Brock v. Entre Computer Centers, Inc.

• Decision Date: 21 June 1991
• Docket Number: No. 90-2419,90-2419
• Citation: 933 F.2d 1253
• Parties: RICO Bus.Disp.Guide 7763 Jerry BROCK; Clifford Cavett; BPM Computer Systems of Beaumont, Incorporated, a Texas corporation; BPM Computer Systems of Louisiana, Incorporated, a Texas corporation, Plaintiffs- Appellants, v. ENTRE COMPUTER CENTERS, INC., a Delaware corporation; Entre Computer Centers of America, Inc., a Delaware corporation; Steven B. Heller; James J. Edgette, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1253

933 F.2d 1253

RICO Bus.Disp.Guide 7763

Jerry BROCK; Clifford Cavett; BPM Computer Systems of Beaumont, Incorporated, a Texas corporation; BPM Computer Systems of Louisiana Incorporated, a Texas corporation Plaintiffs- Appellants, v. ENTRE COMPUTER CENTERS, INC., a Delaware corporation; Entre Computer Centers of America, Inc., a Delaware corporation; Steven B. Heller; James J. Edgette, Defendants-Appellees.

No. 90-2419.

United States Court of Appeals Fourth Circuit.

Argued March 4, 1991.

Decided May 28, 1991.

As Amended June 21, 1991.

Edward A. McConwell, Law Firm of Edward A. McConwell, Overland Park, Kan., for plaintiffs-appellants.

Julia A. Dahlberg, argued (Wesley G. Howell, Jr. and Paul Blankenstein, on brief), Gibson, Dunn & Crutcher, Washington, D.C., for defendants-appellees.

Before ERVIN, Chief Judge, NIEMEYER, Circuit Judge, and RESTANI, Judge, Court of International Trade, sitting by designation.

ERVIN, Chief Judge:

Jerry Brock, Clifford Cavett, BPM Computer Systems of Beaumont, Inc., and BPM Computer Systems of Louisiana, Inc., (collectively referred to as Brock unless otherwise specified) filed suit against Entre Computer Centers, Inc. (Entre) and two of Entre's officers, Steven B. Heller and James J. Edgette, in the District Court for the Eastern District of Texas. Brock alleged that Entre: (1) breached its contracts with Brock, (2) committed fraud, (3) violated the Texas Deceptive Trade Practices Act, (4) breached a fiduciary duty, and (5) engaged in racketeering activities. The Texas District Court transferred the case to the District Court for the Eastern District of Virginia upon Entre's motion. Thereafter, Brock moved for a retransfer of the case to the Eastern District of Texas. The District Court for the Eastern District of Virginia refused to retransfer the case. The court then granted Entre's motion for summary judgment and dismissed the case. Brock appealed to this court from both rulings of the district court. We find no error in the court's rulings and hereby affirm.

I

Entre, a Delaware corporation with its headquarters and principal place of business in McLean, Virginia, is a franchisor of retail computer stores. There are approximately 150 of these stores located across the United States. Steven B. Heller served as Entre's president from April 1981 until June 1986. James J. Edgette served as Entre's vice-president during those years. Both served as directors of Entre from April 1981 to October 1988.

Brock became interested in starting an Entre franchise after reading an ad in the Wall Street Journal. Brock traveled to Vienna, Virginia for a franchise "visitation day." At the "visitation day," Entre made canned presentations regarding its formula for success. Brock alleges that certain representations were made to him at that presentation, and that many of those representations proved to be untrue. In particular, Brock alleges that promises were made regarding the availability of IBM products for franchisees, and that those representations were false.

On March 20, 1984, Brock and Cavett entered into a Franchise Agreement with Entre for the establishment of an Entre Computer Center store in Beaumont, Texas. On March 30, 1984, Brock entered into a second franchise agreement for an Entre Computer Center store in Baton Rouge, Louisiana. The franchise agreements contained the following language relevant to this appeal.

Integration Clause--The franchise agreements provided:

This Agreement, the documents referred to herein, and the Attachments hereto, if any, constitute the entire, full, and complete Agreement between franchisor and franchisee concerning the subject matter hereof, and supersede all prior agreements, no other representations having induced Franchisee to execute this Agreement. No representations, inducements, promises, or agreements, oral or otherwise, not embodied in this Agreement ... were made by either party, and none shall be of any force or effect with reference to this Agreement or otherwise.

Choice of Law--The franchise agreements provided:

A. This Agreement takes effect upon its acceptance and execution by Franchisor in Virginia; and shall be interpreted and construed under the laws thereof, which laws shall prevail in the event of any conflicts of law.

Choice of Forum--The franchise agreements provided:

B. The parties agree that any action brought by either party in any court, whether federal or state, shall be brought within the Commonwealth of Virginia and do hereby waive all question of personal jurisdiction or venue for the purposes of carrying out this provision.

Transferability of Franchise--The franchise agreements provided:

A. Transfer by Franchisee:

1. ... Any purported assignment or transfer, by operation of law or otherwise, not having the written consent of Franchisor shall be null and void and shall constitute a material breach of this Agreement....

2. Franchisor shall not unreasonably withhold its consent to a transfer of any interest in Franchisee or in this franchise, subject to the conditions set forth below. Franchisee ... acknowledges and agrees that each condition which must be met by the transferee franchisee is necessary for such transferee's full performance of the obligations hereunder. The conditions which must be met prior to the time of transfer are as follows:

c. The transferor shall have executed a general release under seal, in a form satisfactory to Franchisor, of any and all claims against Franchisor and its officers, directors, shareholders and employees, in their corporate and individual capacities, including, without limitation, claims arising under federal, state, and local laws, rules, and ordinances ...

After signing the franchise agreements, Brock and Cavett began operations of the stores. However, the stores were unsuccessful from the very beginning. In early 1986, Brock decided to sell the Beaumont and Baton Rouge centers. Entre would not consent to the transfers of the centers unless releases were signed as called for in the franchise agreements. Brock, Cavett, and the BPM corporations set up to operate the two centers entered into general releases with Entre. Each release was virtually identical to the following release, which was the first release that Brock entered:

I, Jerrold R. Brock, (owner of a beneficial interest in BPM Computer Systems, Inc., a Texas corporation, a franchisee of) Entre' Computer Centers of America, Inc. ("Entre' America") pursuant to an Entre' Computer Centers Franchise Agreement dated March 20, 1984, and in consideration of my obtaining Entre' America's consent to the transfer of BPM Computer Systems, Inc. to Spindletop Computer Systems, Inc., for myself and on behalf of each of my heirs, successors, representatives, assignees and agents (myself and all others granting the release all being the "Releasors"), hereby release and forever discharge Entre' Computer Centers, Inc. and each of its subsidiaries (including Entre' America) and each of their present and former agents, officers, directors, shareholders and employees, ... "Releasees") of and from any claims, debts, liabilities, demands, obligations, costs, expenses, actions and causes of action of every nature, character or description, known or unknown, vested or contingent, which Releasors now own or hold, or have at any time heretofore owned or held, or may at any time own or hold against the Releasees for or by reason of or arising out of any matter, transaction, occurrence, cause or thing whatsoever which has occurred prior to and including the date of this General Release....

After the releases were executed, Brock sold the Beaumont and Baton Rouge stores to third parties.

Brock, Cavett, BPM Computer Systems of Beaumont, Inc., and BPM Computer Systems of Louisiana, Inc., filed suit against Entre in the District Court for the Eastern District of Texas on September 1, 1987. Brock amended his complaint on December 28, 1987. On February 29, 1988, Entre filed a motion to dismiss based on lack of personal jurisdiction and improper venue, and alternatively moved for a transfer under 28 U.S.C. Sec. 1404(a) to the Eastern District of Virginia. In addition, Entre moved for summary judgment on the grounds that all of Brock's claims were barred by releases which he had entered into with Entre.

After oral argument on the motions, the Texas District Court initially denied Entre's motion to dismiss or transfer. The court then asked for further argument on the transfer issue. On February 8, 1990, the District Court in Texas transferred the case to the Eastern District of Virginia under 28 U.S.C. Sec. 1404(a).

After the transfer, Entre renewed its motion for summary judgment in the Virginia District Court. On May 14, 1990, Brock moved for a retransfer of the case to the Eastern District of Texas. On June 8, 1990, the Virginia District Court denied Brock's motion for retransfer. In addition, the Virginia District Court granted Entre's motion for summary judgment and dismissed the case.

Brock raises three main issues on appeal. First, he challenges the transfer from the Texas District Court to the Virginia District Court and the refusal of the Virginia District Court to retransfer. Second, he challenges the Virginia District Court's application of Virginia law to the claims before it. Finally, Brock challenges the Virginia District Court's order granting summary judgment in favor of Entre. We will address each issue in turn.

II

The first issue before us concerns the original transfer of the case to the Eastern District of Virginia and that court's subsequent refusal to retransfer the case to the Eastern District of Texas. Brock raises two sub-issues regarding these events. First, he asserts that the Texas District Court erred in transferring his case to the Virginia District Court pursuant to 28 U.S.C. Sec. 1404. This court has held that we have no jurisdiction to review a decision to transfer venue rendered by a...