Ellis v. Zuck

• Decision Date: 01 March 1976
• Docket Number: Civ. A. No. 74-G-841-S.
• Citation: 409 F. Supp. 1151
• Parties: Phillip D. ELLIS and Marilyn N. Ellis, Plaintiffs, v. Richard ZUCK et al., Defendants.
• Court: U.S. District Court — Northern District of Alabama

409 F. Supp. 1151

Phillip D. ELLIS and Marilyn N. Ellis, Plaintiffs, v. Richard ZUCK et al., Defendants.

Civ. A. No. 74-G-841-S.

United States District Court, N. D. Alabama, S. D.

March 1, 1976.

COPYRIGHT MATERIAL OMITTED

Richard F. Ogle, Denaburg, Schoel, Meyerson & Ogle, Birmingham, Ala., for plaintiffs.

Robert R. Bryan, Birmingham, Ala., for Richard Zuck.

Samuel G. McKerall, Shores & McKerall, Foley, Ala., for Wilma Zuck Aulsbrook.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

GUIN, District Judge.

This cause was heard before the court, without a jury, on September 25, 1975. Plaintiffs' claims against the defendants Richard Zuck and Wilma Zuck Aulsbrook, Administratrix of the Estate of Gordon D. Zuck, deceased, were severed from the plaintiffs' claims against the other two defendants, Ruth Zuck and Susan Morton, those claims having been previously tried by a jury. As to the two defendants sub judice, the claims of the plaintiffs were tried by the court, without a jury, and the court makes the following findings of fact and conclusions of law.

FINDINGS OF FACT

1. On March 8, 1973, the plaintiffs executed a franchise agreement with Network Cinema Corporation to operate a "Jerry Lewis Cinema" in the Fort Walton Beach, Florida, area. The franchise agreement executed by the plaintiffs was for a single cinema location costing $17,500.00, of which $7,500.00 was paid directly to Network Cinema Corporation simultaneously with the execution of the contract. The balance of $10,000.00 was to be due upon the approval of a location from which the franchise would operate. In this action plaintiffs do not seek recovery of the $7,500.00 initial payment, but do seek recovery of all subsequent payments made by them for the franchise.

2. Although the plaintiffs had numerous conversations with the various defendants after the execution of the franchise agreement, it was not until July 5, 1973, that the plaintiffs actually met the defendants. Plaintiffs traveled from their home in Columbus, Ohio, to Birmingham, Alabama, where they met initially Ruth Zuck, Susan Morton and defendant Richard Zuck in their offices in Vestavia Hills, Birmingham, Alabama. At this meeting plaintiffs were told by Ruth Zuck that unless the remaining $10,000.00 was paid on the franchise fee, the defendants could not make any more efforts toward the obtaining of a location for the cinema. The plaintiffs agreed to have transferred from their bank account in Columbus, Ohio, the necessary $10,000.00 to complete payment of the franchise fee. Plaintiffs obtained from Ruth Zuck a written agreement that the monies paid by the plaintiffs would be held in escrow and, in the event a lease was not signed within 60 days from that date, all monies would be refunded, less the defendants' expenses. No definite theater site had been secured by the date of the July meeting. Ruth Zuck and Susan Morton advised Mr. Ellis, however, that sites were available and that a location would be no problem.

3. Plaintiff Phillip D. Ellis testified that on the occasion of his meeting with the defendants in Birmingham he engaged in a telephone conversation with Gordon D. Zuck on one of the two telephone extensions in the defendants' offices.¹ During this conversation the defendant Gordon D. Zuck, now deceased, assured the plaintiffs that negotiations were under way in Fort Walton Beach to secure a cinema location. Later on the night of July 5 the plaintiffs were taken to the airport by Ruth Zuck, and at the airport they met the defendant Gordon D. Zuck who was returning from out of town. On this occasion the plaintiffs met Gordon D. Zuck personally for the first time. At this time Gordon D. Zuck welcomed the plaintiffs into the Jerry Lewis Cinema "family," and again assured plaintiffs that negotiations were under way for a Fort Walton Beach location at Brooks Plaza Shopping Center, that he anticipated no problems in completing arrangements for such a location within a short period of time, and that 100 per cent financing for the theater equipment would be available. The parties stipulated that Network Cinema Corporation, the parent corporation of Jerry Lewis Cinema, filed for bankruptcy in New York on July 3, 1973. Phillip D. Ellis testified that the Zucks did not inform him of this fact during the July 5 meeting, and that he learned of it, on his own, a few weeks later.

4. Upon their return to Columbus, Ohio, the plaintiffs continued to have regular telephone conversations with the defendants, and each time were assured by the defendants that all negotiations were proceeding well and that, as before, no difficulties were anticipated. However, during this period of time no lease was ever entered into for this cinema location. Then, the plaintiffs, becoming anxious about the cinema location, made a trip to the Fort Walton Beach area in the first week of October, 1973, after advising the defendants of their intention to do so. An appointment was made by the plaintiffs to meet Ruth and Gordon D. Zuck in Fort Walton Beach. Upon meeting the plaintiffs in Fort Walton Beach, Ruth and Gordon D. Zuck again assured the plaintiffs that they were involved in negotiations for a cinema location at Brooks Plaza and that these negotiations were proceeding without any problems. The Zucks made arrangements to meet the plaintiffs for supper but they did not appear at the appointed time.

5. The next day, Phillip D. Ellis telephoned the Zucks' Birmingham office and spoke to Susan Morton about his missed appointments with Mr. and Mrs. Zuck. Susan Morton advised Mr. Ellis that one of the defendants would meet him in Fort Walton Beach the next day, October 2, 1973. Later in the day of October 1 Mr. Ellis went to the office of Mr. Jay Farris, a real estate agent who had been trying to help find a location for the cinema. At this time Mr. Ellis met one Larry Anchors who was in charge of leasing at Brooks Plaza, a shopping complex owned in part by Mr. Anchors' father. It was at this meeting that the plaintiffs learned, for the first time, from Larry Anchors that there had been no serious negotiations by the defendants with the owners of Brooks Plaza. It is clear from the stipulated testimony of Mr. Anchors that no such serious negotiations had ever taken place. In fact, it appears from Mr. Anchors' stipulated testimony that the first time any negotiations were ever had by any of the defendants with any of the principals of Brooks Plaza, relative to a cinema location for Mr. Ellis, was sometime in late July, several weeks after the plaintiffs had paid to the defendants $10,000.00 and had been repeatedly assured by Ruth Zuck, Gordon D. Zuck and Susan Morton that negotiations for a site at Brooks Plaza were well under way. Mr. Anchors' testimony clearly indicates that the only meeting he had with Gordon D. and Ruth Zuck never progressed beyond an inquiry stage between the Zucks and himself.

6. On October 2, 1973, the plaintiffs again went to the office of Jay Farris where they met with Susan Morton and Richard Zuck. It was at this meeting that the plaintiffs were advised for the first time, by any of the defendants, that in fact there was no possibility for a cinema location at Brooks Plaza. However, the plaintiffs were persuaded on this occasion by the two defendants present at this meeting to enter into a new franchise agreement for a twin cinema location in lieu of a single cinema location. In this regard, prior to signing this new franchise agreement, plaintiffs were assured by these two defendants, and by Ruth Zuck via telephone, that negotiations had already begun for a twin cinema location at the Fort Walton Square shopping center and that 100 per cent financing of the theater equipment would be available. Based on these assurances the plaintiffs executed a new franchise agreement and made arrangements for the transfer of an additional $12,500.00 from the plaintiffs' bank account to the account of Ruth Zuck. Prior to this arrangement for transfer, the plaintiffs were assured that the $12,500.00 would be treated in the same manner as the $10,000.00 payment on July 5; that is, it would be held in escrow and would be refunded to the plaintiffs if a lease was not negotiated within 60 days. At this meeting of October 2, 1973, the plaintiffs were shown a sample lease contract which would be executed for the Fort Walton Square location and the plaintiff Phillip D. Ellis executed an Intent to Lease a location at the Fort Walton Square shopping center.

7. Plaintiffs moved to Fort Walton Beach in an effort to bring this cinema location to a reality. They encountered much difficulty, part of which was financing of a new location. The plaintiffs had been assured by the defendants, both prior to the payment of the $10,000.00 on July 5, 1973, and the additional $12,500.00 on October 2, 1973, that 100 per cent financing of the theater equipment would be available. However, this never proved to be a reality and the plaintiffs were, in fact, unable to obtain financing for the theater equipment. Also, Fort Walton Square shopping center was demanding that the plaintiffs furnish lease mortgage insurance. Because of plaintiffs' diminished financial capacity, from the payment of the $12,500.00, the plaintiffs were unable to secure any such insurance. Although the plaintiffs continued to work diligently in an effort to secure a site location for their franchise, none was ever forthcoming, and the plaintiffs had less and less contact with the defendants. On December 5, 1973, the defendant Gordon D. Zuck was murdered, and three defendants, among others, have been convicted of his murder. At no time have the plaintiffs ever secured a theater location for the exercise of their franchise rights.

8. The court makes the following specific findings in regard to the scenario constructed by the above general findings:

(a) that the representations made to plaintiffs prior to their payment of $10,000.00 on July 5, 1973,

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