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Intermilo, Inc. v. I.P. Enterprises

filed: March 28, 1994.

INTERMILO, INC.
v.
I.P. ENTERPRISES, INC. V. MILOSUN; MILOUOT, AN ISRAELI CORPORATION; INTERMILI, INC.; ISRAEL FRUMER THIRD-PARTY DEFENDANTS, ISRAEL FRUMER, APPELLANT



Appeal from the United States District Court for the District of New Jersey. D.C. Civil Docket No. 88-04313.

Before: Stapleton, Roth and Lewis, Circuit Judges.

Author: Roth

Opinion OF THE COURT

ROTH, Circuit Judge

Poultry has been the subject of extensive Discussion in American jurisprudence. See, e.g., Frigaliment Importing Co. v. B. N. S. International Sales Corp., 190 F. Supp. 116, 117 (S.D.N.Y. 1960) ("The issue is, what is chicken?"). In the present case, the litigants did not ask the court to define the bird but instead to analyze the business arrangements for its sale. Plaintiff, Intermilo, was an importer of frozen pre-cooked kosher poultry products from Israel. Intermilo sued defendant I.P. Enterprises, Inc., ("I.P."), one of its U.S. distributors, for the price of goods delivered to and accepted by I.P. I.P. counterclaimed against Intermilo and added to its counterclaim individual defendant Israel Frumer and corporate defendants Intermili, Milosun, and Milouot, alleging wrongful termination of a distributorship contract, breach of contract, civil conspiracy and tortious interference with prospective economic advantage. A jury trial was held, and on February 21, 1992, the jury returned a verdict against Intermilo on its collection claims and in favor of I.P. on its counterclaims in the amount of $1,245,302.

Following the verdict, the district court considered the parties' motions for judgment as a matter of law. It granted a portion of Intermilo's collection claim; it refused to dismiss I.P.'s counterclaims as a matter of law but reduced the award of compensatory damages as being duplicative; it offset the compensatory award on the counterclaims by the amount I.P. owed on the collection claims; and it reduced the punitive damages to those awarded on the tortious interference cause of action. This resulted in a total verdict in favor of I.P. of $199,981.86 in compensatory damages jointly and severally against Intermilo, Milosun and Frumer and of $100,000 in punitive damages with Intermilo and Frumer individually liable for $50,000. Israel Frumer filed the only appeal.

We conclude that the district court applied an improper standard to evaluate the jury's punitive damage award and we will reverse the award of punitive damages against appellant, Israel Frumer. We will affirm the remaining portions of the judgment of the district court.

I.

Milouot is an Israeli company that markets agricultural products produced on member kibbutzim or farming communities. Milosun is the poultry division of Milouot. Intermilo imported Milouot's frozen kosher poultry products under the "Mili" brand name. In March 1986, I.P. began distributing Mili products on a non-exclusive basis. On November 25, 1987, Isaac Perry, president of I.P., entered into an "exclusive" distributorship agreement with Intermilo and Milosun to sell certain Mili frozen pre-cooked poultry items in New York and most of New Jersey. This agreement allowed I.P. sixty days from the date of delivery to pay for goods and required Intermilo to send I.P. a notice allowing thirty days to cure any defects. Upon a failure to cure, Intermilo could terminate the agreement on thirty days notice.

The relationship among Milosun, Intermilo and I.P. apparently proceeded rather harmoniously until January 1988. At that time, Israel Frumer, an Israeli born businessman living in the United States since 1964, began renting office space at Intermilo's offices in Hackensack, New Jersey. Shortly thereafter, Frumer began to discuss Intermilo's business with its President, Nimrod Vizansky. Starting in March 1988, Frumer made inquiries regarding the Mili product and sent a written proposal of general interest to Yonatan Melamed, the general manager of Milouot. Frumer followed this with a visit to Israel in April 1988.

During this same period, Isaac Perry visited officers of Rokeach, a company which had a nationwide distribution system for kosher products but did not then deal in poultry products. Perry delivered to Rokeach price quotations from I.P. and samples of its products. Under its distributorship agreement with Intermilo, I.P. was required to obtain Intermilo's approval for the private label arrangement I.P. proposed to Rokeach.

As a result of his interest in Intermilo, Frumer accompanied Vizansky on visits to prior and potential distributors and customers. These visits included a meeting with Harold Weiss of Rokeach, who testified that Vizansky and Frumer offered him an opportunity exclusively to represent Mili products in the same area covered by I.P. under I.P.'s exclusive distributorship agreement with Intermilo. Intermilo subsequently sold a substantial amount of product to Rokeach.

The jury was presented with testimony that Frumer obtained I.P.'s price list, calculated its mark-up, and became interested in buying a partnership in Intermilo. Frumer travelled to Israel and allegedly offered $400,000 for a partnership interest in Intermilo. Additionally, Frumer participated with Vizansky in the Javits Center's kosher food show and allegedly collected names of potential customers located within the New York/New Jersey area serviced by I.P. Although Frumer and Vizansky testified that they gathered the names to determine only whether Perry was developing the exclusive market set forth in the agreement, the list was never turned over to I.P.

Frumer became Intermilo's business manager in August 1988. In September 1988, Intermilo claimed that I.P. was in breach of its contract and terminated the agreement. In January 1989, Intermilo was closed. Three months later, Milouot and Milosun chose Frumer from among five candidates to distribute Mili products, imported directly from Israel, in the New ...


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