Appeal from the United States District Court for the District of Montana. CV-91-013-PGH. Paul G. Hatfield, District Judge, Presiding
Before: Beezer and Hall, Circuit Judges, and Conti, District Judge.**fn**
Pennington's, Inc. ("Pennington's") appeals the district court's grant of summary Judgement in favor of the Brown-Forman Corporation ("Brown-Forman") in Pennington's breach of contract action. The district court had jurisdiction pursuant to 28 U.S.C. § 1332. This court has jurisdiction pursuant to 28 U.S.C. § 1291. We affirm.
Pennington's contends that Brown-Forman violated the covenant of good faith and fair dealing implicit in the parties' distributorship agreement by terminating the agreement without cause. Pennington's argues that Brown-Forman was required to provide it more than the thirty day notice period stipulated in the contract to mitigate the effect of the termination. We find this claim unpersuasive.
The termination clause of the parties' contract clearly states: "Either party may terminate this agreement in its sole discretion with or without cause at any time by giving the other party thirty (30) days written notice of termination, except as otherwise required by law." It is well established under both California and Montana law that the implied covenant of good faith and fair dealing can not override express contractual terms.*fn1 See Carma Developers v. Marathon Development California, 6 Cal. Rptr. 2d 467, 484 (Cal. 1992); Farris v. Hutchinson, 838 P.2d 374, 377 (Mont. 1992). Thus, the district court correctly found that Brown-Forman did not violate the implied covenant of good faith and fair dealing by terminating the distributorship agreement without cause.
Pennington's relies on several older cases to support its argument concerning the implied covenant of good faith. See Kelly-Springfield Tire Co. v. Bobo, 4 F.2d 71 (9th Cir. 1925); J.C. Millett Co. v. Park & Tilford Distillers Corp., 123 F. Supp. 484 (D.C. Cal. 1954); Jack's Cookie Co. v. Brooks, 227 F.2d 935 (4th Cir. 1955); Hunt Foods v. Phillips, 248 F.2d 23 (9th Cir. 1957). These cases are distinguishable, however, because they involved contracts that did not contain termination clauses which expressly allowed either party to terminate at will. By arguing that these cases control in the instant case, Pennington's asks us to prohibit Brown-Forman from doing that which is expressly permitted by the distributorship agreement. We refuse to follow this approach.
Pennington's also argues that summary judgment was inappropriate because it is unclear whether the termination clause contains a good cause requirement. Pennington's alleges that at the time the parties entered into the distributorship agreement, Brown-Forman gave oral assurances that the agreement would only be terminated for good cause. Pennington's did not argue that the termination provision is ambiguous before the district court. Because we generally do not reach issues raised for the first time on appeal, we decline to entertain this claim here. United States v. Smith, 905 F.2d 1296, 1302 (9th Cir. 1990); Komatsu, Ltd. v. States Steamship Co., 674 F.2d 806, 812 (9th Cir. 1982).
In its reply brief, Pennington's argues that the phrase "except as otherwise required by law" in the termination clause incorporates the Montana Alcoholic Beverages Act, Mont. Code Ann. § 16-3-201 et. seq. (1991). This statute requires 60 days notice before a distributorship agreement between a beer brewer and wholesaler can be terminated. Mont. Code Ann. § 16-3-221 (1991). Because Brown-Forman did not give 60 days notice before terminating the distributorship agreement, Pennington's argues that it breached the agreement.
Pennington's raises this argument for the first time in its reply brief. Ordinarily, we do not consider claims raised for the first time in a reply brief. Eberle v. City of Anaheim, 901 F.2d 814, 818 (9th Cir. 1990). In any event, Pennington's argument is meritless. By its own terms, the Montana Alcoholic Beverages Act only governs the termination of beer distributorships. This case involved the distribution of wine products. Thus, if we applied the Act's protections in this case we would expand the scope of that statute in violation of its plain language. We are not empowered to take such action.
Pennington's final claim is that the termination clause is unconscionable and should not be given effect as ...