In Manufacturer Direct LLC v. DirectBuy, Inc., No. 2:05-CV-451, 2006 WL 2095247 (N.D. Ind. July 26, 2006), Plaintiff Manufacturer Direct operated a DirectBuy franchise in West Palm Beach, Florida. Defendant DirectBuy is the franchisor for the system and it served Plaintiff with a notice of termination after concluding that Plaintiff overcharged its customers for goods sold, in contravention of the express terms of the franchise agreement. Plaintiff then filed suit in Indiana for declaratory relief; wrongful termination in violation of the Indiana Franchise Act; tortious interference with contract and/or prospective economic advantage; breach of contract; and breach of the implied covenant of good faith and fair dealing. The subject of the Court’s ruling was DirectBuy’s motion for judgment on the pleadings, which the Court granted in part and denied in part.
The Court held that Plaintiff, a Florida company operating its business in West Palm Beach, Florida, was not entitled to the protections of the Indiana Franchise Act because, as the statutory languages makes plain, the Act applies only to “residents of Indiana” or those “who will be operating a business in Indiana.” The Court was not persuaded by Plaintiff’s argument that it conducted business in Indiana by virtue of the franchisor’s location there. The Court further held that the franchise agreement’s general choice of law provision did not create any rights under the Indiana Franchise Act. Consequently, the Court dismissed the claim.
The tortious interference claim, which was predicated on DirectBuy’s refusal to approve a sale of the franchise, was also dismissed. Finding that the express terms of the franchise agreement provided DirectBuy with the discretion to approve any sale and to require that remodeling be completed as a term of a sale, the Court ruled that Plaintiff failed to assert any allegations sufficient to override the terms of the agreement or to conclude that DirectBuy’s decision was without a business justification.
Plaintiff’s claims for breach of contract and breach of the implied covenant of fair dealing survived the motion to dismiss. Unlike other jurisdictions, Indiana does not impute an implied duty of good faith and fair dealing into every contract. However, Plaintiff argued that the Uniform Commercial Code’s “good faith” requirement was applicable to the franchise agreement. In denying the motion, the Court seemingly agreed and stated that the franchise agreement’s specific language may open the possibility that the UCC’s covenant language would apply. Notably, the Court advised the parties that they could revisit the issue during summary judgment proceedings.
Finally, DirectBuy was not able to overcome its burden of proving that, at such an early stage and based on the pleadings alone, Plaintiff overcharged its customers for goods sold. Therefore, the Court did not dismiss Plaintiff’s breach of contract claim or claim for declaratory relief.
| Topic DirectBuyLawsuitsManufacturerDirect2006 . { Edit | Ref-By | Attach | Diffs | r1.1 } |
|
Revision r1.1 - 26 Feb 2007 - 03:36 by EliMantel
Privacy Policy |
Copyright © 2000-2005 by the contributing authors.
All material on this collaboration tool is the property of the contributing authors. Collect email addresses here. Ideas, requests, problems regarding TWiki? Send feedback. |