Mini Melts USA, Inc. et al v. Mini Melts, Inc. et al
RULING ON CROSS-MOTIONS FOR SUMMARY JUDGMENT. For the reasons stated in the attached ruling, defendants' motion for summary judgment (Doc. # 77 ) is GRANTED. Plaintiffs' motion for summary judgment (Doc. # 72 ) is DENIED. The Clerk of Court shall enter judgment for defendants and close the case. It is so ordered. Signed by Judge Jeffrey A. Meyer on 9/18/2017. (Zuckier, C.)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
MINI MELTS USA, INC., et al.,
No. 3:15-cv-01704 (JAM)
MINI MELTS, INC., et al.,
RULING ON CROSS-MOTIONS FOR SUMMARY JUDGMENT
It is a venerable principle of contract law that an “agreement to agree” does not itself
constitute an enforceable agreement. That is true notwithstanding the parties’ best of intentions
that they will reach an agreement one day. Just as the freedom of contract allows parties to agree
to be bound by an agreement, it equally allows for the parties to agree that they will not be bound
unless they enter a future agreement.
If the parties have expressly agreed that there will be no enforceable agreement unless
they agree to one, it is not for the courts to imply that there exists an enforceable contract. It is
not for the courts to balance all the equities and to decide that it would be unfair not to lock the
parties into an agreement that they declined to reach in the first instance. As Justice Cardozo has
observed, “we are not at liberty to revise while professing to construe.” Sun Printing & Publ’g
Ass’n v. Remington Paper & Power Co., 235 N.Y. 338, 346 (1923).
Plaintiffs here have sued defendants to enforce terms of a provision that anticipates
defendants’ sale of assets but is expressly conditioned upon the parties agreeing to “a mutually
acceptable purchase agreement.” It is a classic agreement to agree. And it is unenforceable as a
matter of law. Accordingly, I will grant summary judgment for defendants.
“Mini Melts” is a cryogenically frozen ice cream product that is sold in many markets
worldwide. Somewhat similar to the equally alliterative “Dippin’ Dots” brand, Mini Melts are
produced using nitrogen to flash freeze ice cream in the form of tiny colorful pellets.
The plaintiffs in this case are Mini Melts USA and two of its principals, Shawn and
Daniel Kilcoyne. The defendants are Mini Melts, Inc. (MMI), which owns the U.S. trademark for
Mini Melts, and Thomas Mosey, the owner of patents used to produce the Mini Melts product.
In 2004, the Kilcoynes entered into a customer agreement with MMI in order to become
one of MMI’s distributors. The Kilcoynes eventually became MMI’s biggest customer. As the
relationship between the parties progressed, they discussed the possibility of the Kilcoynes
taking over and eventually purchasing MMI.
On June 6, 2008, Mosey sent a Letter of Intent to the Kilcoynes. See Doc. #73-1 at 56–
57. In the letter, Mosey proposed to sell MMI to the Kilcoynes, offering several “purchase
options.” The Kilcoynes did not purchase MMI in response to this letter, but the parties
continued to discuss the possibility.
In December 2009, after a series of discussions, the parties signed a non-binding Deal
Terms document. The Deal Terms contemplated “two phases: (A) Turnover of operations to
[plaintiffs], and (B) purchase of intellectual property.” Doc. #77-1 at 16. The document focused
mostly on the first phase, the turnover of operations. This phase contemplated plaintiffs
becoming the exclusive manufacturer of Mini Melts in the United States, discussed what assets
would be transferred to plaintiffs, and discussed royalty payments to be paid to defendants by
plaintiffs in return for their greater role in the manufacture of Mini Melts.
As to the purchase of intellectual property, the Deal Terms stated that “at any time after
closing, [plaintiffs] may purchase all US intellectual property . . . for the price of $3,000,000 less
any credits against the purchase price from Purchaser’s royalty payments or sales of territories.”
Id. at 17. The Deal Terms, however, also included the following language at the end: “These deal
terms are not binding on either party unless or until they are included in a definitive, binding
Purchase and Sale Agreement. Seller reserves the right to decline any offer in its sole discretion.”
In April 2010, the parties entered into a Manufacturing and Distribution Agreement
(MDA). Under the MDA, plaintiffs became the exclusive manufacturer and distributor of Mini
Melts within the United States. Id. at 21. The MDA specified that plaintiffs’ term as
manufacturer and distributor would last for five years and then automatically renew for an
additional five years as long as plaintiffs were not in default and paid a specified royalty. Id. at
22. The MDA also gave plaintiffs the right to use two patents held by defendants and provided
for the transfer and lease of certain equipment. Id. at 23.
The MDA featured a standard “integration” clause, stating that the MDA “represents the
complete and final understanding of the parties with respect to the subject matter hereof. It
supersedes any previous understandings, oral or written, between the parties and any such prior
understandings or agreements shall no longer have any force or effect.” Id. at 46.
In addition, the MDA also contained the following “termination-by-purchase” clause that
is now the focus of this lawsuit:
Termination by Purchase. Distributor [plaintiffs] may terminate this Agreement
at any time by paying the sum of Three Million Dollars ($3,000,000.00), less credits
for Owner’s [defendants’] share of Exclusive Territory Fees, for the leased
machinery, equipment, goodwill, Patents and trademarks licensed under this
agreement, and other assets pursuant to a mutually acceptable purchase agreement
that meets the criteria of the “Deal Terms” document executed by the parties on or
about December, 2009.
Id. at 41–43.
On October 16, 2015, about four and a half years after entering the MDA, the Kilcoynes
sent a letter to defendants, stating that they were terminating the MDA pursuant to the
termination-by-purchase clause. Doc. #16-2 at 2. Attached to this letter were a commitment letter
(showing that plaintiffs had secured an investor to make the $3 million purchase) and a draft
purchase agreement. See id. at 3–13, 23. Defendants rejected plaintiffs’ attempt to terminate the
MDA by purchase, arguing that the MDA’s termination-by-purchase clause was non-binding.
Plaintiffs then filed this action in November 2015, alleging breach of contract (Count
One) and breach of the implied covenant of good faith and fair dealing (Count Two). The parties
have filed cross-motions for summary judgment on both counts of the complaint, offering very
different interpretations of the meaning and nature of their agreements.
The principles governing the Court’s review of a motion for summary judgment are well
established. Summary judgment may be granted only if “the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of
law.” Fed. R. Civ. P. 56(a). My role at the summary judgment stage is to decide if there are
enough facts in dispute to warrant a trial. Of course, I must view the facts in the light most
favorable to the party who opposes the motion for summary judgment and then to decide if those
facts would be enough—if eventually proved at trial—to allow a jury to decide the case in favor
of the opposing party. If the facts do not rise to the level that would allow a reasonable jury to
rule in the opposing party’s favor, then there is no point in allowing the lawsuit to proceed, and
the motion for summary judgment will be granted. See generally Tolan v. Cotton, 134 S. Ct.
1861, 1866 (2014) (per curiam); Pollard v. New York Methodist Hosp., 861 F.3d 374, 378 (2d
Count One - Breach of Contract
Plaintiffs allege that defendants breached a contract between the parties when they
refused to allow plaintiffs to terminate the MDA by purchase for $3,000,000. The parties agree
that Connecticut law governs this diversity action. “The elements of a breach of contract claim
are the formation of an agreement, performance by one party, breach of the agreement by the
other party, and damages.” Meyers v. Livingston, Adler, Pulda, Meiklejohn & Kelly, P.C., 311
Conn. 282, 291 (2014). At issue now is the first element: whether the parties formed a valid and
binding sales contract.
Under Connecticut law, “where there is definitive contract language, … the
determination of what the parties intended by their contractual commitments is a question of
law.” Cruz v. Visual Perceptions, LLC, 311 Conn. 93, 101 (2014). By contrast, “when the
language of a contract is ambiguous, the determination of the parties' intent is a question of fact.”
Ibid. Of course, I am not required to find that a contract is ambiguous simply because the parties
advance starkly different interpretations of the language in question. See, e.g., Gabriel v.
Gabriel, 324 Conn. 324, 341 (2016).
Plaintiffs argue that the termination-by-purchase clause constitutes a binding option
contract. An option contract is “an offer by one to sell within a limited time and a right acquired
by the other to accept or reject such offer within such time.” Cutter Dev. Corp. v. Peluso, 212
Conn. 107, 109 (1989). The offer in an option contract is a “continuing offer” and is “irrevocable
until the expiration of the time period fixed by agreement of the parties.” Pack 2000, Inc. v.
Cushman, 311 Conn. 662, 675 (2014). In plaintiffs’ view, the termination-by-purchase clause of
the MDA is an irrevocable offer for plaintiffs to purchase defendants’ intellectual property for
$3,000,000. Plaintiffs contend that they accepted that offer in October 2015, thus forming a
binding bilateral sales contract between the parties.
For their part, defendants argue that the termination-by-purchase clause of the MDA did
not give rise to a binding sales contract, whether labeled an “option contract” or otherwise.
Focusing upon the portion of the termination-by-purchase clause stating that plaintiffs could
terminate the agreement and purchase defendants’ assets only “pursuant to a mutually acceptable
purchase agreement,” they contend that the termination-by-purchase clause established no more
than an unenforceable “agreement to agree” in the future. I agree with defendants.
Under Connecticut law, “an agreement to agree does not give rise to a contractual
relationship.” Realty Res. Chartered v. The HB Nitkin Grp., 2009 WL 2243695, at *7 (D. Conn.
2009). Further, “the general rule is that an agreement to agree is too indefinite to be legally
binding when it requires a superseding contract the terms of which must be negotiated.” Kulick v.
City of Hartford, 2007 WL 4707809, at *2 (Conn. Super. 2007).
In SS-II, LLC v. Bridge St. Assocs., 293 Conn. 287 (2009), the Connecticut Supreme
Court considered the enforceability of a putative option to purchase property under the terms of a
lease agreement between two parties. The court declined to enforce the agreement because “the
option to purchase in the present case also expressly anticipates a future agreement between the
parties with respect to the environmental land use restriction,” such that “the option to purchase
did not guarantee that the plaintiff would be able to purchase the property but simply constituted
an agreement to agree.” Id. at 300-01; see also Makari v. D & A Realty, LLC, 2005 WL 895869,
at *1 (Conn. Super. 2005) (parties’ entry into a purchase agreement not enforceable where under
the terms of the agreement “it is contemplated that there would be a full contract” in the nature of
a real estate contract of sale).
Here, the termination-by-purchase clause explicitly contemplates another agreement
when it notes that a sale of defendants’ assets would only occur “pursuant to a mutually
acceptable purchase agreement.” In my view, this language plainly and obviously shows that a
sale may not take place unless and until the parties reach a subsequent agreement, the terms of
which must be acceptable to all parties.
This interpretation is consistent with rulings of other courts that have interpreted similar
contractual language. For example, in Dumas v. First Federal Sav. and Loan Ass’n, 654 F.2d
359 (5th Cir. Unit B 1981) (per curiam), the Fifth Circuit interpreted an agreement that stated
“on its face that it [was] subject to a later, ‘mutually acceptable’ agreement.” Id. at 361. The
court held that “clearly, [the term] ‘mutually acceptable’ connotes that the terms of the
agreement are still subject to negotiation and not final” and that “any other reading would
obfuscate the plain meaning of the language.” Id. at 360. Accordingly, the court concluded, “the
provision can only mean the parties did not intend the  agreement to be a binding, enforceable
contract.” Id. at 361. See also Bank One, Texas, N.A. v. Apex Energy, LLC., 2001 WL 1335881,
at *2 (N.D. Tex. 2001) (holding that “‘mutually acceptable’ language . . . confirms that future
negotiations were envisioned”); Kopple v. Schick Farms, Ltd., 447 F. Supp. 2d 965, 971 (N.D.
Iowa 2006) (holding that a “letter of intent list[ing] a purchase price of $1,900,000” was not
binding because it also provided that “[a] form of Contract mutually acceptable to Buyer and
Seller . . . shall be used”).
I am not persuaded by plaintiffs’ counterarguments. First, they argue that the phrase
“pursuant to a mutually acceptable purchase agreement” contemplated no more than a
formality—that it “did not condition the sale on a formal contract, it merely identified the means
by which the contemplated sale and termination would be formalized.” Doc. #81 at 13 (emphasis
in original). To support this point, plaintiffs contend that the words “pursuant to” have a different
meaning than “subject to,” which is used elsewhere in the MDA to connote contingency. Id. at
13–14. They argue that if the parties had wanted to make the termination-by-purchase clause
conditional on another mutually acceptable agreement, they would have used the phrase “subject
to” rather than “pursuant to.”
I don’t agree that the use of “pursuant to” changes the termination clause’s meaning.
According to plaintiffs, “pursuant to” means “‘in the course of carrying out: in conformance to or
agreement with: according to.’” Id. at 13 (quoting Nation-Bailey v. Bailey, 316 Conn. 182, 197
(Conn. 2015)). But that definition is not inconsistent with my interpretation. Indeed, it is
precisely defendants’ argument that any purchase must be “in conformance to or agreement
with” the terms of a future agreement that is “mutually acceptable” to the parties.
Plaintiffs next argue that defendants’ interpretation of the termination clause is at odds
with the MDA’s broader purpose. They suggest that the “parties’ shared desire for a sale is . . .
evident throughout the MDA and its ancillary agreements.” Doc. #81 at 6. Specifically, plaintiffs
note that the MDA’s Recitals state that “distributor would like to purchase the business from
Owner,” and that “Owner is interested in selling the business to Distributor if adequate financing
can be obtained, subject to certain conditions and timing.” Doc. #77-1 at 20. In addition,
plaintiffs point to terms in the contract that would kick in if there were a purchase, and argue that
“[t]he parties would not have negotiated for, or included, these material provisions regarding a
sale had they not already agreed that a termination by purchase was the mutually-desired purpose
of the MDA.” Doc. #76 at 16.
But these portions of the MDA show at best that the parties seriously contemplated a sale,
something neither party disputes. The question here, however, is whether the termination-bypurchase provision constitutes a legally enforceable agreement. Because the language
highlighted by plaintiffs is aspirational and conditional, it offers little support for plaintiffs’
argument. To the contrary, language indicating that the parties “would like” to enter into a sale
suggests the opposite—that no agreement had yet been made, but that the parties were hoping to
execute one in the future, “subject to certain conditions and timing,” the details of which are
Third, plaintiffs rely on the basic principle of contract interpretation that “every provision
must be given effect if reasonably possible.” Issler v. Issler, 250 Conn. 226, 240 (1999). They
note that defendants’ interpretation would render inoperative other provisions of the terminationby-purchase clause, including its specific purchase price of $3 million. But it is sadly not
possible here to give effect to every provision of the MDA. If I give effect as plaintiffs wish to
the $3 million price term, then I will not be giving effect to the “mutually acceptable purchase
Lastly, plaintiffs argue that even if the termination-by-purchase clause contained a
condition precedent requiring a mutually acceptable future agreement, that condition should be
excused under the so-called “prevention doctrine.” This doctrine provides that “if a party to a
contract prevents, hinders, or renders impossible the occurrence of a condition precedent to his or
her promise to perform, or to the performance of a return promise, [that party] is not relieved of
the obligation to perform, and may not legally terminate the contract for nonperformance.”
Blumberg Assocs. Worldwide, Inc. v. Brown & Brown of Connecticut, 311 Conn. 123, 176
(2014). But the Connecticut Supreme Court has made clear that “the prevention doctrine fail[s]
as a matter of law [when] the allegedly hindering conduct by the defendants occurred before the
contract existed.” Id. at 178. In other words, the prevention doctrine only applies if the parties
have already entered into a binding contract (albeit one containing a condition precedent). For
the reasons I have already explained, the termination-by-purchase clause did not constitute a
binding sales contract in the first instance. Accordingly, the prevention doctrine does not apply
In light of my conclusion that the termination-by-purchase clause did not constitute a
binding sales contract, it is not necessary for me to resolve several of the other issues raised in
the parties’ briefing and at oral argument. For example, plaintiffs and defendants have discussed
in considerable detail whether the MDA contained all of the “essential terms” for a sale. But
even a perfectly well-defined transaction is not enforceable if it was never agreed to. Plaintiffs
rely on Bayer v. Showmotion, Inc., 292 Conn. 381 (2009), in which the Connecticut Supreme
Court held that parties “may form a binding contract even if some nonessential terms of their
agreement are indefinite or left to further negotiations.” Id. at 411. The agreement at issue in
Bayer, however, contained no language that was analogous to the phrase “pursuant to a mutually
acceptable purchase agreement” found in the termination-by-purchase provision of the MDA.
The facts of this case—involving an agreement to agree in the future to the terms of a mutually
acceptable purchase contract—are distinguishable from Bayer and other cases where an
agreement simply leaves out nonessential terms or where parties later opt to negotiate such
Defendants also argue that by requiring that the future purchase agreement “meet the criteria of the
‘Deal Terms’ document,” the termination-by-purchase clause effectively incorporated into the MDA the provision
of the Deal Terms stating that its “terms are not binding on either party unless or until they are included in a
definitive, binding Purchase and Sale Agreement,” and that “Seller reserves the right to decline any offer in its sole
discretion.” In light of my resolution of this action in defendants’ favor on alternative grounds, I need not consider
that additional argument.
Count Two - Breach of Covenant of Good Faith and Fair Dealing
Count Two of the complaint alleges that defendants are liable for breach of the covenant
of good faith and fair dealing. Given my conclusion above, I must also grant summary judgment
for defendants on this claim.
“It is axiomatic that the implied duty of good faith and fair dealing is a covenant
implied into a contract or contractual relationship.” Bagley v. Yale Univ., 42 F. Supp. 3d
332, 359 (D. Conn. 2014). Under Connecticut law, a plaintiff asserting a breach of the
covenant of good faith and fair dealing must prove three elements: (1) that the plaintiff
and the defendant were parties to a contract under which the plaintiff reasonably expected
to receive certain benefits; (2) that the defendant engaged in conduct that injured the
plaintiff’s right to receive some or all of those benefits; and (3) that when committing the
acts by which it injured the plaintiff’s right to receive benefits he reasonably expected to
receive under the contract, the defendant was acting in bad faith. Id. at 359-60; see also
Capstone Bldg. Corp. v. American Motorists Ins. Co., 308 Conn. 760, 794-95 (2013).
In light of my conclusion above that the termination-by-purchase clause of the MDA did
not bind the parties, plaintiffs could not have “reasonably expected” defendants to treat it as
binding and to acquiesce to plaintiffs’ demand. Plaintiffs therefore cannot satisfy the first
element of this cause of action as a matter of law. Accordingly, I will grant summary judgment
for defendants on plaintiffs’ claim of breach of the covenant of good faith and fair dealing.
For the foregoing reasons, the Court concludes that the termination-by-purchase clause of
the parties’ Manufacturing and Distributing Agreement does not create an enforceable agreement
for defendants to sell their assets to plaintiffs. Accordingly, defendants’ motion for summary
judgment (Doc. #77) is GRANTED. Plaintiffs’ motion for summary judgment (Doc. #72) is
The Clerk of Court shall enter judgment for defendants and close the case.
It is so ordered.
Dated at New Haven this 18th day of September 2017.
/s/Jeffrey Alker Meyer
Jeffrey Alker Meyer
United States District Judge
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