Opinion
No. 99-2855-JORDAN
November 30, 2001
ORDER GRANTING BURGER KING'S MOTION FOR PARTIAL SUMMARY JUDGMENT
Burger King sues HH Restaurants, Herbert Hakimianpour, Robert Hakimianpour, and Mike Hashim for trademark infringement, unfair competition, breach of a franchise agreement, and breach of guaranty agreements. Along with their answer to the complaint, the defendants filed a counterclaim for breach of contract, breach of the covenant of good faith and fair dealing, tortious interference with contractual relations, tortious interference with prospective business advantage, and violation of the Florida Deceptive and Unfair Trade Practices Act, FLA. STAT. §§ 501.201-501.213. Federal jurisdiction exists for Burger King's claims pursuant to 28 U.S.C. § 1331, and for the defendants' counterclaims pursuant to 28 U.S.C. § 1332.
The defendants, a Burger King franchisee and its principals, operate 29 Burger King restaurants in Texas. The circumstances underlying the parties' claims arise out of the franchise relationship. The defendants allege that Burger King tortiously interfered with their attempted sale of the 29 restaurants to the Olajuwon Group, in breach of paragraphs 15.F and 15.G of the franchise agreement. Burger King has moved for summary judgment on all of the defendants' counterclaims. For the following reasons, the motion [D.E. 58] is GRANTED.
I. RELEVANT STANDARD
Summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A material fact is one that might affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Where the non-moving party fails to prove an essential clement of its case for which it has the burden of proof at trial, summary judgment is warranted. See Celotex Corp. v. Catrett, 477 U.s. 317, 323(1986); Hilburn v. Murata Elecs. North Am., Inc., 181 F.3d 1220, 1225(11th Cir. 1999). Thus, the task is to determine whether, considering the evidence in the light most favorable to the defendants, the non-moving parties, there is evidence on which a jury could reasonably find a verdict in their favor. See Liberty Lobby, 477 U.S. at 251; Hilburn, 181 F.3d at 1225; Allen v. Tyson Foods, Inc., 121 F.3d 642, 646(11th Cir. 1997).
II. RELEVANT FACTS
In June of 1996, HH Restaurants entered into a franchise agreement with Burger King to purchase 26 restaurants in and around San Antonio, Texas. See Declaration of Robert Hakimianpour ¶ 4 (D.E. 81, Exh. B](March 8, 2001). In November of 1996, HH bought two more restaurants. See id. In May of 1997, HH opened an additional Burger King restaurant, for a total of 29. See id. The approximate price of all 29 restaurants was $31.5 million, of which approximately $24.5 million was financed. See id. ¶ 5.
The franchise agreements required HH to "maintain the Franchised Restaurant(s) in good condition and repair in accordance with BKC's then current repair and maintenance standards" and to "improve, alter, and remodel the Franchised Restaurant(s) to bring it into conformance with. . . standards for new or remodeled Burger King restaurants," as Burger King might direct. Franchise Agreement ¶¶ 5.B.1, 5.B.2 [D.E. 27, Exh. A](June 21, 1996).
HH executed a conditional consent to assignment of franchise agreements and leases, which ultimately required it to make repairs of approximately $900,000 to the restaurants. See Hakimianpour Declaration ¶ 6. HH contends that these repairs were made to Burger King's full satisfaction. See id. Burger King maintains that the repairs HH agreed to make in the conditional consent were not completed in a timely fashion, See Declaration of William Kerry Sanders ¶¶ 7-8 [D.E. 73](Feb 5, 2001).
According to the defendants, in August of 1998 Burger King forced them to make additional repairs to 15 of the restaurants. See Hakimianpour Declaration ¶ 7. Not coincidentally, maintain the defendants, those 15 restaurants were situated on real estate owned by Burger King. See id. Burger King admits that it prepared a detailed list of repair violations in August of 1998, but asserts that some of the violations were those that HH had agreed to repair in 1996. See Sanders Declaration ¶¶ 8-9. HH asserts that, in spite of the fact that it had no legal obligation to do so, it made the requested repairs, which cost approximately $600,000. See Hakimianpour Declaration ¶ 7. Burger King contends that it allowed HH through December 21, 1998, to complete the repairs, and asserts that when its representatives visited the restaurants in January of 1999, the repairs had yet to be completed. See Sanders Declaration ¶¶ 9-10. Burger King informed HH that it was in default of the franchise agreement, and advised it that unless the repairs were completed within the cure period, the franchises would be terminated. See id. ¶ 11; Letter from Jill Granat to Herbert Hakimianpour, et al. [D.E. 69, Exh. G](Jan. 29, 1999). HH asserts that although it contested the allegations, Burger King terminated the franchise agreements for each of the 15 restaurants. See Hakimianpour Declaration ¶ 8. Burger King claims that HH admitted that it was in default by representing in its reply to the January 29, 1999, letter that repairs for the "first 9 stores" would be completed by April 30, 1999, and that they would repair one of the last six stores per two month period beginning on May 1, 1999. See Letter from Herbert Hakimianpour to Jill Granat [D.E. 69, Exh. G](Feb. 11, 1999).
HH maintains that Burger King's "purported" termination of the franchise agreements was merely part of Burger King's scheme to force HH to sell the restaurants at a drastically reduced price. See Hakimianpour Declaration ¶ 9. Burger King says that rather than making the necessary repairs and curing its default, HH attempted to sell the restaurants. See Burger King's Statement of Facts ¶ 6 [D.E. 97](March 22, 2001). HH asserts that after it had initiated the repairs, Burger King advised it to cease the repairs and consider finding potential buyers, and that it did so at Burger King's behest. See Hakimianpour Declaration ¶ 11.
The franchise agreement contains detailed provisions regarding the HH's ability to sell the franchised restaurants, including the following:
Except with prior written consent of an authorized officer of BKC, FRANCHISEE shall not (1) assign or pledge this Agreement or assign any of FRANCHISEE's rights or delegate any of its duties hereunder; or (2) sell, assign, transfer, convey, give away, pledge, mortgage, or otherwise encumber any equity securities of FRANCHISEE; or (3) sell, assign, transfer, convey or give away, substantially all of the assets of the Franchised Restaurant.
* * *
BKC may condition its consent to the proposed transfer of an interest. . . on satisfaction of any or all of the following requirements:
(1) That all of FRANCHISEE'S accrued monetary obligations and all other outstanding obligations to BKC and its affiliates, whether arising under this Agreement, or otherwise, have been satisfied;
(2) That FRANCHISEE is not in default of any provision of this Agreement, any amendment hereof or successor hereto, or any other agreement between FRANCHISEE and BKC or its affiliates;
(3) That the transferee. . . in BKC's sole judgment, satisfies all of BKC's business standards and requirements; has the ability to operate the Franchised Restaurant; and has adequate financial resources and capital to do so; and that transferee complete and be approved through BKC's selection process including satisfactorily demonstrating to BKC that transferee meets the financial, character, managerial, ownership, and such other criteria and conditions as BKC shall then be applying in considering applications for new franchises, including transferee, and/or if applicable, Managing Owner and Managing Director satisfactorily completing all BKC's training requirements.
* * *
(9) Approval by BKC of the terms of the contract of sale which impact the sufficiency of cash flow from the business after payment of debt service to provide for, among other things, any needed repairs to or remodeling of the Franchised Restaurant.
* * *
If BKC does not accept the offer under [right of first refusal], FRANCHISEE may conclude the sale to the purchaser who made the offer, provided BKC's consent to the assignment or sale of stock first be obtained, which consent will not be unreasonably withheld upon compliance with the conditions imposed by BKC on such assignment or sales. Conditions may include, but are not limited to, the conditions set forth above.
Franchise Agreement ¶¶ 15.A, 15.F.1-3, 9, 15.G.
HH located the Olajuwon Group as a potential buyer of all 29 of its restaurants. See Hakimianpour Declaration ¶ 12. HH and the Olajuwon Group commenced negotiations for the restaurants in April of 1999, and eventually agreed on a price of $28 million for the restaurants. See id. ¶ 13. At the time of the negotiations, the Olajuwon Group was already a Burger King franchisee, owning seven restaurants in the Cleveland, Ohio area. See id. ¶ 12. HH contends that Burger King was fully aware of the negotiations, and never expressed any reservations regarding the Olajuwon Group as a prospective buyer. See id. ¶ 13. Once the agreement between the Olajuwon Group and HH was reduced to writing and the Olajuwon Group had deposited earnest money in an escrow account, Burger King requested a meeting with Akinola Olajuwon, the CEO of the Olajuwon Group. See id. ¶ 14. During his meeting with Burger Kings' representatives, Mr. Olajuwon was informed that Burger King believed the agreed price, $28 million, was too high in light of the necessary repairs — which Burger King estimated would cost $3 million. See Deposition of Akinola Olajuwon at 104-06 [D.E. 81, Exh. D](Aug. 2, 2000). Mr. Olajuwon testified that he asked whether Burger King would be satisfied with the sale if the price was adjusted in light of the repair costs, and was told that it would be. See id. at 106-07. Burger King claims that HH failed to inform the Olajuwon Group that it was currently in default of the franchise agreements, or that Burger King was requiring that the restaurants undergo costly repairs to cure the default. See Olajuwon Deposition at 105-06; Burger King's Statement of Facts ¶ 6.
Burger King notified Mr. Olajuwon of its disapproval of the HH/Olajuwon sale in a letter dated June 28, 1999, a copy of which was sent to HH. See Letter from Jim Myers to Akinola S. Olajuwon [D.E. 81, Exh. A] (June 28, 1999). In the letter Burger King explained its concern that the Olajuwon Group would "encounter economic and management challenges which may strain the franchisee's support system and resources, and jeopardize the franchisee's viability." Id. Burger King was particularly concerned because the Olajuwon Group had recently acquired 7 restaurants in the Cleveland market that were not operating in compliance with Burger King's standards, and Burger King claimed that Mr. Olajuwon had failed to complete enumerated repair and maintenance items on these 7 restaurants despite agreeing to do so. See id.; Declaration of Jim Myers ¶¶ 5-7[D.E. 60](Feb. 4, 2001); Deposition of James Joy at 75-76[DE. 63](Dec. 3, 2000). Burger King decided that a sale of 29 "operationally challenging" restaurants in San Antonio to the Olajuwon Group would place the Olajuwon Group and the Burger King brand at unreasonable risk, and that the Olajuwon Group's efforts would be better served improving their existing operations in Cleveland, which needed assistance. See Letter from Myers to Olajuwon; Myers Declaration ¶ 7; Joy Deposition at 75-76.
HH claims that Burger King's disapproval of the sale to the Olajuwon Group was based on arbitrary and pretextual reasons, and that Burger King's true motivation in disapproving the sale was to force a sale at a drastically reduced price to certain pre-approved buyers identified by Burger King. In particular, HH claims that Burger King's refusal of the Olajuwon Group was unreasonable considering HH was current on all obligations at the time of the proposed transfer, the Olajuwon Group was an existing Burger King operator familiar with the Burger King system, the Olajuwon Group was headquartered closer to the restaurants than was HH, the Olajuwon Group effectively operated numerous Burger King and Denny's restaurants hundreds of miles from its headquarters, the Olaj uwon Group already established the personnel and infrastructure to operate the restaurants at peak efficiency, and the Olajuwon Group would have less fixed debt than HH, which would permit the Olajuwon Group to continue investing in the restaurants without any cashflow difficulties. See Hakimianpour Declaration ¶ 17.
HH does not dispute that the Olajuwon Group's 7 Cleveland restaurants were operating below operational standards and procedures. Mr. Olajuwon, in fact, conceded in his deposition that the 7 Cleveland restaurants had problems, see Olajuwon Deposition at 132-133, though he claimed that Burger King representatives told him that the performance of the Cleveland restaurants would not effect his opportunity to expand with Burger King because those restaurants had problems when he bought them and would take 24 months to make a financial turnaround. See id. at 132-133, 141. Mr. Olajuwon also claimed that the disapproval of the sale was premature because the Olajuwon Group had not yet submitted all of the information Burger King requested, including financial projections, before Burger King issued the disapproval letter. See id. at 137-138. HH claims that these facts establish that Burger King's disapproval of the sale to Olajuwon was arbitrary and pretextual.
III. BREACH OF CONTRACT
HH claims that Burger King's refusal to approve the sale between HH and the Olajuwon Group was a violation of the franchise agreement, which provides that "consent [to transfers] will not be unreasonably withheld." Franchise Agreement ¶ 15.G. HH contends that Burger King unreasonably withheld its consent to the HH/Olajuwon transfer. Burger King argues that the franchise agreement expressly allowed it to disapprove the transfer. Burger King says that it acted within the agreement by determining in its "sole judgment" that the Olajuwon Group did not satisfy Burger King's business requirements, did not have adequate financial resources to operate the franchises, and did not demonstrate to Burger King's satisfaction that it met the financial, character, managerial, ownership, or other criteria. Additionally, claims Burger King, the agreement allows it to disapprove a sale where the franchisee, here HH, is in default. Burger King contends that as a matter of law, no breach occurred because it is undisputed that HH was in default. As noted earlier, HH appears to dispute that it was in default.
Although the franchise agreement states that Burger King's consent shall not be unreasonably withheld, Burger King did not breach the contract under Florida law because it was afforded "sole judgment" in determining whether the Olajuwon Group satisfied all of Burger King's business standards and requirements. See, e.g., Ford v. Ford Motor Co., 260 F.3d 1285, 1290(11th Cir. 2001) (affirming summary judgment for a manufacturer on dealer's breach of contract claim where the car dealer's relocation of the dealership required the manufacturer's written consent based on its "best judgment"); America's Favorite Chicken Co. v. Cajun Enterprises, Inc., 130 F.3d 180, 182 (5th Cir. 1997) (dismissing breach of franchise agreement claim under Louisiana law where franchise agreement granted "sole discretion" to the franchisor over the allocation of advertising funds); Burger King Corp. v. Austin, 805 F. Supp. 1007, 1011 (S.D. Fla. 1992) (holding that franchisor could not have breached the express terms of a contract by failing to spend monies on local advertising where the franchise agreement left such expenditures to the discretion of the franchisor).
According to the terms of the agreement, the franchise agreement "shall be governed and construed under and in accordance with the laws of the State of Florida." See Franchise Agreement ¶ 21C.1. Thus, I analyze the breach of contract claim under Florida law.
In Perez v. McDonald's Corp., 60 F. Supp.2d 1030 (E.D. Cal. 1998), the district court granted summary judgment under Illinois law on a breach of contract claim where the franchise agreement required the franchisor's prior written approval for the sale or assignment the franchise. In Perez, the franchisor refused to approve the sale because the purchaser failed to complete the mandatory training programs. The district court held that this refusal to consent was not arbitrary because the decision to sell rested in the franchisor's "sole discretion" under the franchise agreement. Id. at 1035. Similarly, the franchise agreement between Burger King and HH requires Burger King's consent for the sale or assignment of restaurants. The franchise agreement permits Burger King to condition its consent upon the satisfaction of three factors, including the satisfaction of Burger King's standards and requirements according to Burger King's "sole judgment."
Burger King determined in its "sole judgment" that the Olajuwon Group did not satisfy Burger King's business requirements, did not have adequate financial resources to operate the franchises, and did not demonstrate to Burger King's satisfaction that it met the financial, character, managerial, ownership, or other criteria. In light of the record, including the undisputed fact that the Olajuwon Group's 7 restaurants in the Cleveland market were not operating consistently with Burger King's operational standards and procedures, there was a basis for Burger King's exercise of discretion in disapproving the sale of an additional 29 sub-standard restaurants to the Olajuwon Group. Even if Burger King representatives assured Mr. Olajuwon that the poor performance of the 7 Cleveland restaurants would not hinder his ability to expand with Burger King, the decision of whether to approve a sale was left to Burger King's "sole judgment" under the franchise agreement. Because the decision to disapprove the sale was based on the grounds specifically left to Burger King's "sole judgment" in the franchise agreement, the decision was not arbitrary. Therefore, Burger King's consent was not unreasonably withheld in violation of the franchise agreement.
Because Burger King was entitled to disapprove the sale to the Olajuwon Group under the "sole judgment" clause of the franchise agreement, I need not and do not reach the issue of whether Burger King was entitled to disapprove the sale based on HH's alleged default.
IV. BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING
HH also contends that Burger King's actions breached the covenant of good faith and fair dealing. Burger King argues that a breach of the covenant of good faith and fair dealing only occurs when another provision of the contract is breached, and that because it did not breach the agreement by refusing to approve the transfer, it could not have, as a matter of law, breached the covenant of good faith and fair dealing.
Under Florida law, every contract impliedly includes a duty of good faith. See Burger King Corp. v. Weaver, 169 F.3d 1310, 1316(11th Cir. 1999) (citing Hospital Corp. of Am. v. Florida Med. Ctr, Inc., 710 So.2d 573, 575(Fla. 4th DCA 1998)). Under the implied covenant of good faith and fair dealing, "one party cannot capriciously exercise discretion accorded it under a contract so as to thwart the contracting parties' reasonable expectations." Ford, 260 F.3d at 1291 (citing Sepe v. City of Safe Harbor, 761 So.2d 1182, 1185 (Fla. 2d DCA 2000)). Florida law, however, does not recognize an independent duty of good faith, and a plaintiff must allege a separate breach in order to maintain a cause of action for breach of the duty of good faith. See Weaver, 169 F.3d at 1316-17. In Weaver, for example, the Eleventh Circuit held that "a cause of action for the breach of implied covenant cannot be maintained (a) in derogation of the express terms of the underlying contract or (b) in the absence of breach of an express term of the underlying contract." Id. at 1318. As discussed above, Burger King did not breach the franchise agreement by refusing to consent to the sale of the restaurants to the Olajuwon Group. Because there was no breach of an express term of the franchise agreement, HH's counterclaim for breach of the implied covenant of good faith and fair dealing must fail.
Even if HH could bring a breach of duty claim based upon Burger King's alleged abuse of discretion, such a claim would still fail because Burger King's refusal to consent to the sale of the restaurants was not capricious nor in contravention of the parties' expectations. In Ford, the Eleventh Circuit analyzed the extent to which the implied duty of good faith and fair dealing modified broad discretion granted to a car manufacturer under a "best judgment clause" in a dealership agreement. It noted that "the limit placed on a party's discretion is not great," Ford, 260 F.3d at 1291, and explained that a party's decision will not violate the covenant of good faith and fair dealing "`unless no reasonable party. . . would have made the same discretionary decision." Id. (quoting Sepe v. City of Safe Harbor, 761 So.2d 1182, 1185 (Fla. 2d DCA 2000)). Thus, the Eleventh Circuit held that the manufacturer's decision not to approve the relocation of the dealership was not capricious nor in contravention of the parties' reasonable expectations because the decision did not preclude the dealership from selling cars, its central purpose. Id. at 1292 (distinguishing Cox v. CSX Intermodal, Inc., 732 So.2d 1092, 1097-1098(Fla. 1st DCA 1999), where the company frustrated the purpose and reasonable expectation of the contracting parties by refusing to assign freight where the central purpose of the contract was the hauling of freight). In the instant case, the central purpose of the franchise agreement was the sale of food, not the transfer of restaurants. As such, Burger King's refusal to consent to the sale of the restaurants to the Olajuwon Group was not capricious nor in contravention of the parties' reasonable expectations.
V. TORTIOUS INTERFERENCE WITH A CONTRACTUAL RELATIONSHIP AND TORTIOUS INTERFERENCE WITH A PROSPECTIVE BUSINESS ADVANTAGE
HH contends that Burger King tortiously interfered with HH's contract with the Olajuwon Group for the sale of the restaurants by meeting with Mr. Olajuwon and advising him that HH's sale price was excessive. Burger King maintains that it was a party to that contract via the franchise agreement and its right to grant or withhold consent. Burger King maintains that under Florida law, no claim for tortious interference will lie against one who is a party to the contract. HH contends that Burger King was in fact not a party to HH's contract with the Olajuwon Group, and is therefore liable for tortious interference. HH also contends that whether Burger King's interference was justified is at a minimum a disputed factual issue, and therefore a jury question.
Burger King also argues for the first time in its reply memorandum that HH's tortious interference claim must fail as a matter of law because HH has not suffered any damages as a result of the alleged interference. A new ground for summary judgment raised for the first time in a reply memorandum, however, will not be considered.
To prevail on a tortious interference claim, the HH must show (1) the existence of a business relationship, (2) that Burger King had knowledge of the relationship, (3) that Burger King nevertheless intentionally and unjustifiably interfered with the relationship, and (4) that HH suffered damage as a result. See Gregg v. U.S. Indus., Inc., 887 F.2d 1462, 1473(11th Cir. 1989); Tamiami Trail Tours, Inc. v. J.C. Cotton, 463 So.2d 1126, 1127(Fla. 1985). Intentional interference requires both the intent to damage the business relationship and a lack of justification for doing so. See Smith v. Emery Air Freight Corp., 512 So.2d 229, 230(Fla. 3d DCA 1987) (citing Landry v. Hornstein, 462 So.2d 844(Fla. 3d DCA 1985)). To be intentional, interference need not be motivated by the intent to secure a business advantage. It is enough for the interference to have been motivated by malice; it need not have been motivated by greed. See Ahern v. Boeing Co., 701 F.2d 142, 145 (11th Cir. 1983); Tamiami Trail Tours, 463 So.2d at 1127-28.
The Eleventh Circuit has explained that "[u]nder Florida law, a claim for tortious interference with contract cannot lie where the alleged interference is directed at a business relationship to which the defendant is a party." Ford, 260 F.3d at 1294. A party is not a disinterested third-party where it has a contractual right to approve or disapprove a proposed transaction. See Genet Co. v. Annheuser-Busch, Inc., 498 So.2d 683, 684(Fla. 3d DCA 1986) (company cannot be liable for tortious interference as a matter of law where a wholesaler's agreement with a potential purchaser was expressly conditioned upon the company's approval); Hall v. Burger King Corp., 912 F. Supp. 1509, 1538 (S.D. Fla. 1995) (holding as a matter of law that a tortious interference claim does not lie against a franchisor where the franchisor was a necessary party to any assignment agreement). In Ford, the Eleventh Circuit held that the manufacturer was not a disinterested third-party where a transfer and relocation agreement was expressly conditioned on the manufacturer's approval and a dealership agreement accorded the manufacturer the power to disapprove of a transfer or relocation. 260 F.3d at 1294 (relying on Genet, 498 So.2d at 683-685, in affirming summary judgment for the manufacturer on tortious interference claim). Though the agreement between HH and the Olajuwon Group was not expressly conditioned upon Burger King's approval, the franchise agreement between Burger King and HH did expressly condition the sale of franchised restaurants upon Burger King's prior written consent.
HH nevertheless argues that Burger King is a disinterested third-party with only a qualified privilege to interfere. HH relies on several cases for the proposition that once a plaintiff has established a prima facie case of tortious interference, the burden shifts to the defendant to show its conduct is privileged or justified in order to avoid liability. If Burger King can establish that it is privileged to interfere, the privilege is stripped only if Burger King interfered solely out of spite, to do harm, or some other bad motive. See Ford, 260 F.3d at 1294 n. 9. Burger King was privileged to refuse to consent to the sale even if its decision was based on its own financial interests as long as it did not employ improper means. See Ethyl Corp. v. Balter, 386 So.2d 1226, 1223 (Fla.App. 3d 1980).
In Ford, the Eleventh Circuit dismissed the dealership's tortious interference claim because the dealership failed to show that the manufacturer's sole basis for disapproving the transaction was malicious. 260 F.3d at 1294 n. 9. The manufacturer presented several business reasons for refusing to approve the plan, including the fact that it conflicted with their market plan. Id. at 1289-1290. Here, Burger King had a non-malicious business reason for its refusal of HH's sale to the Olajuwon Group, namely that the Olajuwon Group did not have adequate financial resources to operate the franchises, and the sale would place the "Burger King brand at unreasonable risk." See Letter from Meyers to Olajuwon; Myers Declaration ¶¶ 5-7; Joy Deposition at 75-76. In light of this record, HH has failed to show that Burger King's sole basis for disapproving the sale to the Olajuwon Group was malicious. Cf. Burger King Corp. v. Ashland Equities, Inc., 161 F. Supp. 1331, 1335-1338 (S.D. Fla. 2001) (denying motion to dismiss where the counterclaim, which had to be accepted on its face, alleged a malicious interference by the franchisor in refusing to consent to a sale despite the potential purchaser's franchise business experience, business education and good financial resources).
VI. VIOLATION OF FLORIDA'S UNFAIR AND DECEPTIVE TRADE PRACTICES ACT
HH alleges that Burger King's practice is to systematically interfere with franchise sales in order to lower the sale prices, in violation of the Florida Unfair and Deceptive Trade Practices Act, FLA. STAT. §§ 501.201-501.213. Burger King wants low sale prices, HH contends, because then the buyers will have more capital to commit to remodeling and updating the restaurants. HH asserts that Burger King regularly overreaches in exercising its consent rights to its own financial benefit. Burger King argues that "HH's counsel regularly, though unsuccessfully, attacks quick service hamburger franchisors with this frivolous `conspiracy' argument." Burger King's Motion for Summary Judgment at 9 [DE. 58](Feb. 2, 2001).
Burger King also contends that HH is not a consumer with standing to sue within the meaning of Florida's Unfair and Deceptive Trade Practices Act. The Act, including the 1993 amendments, is intended to protect consumers from those engaging in unfair and deceptive trade practices. See FLA. STAT. § 502.204. See also Delgado v. J.W. Courtesy Pontiac-GMC Truck Inc., 693 So.2d 602, 605(Fla. 2d DCA 1997). Although the Act may extend to protect business entities from such practices, it has no application to entities complaining of tortious conduct which is not the result of a consumer transaction. See Babbit Electronics, Inc. v. Dynascan Corp., 38 F.3d 1161, 1182 n. 7 (11th Cir. 1994) (citation omitted); Big Tomato v. Tasty Concepts, Inc., 972 F. Supp. 662, 664 (S.D. Fla. 1997) (citation omitted).
The Act prohibits "[u]nfair methods of competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the conduct of any trade or commerce." FLA. STAT. § 502.204. Under § 501.211, "a consumer who has suffered a loss as a result of a violation [of the Act]. . . may recover actual damages, plus attorney's fees and court costs." FLA. STAT. § 501.211. The 1993 amendments to the Act define a consumer as "an individual; child. . .; firm; association; joint venture; partnership; estate; trust; business trust; syndicate; fiduciary; corporation; or any other group or combination." FLA. STAT. § 501.203(7).
In its notice of supplemental authority, HH points to a recent case from this district in support of its tortious interference claim. HH failed to note, however, that this case directly contradicts its counterclaim for violation of Florida's Unfair and Deceptive Trade Practices Act. In Ashland, 161 F. Supp. at 1338, the district court dismissed a franchisee's counterclaim under the Act for lack of standing. In Ashland, as in the instant case, a franchisee alleged that a franchisor unreasonably withheld its consent for the sale of franchised restaurants. Id. at 1334. The district court held that under the plain language of the Act — even after the 1993 amendments — only consumers may sue for monetary damages, a consumer is one engaged in the purchase of goods or services, and a franchisee attempting to sell franchised restaurants is not a consumer. Id. at 1338 (citations omitted). This case is directly on point and persuasive, and leads me to the same conclusion here. HH cannot be considered a purchaser in its attempts to sell the franchised restaurants, and therefore a consumer with standing to sue under the Act.
Because HH lacks standing to bring a claim under the Act, I need not and do not reach the issue of whether Burger King's acts were authorized by the franchise agreement so as to prevent a claim under the Act.
VII. CONCLUSION
There is no genuine issue as to any material fact to support any of HH's counterclaims. HH's breach of contract counterclaim fails because Burger King disapproved the sale to the Olajuwon Group based on grounds specifically left to its "sole judgment" under the franchise agreement. HH's counterclaim for breach of the covenant of good faith and fair dealing fails because Burger King did not breach any express term of the franchise agreement. HH's tortious interference counterclaims fail because Burger King is not a disinterested third-party. Finally, HH's FUDTPA counterclaim fails because HH is not a consumer with standing to sue under the Act. For the reasons set forth above, Burger King's motion for partial summary judgment [DE. 58] is GRANTED.
DONE and ORDERED in chambers in Miami, Florida.