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STRADLING v. SOUTHLAND CORP.

March 19, 1996

RONALD C. STRADLING, and BETTY LOU STRADLING, Plaintiffs,
v.
THE SOUTHLAND CORPORATION, Defendant



The opinion of the court was delivered by: VANASKIE

 Plaintiffs Ronald C. Stradling and Betty Lou Stradling (the "Stradlings") bring this action against the Defendant, Southland Corporation, alleging a violation of the New Jersey Franchise Practices Act. Presently pending are cross-motions for summary judgment. The issues presented are whether the Act applies to the Franchise Agreement at issue, and, if so, whether a requirement in the Agreement that the Stradlings execute a general release in favor of Southland in connection with the transfer of Stradlings' 7-Eleven franchise to a location in New Jersey violates the New Jersey Act. Because the Franchise Agreement does not "contemplate" the operation of a franchise in New Jersey, the Act is inapplicable. Moreover, because the Release in question is intended to cover only those claims connected with the Pennsylvania franchise, which presently exist or may arise prior to the execution of the Release, the requirement that it be signed before a transfer will be effectuated does not violate the New Jersey Franchise Practices Act. The Stradlings' motion will, therefore, be denied, and summary judgment will be entered in favor of Southland.

 I. BACKGROUND

 Southland is a franchisor of 7-Eleven convenience stores. On May 31, 1979, Southland and the Stradlings entered into a 7-Eleven Store Franchise Agreement (the "Allentown, PA Franchise Agreement") for the operation of a 7-Eleven convenience store in Allentown, Pennsylvania. (Dkt. Entry # 19 at Ex. "A.") The term of the Allentown, PA Franchise Agreement was the earlier of fifteen (15) years or until the end of Southland's leasehold rights in the property. On July 11, 1979, the parties entered into a "Year 2000 Amendment," which extended the term of the original Franchise Agreement and allowed the Franchisee, in the event of a termination or closing of an existing store, to transfer to another available 7-Eleven Store. (Id. at Ex. "B.")

 On September 2, 1994, Southland, as sublessor of the Stradlings' 7-Eleven convenience store, notified the Stradlings that Southland did not intend to renew the lease for the Allentown location. Southland, however, also informed the Stradlings that they could transfer their franchise to another 7-Eleven store for which they were qualified. The Stradlings elected to transfer their franchise to a 7-Eleven store located in Toms River, New Jersey.

 Paragraph 25 of the Allentown, PA Franchise Agreement provides, inter alia, that the Franchise Agreement shall not be transferred unless, as a condition precedent, Southland and the Stradlings execute a Mutual Termination and Release (the "Release") of the Franchise Agreement. (Id. at Ex. "A" at P 25.) Southland presented a copy of the Release to the Stradlings for their execution. *fn1" (Id. at Ex. "D.") The Stradlings failed to execute the Release. As a result, Southland refused to allow the transfer unless the release was executed.

 The Stradlings filed this action on March 13, 1995, claiming that Southland's actions have violated the New Jersey Franchise Practices Act. The Act makes it an unlawful practice to require a franchisee at the time of entering into a franchise agreement to consent to a release of claims arising under the Act. The Stradlings contend that by requiring them to sign the Release prior to transferring their store to Toms River, New Jersey, Southland has violated the Act. (Dkt. Entry # 1 at 3.)

 On May 16, 1995, Southland filed a motion for summary judgment (Dkt. Entry # 6), along with a statement of undisputed material facts (Dkt. Entry # 5). Southland filed a brief in support its motion on June 2, 1995, (Dkt. Entry # 10), along with exhibits. (Dkt. Entry # 11.) On June 26, 1995, the Stradlings filed a cross-motion for summary judgment (Dkt. Entry # 19), a supporting brief (Dkt. Entry # 20), a statement of undisputed material facts (Dkt. Entry # 21), an affidavit in support of their motion (Dkt. Entry # 22), and a brief in opposition to Southland's motion for summary judgment. (Dkt. Entry # 23.) On July 11, 1995, Southland filed a brief in opposition to Stradlings' motion for summary judgment and a reply brief in support of its own motion. (Dkt. Entry # 28.)

 II. DISCUSSION

 Summary judgment is appropriate when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). Materiality is determined by the governing substantive law. Gabai v. Jacoby, 800 F. Supp. 1149, 1153 (S.D.N.Y. 1992). Construction and legal effect of an unambiguous writing is for a court and not for a jury to decide. Summary judgment is properly used for interpreting a contract whose terms are considered by opposing parties to be clear and unambiguous, despite disagreement between the parties as to what the agreement provides. Goldinger v. Boron Oil Co., 375 F. Supp. 400 (W.D. Pa. 1974), aff'd mem., 511 F.2d 1393, cert. denied, 423 U.S. 834 (1975). The provisions of the Franchise Agreement and the "Year 2000 Amendment" are not, as a matter of law, ambiguous or susceptible to two reasonable alternative meanings. *fn2" Consequently, there is no basis for having a trier of fact decide between alternative interpretations proffered by the parties. See Mellon Bank, N.A. v. Aetna Business Credit, Inc., 619 F.2d 1001, 1011 (3rd Cir. 1980).

 A. The Application Of The New Jersey Franchise Practices Act To The Franchise Agreement

 Section 4 of the New Jersey Franchise Practices Act provides:

 
This act applies only to a franchise (1) the performance of which contemplates or requires the franchisee to establish or maintain a place of business within the state of New Jersey, (2) where gross sales of products or services between the franchisor and the franchisee covered by such franchise shall have exceeded $ 35,000 for the 12 months next preceding the institution of the suit pursuant to this act, and (3) where more than 20% of the franchisee's gross sales are intended to be or are derived from such franchise. [N.J.S.A. 56:10-4 (West 1995).]

 The Stradlings submit that the Act is applicable here because the terms of the Agreement contemplate the transfer of the 7-Eleven Store Franchise to any available store, which would include a New Jersey location. They point out that Southland admits that the Stradlings were afforded the opportunity to transfer their store to another 7-Eleven convenience store location and that the Stradlings elected, in fact, to transfer their 7-Eleven franchise to Toms River, New Jersey. This, they ...


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