Fronckowiak v. Sears Authorized Hometown Stores, Case No. 1:19-cv-01945-AA
| Decision Date | 31 January 2021 |
| Docket Number | Case No. 1:19-cv-01945-AA |
| Parties | DORIS FRONCKOWIAK, Plaintiff, v. SEARS AUTHORIZED HOMETOWN STORES,LLC, Defendant. |
| Court | U.S. District Court — District of Oregon |
This case arises out of two separate underlying arbitration proceedings. Plaintiff, Doris Fronckowiak, has filed this action seeking a declaratory judgment finding that defendant, Sears Authorized Hometown Stores, LLC ("SAHS") violated the terms of various agreements between the parties. She also seeks injunctive relief vacating an arbitrator's ruling that joined her as a party in one of the underlying arbitration proceedings. Finally, plaintiff requests that SAHS be enjoined from further alleged violations of the parties' agreements. Doc. 4. Two motions are now before the Court. Plaintiff has filed a motion for reconsideration of this Court's denial of a temporary restraining order ("TRO"). Doc. 20. Defendant has filed motion to dismiss for lack of subject matter jurisdiction pursuant to Fed R. Civ. P. 12(b)(1), arguing that, because a final award has been entered against plaintiff in the underlying arbitration proceeding, this action is moot. Doc. 16.
For the reasons set forth below, plaintiff's motion for reconsideration is DENIED, and defendant's motion to dismiss is GRANTED.
Plaintiff is a former independent owner of at least two Sears Authorized Hometown Stores, "the Stores" one located in Grants Pass, OR and another in Klamath Falls, OR. Independent owners of the Stores sell SAHS-procured merchandise on consignment in return for a variable commission from the proceeds on each sale, pursuant to a "dealer agreement." Notably, the dealer agreements in this case require the parties to submit all claims arising out of the agreement to binding arbitration before American Arbitration Association ("AAA").
Plaintiff and defendant entered a dealer agreement which established plaintiff as a franchisee of SAHS operating out of Grants Pass, Oregon in November 2016. This Store was owned and operated by plaintiff's entity Parkway Hometown, Inc. Plaintiff owned and operated another Store in Klamath Falls, Oregon from 1999 to 2017. Sometime in early 2017, plaintiff sold the rights to the Klamath Falls Store tothe entity So-Mo, Inc. ("So-Mo") which was co-owned by plaintiff and her son Christopher Fangman.1
At that time, defendant entered into a new dealer agreement with So-Mo granting it a limited license to operate the Klamath Falls Store. Fangman signed the dealer agreement as owner of So-Mo, personally guaranteeing So-Mo's obligations under the agreement. Though she did not sign the So-Mo Dealer Agreement, it is undisputed that plaintiff also executed a Joinder Agreement in February 2017, where she agreed to be bound by the dealer agreement's non-competition covenant which would come into effect should the deal agreement be terminated. The Joinder Agreement states, in pertinent part, that:
[i]n order to induce Sears Authorized Hometown Stores, LLC to execute the Agreement and in consideration of the material benefits to be derived by the undersigned therefrom, each of the undersigned, constituting all the owners, officers and directors of Owner, hereby joins in and agrees to be bound by all the provisions of Section 15 of the Agreement, as his or her primary and direct obligations, with the same force and effect as if he or she were the Owner.
Pl's Am. Compl. ¶ 21. Section 15 of the So-Mo Dealer Agreement outlines a covenant not to compete which provides, inter alia, that those bound by the agreement may not have an ownership interest in a competing business during the term of the agreement or for a period of two years after the termination or expiration of the agreement.
In March 2019, Fangman contacted defendant, informing it that he would be abandoning the Klamath Falls Store prior to the expiration of the dealer agreementwhich was set for July 2, 2022. Eventually, defendant terminated the agreement on April 30, 2019 after further representations and withheld payments from Fangman. Defendant then initiated arbitration proceedings against So-Mo in May of 2019 ("So-Mo Abitration"). It also sought emergency enforcement of various provisions under the dealer agreement, which were granted by the arbitrator. Defendant also requested an order enjoining Fangman and So-Mo from violating the terms of the post-termination non-competition clause found in Section 15 of the So-Mo Dealer Agreement. The arbitrator initially denied that request because defendant lacked evidence that Fangman was competing in violation of the dealer agreement at that time.
Defendant alleges that a competing store, Basins Home Appliance and Service Center, was opened by So-Mo and Fangman and has been continuously operating since July 2019. After gathering evidence, defendant obtained a preliminary injunction from an appointed arbitrator on September 5, 2019 which ordered So-Mo and Fangman to cease their involvement in the competing store. When later attempting to confirm compliance with this order, Fangman testified in deposition that he was not involved with the competing store but rather alleged that plaintiff was the sole operator.
Defendant then filed with the arbitrator a motion to join plaintiff as a party to the So-Mo Arbitration. After briefing, in which plaintiff and Fangman opposed the joinder, the arbitrator granted the motion ruling that plaintiff was a proper party to the arbitration.
While these proceedings were ongoing, plaintiff and defendant were involved in arbitration dealing with the Grants Pass Store owned by plaintiff's entity Parkway Hometown Inc ("Parkway Arbitration"). Plaintiff alleges that supply shortages and related issues in October 2018 threatened the economic viability of the Grants Pass Store and the contractual relationship with defendant, which was not set to expire until July 2021. As a result of these difficulties, plaintiff and defendant negotiated and executed a Mutual Termination Agreement ("MTA") in April 2019 which effectively ended, with some exceptions, the Parkway Agreement.
A second arbitration was initiated by defendant in June 2019 dealing with the set of agreements involving Parkway Hometown, Inc. and the Grant's Pass Store. This action was pending before a different arbitrator with a final hearing set to begin in February 2020. After defendant sought to join plaintiff in the So-Mo Arbitration, plaintiff filed a motion in the Parkway Arbitration requesting that the arbitrator prohibit plaintiff from being added as party to the So-Mo Arbitration. The arbitrator in the Parkway matter denied that motion, noting that she had no authority to enjoin the actions of parties to a separate arbitration proceeding.
Following the denial of her motions before the arbitrators in the So-Mo and Parkway Arbitrations, plaintiff filed the present complaint seeking declaratory and injunctive relief with this Court. Plaintiff also moved for a TRO asking this Court to enjoin the So-Mo Arbitration, which was denied.
In March 2020, a final award was entered by the arbitrator in the So-Mo Arbitration against plaintiff, her son, and So-Mo. Defendant then filed a motion todismiss plaintiff's complaint as moot. Doc. 14. In response to that motion, plaintiff requested reconsideration of this Court's denial of her request for a TRO and preliminary injunction. Docs. 19 and 20.
I. Motion for Reconsideration
A motion for reconsideration is often considered analogous to a motion to alter of amend a judgment under Fed. R. Civ. P. 59(e). See, e.g., Marlyn Nutraceuticals, Inc. v. Mucos Pharma GMbH & Co., 571 F.3d 873, 880 (9th Cir. 2009). Granting a motion for reconsideration is "an extraordinary remedy, used sparingly in the interests of finality and conservation of judicial resources." Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000) (quotation omitted). Reconsideration is appropriate only if "the district court (1) is presented with newly discovered evidence, (2) committed clear error or the initial decision was manifestly unjust, or (3) if there is an intervening change in controlling law." 389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir.1999).
Ass'n of Am. Med. Colleges v. United States, 217 F.3d 770, 778 (9th Cir. 2000) (citing St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir.1989)).
To avoid advisory opinions on abstract principles, the jurisdiction of Article III courts is limited to actual cases and controversies. California v. San Pablo & T.R. Co., 149 U.S. 308 (1893). Mootness is among the justiciability requirements that ensure that courts adhere to this jurisdictional limitation. Already, LLC v. Nike, Inc., 568 U.S. 85, 91 (2013). "[A] case is moot when the issues presented are no longer 'live' or the parties lack a legally cognizable interest in the outcome." Powell v. McCormack, 395 U.S. 486, 496 (1969).
In her complaint, plaintiff alleges that defendant violated the terms of its Dealer Agreements and violated the 2019 MTA's release of...
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