 28, 2017.
Attorneys and Law Firms
John S. Jagiela, Esq., for the Plaintiff.
David S. Williams, Esq., for the Defendant.
MEMORANDUM OF DECISION RE DEFENDANT’S CROSS MOTION FOR SUMMARY JUDGMENT AND DEFENDANT’S MOTION FOR JUDGMENT ON THE PLEADINGS
EDWARD B. O’CONNELL, Judge.
For purposes of these motions, the following pertinent facts are undisputed: On *437 March 23, 2007, the plaintiff, The Grandma Gebhard Co., d/b/a Annie’s Frozen Yogurt (sometimes “Grandma Gebhard”), and the defendant, Mashantucket Pequot Gaming Enterprise (sometimes the “Gaming Enterprise”), entered into an initial three year contract whereby Grandma Gebhard agreed to provide and install three Taylor yogurt dispensing machines and to license the use of the Annie’s Frozen Yogurt Trademark and images. In return, the Gaming Enterprise agreed to purchase from Grandma Gebhard, a total of 5,000 cases of yogurt per year at a cost of $39.94 per case. The contract became effective upon installation of the yogurt machines at the Foxwoods Resort Casino on May 16, 2007.
The contract contained an automatic renewal provision, which provided that the contract would automatically renew for successive one year terms unless otherwise notified in writing, by either party, 30 days prior to expiration. The contract automatically renewed for three successive one year periods following the initial three year term.
In each year of the contract, the Gaming Enterprise failed to purchase the minimum required amount of 5,000 cases per year. These purchase shortfalls varied from year to year and ranged from 1,362 cases for year 1 of the contract to 5,000 cases for year 6 of the contract (meaning that the Gaming Enterprise bought no cases in year 6). Grandma Gebhard claims an amount of $326,238.00 for total net profits lost due to the Gaming Enterprise’s total minimum purchase shortfalls.
In September 2011, the Gaming Enterprise notified Grandma Gebhard that it would not be purchasing any more yogurt under the contract. Records indicate that purchases of cases had been diminishing for many months prior to this communication. In January 2012, the Gaming Enterprise made a final purchase of 18 cases of yogurt. By a letter dated July 16, 2012, Counsel for Grandma Gebhard advised the Gaming Enterprise that the Gaming Enterprise had breached the contract by failing to purchase the required minimum number of cases and requested the Gaming Enterprise to cure the shortfall or pay the outstanding balance resulting from it. By letter dated October 9, 2012, Counsel for the Gaming Enterprise replied that prior communications of the parties had terminated the agreement, but if it is determined that those prior communications did not constitute a valid termination, then “this letter shall serve as further notice” of the defendant’s election to terminate the contract. The yogurt machines were returned to Grandma Gebhard shortly thereafter.
On May 24, 2013, Grandma Gebhard brought this action against the Gaming Enterprise, claiming damages resulting from the alleged breach of contract. On December 14, 2015, the plaintiff moved for summary judgment, on Count I (breach of contract), and on Count II (breach of the implied covenant of good faith and fair dealing), on the grounds that there was no issue of material fact. The Court denied the plaintiff’s motion, finding that plaintiff had not demonstrated the absence of a genuine issue as to all material facts on those Counts.
The defendant filed a Cross Motion for Summary Judgment for all counts and a Motion for Judgment on the Pleadings as to Count II (alleging breach of the implied covenant of good faith) and Count IV (alleging fraud/negligent misrepresentation). Thereafter, the plaintiff submitted its memorandum in opposition to the defendant’s motions and the defendant submitted its reply. The Court heard argument on these pleadings.
The basis of the defendant’s Cross Motion for Summary Judgment is that the plaintiff’s claims are time barred by the one year statute of limitations set forth at 4 M.P.T.L. ch. 1 § 5 and 12 M.P.T.L. ch. 1 § 4. The basis of the defendant’s Motion for Judgment on the Pleadings, on Counts II and IV, is that the plaintiff failed to plead facts sufficient to support claims of bad faith conduct and failed to plead facts with particularity to support a claim of fraud. For the reasons that follow, the defendant’s Motion for Summary Judgment is denied; the defendant’s Motion for Judgment on the Pleadings as to Count II of the Complaint is denied; and the defendant’s Motion for Judgment on the Pleadings as to Count IV of the Complaint is granted.
A. MOTION FOR SUMMARY JUDGMENT1
A motion for summary judgment may not be granted unless the court determines that there is no genuine issue of material fact in dispute and that the moving party is entitled to judgment as a matter of law. M.P.R.C.P. 56(c). “In ruling on a motion for summary judgment, the function of the trial court is not to decide issues of material fact, but rather to determine whether any such issues exist.” Mahan v. Mashantucket Pequot Gaming Enterprise, 4 Mash.Rep. 499, 502 (2007) (citing Bauer v. Mashantucket Pequot Gaming Enterprise, 1 Mash.Rep. 119, 120, 1 Mash. 86 (1995)). “If a genuine issue exists, it must be left to a later determination after a full hearing.” Id.
“A ‘material’ fact is a fact which will make a difference in the result of the case.” Id. In determining whether or not there are material facts at issue, and thus whether summary judgment is appropriate, “[t]he trial court must view the evidence in the light most favorable to the nonmoving party.” Id. “A dispute over ‘material fact’ is ‘genuine’ if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
"A breach of contract claim is complete and accrues at the time the breach of contract occurs, that is, when the injury has been inflicted. The true test [of accrual] is to establish the time when the plaintiff first could have successfully maintained an action.” Pequot Pharmaceutical Network v. Connecticut Hospice, No. CV–GC–2015–104, 6 Mash.Rep. 323, 328, 2015 WL 9601099, at *3 (Mash. Pequot Tribal Ct. Dec. 10, 2015) (internal quotation marks and citations omitted). Consistent with this standard is the hornbook principle that not all “breaches” result in breach of contract. The breach must be material in order for a plaintiff to successfully maintain a breach of contract action. If a nonmaterial breach occurs but the parties nevertheless substantially perform, then a total breach of contract has not occurred and the action has not accrued and the statute of limitations has not been triggered.
For purposes of this motion for summary judgment, the defendant does not dispute that it failed to make the minimum required purchases of yogurt throughout the six year period. The defendant asserts that each shortfall—whether on a monthly, quarterly, or yearly basis—constituted breaches of contract that thereby triggered the one year statute of limitations. As a result of these ongoing breaches and the plaintiff’s failure to make demand on the shortfalls, the defendant asserts that the plaintiff is not entitled to recover on any shortfall prior to May 25, 2012 (one year before the plaintiff filed its Complaint). In the defendant’s view, injuries resulting from a breach that occurred more than a year before that date, i.e. before May 25, 2012, would be time barred under Mashantucket procedure. See 4 M.P.T.L. ch. 1 § 5 and 12 M.P.T.L. ch. 1 § 4. This argument fails because a genuine dispute of material fact exists as to whether the failures by the Gaming Enterprise to make the minimum purchases of yogurt prior to May 25, 2012 were material breaches, resulting in a total breach of contract, and thus triggering the statute of limitations.
The defendant’s purchases of cases of yogurt per month/year varied. At times, the defendant purchased on a monthly basis more than the average minimum number of cases (415) that would comply with the annual purchase requirement of 5,000 cases; at other times, the defendant purchased zero cases of yogurt in a given month. At some point along the six year period, the defendant’s ongoing failure to meet the annual minimum particular requirement became a material breach of contract. But this point in time cannot be determined on the record presently before this Court. This is a genuine dispute of material fact because the time at which the breaches became material determines whether the plaintiff’s claim is time barred by the one year statute of limitations.
The defendant also contends that the breach of contract accrued and the one-year statute of limitations was triggered in September 2011 when it informed the plaintiff that it would no longer be purchasing yogurt. In the alternative, the defendant asserts that the statute was triggered in January 2012, when the defendant made its last purchase of yogurt from the plaintiff. In either case, the argument runs, the plaintiff’s filing date of May 24, 2013, renders out of statute the defendant’s breaches, because they occurred more than a year earlier, i.e., before May 25, 2012.
The defendant’s argument is grounded in the doctrine of anticipatory repudiation or anticipatory breach of the contract. “A positive statement to the promisee that the promisor will not perform his contract constitutes an anticipatory breach which is a total breach of contract.” Martin v. Kavanewsky, 157 Conn. 514, 518–19, 255 A.2d 619 (1969). “Anticipatory breach of contract occurs when a party communicates a definite and unequivocal manifestation of intent not to render the promised performance at the contractually agreed upon time.... The manifestation of intent not to render the agreed upon performance may be either verbal or non-verbal ... and is largely a factual determination in each instance.” Andy’s Oil Service, Inc. v. Hobbs, 125 Conn.App. 708, 722, 9 A.3d 433 (2010) (citation omitted).
Here, the defendant’s actions were not definite and unequivocal. After telling the plaintiff in September 2011 that it would no longer purchase any cases of yogurt, the Gaming Enterprise undermined its own representation by proceeding to purchase 65 cases in November 2011 and 18 cases in January 2012. These subsequent *440 purchases put in doubt whether the plaintiff unequivocally considered the defendant to be in breach on the earlier date of September, 2011.2 The defendant correctly observes that the letter from plaintiff’s Counsel dated July 16, 2012 indicates the plaintiff then considered the defendant to be in breach. However, that letter is not determinative of whether the breach was understood by the plaintiff to have accrued before or after May 25, 2012—the earliest date that would allow plaintiff’s claim to remain within statute.3
The defendant’s last purchase was made in January 2012, after it had notified the plaintiff that it would not purchase any more yogurts. This purchase contradicted the defendant’s previous statements to the plaintiff that it no longer wanted to purchase yogurt under the terms of the contract, and put in doubt whether the defendant considered the contract to be ongoing and still in effect. Moreover, after the January 2012 purchase, which might be viewed as an action in furtherance of the contract at issue, the defendant failed to give written notice as required by the contract in order to prevent automatic renewal. This ambiguous record does not demonstrate an unequivocal intent to breach the contract. On the record before the Court at this time, the doctrine of anticipatory repudiation does not apply.
B. DEFENDANT’S MOTION FOR JUDGMENT ON THE PLEADINGS
“The legal standards governing the court’s consideration of a motion for judgment on the pleadings are the same as those standards governing the court’s consideration of a Rule 12(b)[ (7) ] motion to dismiss. The Court is required to accept the material facts alleged in the complaint as true. All doubts and inferences are resolved in the plaintiff’s favor, and the pleading is viewed in the light most favorable to the plaintiff. However, the plaintiff must still allege facts, either directly or inferentially, that satisfy each element required for recovery under some actionable legal theory.” White Mountain Apache Tribe v. Pequot Health Care, 5 Mash.Rep. 397, 399 (2011) (internal quotation marks and citations omitted).
Adequacy of Allegations in Count II—Breach of the Implied Covenant of Good Faith and Fair Dealing
“Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement. The duty of good faith and fair dealing does not create a generalized obligation of good faith in all aspects of life. Rather, it protects the ‘benefits of the agreement’ between the parties to a contract. [The] implied covenant of good faith and fair dealing [requires] that neither party do anything that will injure the right of the other to receive the benefits of the agreement. This is a rule of construction designed to fulfill the reasonable expectations of the contracting parties. Conversely, bad faith means more than mere negligence; it involves a dishonest purpose.” Cives Corp. v. Mashantucket Pequot Tribal Nation, 3 Mash.Rep. 309, 313, 4 Mash. 196 (2001) (citation omitted). “[T]he notion of bad faith encompasses a wide range *441 of dishonest behavior, including evasion of the spirit of the bargain. When one party performs the contract in a manner that is unfaithful to the purpose of the contract and the justified expectations of the other party are thus denied, there is a breach of the covenant of good faith and fair dealing, and hence, a breach of contract, for which damages may be recovered; reasonable or justified expectations, in turn, are to be determined by considering the various factors and circumstances that surround the parties’ relationship and thereby shape or give contour to the expectations in the first instance.” Landry v. Spitz, 102 Conn.App. 34, 44–45, 925 A.2d 334 (2007) (internal quotation marks and citations omitted).
Here, the plaintiff asserts that the Gaming Enterprise’s “actions [in the Complaint] constitute a breach of the implied covenant of good faith in fair dealing.” Complaint ¶ 57. Specifically, the plaintiff contends that the Gaming Enterprise “acted in bad faith in breaching the exclusive use provision of the Equipment & License Agreement by dispensing product other than Annie’s Frozen Yogurt with Grandma Gebhard Equipment.” Complaint ¶ 38. Violation of the use provision would itself be a basis for breach of contract. However, the alleged facts and reasonable inferences drawn therefrom suggest that the Gaming Enterprise’s conduct constituted more than a mere violation of the use provision. For purposes of this Motion, the Court must accept as true that the Gaming Enterprise either used Annie’s Frozen Yogurt in unauthorized machines or used non-Annie’s Frozen Yogurt in Grandma Gebhard machines or both. The Court finds these allegations sufficient to support a claim for breach of the implied covenant of good faith and fair dealing.
A reasonable inference from the facts pleaded is that the Gaming Enterprise sought to utilize Grandma Gebhard products, equipment, and trademarks to its own benefit in a manner that was deceptive and contradictory to the terms of the contract. It can be further inferred from the facts alleged in the Complaint that Grandma Gebhard, a Minnesota corporation, would not realistically be able to constantly monitor the Gaming Enterprise’s use of its product, equipment, and trademarks. Accepting the well-pleaded facts, as true, as the Court must for purposes of this Motion, if the Gaming Enterprise exploited this inability for an indeterminate amount of time, this violated the duty of good faith and fair dealing.
For the foregoing reasons, the plaintiff has alleged facts sufficient to support a claim for breach of the implied convent of good faith and fair dealing. The defendant’s Motion for Judgment on the Pleadings as to Count II is denied.
Adequacy of Allegations in Count IV—Fraud/Negligent Misrepresentation
In Mashantucket, “[f]raud occurs when all of the following elements are met: (1) a false representation was made as a statement of fact; (2) the statement was untrue and known to be untrue by the party making it; (3) the statement was made to induce the other party to act on it; and (4) the other party has acted on it to his injury.” Mashantucket Pequot Tribal Nation v. Kenneth Castellucci & Assoc., 4 Mash.Rep. 21, 34, 5 Mash. 227 (2002) (citing Paiva v. Vanech Heights Constr. Co., 159 Conn. 512, 515, 271 A.2d 69 (1970)). “[I]n all allegations of fraud or mistake, the circumstances constituting the fraud or mistake shall be stated with particularity.” M.P.R.C.P. 9(b).
The plaintiff’s claim for fraud and/or negligent misrepresentation is based on representations and assurances that it asserts were false. The plaintiff failed to plead with particularity what *442 those representations and assurances are. The most the Court can discern from the Complaint is that the communications Grandma Gebhard relied on were the initial communications that established the terms of the contract. See Complaint ¶¶ 6–31, 61–62, 67, 72–73. The Complaint fails to allege with particularity any statements that the Gaming Enterprise made that were untrue and known to be untrue by the Gaming Enterprise.
The plaintiff has failed to allege facts sufficient to support a claim of fraud/negligent misrepresentation. The defendant’s Motion for Judgment on the Pleadings as to Count IV is granted.
For the foregoing reasons, the defendant’s Motion for Summary Judgment is DENIED. The defendant’s Motion for Judgment on the Pleadings is DENIED as to Count II and GRANTED as to Count IV.
6 Mash.Rep. 434, 2017 WL 3713098
The Court assumes that the defendant concedes for purposes of the motion for summary judgment that the contract between the parties constituted a single contract covering a six year period as opposed to four separate contracts (i.e. one contract for the initial three year term and three successive, independent one year contracts). This is assumed because whether or not the parties intended for the contract to be a single contract or four separate and severable contracts would itself be a genuine dispute of material fact affecting the timeliness of the plaintiff’s Complaint. The Court does not rule on whether or not this contract is in fact a single contract.
This is notwithstanding defendant’s contention that plaintiff’s discovery responses indicate that it understood the defendant to be in breach. The parties continued to perform; if there was a breach, it was either not recognized at all or understood not to be material.
On the defendant’s part, the only unequivocal and undisputed action of breach is its election to terminate the contract through its Counsel’s letter dated October 9, 2012. This date however, allows the plaintiff’s action to remain within statute.