A Delaware County jury has awarded $3.9 million to a beer sub-distributor who claimed its primary supplier breached an oral contract, leading to lost profits.
Ernest Cruciani and his business, Wood Beverage Inc., filed suit against Clement & Muller Inc. and the estate of its former owner, C. John Muller. Clement & Muller is the importing distributor of Miller Brewing Co. products in the five-county Philadelphia area. Wood Beverage was the exclusive sub-distributor of Clement & Muller's products in Delaware County for a 33-year period, from 1965 until 1998.
Muller owned Wood Beverage from 1965 to 1984, but his sister-in-law's name was on the business' liquor license because Pennsylvania liquor laws prevent an individual from holding more than one malt liquor license. Muller held such a license for another beer distributor outside Delaware County.
In 1984, the sister-in-law told Muller she wanted her name off the license, because all the income for Wood Beverage was being reported to her. At the time, Cruciani was the manager of the depot, and Muller offered to sell him the business for $750,000.
According to David Concannon, attorney for the plaintiffs and a Malvern practitioner, the two men also made an oral contract allowing Wood Beverage to continue to receive Miller products from Clement & Muller and to remain the exclusive sub-distributor, or depot, of the brand.
"Ernie was told that he would be the depot for as long as he owned Wood Beverage," Concannon said.
In 1985, Muller's wife died, and he married a woman named Sandra a year later. Soon after, Mrs. Muller bought a beer distributor, Lamb Beverage, in Chester County. Lamb Beverage became the depot for Clement & Miller in Chester County.
According to Concannon, Muller breached his agreement with Cruciani in 1998, when Muller allowed his wife to distribute Miller products in Delaware County in violation of the supposed oral contract between Muller and Cruciani.
Concannon said Wood Beverage's customer base included 300 to 350 bars, pubs, restaurants and pizza shops in Delaware County.
At trial, Concannon said that defense attorney Abbe Fletman of Wolf Block Schorr & Solis-Cohen argued that the two men never made a legally binding oral agreement, but that if they had, the statute of frauds made it invalid.
Fletman also argued that being a "depot" means only one thing -- that the depot gets discounts on the exclusive products, Concannon said.
Concannon countered that the definition of "depot" also means that the sub-distributor is entitled to exclusive territory.
"The defense also argued that they were going to invade Wood Beverage's territory because they were under pressure from Miller to go direct, but evidence showed that they were only going direct in Delaware County," Concannon said.
The jury agreed, finding that a valid oral agreement existed between Miller and Cruciani, that from 1984 to 1998, Wood Beverage was the exclusive territory of Miller products in Delaware County, and that Muller breached the contract when Mrs. Muller began selling Miller products in Delaware
County.
The jury awarded Cruciani and Wood Beverage $3.9 million for their lost profits from June 1998 through 2007. Andrew Verzilli, an expert witness for the plaintiffs, said that Cruciani could expect to own Wood Beverage for six more years, which significantly added to the award.
However, the $3.9 million was less than half the amount one expert testified the case was worth.
Concannon said that one of the main issues at trial was the amount of profit Cruciani lost.
"What we fought over was average profit per case. Muller said 80 cents per case, we said $1.81. But the jury went a little higher than that," Concannon said. "I think that everyone was surprised that they gave everything the plaintiffs were asking for."
However, Concannon said that litigation in the case is far from over. Just before Muller's death several years ago, he transferred nearly all his assets, more than $50 million, to Mrs. Muller, leaving little to his actual estate, Concannon said. He also said the Delwaware County Court had granted permission for a suit against Mrs. Muller to try to recover the amount of the award.
Fletman said that she would file post-trial motions today, seeking JNOV, a new trial or, at least, a reduction of the damages.
The case is Cruciani and Wood Beverage Inc. v. Clement & Muller Inc., et al.
Note: The trial court denied the defendant's post-trial motions. This decision was affirmed by the Pennsylvania Superior Court, and the case settled while on appeal to the Pennsylvania Supreme Court.
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