Cook v. Little Caesar Enterprises, Inc.

• Decision Date: 07 August 1997
• Docket Number: Civil Action No. 95-40234.
• Citation: Cook v. Little Caesar Enterprises, Inc., 972 F.Supp. 400 (E.D. Mich. 1997)
• Parties: Kevin R. COOK and K. Cook Enterprises, Inc., Plaintiffs, v. LITTLE CAESAR ENTERPRISES, INC., Defendant.
• Court: U.S. District Court — Eastern District of Michigan

972 F.Supp. 400

Kevin R. COOK and K. Cook Enterprises, Inc., Plaintiffs, v. LITTLE CAESAR ENTERPRISES, INC., Defendant.

Civil Action No. 95-40234.

United States District Court, E.D. Michigan, Southern Division.

August 7, 1997.

COPYRIGHT MATERIAL OMITTED

Alan D. Penskar, Paul J. Goyette, Flint, MI, for plaintiffs.

Alan C. Harnisch, Harnisch & Hohauser, Bingham Farms, MI, for defendant.

MEMORANDUM OPINION AND ORDER GRANTING, IN PART, AND DENYING, IN PART, DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

GADOLA, District Judge.

Before the court is defendant, Little Caesar Enterprises, Inc.'s ("LCE") motion for summary judgment, pursuant to Federal Rule of Civil Procedure 56. The motion was initially filed on December 12, 1996 and seeks summary judgment as to all counts of plaintiffs', Kevin R. Cook and K. Cook Enterprises ("Cook"), first amended complaint.¹ This court held oral argument on June 4, 1997. For the reasons set forth below, this court will grant, in part, and deny, in part, LCE's motion for summary judgment.

Background

This is essentially a breach of contract action involving a franchise agreement ("FA") between LCE and Cook. LCE operates and franchises pizzeria-style restaurants. Plaintiff Cook operates three Little Caesars restaurants in Fresno, California.

In 1989 Cook, who at the time was a deputy sheriff in Ventura County, California, investigated several different possible franchises. On or about November 29, 1989, Cook received a "Dear Prospective Franchisee" ("DPF") letter and a franchise offering circular ("FOC") from LCE's director of franchise services. The DPF stated, in relevant part, that:

The first document which a prospective franchisee signs is an Option Agreement. The Option Agreement defines a non-exclusive area in which the franchisee can develop his or her first unit. Each time a franchisee has gained site approval and the Franchise Option Committee's approval to construct another unit, a Franchise Agreement is executed covering that unit, outlining an exclusive one (1) mile radius around that store.

Even though, in North America, Little Caesars does not grant exclusive development territories, one of our corporate goals is to have our franchisee develop multiple units.

The FOC stated, in relevant part, that:

The Franchisee is appointed as the exclusive LITTLE CAESAR Franchisee for a specific geographic area. The area of territorial exclusivity of the LITTLE CAESAR Franchisee is defined by reference to boundaries such as streets or natural borders (e.g. a river). In any event the Franchisee's exclusive territory shall be so defined that no LITTLE CAESAR pizza restaurant shall be operated or opened within an approximate one mile radius of the Franchisee's location throughout the period of the Franchise Agreement ... subject to the provision that said borders shall not be required to be at precise one mile distances from the franchise location at all points. Where a franchise location is situated at a point close to a market area border, other borders may be extended to take into account the fact that some borders may be less than one mile from the franchise location.

Cook was directed by LCE to Robert Moglia ("Moglia"), an LCE real estate representative in Fresno, in January or February of 1990. Cook has testified that at that time Moglia stated that Cook "would be able to have [exclusive rights to develop LCE franchises] east of Blackstone, [and] Jean [Aboujaoude] would be able to have [the right to develop] west of Blackstone. Blackstone/41."² Cook and Moglia allegedly modified area maps which memorialized this division of the Fresno market. Those maps, however, are not part of the record before this court.

Thereafter, on April 16, 1990, Cook signed a franchise option agreement ("FOA"). Cook signed the FOA after he had read the agreement and had an opportunity to have an attorney review it. Cook declined, however, to have an attorney review the FOA. The FOA provides, in relevant part, that:

WHEREAS, OPTIONEE desires to obtain from LITTLE CAESARS the nonexclusive right and option to establish a certain distinctively styled carry-out restaurant under the trade name "LITTLE CAESAR" ("RESTAURANT") within the geographical area generally described as CALIFORNIA: THE FRESNO ADI ...

1. LITTLE CAESAR hereby grants to OPTIONEE the non-exclusive right and option to establish one (1) Restaurant ... within the [FRESNO ADI] at a location to be approved by LITTLE CAESAR ...

* * * * * *

10. This Agreement constitutes the entire Agreement between LITTLE CAESAR and OPTIONEE in respect of the subject matter thereof and this Agreement supersedes all prior and contemporaneous agreements between LITTLE CAESAR and OPTIONEE in connection with the subject matter of this Agreement. No officer, employee or other servant or agent of LITTLE CAESAR or OPTIONEE is authorized to make any representation, warranty or other promise not contained in this Agreement. No change, termination or attempted waiver of any of the provisions of this Agreement shall be binding unless in writing and signed by LITTLE CAESAR and OPTIONEE.

. . . . .

15. OPTIONEE acknowledges that:

A. It has no knowledge of any representations by LITTLE CAESAR or its officers, directors, shareholders, employees agents or servants about the business contemplated by this Agreement.

In accordance with the FOA, Cook opened his first LCE restaurant ("Restaurant 558-001") in November of 1990. In March of 1991 Cook attended LCE's national franchisee convention in Orlando, Florida where he met, in a small "round-table" session, with senior LCE executives. Cook claims that at the meeting LCE executives modified maps to reflect Cook's exclusive right to develop "east of Blackstone" while Aboujaoude would develop "west of Blackstone."

On April 8, 1991, Cook signed a franchise agreement ("FA") for restaurant 558-001. Cook read the FA and had an opportunity to consult with an attorney before signing the FA. Cook, however, chose not to have an attorney review the FA. The FA provides, in relevant part, that:

I.A. Subject to the terms and conditions of this Agreement, LITTLE CAESAR hereby grants to Franchise Owner the exclusive franchise to establish, own and operate a LITTLE CAESAR type C restaurant ("Restaurant"), including the right to use the LITTLE CAESAR System and the Licensed Rights at the Restaurant, and to be identified as a member of the LITTLE CAESAR System for so long as this Agreement is in force and effect, and Franchise Owner is not in default hereof.

* * * * * *

II. B. LITTLE CAESAR shall not, so long as this Agreement is in effect, and Franchise Owner is not in default hereof, establish, operate or enfranchise any other LITTLE CAESAR Restaurant utilizing the LITTLE CAESAR name within Franchise Owner's "exclusive territory." The "exclusive territory" is defined as a geographical area determined by drawing a circle around the location set forth in Section II-A above, which circle has its center at said location and a radius of one mile. In the case of an overlap between Franchise Owner's exclusive territory and the exclusive territory of another Franchise Owner, the location at which a Restaurant shall first be opened and operating shall take precedence.

V. A.

1. Franchise Owner understands and agrees that its license under said Proprietary Marks is non-exclusive and that LITTLE CAESAR in its sole discretion has the right to operate restaurants and sell equipment and supplies under said marks, and to grant licenses in, to and under such terms and conditions as LITTLE CAESAR deems fit, subject to the provisions of section II(B) of this Agreement.

* * * * * *

XXII. This Agreement and the exhibits attached hereto, if any, constitute the entire, full and complete Agreement between Franchise Owner and LITTLE CAESAR, concerning the subject matter hereof, and supersede all prior agreements, if any. Neither Franchise Owner nor LITTLE CAESAR may change or modify Franchise Agreement unless the change or modification is in writing and signed by both the parties to this Agreement.

* * * * * *

XXV. Franchise Owner acknowledges that:

A. It has no knowledge of any representations by LITTLE CAESAR or its officers, directors, shareholders, employees, agents or servants about the business contemplated by this Agreement, that are contrary to the terms of this Agreement or the documents incorporated herein, and further represents to LITTLE CAESAR as an inducement to its entry into this Agreement, that it has made no misrepresentations in obtaining this Agreement.

In January or February of 1992, another franchisee, Scott Hellum and Robert Fino ("Hellum and Fino") opened a LCE restaurant in Clovis, California, a city that abuts Fresno on the east and which Cock claims fell within his exclusive area for development. Cook complained to LCE. Moglia also apparently voiced his opposition to Hellum and Fino entering into that market and wrote a memo to that effect dated August 8, 1992. That memo, however, is not part of the record before this court.

Thereafter, Cook opened his second restaurant ("Restaurant 558-002") on May 26, 1992 and signed a FA for it on July 1, 1992. Cook signed a FA for his third restaurant ("Restaurant 558-003") on May 20, 1993. Prior to signing both FAs, Cook had the opportunity to read them and to consult with an attorney. The FAs for restaurants 558-002 and 558-003 contain the same provisions as the FA for Restaurant 558-001.

Plaintiffs do not identify exact dates, but claim that at two more national franchise conventions subsequent to the execution of FA 558-001 more oral and written representations and/or modifications, i.e. maps, were made by LCE executives concerning the exclusive development territory.

Thereafter, from approximately October 1992 to July 1993, Cook engaged in a litany of correspondences with LCE which reflected his concern about Hellum and Fino's entrance into the Fresno market. Cook also claims...