Law Offices of John P. Connell, P.C.: Every now and then a Massachusetts brewery will not be paid by a wholesaler due to some dispute that arises out of the parties’ contractual relationship, whether that contractual relationship is written or verbal. In March 2019, the state Appeals Court rendered its decision in Paper City Brewery Co., Inc. vs. La Resistance, Inc., et al, Appeals Court No. 17-P-1633 (March 15, 2019), wherein the Appeals Court was required to decide which statute of limitations is applicable when a brewery does decide it needs to file a lawsuit against a wholesaler for breach of contract: the four (4) year statute of limitations that applies to the sale of “goods,” which is enumerated in our state’s Uniform Commercial Code (“UCC”) at Article 2; or the six (6) year statute of limitations that applies to contracts that are not strictly for the sale of “goods.”
By way of background, Paper City Brewery was a brewery located in Holyoke, Massachusetts from 1995 until it ceased operations in 2017. Prior to ceasing operations, however, it had contracted with La Resistance, a wholesaler licensed in Massachusetts, to sell and distribute its beer to retail outlets such as restaurants and package stores. Ultimately, according to Paper City Brewery, La Resistance failed to pay for the beer it sold to La Resistance but then waited five (5) years to file suit to collect payment.
La Resistance successfully argued in the Superior Court that the applicable statute of limitations for the sale of “goods,” as set forth G.L. c. 106, § 2-725, was applicable to the sale of beer, and was granted summary judgment, and the case was dismissed as un-timely. Very generally, there are two bodies of Massachusetts contract law, one of which governs the sale of “goods” and is codified at Article 2 of our UCC; and one of which governs contracts that are not strictly for the sale of “goods,” such as contracts that involve services and goods.
Paper City Brewery appealed the dismissal of its lawsuit and argued to the Appeals Court that the brewery-distributor relationship is not strictly for the sale of an identifiable “good,” but rather a broader agreement wherein the wholesaler provides such services as “managing accounts, representing the brewery at trade shows and festivals, and being the first line of defense in the event that there were issues with the product.” Therefore, the brewery argued, the six (6) year statute of limitations for ordinary “breach of contract” claims, as set forth at G.L. c. 260, § 2, should apply.
The Appeals Court disagreed and upheld the dismissal of the lawsuit as being filed more than four (4) years from the initial breach of the contract in violation of the UCC statute of limitations. While the Appeals Court declined to state a “general rule” that all brewery – wholesaler contracts, whether written or verbal, are subject to the UCC when a “breach of contract” arises, the Appeals Court found there was not enough evidence in the record to show that in this particular case there was ever an agreement to provide or pay for services which would bring the relationship outside the UCC.
This decision is important not only for determining the applicable statute of limitations when a party to a distribution agreement believes the other party has breached a contract but rather it opens the door for all sorts of other breach of contract issues that are covered by the UCC as “gap filling terms” in every contract for the sale of “goods,” which do not apply to non-UCC contractual disputes. In drafting a Distribution Agreement, therefore, all parties should take care as to which body of Massachusetts law will govern a dispute.
2019© Law Offices of John P. Connell, P.C.