FRANCHISE LAWSUITS: Noble Roman’s Granted Summary Judgment Against Franchisees
Noble Roman’s franchise lawsuit news. Kari Heyser, Fred Eric Heyser and Meck Enterprises, LLC, et al v. Noble Roman’s, Inc. et al, lawsuit was filed in Superior Court in Hamilton County, Indiana on June 19, 2008.
The franchisee plaintiffs alleged that Noble Roman’s fraudulently induced them to purchase franchises for traditional locations through misrepresentations and omissions of material facts regarding the franchises.
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Noble Roman’s filed counterclaims for damages for breach of contract against all of the Plaintiffs in the approximate amount of $3.6 million plus attorney’s fees, interest and other cost of collection, or a total of over $5 million.
As a result of the Order filed January 26, 2012, the company’s partial summary judgment motions were granted as to specific types of damages such as past fees, future fees, attorney’s fees and interest.
Here is Noble Roman’s press release on the granting of the summary judgement.
press release Jan. 30, 2012, 5:00 p.m. EST
Noble Roman’s Granted Summary Judgment on Counterclaims Against Plaintiffs
INDIANAPOLIS, Jan 30, 2012 (GlobeNewswire via COMTEX) — Noble Roman’s, Inc. /quotes/zigman/235863 NROM -5.67% , the Indianapolis based, non-traditional franchisor and licensor of Noble Roman’s Pizza and Tuscano’s Italian Style Subs, today announced that in an Order by the Hamilton Superior Court I filed January 26, 2012 in the long-standing lawsuit by certain former franchisees, Noble Roman’s was granted partial summary judgment as to liability against the Plaintiffs/Counter-Defendants on the company’s counterclaims against them. As a result of this partial summary judgment, the Court determined that certain of the former franchisees of Noble Roman’s, Inc. were liable to the company for direct damages and consequential damages, including net loss future royalties, for breach of their franchise agreements. In addition, the Court determined that, as a matter of law, Noble Roman’s was entitled to recover attorneys fees associated with obtaining preliminary injunctions, fees resulting from the prosecution of Noble Roman’s counterclaims and fees for defending against fraud claims against the company and certain of its officers. The amount of the award is to be determined at trial.
The company was a Defendant in a lawsuit styled Kari Heyser, Fred Eric Heyser and Meck Enterprises, LLC, et al v. Noble Roman’s, Inc. et al, filed in Superior Court in Hamilton County, Indiana on June 19, 2008 (Cause No. 29D01 0806 PL 739). The Court issued an Order dated December 23, 2010 granting summary judgment in favor of the company against all of the Plaintiffs allegations of fraud. As a result, the Plaintiffs’ allegations of fraud against the company and certain of its officers were determined to be without merit. Plaintiffs previously filed numerous motions, including an appeal to the Indiana Court of Appeals, in an attempt to get the December 23, 2010 summary judgment order reversed. All of those attempts have failed, including the Indiana Court of Appeals which dismissed the appeal with prejudice. Plaintiffs’ last attempt to get the summary judgment award vacated was their attempt to vacate the Order on the grounds of misconduct of third parties. On December 1, 2011, the Judge issued an Order denying their request and specifically found "that there was absolutely no evidence of misconduct and the Court admonished Plaintiffs and Plaintiffs’ counsel for making such unfounded allegations." The fraud charges against the company and certain of its officers have been dismissed entirely, and Plaintiffs have no appeal rights remaining.
The Complaint was originally against the company and certain officers and institutional lenders. The Plaintiffs are former franchisees of the company’s traditional location venue. The Plaintiffs alleged that the Defendants fraudulently induced them to purchase franchises for traditional locations through misrepresentations and omissions of material facts regarding the franchises. In addition to the above claims, one franchisee/Plaintiff in the case asserted a separate claim under the Indiana Franchise Act as to which the Court’s Order denied the company’s motion for summary judgment, as the Court determined that there is a genuine issue of material fact, but did not render any opinion on the merits of the claim. The company denies liability on the Indiana Franchise Act claim and will continue to vigorously prosecute its defenses against the claim.
The company filed counterclaims for damages for breach of contract against all of the Plaintiffs in the approximate amount of $3.6 million plus attorney’s fees, interest and other cost of collection, or a total of over $5 million. As a result of the Order filed January 26, 2012, the company’s partial summary judgment motions were granted as to specific types of damages such as past fees, future fees, attorney’s fees and interest. The amount of the damages awarded to the company will be determined at trial.
SOURCE: Noble Roman’s, Inc. CONTACT: Paul Mobley, Chairman & CEO 317/634-3377
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As a franchise lawyer specializing only in representing franchisees, I’d say that, to the extent that the above article is truly an accurate summary of what has actually transpired in the case, it again shows the hostility that very many courts have towards franchisees. Although everyone in the franchise law field knows that fraud frequently permeates the franchise sales process, very few courts will recognize or find franchise fraud. The law has evolved on this matter such that there are prolific “back doors” for franchisors to exit the house before a fraud claim before the house of cards begins to fall. “Integration Clauses” and “Merger Clauses” are usually the standard fare “get out of jail free” cards for franchisors accused of fraud in selling franchises. This is why franchise lawyers many times gravitate to little-known state-specific franchise statutes on which to hang their hats. However, even with these statutes, some of which have legal teeth, there have been escape doors created for franchisors by courts who generally go out of their way to protect franchisors from wrong-doing, especially fraud. Although there are certain legal nuances that will allow a good and experienced franchise attorney to side-step some of these legal barriers, the fact that the battle is fought on favorable turf for franchisors — the courtroom — diminishes the prospects of success for franchisees in any such litigation. Accordingly, before a franchisee gets caught up in the moment and decides to ‘slay the franchisor in court’, he or she should contact an experienced franchise lawyer who represents only franchisess, not franchisors, for advice. Jeff Goldstein; Goldstein Law Group; http://www.goldlawgroup.com jgoldstein@goldlawgroup.com
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