Trotter's Corp. v. Ringleader Restaurants, Inc.

• Decision Date: 27 August 1996
• Docket Number: No. 69819,69819
• Citation: 929 S.W.2d 935
• Parties: TROTTER'S CORPORATION, a Missouri Corporation, Plaintiff/Respondent, v. RINGLEADER RESTAURANTS, INC., Clyde Johnson and Rebecca Johnson, Defendants/Appellants.
• Court: Missouri Court of Appeals

Page 935

929 S.W.2d 935

TROTTER'S CORPORATION, a Missouri Corporation, Plaintiff/Respondent, v. RINGLEADER RESTAURANTS, INC., Clyde Johnson and Rebecca Johnson, Defendants/Appellants.

No. 69819.

Missouri Court of Appeals,

Eastern District,

Division Five.

Aug. 27, 1996.

Thomas A. Connelly, St. Louis, for Defendants-Appellants.

Mark T. Stoll, Wegmann, Gasaway, Stewart, Schneider, Diefenbach, Tesreau, Stoll & Sherman, Hillsboro, for Plaintiff-Respondent.

CRANE, Chief Judge.

Plaintiff, Trotter's Corporation, filed an action against its franchisee, defendant Ringleader Restaurants, Inc., and defendants Clyde and Rebecca Johnson, assignees of the franchise agreement to recover the unpaid monthly royalty payments under the franchise agreement, the purchase price of supplies and products delivered and invoiced, and the balance due under a promissory note. Defendants filed an answer asserting affirmative defenses. A counterclaim was filed against Trotter's seeking damages in Count I on a claim that Trotter's had fraudulently induced Ringleader to enter into the franchise agreement and had fraudulently induced Clyde Johnson to enter into a guaranty. In Count II Ringleader sought damages for breach of the franchise agreement. ¹

After discovery, Trotter's filed motions for summary judgment on its claim and on both counts of the counterclaim which the trial court granted. The defendants appeal from the order granting summary judgment. We affirm.

I. Trotter's Claim for Monies Owed

For their first point defendants assert that the trial court erred in granting summary judgment in Trotter's favor because Trotter's did not establish that defendants' affirmative defenses of waiver and prior breach failed as a matter of law and because there were genuine issues of material fact.

When considering an appeal from an order granting summary judgment, we view the record in the light most favorable to the party against whom judgment was entered. ITT Commercial Finance Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). Facts set forth by affidavit or otherwise in support of a party's motion are taken as true unless contradicted by the non-moving party's response to the summary judgment motion. Id. We accord the non-movant the benefit of all reasonable inferences from the record. Id.

On February 15, 1989 Trotter's entered into a Franchise Agreement and Addendum to the Franchise Agreement [hereinafter "franchise agreement"] with Ringleader granting Ringleader a franchise to operate a Trotter's Bar-B-Que Restaurant in Arnold, Missouri. Bill Trotter, President of Trotter's, signed the agreements on Trotter's behalf and James Riddle, President of Ringleader, signed the agreements for Ringleader. The restaurant opened in December, 1989. Defendants Clyde and Rebecca Johnson purchased all outstanding Ringleader stock. On July 6, 1990, pursuant to an Assignment and Assumption of Franchise Agreement, Ringleader and Riddle assigned all of their rights under the Franchise Agreement and Addendum to defendants Clyde and Rebecca Johnson, who assumed all of the obligations thereunder. The restaurant closed at the end of April, 1991.

On June 1, 1992, Trotter's filed this action to recover from defendants $21,385.80 in unpaid royalty payments required by the Franchise Agreement; $4,604.22 on unpaid invoices for products received; and a balance of $4,817.17 due on a promissory note. In its motion for summary judgment, Trotter's supported its claim for these amounts, totaling $30,861.19, with references to the record including defendants' admissions in which they did not dispute the amounts, but claimed payment of these amounts had been orally waived and was also excused by Trotter's breach of contract.

In their brief on appeal, defendants again do not challenge the amounts of monies due and unpaid, but claim instead that summary judgment was improper because material facts remained relating to their affirmative defenses of waiver and prior breach of contract.

With respect to waiver, defendants alleged in their answers to Trotter's first amended petition:

f) In the fall of 1991, Plaintiff orally agreed to waive any and all franchise fees relevant to Ringleader's operation.

This assertion is limited to franchise fees and does not constitute a claim of waiver with respect to the other monies claimed. The theory of waiver is founded upon the intentional relinquishment of a known right. Brown v. State Farm Mut. Auto. Ins. Co., 776 S.W.2d 384, 386 (Mo. banc 1989). Defendants' answer failed to set forth any facts to show that plaintiff intentionally relinquished its right to collect the money it was owed by defendants. The factual basis for defenses must be set out in the same manner as is required for pleadings of claims. ITT, 854 S.W.2d at 384. A summary judgment movant is not required to negate conclusory allegations in its motion; otherwise, it would first have to make the non-movant's case and then defeat it. Id.

Even if we were to hold that defendants' allegation was sufficient to require Trotter's to negate it, Trotter's made a sufficient showing that there was no factual basis for defendants' claim of waiver in its motion for summary judgment. It relied on the following excerpt from Bill Trotter's deposition:

Q. Were there any discussions relevant to waiver for bargaining or excusing the payment of royalties by Ringleader for the Arnold location?

A. (Trotter) There was no waiver whatsoever. It was I told Skip that I would hold off for two or three months on his payments. I would give him time to get his bar going, and then he would pay me.

Because Trotter's made this showing in its motion, defendants had the burden to supplement the record in their response under Rule 74.04(c) to show a factual dispute on this issue. ITT, 854 S.W.2d at 387. However, in their response to the motion, defendants made only one reference to the record to support the defense of waiver, which was the same question and answer from Bill Trotter's deposition set out above. Defendants wholly failed to show any genuine dispute as to a material fact relating to their defense of waiver.

a. Prior Breach of Contract

Defendants alleged a defense of prior breach of contract in their answers to Trotter's first amended petition as follows:

e) Plaintiff breached the contract between itself and Defendant Ringleader Restaurants, Inc. such as to preclude Plaintiff's recovery pursuant to any alleged agreement sued for hereunder[.]

This allegation is wholly conclusory. It does not contain the required factual basis to support a claim that plaintiff breached the contract. Trotter's had no duty to negate this allegation in its motion for summary judgment and this bare allegation does not prevent the trial court's entry of summary judgment.

The trial court did not err in granting Trotter's motion for summary judgment on its claim for monies due in the total amount of $30,861.19.

II. Defendants' Counterclaim

With respect to its motion for summary judgment on the counterclaim, Trotter's is a "defending party." Where the movant is a "defending party" and does not bear the burden of persuasion at trial, that party need not controvert each element of the nonmovant's claim in order to establish a right to summary judgment. ITT, 854 S.W.2d at 381. Rather, a "defending party" may establish a right to judgment by showing facts that negate any one of the elements of claimant's claim. Id. If the movant meets this burden, the non-movant may not rest upon the mere allegations or denials of its pleading, but its response, by affidavits or as otherwise provided in Rule 74.04, shall set forth specific facts showing that there is a genuine issue for trial. Id.; Rule 74.04(e).

a. Count I--Fraud in the Inducement

For their second point defendants claim the trial court erred in entering summary judgment for Trotter's on Count I of their counterclaim which sought damages for fraud in the inducement of the franchise agreement and assignment. In that count, defendants alleged that Trotter's made certain false representations to defendants, on which defendants relied and which were intended to induce Ringleader to enter into the franchise agreement and Johnson to enter into a guaranty.

To prevail at trial, the defendants would have to prove each of the following: (1) that agents of Trotter's made certain material representations to defendants, (2) such representations were false when made, (3) the agents making the representations knew they were false, (4) the representations were made with the purpose of deceiving defendants, (5) defendants were, in fact, deceived, (6) defendants reasonably relied on the representations in signing the franchise agreement and assignment, and (7) defendants suffered damage as a proximate result of the fraudulent misrepresentations. ITT, 854 S.W.2d at 386. Trotter's need not disprove each of these elements; it need only establish that one element is lacking. Id.

The misrepresentations alleged in the counterclaim are as follows:

a) That although the restaurant was 50% larger in size than any existing restaurants in the State of Missouri, Trotter's assured Ringleader and Johnson that the larger sized restaurant although far more expensive that [sic] existing designed units would be economically profitable and successful; and

b) The design as proposed by Trotter's had been test marketed and marketing surveys and analysis had been completed relevant to the new designs indicating that they would be successful; and

c) That the investment would be successful and that Trotter's would supply properly trained individuals to operate and manage the restaurant business for Ringleader; and

d) Although repeatedly requested to do so, Trotter's refused to supply present sales figures for stores in the St. Louis Metropolitan area and, instead, orally represented that those figures showed substantial operating profits for the individual store...