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World Class Wholesale, LLC v. Star Industries, Inc.

Superior Court of Delaware

May 22, 2018

WORLD CLASS WHOLESALE, LLC, a Delaware Limited Liability Company, Plaintiff,
v.
STAR INDUSTRIES, INC., a New York Corporation, Defendant.

          Submitted: March 7, 2018

          John G. Harris, Esq. (Argued), Sean A. Meluney, Esq., Berger Harris LLP, Attorneys for World Class Wholesale, LLC

          Adam Balick, Esq. (Argued), Balick & Balick, LLC, Attorney for Defendant Star Industries, Inc.

          OPINION

          Mary M. Johnston, Judge

         FACTUAL AND PROCEDURAL CONTEXT

         This case arises out of an alleged alcohol distribution agreement. Plaintiff World Class Wholesale, LLC ("WCW") is licensed as an alcohol wholesaler in Delaware. Defendant Star Industries, Inc. ("Star") is an alcohol supplier headquartered and incorporated in New York. WCW claims that it entered into an oral contract with Star in which WCW agreed to be the exclusive distributor of Star's products in Delaware for an indefinite period of time. When Star voluntarily surrendered its Delaware out-of-state liquor supplier's license and ceased doing business in Delaware, WCW initiated an action against Star before the Office of the Delaware Alcoholic Beverage Control Commissioner.

         Before the Commissioner, WCW argued that the surrender of the license constituted an involuntary termination of distribution rights without good cause pursuant to Rule 901 of Title 4 of the Delaware Administrative Code. WCW sought $160, 000 in compensation. The Commissioner held that Rule 901 did not apply, reasoning that the purpose of Rule 901 "is to compensate a wholesaler for building a brand where another wholesaler in the state ultimately reaps the rewards of such building and labor .... This present matter is not a scenario where Star's products are coming into Delaware though a different wholesaler while at the labor of WCW."[1]

         In spite of the Commissioner's ruling, which WCW does not appeal here, WCW seeks damages as if Rule 901 did apply, referencing alleged violations of Rule 901 in its breach of contract claim in its complaint. In addition to the breach of contract claim, WCW also brings claims under the theories of breach of the implied covenant of good faith and fair dealing, promissory estoppel, and unjust enrichment.

         In response, Star has filed two motions to dismiss. Star seeks dismissal of the breach of contract, breach of the implied covenant of good faith and fair dealing, and the unjust enrichment claims.

         MOTION TO DISMISS STANDARD

         In a Rule 12(b)(6) motion to dismiss, the Court must determine whether the claimant "may recover under any reasonably conceivable set of circumstances susceptible of proof."[2] The Court must accept as true all well-pleaded allegations.[3] Every reasonable factual inference will be drawn in the non-moving party's favor.[4] If the claimant may recover under that standard of review, the Court must deny the motion to dismiss.[5]

         ANALYSIS

         Motion to Dismiss the Breach of Contract and Breach of the Implied Covenant of Good Faith and Fair Dealing Claims

         Star contends these counts should be dismissed because the alleged underlying oral promise violates the Statute of Frauds. The Delaware Statute of Frauds prohibits an action from being brought based on an "agreement that is not to be performed within the space of 1 year from the making thereof . . . unless the contract is reduced to writing . . . signed by the party to be charged therewith."[6] "It has been the law in Delaware for many years that the ...


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