Full Opinion

Third District Court of Appeal State of Florida Opinion filed June 3, 2020. Not final until disposition of timely filed motion for rehearing. ________________ Nos. 3D18-1989 & 3D18-620 Lower Tribunal No. 15-23985 ________________ Diageo Dominicana, S.R.L., et al., Appellants/Cross-Appellees, vs. United Brands, S.A., Appellee/Cross-Appellant. Appeals from the Circuit Court for Miami-Dade County, William Thomas, Judge. Hunton Andrews Kurth LLP, and Samuel A. Danon, Gustavo J. Membiela, María Castellanos Alvarado, and Elbert Lin (Richmond, VA), for appellants/cross- appellees. Akerman LLP, and Gerald B. Cope, Jr., Francisco A. Rodriguez, and Andrew J. Dominguez, for appellee/cross-appellant. Before SALTER, LINDSEY, and HENDON, JJ. HENDON, J. Diageo Dominicana, S.R.L., Diageo plc, Diageo Brands, B.V., and Ketel One Worldwide, B.V. (collectively, “Diageo”), appeals from a final judgment arising out of United Brands’ Corrected Amended Counterclaim, in which the jury found in Count IV that Diageo breached the implied covenant of good faith and fair dealing in its agreement with United Brands, S.A. (“United Brands.”). United Brands cross- appeals from the final judgment regarding its fraud and punitive damages claim. We reverse that part of the final judgment finding Diageo liable on Count IV of United Brands’ Corrected Amended Counterclaim. We affirm the remainder of the final judgment. I. Background Diageo is one of the largest producers of alcoholic beverages worldwide. Beginning in 2009, United Brands became Diageo’s exclusive distributor in the Dominican Republic. The parties executed a Resale Agreement that memorialized their respective duties, expectations, and obligations under their working agreement. The Resale Agreement also memorialized the terms under which the venture could be terminated, and included a provision excluding implied warranties. Both parties agreed to be bound by the Resale Agreement. From 2009 through 2013, United Brands managed five key accounts for Diageo. During this time, both companies continued to grow and prosper. In August of 2013, Diageo approached United 2 Brands regarding an initiative called the “Route to Consumer” project. The goal of this project was to develop strategies aimed at reducing intermediaries in order to market more directly to retailers. Under Diageo’s proposed initiative, United Brands would need to expand its capabilities in order to market and distribute Diageo’s products on a broader scale, with the suggestion that undertaking this initiative would transform United Brands into a world-class distributor. United Brands’ decision to pursue the new initiative was made in reliance on documented statements made to United Brands by Jaime Graña, Diageo’s managing director of the western Latin America and Caribbean division. These statements indicated that Diageo intended to continue the exclusive contractual relationship with United Brands if United Brands made the structural transformations necessary to implement the Route to Consumer project. In reliance on these reassurances, United Brands agreed to invest and restructure. Between March 2014 and February 2015, United Brands invested $5.7 million in hiring additional personnel, purchasing new capital equipment, acquiring larger office and operational space and promoting Diageo products. In January 2014, Diageo made an internal decision to evaluate additional product distribution plans, and developed a relationship with a company named Mercasid, a direct competitor of United Brands. In September 2014, Diageo and Mercasid entered into a letter of intent to effectively replace United Brands as 3 Diageo’s exclusive distributor while continuing to allow United Brands to perform as usual under the Resale Agreement. In February 2015, Diageo gave United Brands timely notice of its intention to terminate the Resale Agreement. Because United Brands was bound by the Resale Agreement to market only Diageo products, its business suffered. As a result of Diageo’s termination of the Resale Agreement, United Brands was forced to lay off employees and reduce its operations. In August 2015, United Brands filed suit against Diageo Dominicana and Mercasid in the Dominican Republic. Diageo responded by filing this case in Miami- Dade County seeking declaratory relief and an anti-suit injunction to prevent United Brands from litigating its claims in the Dominican Republic pursuant to the forum selection clause in the Resale Agreement. The trial court entered an order granting Diageo’s request and enjoined United Brands from pursuing its claims against Diageo in the Dominican Republic. 1 On appeal, this Court affirmed. United Brands then filed a counterclaim in Miami-Dade County for breach of implied covenant of good faith and fair dealing, breach of contract, and fraud. The trial court denied the Diageo entities’ motion to dismiss the counterclaim.2 The trial court subsequently 1 Diageo Dominicana subsequently obtained expansion of the scope of the injunction to preclude United Brands from pursuing its claims in the Dominican Republic against defendants Diageo Brands and Ketel One Worldwide. 2 Diageo has since voluntarily dismissed its appeal of the lower court’s non-final order denying its motion to dismiss, originally docketed under Case No. 3D18-449 and later consolidated with Case No. 3D18-1989. 4 granted United Brands’ leave to amend its counterclaim to include a claim for punitive damages in connection with its fraud count. Diageo3 filed a petition for writ of certiorari challenging the grant of leave to amend the counterclaim to add punitive damages. Later, that petition was rendered moot.4 After a twelve-day trial, the jury determined that Diageo did not breach the Resale Agreement when it terminated United Brands in accordance with that contract’s terms (Counts II and III of the Corrected Amended Counterclaim). On Count IV of United Brands’ Corrected Amended Counterclaim, the jury found that Diageo breached the implied covenant of good faith and fair dealing and awarded United Brands $2.3 million in damages. The trial court denied Diageo’s motion to set this verdict aside. On Counts VI and VII, United Brands’ fraud counts, the jury found Diageo was not liable. The jury similarly found in Count VIII that Graña was not liable for negligent misrepresentation regarding the Route to Consumer project. The trial court instructed the jury that it could award punitive damages under Count IX only if it found Diageo liable for fraud. The interrogatory verdict form for 3 Excluding Diageo Dominicana. 4 Diageo’s petition for certiorari challenging the trial court’s order allowing United Brands to amend its counterclaim to add a claim for punitive damages was originally docketed under Case No. 3D18-620 and later consolidated with Case No. 3D18- 1989. We agree with United Brands’ statement at oral argument that the jury’s findings of punitive damages subsequent to the filing of the petition for certiorari render this petition moot. 5 Count IX, however, shows that the jury found, in contrast to its prior verdicts in Counts VII and VIII, that Graña, on Diageo’s behalf, was personally guilty of intentional misconduct or gross negligence that caused damage to United Brands in connection with its fraud claim. The jury awarded $2.3 million in punitive damages against Diageo plc. Prior to discharge of the jury, United Brands argued that the jury’s findings were inconsistent and contradictory. It argued that the jury’s finding in Counts VI, VII, and VIII – that Diageo and Graña were not liable for negligent or intentional fraud and misrepresentation – was apparently contradicted by their finding in Count IX, the punitive damages count, that Graña was liable for intentional misconduct in connection with United Brands’ fraud claim, for which they awarded punitive damages. United Brands asked the trial court to return the fraud and punitive damage counts to the jury to deliberate further and resolve the apparent inconsistency. The trial court declined to submit the issue to the jury, and instead entered the final judgment against Diageo on the breach of implied covenant claim, and awarded $2.3 million to United Brands in compensatory damages. The trial court vacated the punitive damage award in Count IX. On appeal, Diageo appeals from the trial court’s denial of its motion to set aside the verdict, and seeks to vacate the final judgment. It argues that judgment should be entered in its favor with respect to United Brands’ claim for breach of the 6 implied covenant of good faith and fair dealing. We agree, and reverse that portion of the final judgment finding Diageo liable for breach of implied covenant of good faith and fair dealing. On United Brands’ cross-appeal seeking a new trial on fraud and punitive damages, we affirm. II. Breach of the implied covenant of good faith and fair dealing. A. Standard of Review The standard of review of a trial court’s grant or denial of a motion for directed verdict is de novo. See Contreras v. U.S. Sec. Ins. Co., 927 So. 2d 16, 20 (Fla. 4th DCA 2006); Publix Super Markets, Inc. v. Bellaiche, 245 So. 3d 873, 875 (Fla. 3d DCA 2018). However, “[a]n appellate court reviewing the grant of a directed verdict must view the evidence and all inferences of fact in the light most favorable to the nonmoving party, and can affirm a directed verdict only where no proper view of the evidence could sustain a verdict in favor of the nonmoving party.” Owens v. Publix Supermarkets, Inc., 802 So. 2d 315, 329 (Fla. 2001) (citation omitted). B. Discussion United Brands asserts that Diageo breached the implied covenant of good faith and fair dealing inherent in the Resale Agreement by striking a behind-the-back deal with a competitor while promising to continue the relationship with United Brands, thus violating the reasonable expectations of the parties. Florida contract law 7 recognizes the implied covenant of good faith and fair dealing in every contract. Cty. of Brevard v. Miorelli Eng'g, Inc., 703 So. 2d 1049, 1050 (Fla. 1997) (“‘[E]very contract includes an implied covenant that the parties will perform in good faith.’” quoting Champagne–Webber, Inc. v. City of Fort Lauderdale, 519 So. 2d 696, 697 (Fla. 4th DCA 1988)); Ins. Concepts & Design, Inc. v. Healthplan Servs., Inc., 785 So. 2d 1232, 1234–35 (Fla. 4th DCA 2001). The implied covenant of good faith and fair dealing is designed to protect the contracting parties’ reasonable expectations. Speedway SuperAmerica, LLC v. Tropic Enters., Inc., 966 So. 2d 1, 3 (Fla. 2d DCA 2007); Cox v. CSX Intermodal, Inc., 732 So. 2d 1092, 1097 (Fla. 1st DCA 1999). However, there are two limitations on such claims: (1) where application of the covenant would contravene the express terms of the agreement; and (2) where there is no accompanying action for breach of an express term of the agreement. QBE Ins. Corp. v. Chalfonte Condo. Apartment Ass'n, Inc., 94 So. 3d 541, 548 (Fla. 2012) quoting Ins. Concepts, 785 So. 2d at 1234. A duty of good faith must “relate to the performance of an express term of the contract and is not an abstract and independent term of a contract which may be asserted as a source of breach when all other terms have been performed pursuant to the contract requirements.” Id. (quoting Hosp. Corp. of Am. v. Fla. Med. Ctr., Inc., 710 So. 2d 573, 575 (Fla. 4th DCA 1998)); see also Johnson Enter. of Jacksonville, Inc. v. FPL Group, Inc., 162 F.3d 1290, 1314 (11th Cir. 1998) (“[G]ood faith requirement does not exist ‘in the air’. Rather, it 8 attaches only to the performance of a specific contractual obligation.”). Allowing a claim for breach of the implied covenant of good faith and fair dealing “where no enforceable executory contractual obligation” exists would add an obligation to the contract that was not negotiated by the parties. Hospital Corp., 710 So. 2d at 575. The jury found that Diageo did not breach the Resale Agreement, did not violate the termination provision of the Agreement, and fulfilled all of its contractual obligations under the Agreement. As discussed earlier, the Resale Agreement negotiated by the parties contained express provisions detailing the manner in which the agreement could be mutually terminated. The record on appeal shows that Diageo properly terminated the Agreement according to the express termination provision. The Resale Agreement also contained a provision that excluded any conditions, representations, and warranties implied by statute or common law that were not expressly included in the agreement. Those contract provisions are unambiguous. The provision waiving implied warranties not expressly set forth in the Agreement, coupled with the provision that gave either party the right to terminate the Resale Agreement with three months’ notice, does not implicate breach of the implied warranty of good faith and fair dealing because Diageo terminated the 9 Agreement pursuant to the plain and unambiguous termination provision of that contract.5 On de novo review of the record on appeal, we reverse the final judgment and remand for entry of judgment in favor of Diageo as to Count IV of United Brands’ Corrected Amended Counterclaim for breach of implied covenant of good faith and fair dealing, and vacate the award of $2.3 million in damages to United Brands. III. United Brands’ cross-appeal. In its cross-appeal, United Brands seeks to remand for a new trial on its Count VIII fraud claim and Count IX punitive damages claim. We affirm the trial court’s denial of United Brands’ motion for new trial. A. Standard of review Our standard of review on denial of a motion for new trial is whether the trial court abused its discretion. Brown v. Estate of Stuckey, 749 So. 2d 490, 497–98 (Fla. 1999); Graham Companies v. Amado, 45 Fla. L. Weekly D877 (Fla. 3d DCA, Apr. 15, 2020). B. Discussion 5 The Resale Agreement was the product of knowledgeable businesspeople negotiating in their own self-interest. Indeed, the Resale Agreement provision, in which each party acknowledged that all implied warranties not expressly set forth are excluded, finishes with the statement that, “[e]ach party had the opportunity to consult with counsel of its choice prior to entering into this Agreement.” 10 The jury was properly instructed that it could award punitive damages in Count IX only if it found Diageo committed fraud. The jury determined in Counts VI, VII, and VIII that Diageo and Graña, on Diageo’s behalf, did not commit fraud or intentional misrepresentation. However, in Count IX, the count for punitive damages, the jury found that Graña, on Diageo’s behalf, personally committed intentional misconduct or gross negligence, and the jury thus awarded punitive damages. The trial court polled the jury, and the jury affirmed their verdict that Diageo did not commit fraud. Prior to discharge of the jury, United Brands’ counsel objected to the punitive damages verdict and argued that the finding of no substantive fraud was inconsistent with an award of punitive damages. United Brands’ counsel asked the trial court to return the verdict to the jury to resolve the apparent inconsistency by revisiting their findings of fraud. The trial court concluded that the jury’s finding of no fraud in any of the substantive fraud counts meant there could be no award of punitive damages, and denied United Brands’ request to send the verdicts back to the jury for reconsideration. The trial court subsequently denied United Brands’ post-judgment motion for new trial on the fraud and punitive damages claims, and granted Diageo’s motion to strike the punitive damage award as a departure from the jury instructions and applicable law. We agree that without a finding of liability on the underlying fraud claims there can be no valid award of punitive damages. See Cont'l Assur. Co. v. Davis, 11 538 So. 2d 542, 544 (Fla. 1st DCA 1989); Oliveira v. Ilion Taxi Aero Ltda, 830 So. 2d 241(Fla. 4th DCA 2002) (reversing the award of punitive damages where, as a matter of law, a judgment for damages cannot be entered where there is no finding of liability). Finding no abuse of discretion, we affirm the trial court’s denial of United Brands’ motion for new trial, and affirm the final judgment for Diageo on the fraud and punitive damages claims. Reversed in part; Affirmed in part. 12