Franklin's Systems, Inc. v. Infanti

• Decision Date: 31 March 1995
• Docket Number: No. 94-C-3830.,94-C-3830.
• Citation: 883 F. Supp. 246
• Parties: FRANKLIN'S SYSTEMS, INC., Plaintiff, v. Steven C. INFANTI, Defendant.
• Court: U.S. District Court — Northern District of Illinois

883 F. Supp. 246

FRANKLIN'S SYSTEMS, INC., Plaintiff, v. Steven C. INFANTI, Defendant.

No. 94-C-3830.

United States District Court, N.D. Illinois, Eastern Division.

March 31, 1995.

Jeffrey Wayne Finke, Raleigh and Helms, Chicago, IL, Richard A. Gordon, Richard A. Gordon, P.C., Atlanta, GA, for Franklin's Systems, Inc.

Paul Lieggi, Law Offices of Paul R. Lieggi, Chicago, IL, for Steven C. Infanti.

MEMORANDUM OPINION AND ORDER

CASTILLO, District Judge.

Plaintiff Franklin's Systems seeks to enforce a judgment entered against defendant Mr. Infanti by the State Court of Fulton County, Georgia, in the amount of $60,687.79, plus post-judgment interest at the rate of 12% per annum. This case is before the court on Plaintiff's motion for summary judgment. For the reasons cited below, the motion is GRANTED.

BACKGROUND

Plaintiff Franklin's Systems, Inc. (Franklin's) is a Georgia Corporation engaged in the business of franchising its name and business marks to franchisees, who operate Franklin stores in various locations around the country. Each franchisee pays a franchise fee on entering into the franchise agreement, plus monthly royalties calculated as a percentage of gross billings for the continuing privilege of operating the franchise.

Defendant Steven Infanti, a resident of Illinois, noticed and responded to an advertisement for Franklin's Systems franchises in February of 1988, and requested and received by mail further information about the franchise as a business opportunity. In March of 1988, Mr. Infanti traveled to Franklin's headquarters in Georgia to tour the plant and discuss a possible franchise with Franklin's officials. In April, he returned to Georgia to sign a franchise agreement and undertake mandatory training before entering upon the operation of the franchise. Defendant claims, and Plaintiff does not dispute, that no negotiations occurred with respect to the franchise agreement, although "the amount and timetable for payment of franchise fees were discussed." (Exh. A, Def. Memo Opposing Summary Judgment).

Mr. Infanti has operated the franchise from June of 1988 to the present. Sometime around August, 1992, a dispute developed over Mr. Infanti's compliance with the franchise agreement's conditions for payment of royalties, and Franklin's brought suit in the State Court of Fulton County, Georgia to compel payment of those amounts. Mr. Infanti retained local Illinois counsel, who was led to believe that the parties were negotiating a resolution that would obviate the need to respond to the suit, but began nonetheless to seek information regarding Franklin's registration with the Illinois Secretary of State. As a result of local counsel's belief that Plaintiff would take no further action in the case until additional discussions were had, and the delay involved in obtaining information from the Secretary of State, Mr. Infanti did not reply to the Georgia suit until it appeared that a judgment was imminent. (Exhibits B and C, Def. Memo Opposing Summary Judgment).

Georgia counsel was associated, who entered a special appearance in the Georgia court late in November, 1993, arguing that the state of Georgia did not have personal jurisdiction over Mr. Infanti, and seeking to open the default. The Georgia court denied the motion to open default, and entered judgment for plaintiff. Plaintiff now presents the Georgia default judgment to this court, seeking enforcement under 28 U.S.C. 1738 and the full faith and credit clause of the U.S. Constitution. Plaintiff's motion for summary judgment argues that there are no material issues of fact pertaining to the enforceability of the Georgia judgment.

Mr. Infanti has answered the complaint, objecting to enforcement of the Georgia default judgment on the grounds that the Georgia court did not have personal jurisdiction over him and that its judgment is therefore not entitled to full faith and credit. In support of this position he argues, (1) that the Illinois Franchise Disclosure Act prohibits a franchise agreement from including a clause that requires consent to jurisdiction and venue in a foreign state, and (2) that the Georgia long arm statute requires more significant contacts than the single visit eight years ago during which he signed the contract, before it can exercise its jurisdiction over a non-resident. Mr. Infanti also offers as an affirmative defense the allegation that Plaintiff obtained the Georgia judgment by misrepresenting to that court the enforceability of the jurisdiction and venue provisions of the franchise agreement.

Although not relevant to this motion, Infanti also counterclaims that Franklin's made material misrepresentations in connection with the sale of the franchise, caused Infanti damage when it was prohibited from selling franchises in Illinois between 1989 and 1991, and that Infanti is entitled to resultant damages in excess of those represented by the Georgia judgment. The facts regarding the Georgia judgment being undisputed, the motion appears ripe for summary judgment.

FACTS NOT IN DISPUTE

The parties agree that plaintiff Franklin's is a Georgia corporation authorized by the Illinois Secretary of State to sell franchises to Illinois residents in 1988 when Mr. Infanti bought his franchise. Mr. Infanti, who has been at all relevant times a resident of Illinois, sought and received by mail information about the franchise opportunities Franklin's offered, and traveled to Georgia twice, in March and April of 1988, first to investigate, and then to enter into a franchise contract. In connection with the signing of the contract, "the amount and timetable for payment of franchise fees were discussed." Mr. Infanti remained in Georgia for several days to receive training at Franklin's corporate headquarters prior to beginning the operation of his franchise.

Apart from these initial visits to Georgia, Mr. Infanti has never traveled to or conducted business there, has not owned any real or personal property, nor maintained an office, telephone number or business address in Georgia. His offices, customers and suppliers are all in Illinois, his employees are all residents of Illinois, all his sales and payroll taxes have been rendered to the State of Illinois, and apart from sending royalty payments to corporate headquarters, Mr. Infanti has not had any other business contacts within the state of Georgia. After execution of the franchise agreement, all face-to-face meetings between Mr. Infanti and Franklin's have occurred outside of Georgia, and eight of these have occurred in Chicago, Illinois.

After being served with the Georgia complaint in September, 1993, Mr. Infanti belatedly entered a limited appearance, contesting the jurisdiction of the State Court of Fulton County, Georgia on November 29, 1993. Mr. Infanti having failed to timely appear before the Georgia Court, a default judgment was entered in favor of Franklin's Systems on March 9, 1994. (Exh. B, Def. Memo Opposing Summary Judgment).

LEGAL STANDARD

Summary Judgment is appropriate under Federal Rule 56(c) when there remains no genuine issue of material fact upon which a reasonable jury could find in favor of the non-moving party, or where the moving party is entitled to judgment as a matter of law. "One of the principle purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses...." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2553-55, 91 L.Ed.2d 265 (1986). Thus, although the moving party is responsible for demonstrating to the Court that there is no genuine issue of material fact, the non-moving party must go beyond the face of the pleadings, affidavits, depositions, answers to interrogatories and admissions on file to demonstrate through specific evidence that a material issue remains upon which a rational jury could return a verdict in the non-moving party's favor. Id.; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254-55, 106 S.Ct. 2505, 2513-14, 91 L.Ed.2d 202 (1986); Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986). Consequently, the inquiry on summary judgment is whether the evidence presents a sufficient disagreement to require submission to a jury, or whether the evidence 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. Disputed facts are material when they might affect the outcome of the suit. First Ind. Bank v. Baker, 957 F.2d 506, 507-08 (7th Cir.1992). A metaphysical doubt will not suffice. Matsushita, 475 U.S. at 586, 106 S.Ct. at 1356; Beraha v. Baxter Health Care Corp., 956 F.2d 1436, 1440 (7th Cir.1992). If the evidence is merely colorable, or is not significantly probative, or is no more than a scintilla, summary judgment may be granted. Matsushita at 586, 106 S.Ct. at 1356.

Under 28 U.S.C. 1738, federal courts must give full faith and credit to the final judgments of state courts. That obligation is subject, however, to an important caveat: "before a court is bound by the judgment rendered in another state, it may inquire into the jurisdictional basis of the foreign court's decree. If that court did not have jurisdiction over the subject matter and the relevant parties, full faith and credit need not be given." Underwriters National Assurance Co. v. North Carolina Life & Accident & Health Guaranty Ass'n, 455 U.S. 691, 705, 102 S.Ct. 1357, 1366, 71 L.Ed.2d 558 (1982). This requires the Court to undertake a two-tier analysis, under which it first examines whether the Georgia court had jurisdiction, thus entitling it to full faith and credit, and second determines how much credit the judgment is entitled to receive. The judgment must be given "the same credit, validity, and effect ... which it had in the state where it was pronounced." Fehlhaber v. Fehlhaber, 681 F.2d 1015, 1020 (5th Cir.1982), cert. denied, 464 U.S. 818, 104 S.Ct. 79...