Opinion
Civil Action No. 00-30115-MAP,
May 10, 2002
MEMORANDUM REGARDING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT (Docket No. 14)
I. INTRODUCTION
Plaintiff Bean's Glass Service, Inc. ("plaintiff"), a windshield replacement and repair company, has brought suit against its former franchisor, Speedy Auto Glass Franchising Systems, Inc. ("SAG"), and its affiliates, Speedy Auto Glass, Inc. ("Speedy"), and TCG International, Inc. ("TCGI") (together, "defendants"), for breach of contract, false representation, and violations of Mass. Gen. Laws ch. 93A. Defendants now move for summary judgment, claiming that plaintiff's claims are barred by the applicable statutes of limitations and a settlement agreement and release of claims plaintiff entered into in 1995. Because the court concludes that defendants are correct, the motion for summary judgment will be allowed.
II. STANDARD OF REVIEW
Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with 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 "genuine" issue is one that reasonably could be resolved in favor of either party, and a "material" fact is one that affects the outcome of the suit under governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50 (1986). "The record evidence must be construed 'in the light most favorable to, and drawing all reasonable inferences in favor of, the nonmoving party.'" Pure Distributors, Inc. v. Baker, 285 F.3d 150, 154 (1st Cir. 2002), quoting Feliciano de la Cruz v. El Conquistador Resort Country Club, 218 F.3d 1, 5 (1st Cir. 2000).
III. FACTUAL AND PROCEDURAL BACKGROUND
The facts below are summarized in the light most favorable to plaintiff, the non-moving party. All uncontroverted facts are deemed admitted.
Robert Bean ("Bean") started Bean's Glass Service, Inc. ("plaintiff") in 1984. (Docket 16 at 2). Bean is the President and a 52% shareholder; his two sons own the remaining 48% of the shares. Id. In 1991 and 1992, plaintiff had locations in Springfield and West Springfield, Massachusetts. Id.
At some point, Bean became interested in the Speedy franchise. SAG specialized in the installation and repair of auto glass and sun roofs, along with other residential and commercial glass work. Id. Each franchisee operated within the SAG business system and licensed the Speedy trade names, trademarks, service marks, and logotypes. Id. at 2-3.
On June 15, 1992, Bean attended a "discovery day" at SAG to learn about its franchise program. Id. at 3. Plaintiff claims that at this time an agent of SAG, Ronald Burnham ("Burnham"), said that with the SAG name and system plaintiff's business would increase to $1,500,000.00 in one year and to $3,000,000.00 in three to four years. (Docket 20 at 3). Plaintiff also contends that other SAG representatives promised that SAG would (1) generally increase plaintiff's profitability; (2) bring in insurance business; and (3) facilitate consumer recognition of the Speedy name by creating additional franchises in Massachusetts and New England. Id. at 3-4.
Bean was convinced, and in July and August of 1992, he and SAG representatives reached an agreement to make plaintiff a franchisee. (Docket 16 at 4). SAG gave plaintiff the non-exclusive right to open nine franchise locations in Massachusetts in an Area Development Agreement executed in July and August of 1992. Id. Also in July 1992, plaintiff and SAG executed Franchise Agreements for the existing locations in Springfield and West Springfield, Massachusetts. Id. Plaintiff was represented by counsel in connection with the negotiations for each of these agreements. Id.
SAG went to great lengths to ensure that plaintiff did not rely on any oral representations not reflected in the Area Development or Franchise Agreements. Each of the Agreements contained an expansive integration clause, and the Franchise
Agreements also contained the following language at Sections 7.6:
No officer, employee or other servant or agent of SAG or Franchisee is authorized to make any representation, warranty or other promise not contained in this Agreement. No change, termination or attempted waiver of any of the provisions of the Agreement shall be binding upon SAG or Franchisee unless in writing and signed by SAG and Franchisee.
See Docket 17, Exhibit D at 26. Further, Sections 7.16, entitled "Acknowledgments," provided that, "Franchisee acknowledges that it has no knowledge of any representations by SAG, or its officers, directors, shareholders, employees, agents, or servants, about the business contemplated by this Agreement, that are contrary to the terms of this Agreement or the documents incorporated herein. . . ." Id. at 27.
The Franchise Agreements also foreswore any prediction about how well plaintiff's franchises would do. In the "Acknowledgments" Section, plaintiff agreed that "it ha[d] not received or relied upon, any warranty or guaranty, express or implied, as to the potential volume, profits, or success of the business venture contemplated by this Agreement." Id. For good measure, plaintiff was also asked to sign a separate form for each franchise entitled "Business Risk Acknowledgment Statement." (Docket 17, Exhibit D at Exhibit I). Here, Bean acknowledged,
that the decision to enter into this business risk is in no matter predicated upon any oral representations, assurances, warranties, guarantees or promises made by SAG as to the likelihood of success of the franchise. Franchisee further acknowledges that he has not received any information concerning actual, average, projected or forecasted franchise sales, profits or earnings.
Id.
In addition to these disclaimers and warnings, the Franchise Agreements obviously imposed some duties upon SAG. Of particular note was Section 5.6.2.5, present in each of the Franchise Agreements, which required SAG to "maintain a Sales Force that calls on the insurance industry and national and/or regional accounts." Id. at 10. Plaintiff saw this Section as codifying SAG's oral promises to solicit insurance business for plaintiff's franchises. Plaintiff does not point to any written portions of the agreements reflecting SAG's alleged oral promises to increase plaintiff's profitability generally or to increase name recognition by creating new franchises in Massachusetts.
The franchise relationship never developed as plaintiff hoped. Indeed, Bean testified that the "whole [Speedy] system went" "downhill" "almost immediately." (Docket 17, Exhibit B at 54). In fact, Bean felt that in early 1993, SAG was "trying to reduce expenses. They eliminated personnel. People quit. . . . They either canned people or people were quitting." Id. at 55. Bean claimed that in late 1993, "you could see things happening. All the guys were quitting. They knew what was going on. They were getting let go. You could feel that." Id. at 58.
Bean also reports that Burnham, who was responsible for Massachusetts, was told to not sell any new franchises in late 1993. Id. Burnham was "a personal friend" of Bean, id. at 43, and they talked on the phone "sometimes three times a week or sometimes every day in the week." Id. at 55. During one of these conversations, Burnham told Bean that he was told not to sell new franchises in Massachusetts. Id. at 58.
Bean also noticed that SAG was not successfully recruiting insurance company business for his franchises. Id. at 56. Indeed, in 1993, several insurance companies published new lists of glass service providers, and SAG was not included. (Docket 21, Exhibit A at 64). Bean conveyed written complaints to SAG approximately fourteen separate times, "stating where we were with sales, nobody is calling on insurance companies." (Docket 17, Exhibit B at 56).
Bean's worries were not unfounded. SAG and TCGI had acquired the "NOVUS" franchise, which specialized in windshield repair rather than windshield replacement. (Docket 26, Exhibit 1 at 2). Windshield repair is apparently cheaper than replacement, and therefore more attractive to insurance companies. The minutes of the June 24, 1994, Franchise Advisory Council Meeting reflect that SAG decided to stop promoting the Speedy name in favor of the NOVUS name:
One way that the goal to be a national provider of auto glass can be achieved is through name recognition. After much strategic planning, it was decided that it would make the most sense to move towards one name. NOVUS has a stronger name which will open doors faster than Speedy. There are a few difficult areas, but by and large, future franchises will not be promoted under the Speedy name. . . . It should be noted that one of the best reasons for using the NOVUS name will be the ability to gain access to insurance companies based upon the demonstrated ability of NOVUS to achieve repair ratios that are being sought by the insurance industry. Further, it should be noted that although there will not be additional Speedy franchises sold in the future — other than those that may be developed under Area Development Agreements already in effect — the current Speedy stores will not be shut down.
Id. Plaintiff was sent these minutes on September 14, 1994. (Docket 26 at 1). However, it was Bean's opinion that "rather than promoting and switching to the Novus system," SAG should have "continue[d] to emphasize and sell the Speedy system." (Docket 17, Exhibit B at 92).
On March 1, 1995, plaintiff and SAG reached a resolution of Bean's complaints, to some extent. They entered into a "Settlement, Confidentiality and Mutual Release Agreement" (the "Release Agreement"). (Docket 17, Exhibit H). The Release Agreement recognized that "a dispute ha[d] arisen between" plaintiff and SAG, and purported to "settle all controversies and claims between them. . . ." Id. at 1. In essence, the Release Agreement converted plaintiff to the NOVUS system. Id. at 2. It provided that plaintiff would not be charged the initial fee for the conversion, and amended each of plaintiff's Franchise Agreements to reflect the franchise change. Id., Exhibit H. Plaintiff later testified that he understood that SAG was "getting rid of the Speedy thing and wanted us to go over to NOVUS and we did." Id., Exhibit B at 68.
As part of the Release Agreement, both SAG and plaintiff agreed to a "Mutual Release," releasing each other of,
any and all liability, claims, obligations, judgments, causes of action, demands, rights, losses and damages, whether known or unknown, that either party may have against the other party for any reasons whatsoever, including breach of any Franchise Agreement, violation of any state or federal franchise laws, violation of any state or federal anti-trust laws, breach of any state or federal common law, from the beginning of time to the date of this Agreement.
Id., Exhibit H at 3. The Release Agreement also worked an important change on SAG's duties under the Franchise Agreements. It eliminated Section 5.6 entirely from each of the Franchise Agreements. Instead, the new language provided in part that "SAG will not be required to provide a sales force, advertising, or marketing support of any nature or kind whatsoever" and that "Franchisee will conduct advertising and marketing activities in the local market area at its own expense." Id., Exhibit H, Exhibits 2-4 at 2. Eliminating prior Section 5.6 also eliminated Section 5.6.2.5, which previously had required SAG to maintain a Sales Force to call on the insurance industry.
Plaintiff remained unsatisfied with the franchise agreement after the Release Agreement, and stopped paying franchise fees in 1995. (Docket 16 at 8). Nevertheless, plaintiff contends that he did not become aware of SAG's decision to stop selling Speedy franchises until June 14, 1996. (Docket 21, Exhibit A at 86). On June 14, 1996, Richard Inman, Executive Vice-President of Speedy, sent Bean a response to a letter he had apparently received from Bean's attorney on June 4, 1996. (Docket 21, Exhibit G). Inman noted in this letter that "we made a decision a couple of years ago not to sell any more Speedy franchises." Id. This, according to Bean, was his first indication that no more Speedy franchises would be sold in Massachusetts.
Although SAG and Speedy indicated to plaintiff in future correspondence that it was interested in expanding its franchises in New England, neither party contends that significant additional franchises were sold after June 14, 1996, or that defendants began soliciting insurance companies on plaintiff's behalf. Plaintiff continued to withhold his franchise fees, and on February 10, 1997, plaintiff was given notice that SAG intended to terminate the Franchise Agreements and the Area Development Agreement. (Docket 17, Exhibit I).
On June 21, 2000, plaintiff filed suit in Superior Court. The case was removed to this court on July 11, 2000. (Docket 1). In Counts I through III, plaintiff charges SAG, Speedy, and TCGI, respectively, with breach of contract for their failure to solicit insurance business. Id.; Docket 24 at 6. In Counts IV through VI, plaintiff charges defendants with false representations. Id. Finally, in Counts VII through IX, plaintiff charges defendants with engaging in unfair and deceptive business practices in violation of Mass. Gen. Laws ch. 93A. Id. Defendants moved for summary judgment on February 28, 2002. (Docket 14).
IV. DISCUSSION A. Non-Contract Claims
Plaintiff's non-contract claims are plainly barred by the governing statutes of limitations. Counts IV through VI, seeking damages for false representations, are governed by a three-year statute of limitations. Mass. Gen. Laws ch. 260, § 2A (1992). Counts VII through IX, seeking damages under Mass. Gen. Laws ch. 93A for unfair and deceptive trade practices, are governed by a four-year statute of limitations. Mass. Gen. Laws ch. 260, § 5A (1992). Plaintiff filed its complaint on June 21, 2000. Therefore, if the causes of action underlying Counts IV through IX began to accrue prior to June 21, 1996, these counts are time-barred.
Given this simple arithmetic, it is puzzling that plaintiff's opposition memorandum argues that "[t]he claims are not time barred since the claim was inherently unknowable until June 14, 1996," and that "[t]he Plaintiff's cause of action accrued when it learned of the SAG decision on July [sic] 14, 1996." (Docket 19 at 1, 7). Plaintiff seems to be arguing that the "discovery rule" tolled the statute of limitations clock until June 14, 1996. See Protective Life Insurance Co. v. Sullivan, 425 Mass. 615, 631 (1997) (noting that "under the discovery rule, a statute of limitations does not begin to run until the prospective plaintiff learns or should have learned that he has been injured.").
According to plaintiff, it was not definitively aware that it had been injured until it received Inman's letter stating, "we made a decision a couple of years ago not to sell any more Speedy franchises." (Docket 21, Exhibit G). Yet, even if plaintiff is correct, June 14, 1996 is before June 21, 1996. Therefore, even if the discovery rule did toll the limitations clock until June 14, 1996, plaintiff's non-contract claims are nevertheless untimely, and barred.
At oral argument, plaintiff suggested that it "may" have not received the letter until after June 21, 1996. However, this was pure speculation. See Rogan v. City of Boston, 267 F.3d 24, 27 (1st Cir. 2001) (noting that "plaintiff who aspires to ward off a properly documented motion for summary judgment" may not do so with "unsupported speculation"). Plaintiff does not deny that the letter was received prior to June 21, 1996, or otherwise attempt to rebut with competent evidence the presumption that the letter was received in a timely manner. See Commonwealth v. Norton, 339 Mass. 592, 594 (1959) (presuming that letter sent would be received "in due course shortly after . . . the date of the postmark."). Compare Migliore v. Purity Supreme Supermarkets, Inc., No. 9162, 1992 WL 213034, at *2 (Mass.App.Div. June 24, 1992) (holding presumption of timely receipt was rebutted by date-stamp in clerk's office showing that letter not received until seven business days after complaint was sent). Indeed, there is nothing in the record that supports any suggestion that the June 14, 1996, letter was not received until after June 21, 1996.
Accordingly, the cause of action underlying Counts IV through IX began to accrue prior to June 21, 1996. Because this lawsuit was not filed until June 21, 2000, Counts IV through IX are barred by the applicable statutes of limitations. No further analysis is necessary. The motion for summary judgment as to Counts IV through IX will be allowed.
Because this issue is so clear, it is not necessary to address defendant's strong alternative argument, that the statute began to run at least as early as September 14, 1994, when plaintiff received the minutes of the Franchise Advisory Council providing clear notice of defendant's change in policy.
B. Contract Claims
Plaintiff's contract claims, although they enjoy a longer statute of limitations, ultimately suffer the same fate. In its opposition memorandum, plaintiff makes it clear that Counts I, II, and III charge defendants with a breach of Section 5.6.2.5 of the Franchise Agreements, docket 24 at 6, which required SAG to "maintain a Sales Force that calls on the insurance industry and national and/or regional accounts." (Docket 17, Exhibit F at 10). Defendants correctly argue that (1) any claims based on a failure to solicit insurance business prior to March 1, 1995, were given up by the Release Agreement; and (2) any claims based on a failure to solicit insurance business after March 1, 1995, have no contractual foundation.As noted, plaintiff entered into the Release Agreement on March 1, 1995. (Docket 17, Exhibit H). This document constituted a settlement of "all controversies and claims" between plaintiff and defendants, and plaintiff agreed to a mutual release, absolving defendants of "any and all liability, claims, obligations, judgments, causes of action, demands, rights, losses and damages, whether known or unknown, that either party may have against the other party for any reasons whatsoever . . . from the beginning of time to the date of this Agreement." (Docket 17, Exhibit H at 1, 3). Thus, the Release Agreement bars plaintiff from bringing any claim for breach of contract against defendants for its conduct "from the beginning of time" until March 1, 1995.
Plaintiff suggests, in response, that it was fraudulently induced to give up its contract claims. However, as defendants point out, the terms of the Release Agreement render this contention unsupportable. As an initial matter, on its face, the Release Agreement eliminated Section 5.6, the very contractual provision that plaintiff claims was breached. See Docket 17, Exhibit H ("Paragraph 5.6 shall be deleted in its entirety."). Plaintiff consulted with counsel before signing the Release Agreement, and understood that it was releasing defendants from all claims "from the beginning of time" until March 1, 1995. (Docket 17, Exhibit C at 29, 32-33). Moreover, Bean admitted that no promises were made to him that were not reflected in the Release Agreement. Id. at 33. Indeed, the Release Agreement contained an integration clause. (Docket 17, Exhibit H at 3). As one court observed,
The rule in Massachusetts is that "where the writing shows on its face that it is the entire agreement of the parties and comprises all that is necessary to constitute a contract, it is presumed that they have placed the terms of their bargain in this form to prevent misunderstanding and dispute, intending it to be a complete and final statement of the whole transaction."
Elias Brother Rests., Inc. v. Acorn Enters., Inc., 831 F. Supp. 920, (D.Mass. 1993), quoting Bendetson v. Coolidge, 7 Mass. App. Ct. 798, 802-803 (1979).
While plaintiff may have hoped that the Release Agreement would result in an increase in business, additional franchises in New England, or more insurance solicitation by defendants, plaintiff did not condition its release of "all claims" on the fulfillment of those expectations. Thus, no reasonable jury could find that plaintiff was fraudulently induced to give up its contract claims. Because it released all claims against defendants prior to March 1, 1995, plaintiff may not survive summary judgment by alleging that defendants breached their duty to "maintain a Sales Force that calls on the insurance industry and national and/or regional accounts" prior to March 1, 1995.
In addition, Counts I, II, and III obviously may not be grounded upon a breach after March 1, 1995. As noted, after the Release Agreement, defendants no longer had a duty to "maintain a Sales Force that calls on the insurance industry and national and/or regional accounts." (Docket 17, Exhibit F at 10). Defendants could not have breached a provision that no longer existed. Therefore, the motion for summary judgment as to Counts I, II, and III will be allowed.
V. CONCLUSION
For the reasons set forth above, defendants' motion for summary judgment is hereby allowed.
A separate order will issue.
ORDER
For the reasons stated in the accompanying Memorandum, defendants' Motion for Summary Judgment (Docket No. 14) is hereby ALLOWED. The clerk will enter judgment for defendants.
It is So Ordered.