Meehan v. United Consumers Club Franchising Corp., 01-3381.

• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)
• Writing for the Court: Riley
• Citation: 312 F.3d 909
• Parties: Harry D. MEEHAN, Jr.; Harry D. Meehan, Sr., Appellants, v. UNITED CONSUMERS CLUB FRANCHISING CORP.; United Consumers Club, Inc.; National Management Corporation; Jack R. Allen, Appellees.
• Docket Number: No. 01-3381.,01-3381.
• Decision Date: 10 December 2002

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312 F.3d 909 Harry D. MEEHAN, Jr.; Harry D. Meehan, Sr., Appellants,
v.
UNITED CONSUMERS CLUB FRANCHISING CORP.; United Consumers Club, Inc.; National Management Corporation; Jack R. Allen, Appellees. No. 01-3381. United States Court of Appeals, Eighth Circuit. Submitted: September 13, 2002. Filed: December 10, 2002.

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John J. Allan, argued, Clayton, MO, for appellant.

C. Joseph Yast, argued, Northfield, IL (Kenneth J. Brennan, St. Louis, MO, on the brief), for appellee.

Before LOKEN, RILEY, and SMITH, Circuit Judges.

RILEY, Circuit Judge.

Harry D. Meehan, Jr., and Harry D. Meehan, Sr., (Meehans) entered into a franchise agreement with appellees United Consumers Club Franchising Corp., United Consumers Club, Inc., and National Management Corporation (collectively, Consumers Club). Appellee Jack Allen (Allen) negotiated the franchise agreement on behalf of Consumers Club. The franchise allowed the Meehans to sell memberships to the general public in a merchandise and services buying club. The Meehans' franchise was not successful, and they filed suit alleging fraud and violations of the Indiana Franchise Act, Ind. Code §§ 23-2-2.5-1 to -51 (1989), and the Indiana Deceptive Franchise Practices Act, Ind.Code §§ 23-2-2.7-1 to -7 (collectively, Indiana Franchise Acts). The district court¹ dismissed the complaint with prejudice, because (1) the Meehans could not establish justifiable reliance, an essential element of fraud, and (2) the Indiana

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Franchise Acts were inapplicable. We affirm.

I. BACKGROUND

The Meehans entered into a franchise agreement with Consumers Club in 1995. The Meehans' franchise failed. The Meehans allege that, just before they entered into the franchise agreement, Consumers Club, through Allen, made false statements and misleading representations to them about (1) earnings, (2) success rates, (3) pricing, and (4) warranties, support, and service. In Count I, the Meehans allege Consumers Club's conduct constituted fraud. The Meehans initially alleged in Count II that the conduct also violated the Indiana Franchise Acts, but later conceded to the district court the Indiana Franchise Acts did not apply.

The district court dismissed both counts with prejudice, determining the express disclaimers contained in the franchise agreement precluded the Meehans from proving justifiable reliance, if any misrepresentations were made. In their response brief to the motion to dismiss, the Meehans sought to amend the complaint to substitute a claim under the Missouri Merchandising Practices Act, Mo.Rev.Stat. §§ 407.010-.943 (2000). The district court ruled the Meehans failed to comply with the requirements of Federal Rule of Civil Procedure 15(a), because they did not file a motion to amend. Meehans also did not submit a proposed amended complaint for review. Therefore, the district court denied the Meehans leave to amend their complaint.

II. DISCUSSION

A. Appellant Filing Appeal

As an initial matter, a question exists about whether both Meehans appealed the district court's order or if only Harry D. Meehan, Jr. appealed. The filings on appeal contain the names of both Meehans and suggest they both appealed; however, the appellees argue only Harry D. Meehan, Jr. appealed. The notice of appeal filed in the district court states: "Comes now the Complainant and notifies the Court and the defendants that the plaintiff will appeal the Judgment, Order, and Memorandum entered August 17, 2001." The caption contains only the name Harry D. Meehan, Jr. as "Claimant," without "et al." or any similar designation. The signature line is for the "Attorney for Plaintiff." No other notice of appeal was filed. Federal Rule of Appellate Procedure 3(c)(4) provides: "An appeal must not be dismissed... for failure to name a party whose intent to appeal is otherwise clear from the notice." Here, the notice clearly lists only Harry D. Meehan, Jr. and makes no reference to Harry D. Meehan, Sr.'s intent to appeal. Accordingly, we find Henry D. Meehan, Sr. has not filed an appeal, and we proceed only with the appeal of Harry D. Meehan, Jr. (Meehan).

B. Fraud Claim

"We review de novo the district court's grant of the defendants' 12(b)(6) motion to dismiss.... We construe [appellant's] complaint in the light most favorable to him and determine whether he can prove any set of facts that would entitle him to relief." Madsen v. Audrain Health Care, Inc., 297 F.3d 694, 697 (8th Cir.2002) (internal citations omitted). The federal rules require averments of fraud shall be stated with particularity. Fed.R.Civ.P. 9(b).

Count I alleges Consumers Club knowingly misrepresented expected earnings, success rates, pricing, and warranties, support, and service in order to induce Meehan to purchase a franchise. Meehan attached the franchise agreement

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and the offering circular to the complaint. The district court determined the express disclaimers contained in the attached franchise agreement and offering circular preclude Meehan from proving justifiable reliance, if misrepresentations were made. Meehan contends the disclaimers do not defeat the misrepresentation claim because they do not contain evidence of whether actual representations were made and relied on.

The franchise agreement provides that the parties' relationship and the...