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W.J. Deutsch & Sons, Ltd v. the Superior Court of Sacramento County

December 6, 2010

W.J. DEUTSCH & SONS, LTD., PETITIONER,
v.
THE SUPERIOR COURT OF SACRAMENTO COUNTY, RESPONDENT; RENWOOD WINERY, INC., REAL PARTY IN INTEREST.



The opinion of the court was delivered by: Raye ,j.

Filed

W.J. Deutsch & Sons v. Superior Court CA3

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

Real party in interest Renwood Winery, Inc. (Renwood), a vintner, sells wines under its own labels produced from grapes grown and harvested locally. Renwood entered into an exclusive marketing and distribution contract (the services agreement) with petitioner W.J. Deutsch & Sons, Ltd. (Deutsch), a national wine distributor. After the services agreement turned to sour grapes, the parties entered into a lengthy arbitration.

The arbitrator ultimately awarded Deutsch liquidated damages, other damages, and attorney fees. Deutsch filed a motion in the trial court to confirm the award. The trial court found the arbitrator exceeded his authority and granted Renwood's petition to vacate the award. Deutsch filed a petition for writ of mandate contending the trial court engaged in an impermissible review of the merits of the award, supplanted its own interpretation of the contract for that of the arbitrator, and incorrectly interpreted the contract. We agree and will grant the petition for writ of mandate, and issue a peremptory writ directing the trial court to annul its decision and conduct further proceedings consistent with the views expressed in this opinion.

FACTUAL AND PROCEDURAL BACKGROUND

Renwood produces and sells wine made from grapes harvested in Amador County. Deutsch is a national marketer, promoter, and distributor of wine, selling wine to other distributors, retailers, and restaurants.

The Services Agreement

In March 2006 Renwood and Deutsch entered into the services agreement in which Deutsch agreed to become Renwood's exclusive marketing and distribution service provider. Under the agreement, Deutsch would purchase specific Renwood wines.

Various types of wines were divided into four tiers, with different sales standards for each tier. The standards were based on Renwood's own prior sales of its products, with a yearly growth rate of 15 percent, compounded each year. Deutsch would market and distribute these wines across the country.

The services agreement defines the term "deplete" as "the sale of wine by a distributor to merchants that sell the wine to the final consumer." Deutsch would be required to "ensure that depletions of Contracted Products do not fall below 80% of the Tier Sales Standards."

The services agreement provided that its "Anniversary Date" was July 1, 2007, and each succeeding July 1. The agreement was for 10 years, in two successive five-year periods from July 1, 2006. However, the parties anticipated the agreement would be ratified prior to the anniversary date. Therefore, the agreement provided that its "Effective Date" was "April 1, 2006, so long as Authorized Execution of this agreement by all signatories . . . takes place by that date" and designated the period from the effective date to July 1, 2006, the "Transition Period."

The services agreement contains a section entitled "Transition Period," described as a period in which the parties would begin the transition in distribution, make appropriate announcements, and "commence ...


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