The deal also allowed Carolina Beverage to receive an “invasion fee” of $1 per case of bottled water sold and directly distributed to retailers. Both parties had the right to terminate the agreement upon a breach, provided a 30-day window was given to remedy the violation. Fiji could also terminate the deal with 30 days’ written notice and a termination payment of $5 per case of water sold by Carolina Beverage in the previous calendar year.
In late 2018, Fiji invaded approximately 85% of Carolina Beverage’s territory but never invoked its right to end the distribution contract, leading Carolina Beverage to sue for a termination payment of $1,993,670.
On Friday, the appellate judges reversed the judgment in Los Angeles County Superior Court, which had ruled in favor of Carolina Beverage. The judges noted that Fiji owed Carolina Beverage nothing for ending their contract, as the termination payment was only required with a 30-day written notice of termination.
“Indeed, the jury was specifically instructed that ‘constructive termination’ occurs whenever one party to a contract ‘interferes with another party’s ability to obtain the benefits of the contract,'” the opinion stated. However, the judges clarified that constructive termination isn’t a viable theory for recovery under California common law, and the deal did not contain a constructive-termination clause.
