Copeland v. Baskin Robbins U.S.A.
California Court of Appeal, Second District
117 Cal.Rptr.2d 875 (2002)
When Baskin Robbins U.S.A. (Baskin Robbins) (defendant) decided to shut down its ice cream manufacturing plant in Vernon, California, Copeland (plaintiff) proposed acquiring it so long as the deal included a “co-packing” agreement whereby Baskin Robbins would purchase ice cream manufactured by Copeland at the plant. The parties negotiated for several months and, in May 1999, came to an agreement on terms documented by a letter delivered by Baskin Robbins to Copeland. The letter provided that Copeland would buy the plant facility and equipment for $1,300,000 in cash and that Baskin Robbins “would agree, subject to a separate co-packing agreement and negotiated pricing,” to purchase seven million gallons of ice cream over a three-year period. If Copeland agreed with the terms set forth in the letter, he was to deliver to Baskin Robbins a $3,000 nonrefundable payment. The deal was anticipated to close within 30 days. Copeland delivered the $3,000 and the parties proceeded to negotiate the co-packing arrangement with respect to terms including price, flavors, quality standards, and intellectual property rights. In July 1999, Baskin Robbins broke off negotiations with Copeland and returned his $3,000, stating that the co-packing arrangement no longer accorded with its corporate strategy. Copeland sued Baskin Robbins on the grounds that it had breached their contract to enter into a co-packing agreement. He sought expectation damages in the form of profits he would have earned from Baskin Robbins and other purchasers of his ice cream, lost employment opportunities, and reputational injury. He neither sought nor proved any losses based on his reliance on the negotiations per se. The trial court granted summary judgment to Baskin Robbins on the grounds that the May letter did not create a contract with respect to co-packing because the essential terms of such agreement were not agreed upon and there was no way to determine them. Copeland appealed.
Rule of Law
Holding and Reasoning (Johnson, J.)