Tyrene Scott v. Carrier Corporation, 662 F. App'x 798

Background

In 1993 Tyrene Scott enrolled himself (as Participant) and his company Scott Air Technology, Inc. (as Dealer) in Carrier’s Income Extension Program, which pays deferred retirement income for qualifying product sales.
Section 2.0 of the enrollment agreement required the Dealer each Program Year to (1) select Carrier as favored supplier, (2) advertise exclusively Carrier equipment, and (3) demonstrate ongoing commitment to the Carrier brand.
Section 5.0 (Vesting) provided that Participants vest after the Dealer meets the minimum purchase level for five years, but also stated that if the Dealer becomes ineligible before payments commence, all credited benefits (even vested ones) are "subject to divestment and forfeiture." Only vested benefits not subject to forfeiture become deferred income.
Scott’s dealer ceased operations in 2008; Scott satisfied the five-year purchase requirement before that and sought early-retirement payment in 2011, which Carrier denied as forfeited.
Scott sued for breach of the enrollment agreement; the district court granted summary judgment for Carrier. Scott appealed, arguing (1) Carrier improperly divested his vested benefits, (2) he was entitled to notice/due-process and a good-faith duty, and (3) the court should draw an adverse inference from Carrier’s discovery responses.

Issues

Issue	Scott's Argument	Carrier's Argument	Held
Whether a dealer that ceased operations became ineligible under the agreement	Scott: Closing the business doesn’t trigger ineligibility because eligibility language aims to prevent switching suppliers	Carrier: Section 2.0 requires meeting yearly promotional/purchasing criteria; a closed business cannot meet them and is therefore ineligible	Court: Agreement unambiguous; closed dealer became ineligible when it ceased operations
Whether vested benefits were forfeited despite vesting	Scott: Vesting means benefits cannot be divested absent affirmative action by Carrier	Carrier: Section 5.0 expressly makes vested benefits subject to forfeiture if Dealer becomes ineligible before payments	Court: Section 5.0 unambiguously subjects even vested benefits to forfeiture upon dealer ineligibility, so benefits were forfeited
Whether Carrier’s failure to notify Scott violated due process or good-faith duties	Scott: Carrier owed notice and breached implied covenant/due process by not notifying forfeiture risk	Carrier: No such obligation under the agreement; Fourteenth Amendment doesn’t apply to private actor	Court: Scott failed to preserve due-process/good-faith argument on appeal; contract language negates an independent good-faith claim here
Whether an adverse inference was warranted from Carrier’s discovery responses	Scott: Carrier’s records about other participants would show how Carrier treated similar closures	Carrier: District court properly refused to rely on extrinsic evidence to vary clear contract terms	Court: Contract is unambiguous; extrinsic evidence (and an adverse inference) inappropriate, so no error in denying inference

Key Cases Cited

Stephens v. Mid-Continent Cas. Co., 749 F.3d 1318 (11th Cir. 2014) (standard of review for summary judgment)
Shaps v. Provident Life & Accident Ins. Co., 317 F.3d 1326 (11th Cir. 2003) (choice-of-law/Florida law governs contract interpretation executed in Florida)
Arriaga v. Fla. Pac. Farms, LLC, 305 F.3d 1228 (11th Cir. 2002) (under Florida law, give effect to plain contract language)
Travelers Indem. Co. v. Hutson, 847 So. 2d 1113 (Fla. 1st Dist. Ct. App. 2003) (interpretation and ambiguity are questions of law)
Access Now, Inc. v. Sw. Airlines, Co., 385 F.3d 1324 (11th Cir. 2004) (issues not raised in district court generally not considered on appeal)
Hosp. Corp. of Am. v. Fla. Med. Ctr., Inc., 710 So. 2d 573 (Fla. 4th Dist. Ct. App. 1998) (duty of good faith must relate to performance of an express contract term)
Jenkins v. Eckerd Corp., 913 So. 2d 43 (Fla. 1st Dist. App. 2005) (clear and unambiguous contract bars consideration of extrinsic evidence)