Pearse v. McDonald's Systems of Ohio, Inc.

• Decision Date: 02 December 1975
• Citation: 351 N.E.2d 788,1 O.O.3d 164,47 Ohio App.2d 20
• Parties: , 1 O.O.3d 164 PEARSE, Appellee, v. McDONALD'S SYSTEMS OF OHIO, INC., Appellant, Fellers, Inc., et al., Appellees.
• Court: Ohio Court of Appeals

Page 20

47 Ohio App.2d 20

351 N.E.2d 788, 1 O.O.3d 164

PEARSE, Appellee, v. McDONALD'S SYSTEMS OF OHIO, INC., Appellant Fellers, Inc., et al., Appellees.

Court of Appeals of Ohio, Tenth District, Franklin County.

Dec. 2, 1975.

Syllabus by the Court

A franchisor, such as McDonald's, may show that it has a legally protected interest in the relationship of its franchisees and the latter's management employees, in order to assert a privilege to cause another not to perform a contract, or enter into or continue a business relation.

Tyack, Scott & Colley, Thomas M. Tyack and George Gray Tyack, Columbus, for appellee.

Topper, Alloway, Goodman, DlLeone & Duffey, Columbus, for appellant and appellee Frank Phalin.

George, Greek, King, McMahon & McConnaughey and Stephen J. Vergamini, Columbus, for appellees Fellers, Inc., McHigh, Inc., and Robert E. Fellers.

HOLMES, Judge.

This matter involves the appeal of a judgment of the Court of Common Pleas of Franklin County on behalf of the plaintiff against defendant McDonald's Systems of Ohio, Inc. The matter was tried to the trial court besically upon the stipulation of facts, the pertinent portions of which are as follows.

McDonald's Systems and its predecessor are engaged in the fast food business, both directly and through a franchise licensing system. Defendants McHigh, Inc., and Fellers, Inc., are Ohio corporations, owned and controlled by defendant Robert E. Fellers, and held and operated as McDonald's stores under franchise licenses with McDonald's Systems of Ohio, Inc.

The facts further show that on and before March 1, 1972, the plaintiff Pearse had been employed by McHigh, Inc., and Fellers, Inc., as the manager of the McDonald's franchise retail food store on South High Street in Columbus, Ohio, and had continued in that employment until his resignation became effective March 31, 1972. The facts show that sometime prior to March, 10, 1972, plaintiff Pearse had contacted Mr. Guy Cicchini, another licensee of McDonald's, who had built a new McDonald's store on North High Street, in Columbus. This contact by plaintiff was for the purpose of obtaining employment with Cicchini as store manager at such store. It appears from the record that it was more desirable for the plaintiff to work at this new store as it was closer to his home. After a discussion, Mr. Cicchini offered plaintiff employment as manager in the new McDonald's franchise store.

In accordance with the aforementioned conversation and offer of employment, plaintiff, on or about March 21, 1972, accepted the position of store manager for Mr. Cicchini, and agreed to commence working as such. Subsequently, on March 22, 1972, plaintiff resigned his position with McHigh, Inc., in writing, effective March 31, 1972, and informed Mr. Fellers that he was accepting employment with Guy Cicchini as a store manager of Cicchini's McDonald's franchise store.

The defendant McHigh, Inc., and its owner, Mr. Fellers, informed McDonald's Systems of Ohio, Inc., of the employment of the plaintiff by Cicchini's McDonald's franchise store, and demanded that McDonald's enforce against Mr Cicchini a certain provision of the McDonald's franchise license agreement, which prohibits the employment by one franchisee of another franchisee's manager.

The facts further show that on or about April 3, 1972, Mr. Frank Phalin, the regional manager of McDonald's, who had authority to review and determine franchise compliance under franchise license agreements, determined the facts were as complained of by Mr. Fellers, and proceeded to request a meeting with the plaintiff Pearse, Mr. Cicchini, and Mr. Fellers. At such meeting, Mr. Phalin reviewed the franchise license agreement with Mr. Cicchini, and informed him that McDonald's would enforce the provisions of such agreement; thereupon, Mr. Cicchini discharged the plaintiff Pearse from his employment at Cicchini's McDonald's franchise store.

Thereafter, the plaintiff Pearse brought this action alleging that defendant McDonald's Systems of Ohio, Inc., did, 'maliciously, wrongfully, intentionally, and without justification, interefere with the contract between plaintiff and Guy Cicchini, and the said defendants did intentionally procure the breach of the aforesaid contract, all to plaintiff's damage.'

Upon the trial hereof, the trial court made certain findings of fact, which were as follows:

'(1) Guy Cicchini violated the terms of his contract with Defendant, McDonald's in hiring Plaintiff.

'(2) Defendant, McDonald's had knowledge of the hiring of Plaintiff by Guy Cicchini.

'(3) Defendant, McDonald's, induced Guy Cicchini to discharge Plaintiff.

'(4) Defendant, McDonald's, had no legitmate business interest in inducing Guy Cicchini to discharge Plaintiff.

'(5) Plaintiff was damaged in the amount of $1,684.90, based upon $700.00 per month, there being insufficient proof of the added percentages.

'(6) No actual malice on the part of Defendant, McDonald's was shown.'

The trial court also entered certain conclusions of law which, in essence, referred to certain sections of IV Restatement of Torts, upon which McDonald's had relied as their major defense, as follows:

'Section 766. General Principle.

'Except as stated in Section 698, one who, without a privilege to do so, induces or otherwise purposely causes a third person not to

(a) Perform a contract with another, or (b) Enter into or continue a business relation with another is liable to the other for the harm caused thereby.'

'Section 773. Privilege to assert Bona Fide Claim. One is privileged purposely to cause another not to perform a contract, or enter into or continue a business relation, with a third person by in good faith asserting or threatening to protect properly a legally protected interest of his own which he believes may otherwise be impaired or destroyed by the performance of the contract or transaction.'

The trial court then stated that it was in agreement with the law set forth in section 766, but, as related to section 773, the trial court stated: '* * * if it be good law, there would need to be a factual showing of good faith on the one asserting the privilege and that he has a legally protected interest. The evidence in this case shows a complete lack of a legally protected interest on the part of Defendant, McDonald's.' Then the court went on to explain the basis of its determination that McDonald's had not shown a legally protected interest, by stating that: 'By Defendant's own evidence and argument of counsel, Plaintiff could have resigned March 31, 1972; worked for Burger King April 1, 1972, and resigned at the close of work on April 1, 1972; then taken a job with Mr. Cicchini on April 2, 1972, and thus would have 'sufficiently insulated himself.'

The court then concluded that: 'If such minimal insulation is sufficient McDonald's interest it was seeking to protect was equally minimal and impairment or destruction of such a minimal interest was not sufficient to grant it such a privilege as contemplated in Sec. 773.' The court then found that there being no actual malice shown, plaintiff was not entitled to punitive damages, and then awarded plaintiff the amount of $1,864.90 as compensatory damages.

The appellant sets forth the following assignments of error:

'1. The Court erred as a matter of law in the (sic) holding appellant McDonald's liable for injuries suffered by plaintiff as a result of his discharge from employment by Cicchini.

'2. The Court erred in finding as a matter of fact, and ...