Filed: Apr. 11, 2012
Latest Update: Feb. 22, 2020
Summary: [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT FILED _ U.S. COURT OF APPEALS ELEVENTH CIRCUIT APRIL 11, 2012 No. 11-14377 JOHN LEY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 lllllllllllllllllllllllllllllllllllll
Summary: [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT FILED _ U.S. COURT OF APPEALS ELEVENTH CIRCUIT APRIL 11, 2012 No. 11-14377 JOHN LEY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 llllllllllllllllllllllllllllllllllllll..
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[DO NOT PUBLISH]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
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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
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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).
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. . . 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.
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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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