Dubois v. Kepchar
Decision Date | 15 June 1995 |
Docket Number | No. 2:94 cv 87.,2:94 cv 87. |
Citation | 889 F. Supp. 1095 |
Parties | David DUBOIS, as trustee of the bankruptcy estate of FOB of Merrillville, Inc., d/b/a Foddy's, et al., Plaintiffs, v. George KEPCHAR, individually and d/b/a Century 21 Kepchar Realtors, et al., Defendants. |
Court | U.S. District Court — Northern District of Indiana |
Lawrence A. Kalina, Spangler Jennings and Dougherty P.C., Merrillville, IN, for plaintiffs.
Gilbert F. Blackmun, Blackmun, Bomberger and Moran, Peter C. Bomberger, Friedrich Bomberger Tweedle and Blackmun P.C., Highland, IN, Byron K. Mason, Indianapolis, IN, for defendants.
FOB of Merrillville, Inc. ("FOB"), owned (or may still own) a restaurant called Foddy's. FOB's president, Robert Forster, wanted to sell Foddy's, and listed it for sale with Century 21 Kepchar Realtors, Inc. ("Kepchar"), after consulting with Thomas Crumpton, a licensed real estate broker associated with Kepchar. (Except where individual identities are relevant, references to "Kepchar" hereafter include Crumpton and other Kepchar principals and agents.) Crumpton presented an offer by potential buyer Steven Hutka. FOB, through Forster, accepted the offer. Hutka refused to close, allegedly because Crumpton had presented an offer to Forster containing terms that Hutka had not authorized, for example, that Hutka would pay the real estate broker's commission on the sale.
FOB declared bankruptcy. On behalf of its estate, the bankruptcy trustee (hereinafter, "FOB") brought this action alleging that Crumpton negligently presented incorrect offer terms to FOB, causing the potential sale to collapse, and thereafter made false representations to FOB concerning Hutka's willingness and ability to close, causing FOB financial harm. Named as defendants are Crumpton, Century 21 Kepchar Realtors, Inc. under various names, its principal, George Kepchar, and three corporations1 in the "Century 21 family:" Century 21 Real Estate Corp., Century 21 Great Lakes, Inc. and Century 21 Great Lakes, Inc., Indiana Region. These latter three defendants have moved for summary judgment.2
By way of background (not a statement of undisputed facts upon which the court's ruling rests), the moving defendants describe "Century 21" as a franchised name and methodology for selling real estate. Every Century 21 realty office throughout the United States (and internationally), of which Century 21 Kepchar Realtors was one, is a locally- and independently-owned-and-operated business. Century 21 Real Estate Corp. ("Century 21 REC") owns the "Century 21" name and trademark, and engages in the business of promoting and franchising that name and the "Century 21 system." The Century 21 system is a trade-secret methodology designed to help local real estate agents make sales. Century 21 REC owns no Century 21 realty offices and conducts no real estate brokerage business.
Century 21 REC wholly owns all of the stock of seven corporations that act as regional subfranchisors, one of which is defendant Century 21 Great Lakes, Inc. Century 21 Great Lakes, Inc. has the right to sublicense the Century 21 trademark and system to licensed real estate brokers in six states including Indiana. Century 21 Great Lakes, Inc., Indiana Region ("Century 21 Indiana")3 acts as the administrative liaison between Century 21 Great Lakes, Inc. and franchisees in Indiana. Century 21 Indiana provides to those franchisees training seminars regarding the Century 21 system. Neither Century 21 Great Lakes, Inc. nor Century 21 Indiana own any Century 21 realty offices or engage in real estate brokerage business.
FOB's complaint alleges that Century 21 REC, Century 21 Great Lakes and Century 21 Indiana are vicariously liable for Crumpton's negligence because of their "training, supervising, controlling, monitoring and evaluating." In addition, FOB alleges that these three defendants are liable for their own negligent "control, supervision, monitoring, and evaluating of Kepchar and Crumpton, as well as in the selection and/or granting of a Century 21 franchise to Kepchar." Complaint, ¶¶ 15, 16. Century 21 REC, Century 21 Great Lakes and Century 21 Indiana (hereafter collectively referred to as "Century 21," except where individual identities are relevant) contend in their motion for summary judgment that the record is devoid of any evidence to support any theory of liability against them arising from the unconsummated sale of Foddy's restaurant.
Rule 56 of the FEDERAL RULES OF CIVIL PROCEDURE requires that summary judgment be granted "forthwith" if the pleadings and discovery "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c). Applying this standard, "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202, 211 (1986).
In determining whether a genuine issue of material fact is in dispute, the trial court must view the record and all reasonable inferences drawn therefrom in the light most favorable to the nonmoving party. Slowiak v. Land O'Lakes, Inc., 987 F.2d 1293, 1295 (7th Cir.1993). At the summary judgment stage the trial court's function is not "to weigh the evidence and determine the truth of the matter, but to determine whether there is a genuine issue for trial." Anderson, 477 U.S. at 249, 106 S.Ct. at 2511, 91 L.Ed.2d at 212.
Anderson, 477 U.S. at 256-57, 106 S.Ct. at 2514, 91 L.Ed.2d at 217; First Bank Southeast, N.A. v. Predco, Inc., 951 F.2d 842, 846 (7th Cir.1992).
When the moving party does not bear the burden of proof, it need not produce evidence to negate the nonmoving party's claim. Celotex Corp. v. Catrett, 477 U.S. 317, 324-25, 106 S.Ct. 2548, 2553-54, 91 L.Ed.2d 265, 274-75 (1986). Instead, "the burden on the moving party may be discharged by `showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Id. at 325, 106 S.Ct. at 2554, 91 L.Ed.2d at 275. In the usual case, then, as here, a defendant's motion for summary judgment attempts to demonstrate that proof of an essential element of plaintiff's case is absent, putting the plaintiff to its proof on that issue.
To survive the motion, the plaintiff need not prove its case, but must make some showing of evidence sufficient to make its prima facie case a matter of factual dispute. Id. at 324, 106 S.Ct. at 2553, 91 L.Ed.2d at 274-75. The trial court "should neither `look the other way' to ignore genuine issues of material fact, nor `strain to find' material fact issues when there are none.'" Secretary of Labor v. Lauritzen, 835 F.2d 1529, 1534 (7th Cir.1987), cert. denied sub nom., 488 U.S. 898, 109 S.Ct. 243, 102 L.Ed.2d 232 (1988) (quoting Mintz v. Mathers Fund, Inc., 463 F.2d 495, 498 (7th Cir.1972)).
Thus, the summary judgment inquiry addresses "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251-52, 106 S.Ct. at 2512, 91 L.Ed.2d at 214. In simple terms, then, in a case where no material facts are disputed a summary judgment motion requires a judge to decide not whether he believes the non-movant will win the case, but instead whether any reasonable jury could decide the case in favor of the non-movant.
FOB's response to Century 21's motion, briefly stated, is that sufficient evidence exists to place in dispute whether Century 21 is vicariously liable because Kepchar was its apparent agent or because Century 21 controlled Kepchar to the degree necessary to impose liability under either principal/agent or franchisor-franchisee theories of liability. In addition, FOB contends that the evidence shows that Century 21 itself was negligent by allowing Kepchar to engage in practices prohibited by the franchise agreement: 1) conducting business other than sale of real estate, and; 2) misusing the Century 21 trademark by publishing it without the phrase "each office is independently owned and operated."
Manifestations made by a principal to a third party, which instill that party with a reasonable belief that another individual is the principal's agent, create an apparent agency by which the principal may be held liable for acts within the scope of the apparent authority. Pepkowski v. Life of Indiana Ins. Co., 535 N.E.2d 1164, 1166-67 (Ind. 1989); Swanson v. Wabash College, 504 N.E.2d 327, 331-32 (Ind.Ct.App.1987). At one time this liability was limited to contract: the "doctrine of presumed, implied or apparent authority will not operate to hold an innocent principal for the tort of his agent." Janeczko v. Manheimer, 77 F.2d 205 (1935).
The modern view, however, appears to be that "respondeat superior ... can also be used to impose liability on a principal for torts committed by an agent within the scope of the agent's actual or apparent authority." Tippecanoe Beverages v. S.A. El Aguila Brewing Co., 833 F.2d 633,...
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