Carmichael v. Adirondack Bottled Gas Corp.

Facts

Ps bought an existing petroleum gas distributorship from Granger. The transaction required Ps to enter into a contractor's agreement D. In general, the agreement described the terms under which D would supply Ps with the product which they, in turn, would retail to their customers. The agreement contained a 'key man' clause, which provided in part: This Agreement shall automatically terminate without written notice upon the sale or assignment of P's business, the death of P, husband, or upon any change in the capital structure, management or ownership of contractor. Eventually, Ps explored with D the possibility of selling their distributorship for $60,000. D offered P $38,500. Ps declined the offer. Husband died in a snowmobile accident, triggering the 'key man' termination provision. At the funeral, D asked Wife about her intentions toward the business. She indicated an intention to stay in business, and D replied that they would get together at a future time to discuss how she would operate the distributorship. D again sent a letter to Wife's attorney, again offering to purchase the business for $38,500. Wife promptly instructed her attorney to inform D that she still wished to stay in business. D gave an ultimatum that the offer would expire in 5 days and even if she didn't accept the buyout offer, she would be out of business. Concluding that D would no longer supply her with fuel as of Monday, Wife laid off her employees Friday afternoon. She sold much of her business equipment for $35,000 to Blue Flame Gas, a local competitor. On Monday, Wife returned to her workplace and began closing up shop. The phone rang repeatedly that morning with calls from customers needing fuel deliveries. D stopped by to see Wife, who told him she had sold her trucks and discharged her employees. She then handed him a list of customers who required immediate attention. D's attorney called. The attorney became extremely upset. A final meeting was held to tie up loose ends. Wife's attorney would not be present, and she announced upon her arrival that she would not discuss legal questions without her lawyer present. D repeatedly asked wife to accept and sign a written agreement for the transfer of Wife's remaining business assets. She eventually relented and signed after the meeting.  D also handed over the requested documents. D then immediately began servicing the customers. Disputes magnified and eventually, Wife sued D. The court ordered arbitration for some of the claims. The parties stipulated to the entry of an arbitration award. Wife was awarded $4,922.26. The arbitration proceedings did not address any claim regarding bad faith and unfair dealing. It dealt only with accounting disputes. Wife initiated suit against D in federal district court on January 5, 1990, alleging federal antitrust violations.  The district court dismissed Wife's antitrust suit with prejudice. D moved for summary judgment in state court. The state court denied summary judgment and the parties proceeded to trial. All claims were dismissed except for the breach of the implied covenant of good faith and fair dealing. The jury gave wife a verdict in the amount of $60,000 compensatory and $100,000 punitive damages. D appealed after several post-verdict motions were denied.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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