Eichman v. Fotomat Corp.
| Decision Date | 13 July 1989 |
| Docket Number | No. 87-6532,87-6532 |
| Citation | 880 F.2d 149 |
| Court | U.S. Court of Appeals — Ninth Circuit |
| Parties | Adrian C. EICHMAN, Plaintiff-Appellant, v. FOTOMAT CORPORATION, a Delaware Corporation, Defendant-Appellee. |
J. David Franklin, Franklin & Franklin, La Jolla, Cal., John M. Morris, Higgs, Fletcher & Mack, San Diego, Cal., for plaintiff-appellant, Adrian C. Eichman.
John H. L'Estrange, Jr., Wright & L'Estrange, San Diego, Cal., for defendant-appellee, Fotomat Corp.
Appeal from the United States District Court for the Southern District of California.
Before FLETCHER, ALARCON and KOZINSKI, Circuit Judges.
Plaintiff-Appellant, Adrian C. Eichman, appeals from two orders of the district court granting summary judgment to Defendant-Appellee, Fotomat Corporation. Eichman appeals from the order of the district court granting Fotomat's motion for partial summary judgment based on res judicata and the statute of limitations. Eichman also appeals from the subsequent order of the district court which granted Fotomat's motion for summary judgment based on the merits of the remaining state and federal claims. We affirm.
Plaintiff-Appellant, Adrian C. Eichman, a Fotomat franchise operator, appeals from the orders of the district court granting summary judgment to Defendant-Appellee, Fotomat Corporation, based on Eichman's federal antitrust and state law claims.
This action against Fotomat is the third action brought by Eichman against Fotomat (Eichman III ). Eichman v. Fotomat Corp., 759 F.2d 1434 (9th Cir.1985). This is the second time Eichman III has been before this court for review
Fotomat is a nationwide retailer of photoprocessing and photographic products. Fotomat's retail business is conducted by means of small merchandising islands (kiosks) located in the parking lots of shopping centers and by means of conventional retail stores. Fotomat is both an operator and a franchisor of Fotomat retail stores. Between 1967 and 1969 Fotomat entered into a number of Fotomat franchise agreements. At one time almost half of Fotomat's stores were operated by franchisees. Now almost all the stores are operated by Fotomat.
Eichman has been a Fotomat franchisee operating one store in Chino, California, since 1968. The relationship between Eichman and Fotomat has not been smooth. The parties have been engaged in litigation since 1973. 759 F.2d at 1436. Details of the franchise agreement and other pertinent facts will be set forth where relevant to the specific arguments discussed.
On July 31, 1973, Eichman sued Fotomat in California State Superior Court in San Bernardino County (Eichman I ). Eichman v. Fotomat Corp., 147 Cal.App.3d 1170, 197 Cal.Rptr. 612 (1983). Eichman alleged that Fotomat breached the franchise agreement and violated California's Unfair Trade Practices Act, Cal.Bus. & Prof.Code Sec. 17200 et seq. 147 Cal.App.3d 1170, 1173, 197 Cal.Rptr. 612. Eichman alleged that Fotomat sold photoprocessing to Eichman's franchise store at prices higher than the prices available to company stores, failed to advertise properly for franchise stores, placed company stores unreasonably close to Eichman's store, and fraudulently induced Eichman to enter into the franchise agreement by representing that Fotomat's company stores would not compete with Eichman's store. 147 Cal.App.3d at 1173, 197 Cal.Rptr. 612. On September 7, 1977, Eichman entered into a consent judgment with Fotomat for $7,500 pursuant to California Code of Civil Procedure Section 998. In May 1978, the Superior Court entered the judgment nunc pro tunc as of September 7, 1977.
On April 21, 1978, Eichman filed his second action (Eichman II ) against Fotomat in California State Superior Court in San Diego. The complaint in Eichman II was more specific, but the facts alleged were basically the same. Eichman alleged hidden markups in violation of the franchise agreement; sales to company stores at lower prices than those offered to franchise stores; tying of processing, merchandise, and kiosk leases to franchise licenses; fraudulent inducement to enter into the franchise agreement by false representations; and excessive franchise royalty fees. The complaint stated causes of action for breach of contract, fraud, conversion, breach of fiduciary duty, restraint of trade in violation of California law, and monopolization and attempted monopolization in violation of California law. Eichman also requested an accounting and declaratory relief.
Fotomat demurred to all causes of action in the complaint except the accounting and declaratory relief counts on the ground that Eichman I was res judicata. The San Diego Superior Court sustained the demurrer with leave to amend. Eichman amended the complaint adding allegations that Fotomat fraudulently concealed the full extent of its wrongs until after the judgment was entered in Eichman I. Fotomat demurred again on the ground that Eichman I was res judicata. On February 27, 1979, the superior court sustained the demurrer without leave to amend as to all counts, except those for an accounting and declaratory relief, on the ground that Eichman I was res judicata. Eichman dismissed the remaining claims in order to pursue an appeal in the state system.
On October 14, 1983, the California Court of Appeal affirmed the superior court judgment. Eichman v. Fotomat Corp., 147 Cal.App.3d 1170, 197 Cal.Rptr. 612 (1983). The California Court of Appeal held that Eichman I precluded Eichman from suing on claims that he had already settled. The court rejected Eichman's fraudulent concealment argument stating that ignorance of evidence, which the court stated Eichman should have discovered through due diligence, would not negate the application of res judicata. 147 Cal.App.3d at 1176, 197 Cal.Rptr. 612.
While Eichman II was pending on appeal in the state system, Eichman filed the present case, Eichman III, in the United States District Court for the Southern District of California on June 19, 1981. The facts alleged in the Eichman III complaint are substantially the same as those alleged in Eichman II. However, Eichman has expanded his theories of recovery alleging claims under the Sherman Antitrust Act, 15 U.S.C. Secs. 1-7, and the Clayton Act, 15 U.S.C. Sec. 12-27, and a number of pendent state law claims. On April 21, 1982, the district court dismissed all claims except the two state law claims for an accounting and for declaratory judgment on the ground that Eichman I was res judicata to Eichman's federal suit. The parties stipulated to the dismissal of the two remaining state law claims for lack of subject matter jurisdiction. Eichman appealed to this court.
On May 10, 1985, we reversed. We held that Eichman I only precluded state claims that were based on conduct occurring prior to September 7, 1977. Eichman v. Fotomat Corp., 759 F.2d 1434, 1439 (9th Cir.1985). We rejected Eichman's argument that Fotomat's fraudulent concealment should preclude the application of res judicata as to his pre September 7, 1977 claims. Id. at 1438. Finally, we held that Eichman I was not res judicata as to Eichman's federal antitrust claims because the California state court in Eichman I lacked subject matter jurisdiction over the federal antitrust claims. Id. at 1437.
On November 1, 1985, Eichman filed a second amended complaint. On December 3, 1985, Fotomat filed a motion for summary judgment. Rather than ruling on the motion, the district court instructed Fotomat to refile the motion and address only the issues of res judicata and the statute of limitations. Eichman filed a third amended complaint on June 20, 1986.
On July 21, 1986, Fotomat filed a motion for partial summary judgment limited to the issues of res judicata and the statute of limitations. On January 7, 1987, the district court granted Fotomat's motion. On February 2, 1987, Fotomat filed a motion for summary judgment challenging the merits of the remaining claims. Fotomat also filed a motion for sanctions. Eichman filed an opposition to the motion for summary judgment and filed a cross motion for sanctions. The district court granted Fotomat's motion for summary judgment and dismissed the remaining claims on September 14, 1987. The district court denied both motions for sanctions. Judgment was entered against Eichman on November 2, 1987. Eichman filed a timely notice of appeal on October 20, 1987.
While Eichman II was still pending in the California Court of Appeal and shortly after the district court's oral ruling that Eichman III would be dismissed, Eichman filed Eichman IV against Fotomat in San Diego Superior Court on March 10, 1982. However, Eichman did not serve Fotomat with the complaint. On January 13, 1984, Eichman filed Eichman V against Fotomat in San Diego Superior Court. Fotomat removed Eichman V to federal court and filed an answer.
The district court had jurisdiction over the federal antitrust claims pursuant to 28 U.S.C. Secs. 1331(a) and 1337(a). The district court had pendent jurisdiction over the state law claims. Because a judgment was entered dismissing this action, we have jurisdiction pursuant to 28 U.S.C. Sec. 1291.
We review independently an order granting summary judgment. Medallion Television...
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