Cuba Libre Humidors, Inc. v. Phillips & King International, Inc.

Verdicts & Settlements   ·   January 22, 1999

California Daily Journal

Cuba Libre Humidors, Inc., a California Corporation vs. Phillips & King International, Inc., a California Corporation, Universal Color Graphics
(BC188073)
Result: January 22, 1999

LA Superior Central
HON Reginald A. Dunn

Topic: Contracts
Sub topic: Breach of Contract
Sub-sub topic: Negligent Misrepresentation

Jury verdict: $1,777,550 ($888,775 general damages; $888,775 punitive damages)

Attorneys:
Plaintiff- Jeffrey S. Benice, The Benice Group, Irvine
Defendant- Sidney Mendlovitz
Defendant- Gordon D. Soladar

Facts & Contentions: On or about May, 1997, plaintiff’s president, Marc Short (Short) met with defendant Philips and King’s president Jerry Christiansen (Christiansen) to negotiate an exclusive distribution agreement at Phillips & King’s offices in the City of Industry, California. Short had been referred to Christiansen by Universal through Universal’s principals Mary and Abraham Bagbodorian. Short had used Universal for printing work. The plaintiff is the designer and manufacturer of a premium cigar humidification device called the “Cuba Libre.”

When Short met with Christiansen, Christiansen represented that Phillips & King would sell at least 10,000 humidification units a month, generating $2,900,000 in annual revenues; Christiansen stated that Phillips & King would sell three humidification units to each of the 3,500 tobacco stores served by Phillips & King monthly. Christiansen also stated that Phillips & King would sell 20 humidors a month. Christiansen further represented to Short that Phillips & King would agree to purchase and distribute plaintiff’s Cuba Libre units, but only on the condition that plaintiff give Phillips & King nationwide exclusive distribution rights. Christiansen further stated that plaintiff was required, as a condition of the exclusive distribution agreement, to manufacture a supply of 10,000 units immediately, constituting a one month inventory.

Plaintiff and Phillips & King entered into the exclusive distribution agreement on the terms discussed herein. The parties specifically agreed to reduce the agreement to a writing. However, Phillips and King never prepared a written agreement as promised, despite numerous requests to do so by plaintiff. The plaintiff thereafter commenced manufacturing the 10,000 pieces. In or about November 1997, plaintiff had manufactured 7500 units. As an additional condition of Phillips & King’s exclusive distribution agreement, Phillips & King required that plaintiff expend thousands of dollars in advertising revenues on a radio program called “Lighten Up Cigar Radio” that Phillips & King and/or Christiansen held an interest in, and an industry magazine entitled “Tobacconist.” Phillips & King also required that plaintiff have all of its printing completed by defendant Universal, which plaintiff discovered overcharged plaintiff for printing services.

In or about October 1997, Phillips & King made a minimal $12,000 purchase of plaintiff’s humidification units and humidors, after numerous demands by plaintiff to perform, pursuant to the exclusive distribution agreement. Thereafter, Phillips & King made no further purchases; refused to communicate with plaintiff’s president Short, and refused to market and distribute plaintiff’s Cuba Libre products. Although a distribution agreement was promised, the defendant contended that no agreement was ever made.

Damages: The plaintiff has been damaged in the amount of at least $2 million, advertising and printing costs, and loss of future revenues.

Jury trial: Length five days; Poll 12-0; Deliberation one day
Other Information: The verdict was reached approximately 10 months after the case was filed.