Yumilicious Franchise, L.L.C. v. Barrie
| Decision Date | 14 August 2014 |
| Docket Number | Civil Action No. 3:13-CV-4841-L |
| Parties | YUMILICIOUS FRANCHISE, L.L.C., Plaintiff, v. MATT BARRIE; KELLY GLYNN; BRIAN GLYNN; and WHY NOT, L.L.C., Defendants. |
| Court | U.S. District Court — Northern District of Texas |
Before the court is Yumilicious's Motion to Dismiss Counterclaims, for a More Definite Statement, and to Strike (Doc. 8), filed January 8, 2014. This motion actually includes four separate motions. After carefully considering the motions, briefs, pleadings, and applicable law, the court grants in part and denies in part Yumilicious's Motion to Dismiss Counterclaims and will allow Defendants to replead those claims that the court determines do not fail as a matter of law; denies as moot Yumilicious's Motion for a More Definite Statement; grants Yumilicious's Motion to Strike Defendants' general denial but will allow Defendants to file an amended answer; and denies without prejudice Yumilicious's Motion to Strike Defendants' jury demand.
This action was brought on December 12, 2013, by Yumilicious Franchise, L.L.C. ("Plaintiff" or "Yumilicious") against Defendants Why Not, L.L.C ("Why Not"); Matt Barrie; Kelly Glynn; and Brian Glynn1 (collectively, "Defendants") for alleged breaches of two franchiseagreements. Yumilicious is a self-serve frozen yogurt franchise concept. Yumilicious launched its first yogurt shop in 2008 in the Uptown neighborhood of Dallas, Texas. Since that time, Yumilicious has expanded to thirteen locations in the Dallas-Fort Worth, Texas area. In 2010, Why Not entered into two franchise agreements with Yumilicious to open two yogurt shops in South Carolina - one in the Forest Acres/Columbia area and one in Lexington. The Individual Defendants, as principals of Why Not, entered into the Principals' Guaranty and Assumption Agreement ("Guaranty Agreement") wherein they personally guaranteed to Yumilicious that franchisee Why Not would pay in a timely fashion all of its obligations under the franchise agreements.
Yumilicious contends that Defendants breached the franchise agreement for the Columbia location by closing the yogurt store without prior authorization from Yumilicious. Yumilicious further contends that Defendants breached the franchise agreements by failing to pay royalties and pay for yogurt products that they ordered. Yumilicious seeks to recover damages that it allegedly sustained as a result of Defendants' breaches of the franchise agreements, including royalties and unpaid invoices for products and supplies. Yumilicious also seeks attorney's fees under the Guaranty Agreement, as well as costs of suit, and prejudgment and postjudgment interest.
Defendants, on the other hand, maintain that the South Carolina yogurt shops were doomed from the beginning and that they had no option but to close the Columbia store because Why Not is unable to obtain proprietary Yumilicious-approved yogurt products at a reasonable price. Defendants contend that Why Not was induced by Yumilicious's fraudulent statements regarding franchise costs and the national availability of products to enter the franchise agreements to open stores in South Carolina. Defendants contend that, despite Yumilicious's false assurances to the contrary, Why Not was unable to obtain proprietary yogurt products at a reasonable price or the costat which Dallas area yogurt stores were able to obtain products because Yumilicious subsequently entered into a contract with a supplier in Dallas, Texas, that would not deliver products to South Carolina unless Why Not agreed to place large expensive pallet-sized orders. Defendants contend that Why Not's only other option was to purchase products from other national suppliers (that were presumably approved by Yumilicious) at a cost that was 20 to 40 percent higher than that paid by Dallas stores. Defendants have asserted counterclaims for breach of contract, fraud, negligent misrepresentation, and violations of the Texas Deceptive Trade Practices Act ("DTPA"). Defendants seek actual, consequential, and incidental damages in excess of $1 million; punitive and treble damages; unspecified statutory relief under Texas's franchise laws; and attorney's fees. In addition, or alternatively, Defendants seek to have the franchise agreements voided through a declaratory judgment action.
Yumilicious moved on January 8, 2014, to dismiss all of Defendants' counterclaims under Federal Rule of Civil Procedure 12(b)(6). Alternatively, Yumilicious moves for a more definite statement and contends that Defendants should be required to replead their claims with more specificity. Yumilicious also contends that Defendants' jury demand and general denial in response to its Original Complaint ("Complaint") should be stricken.
To defeat a motion to dismiss filed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); Reliable Consultants, Inc. v. Earle, 517 F.3d 738, 742 (5th Cir. 2008); Guidry v. American Pub. Life Ins. Co., 512 F.3d 177, 180 (5th Cir.2007). A claim meets the plausibility test Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations omitted). While a complaint need not contain detailed factual allegations, it must set forth "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (citation omitted). The "[f]actual allegations of [a complaint] must be enough to raise a right to relief above the speculative level . . . on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. (quotation marks, citations, and footnote omitted). When the allegations of the pleading do not allow the court to infer more than the mere possibility of wrongdoing, they fall short of showing that the pleader is entitled to relief. Iqbal, 556 U.S. at 679.
In reviewing a Rule 12(b)(6) motion, the court must accept all well-pleaded facts in the complaint as true and view them in the light most favorable to the plaintiff. Sonnier v. State Farm Mutual Auto. Ins. Co., 509 F.3d 673, 675 (5th Cir. 2007); Martin K. Eby Constr. Co. v. Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004); Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). In ruling on such a motion, the court cannot look beyond the pleadings. Id.; Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999). The pleadings include the complaint and any documents attached to it. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000). Likewise, "'[d]ocuments that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to [the plaintiff's] claims.'" Id. (quoting Venture Assocs. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993)). Inthis regard, a document that is part of the record but not referred to in a plaintiff's complaint and not attached to a motion to dismiss may not be considered by the court in ruling on a 12(b)(6) motion. Gines v. D.R. Horton, Inc., 699 F.3d 812, 820 & n.9 (5th Cir. 2012) (citation omitted).
The ultimate question in a Rule 12(b)(6) motion is whether the complaint states a valid claim when it is viewed in the light most favorable to the plaintiff. Great Plains Trust Co. v. Morgan Stanley Dean Witter, 313 F.3d 305, 312 (5th Cir. 2002). While well-pleaded facts of a complaint are to be accepted as true, legal conclusions are not "entitled to the assumption of truth." Iqbal, 556 U.S. at 679 (citation omitted). Further, a court is not to strain to find inferences favorable to the plaintiff and is not to accept conclusory allegations, unwarranted deductions, or legal conclusions. R2 Invs. LDC v. Phillips, 401 F.3d 638, 642 (5th Cir. 2005) (citations omitted). The court does not evaluate the plaintiff's likelihood of success; instead, it only determines whether the plaintiff has pleaded a legally cognizable claim. United States ex rel. Riley v. St. Luke's Episcopal Hosp., 355 F.3d 370, 376 (5th Cir. 2004). Stated another way, when a court deals with a Rule 12(b)(6) motion, its task is to test the sufficiency of the allegations contained in the pleadings to determine whether they are adequate enough to state a claim upon which relief can be granted. Mann v. Adams Realty Co., 556 F.2d 288, 293 (5th Cir. 1977); Doe v. Hillsboro Indep. Sch. Dist., 81 F.3d 1395, 1401 (5th Cir. 1996), rev'd on other grounds, 113 F.3d 1412 (5th Cir. 1997) (en banc). Accordingly, denial of a 12(b)(6) motion has no bearing on whether a plaintiff ultimately establishes the necessary proof to prevail on a claim that withstands a 12(b)(6) challenge. Adams, 556 F.2d at 293.
A statute of limitations may support dismissal pursuant to Rule 12(b)(6) when it is evident from a plaintiff's pleadings that the action is time-barred and the pleadings fail to set forth or raisesome basis for tolling the statute. Jones v. Alcoa, Inc., 339 F.3d 359, 366 (5th Cir. 2003) (citations omitted).
Defendants' DTPA claim is based on alleged violations of the Federal Trade Commission's Franchise Rule ("FTC Act"), and the Business Opportunity Acts of Texas and South Carolina. Plaintiff contends that Defendants' DTPA claim is barred by the statute of limitations applicable to such claims. Plaintiff asserts that while it is not entirely evident why Defendants...
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