The opinion of the court was delivered by: William H. Yohn, Jr., J.
Plaintiffs' complaint is based on an incident in Pittsburgh when
defendant Vasuda Patel handed to a Dunkin' Donuts employee an envelope
containing three $100 bills with the words "Happy Birthday" written on
the envelope. There was no card in the envelope. Patel and the employee
were discussing Patel's proposed purchase of two additional Dunkin'
Donuts shops located in the Pittsburgh area. Plaintiffs would have to
approve the purchase of those shops. Plaintiffs interpret the $300 as an
attempt to bribe the employee. Defendants interpret the incident as a
birthday gift. This is clearly a factual question for the jury to
decide.
The relevant portion of the franchise agreement states that defendants
agree to "comply promptly with all applicable laws, rules, regulations,
ordinances and orders of public authorities including, but not limited
to, the Board of Fire Underwriter and other similar organizations and all
governmental agencies, however designated, which address health, safety,
sanitation, environmental or other issues affecting operation of the
Dunkin' Donuts shop." (emphasis added). Both parties contend that the
plain language of this provision supports their position. Because both
parties offer a reasonable interpretation of the provision, the provision
is ambiguous. The phrase "all applicable laws" requires an interpretation
as to which laws apply and which laws do not and whether the facts in
dispute constitute a violation of the applicable law. A determination by
the court that a given term in a contract is ambiguous makes the
interpretation of that term a question of fact for the trier of fact to
resolve in light of the extrinsic evidence offered by the parties in
support of their respective interpretations. Summary judgment on Counts I
and II will, therefore, be denied on this claim.
The franchise agreements also provide that the defendants agree not to
"do or perform, directly or indirectly, any other act injurious or
prejudicial to the goodwill associated with Dunkin' Donuts proprietary
marks and the Dunkin' Donuts system." (emphasis added).
Normally, goodwill relates to associations made by consumers or the
general public with the company. Every witness from Dunkin' Donuts
testified that they personally did not discuss the incident with anyone
outside of fellow Dunkin' Donuts employees or Dunkin' Donuts legal
counsel. Plaintiffs have produced no evidence that there is a possibility
that a consumer or some other member of the public will associate Patel's
actions with Dunkin' Donuts. In fact, plaintiffs have not produced any
evidence that anyone other than Dunkin' Donuts employees is aware of the
incident involving Patel. Thus, plaintiffs have offered no proof that
either the general public, Dunkin' Donuts customers or any Dunkin' Donuts
franchisee was aware of Patel's alleged act so that it is not possible
for any of the members of those groups to associate Patel's actions with
Dunkin' Donuts.
Defendants have filed a counterclaim alleging that the plaintiffs
terminated their Media franchise agreements for pretextual reasons
— essentially because Dunkin' Donuts wanted to acquire the
Pittsburgh stores for less than what the defendants were willing to pay,
and then resell those Pittsburgh stores for a profit. Defendants contend
that this is not only a violation of the franchise agreements, but also a
violation of the implied covenant of good faith and fair dealing which
applies to the franchise agreements because they are to be interpreted,
construed and governed by the laws of the Commonwealth of Massachusetts.
Plaintiffs contend that summary judgment should be entered in their
favor on Counts I and II of the counterclaim because if the defendants
win on the issues in Counts I and II of the complaint, plaintiffs have
agreed that the termination of the franchise agreements would be invalid
and defendants will have suffered no damages because they have been
allowed to continue operating the Media store.
Defendants contend that they have produced sufficient evidence for a
jury to rule on their favor on these claims. If the plaintiffs are
unsuccessful in their claims that defendants breached the franchise
agreements because of the alleged bribe, the defendants might very well
still be successful in their counterclaims for breach of contract and
declaratory judgment. Although defendants have articulated no particular
benefit they would achieve from such a victory, other than nominal
damages, I will permit them to proceed on these claims at this stage of
the litigation.
In Count III of defendants' counterclaim, they allege tortious
interference with contractual relations, business relations, business
advantage and prospective contractual relations. Defendants contend that
plaintiffs fabricated a reason (the $300.00 gift alleged to be a bribe) in
order to justify a refusal to approve the transfer of the Pittsburgh
stores to Patel. Defendants further contend that plaintiffs' true
motivation was to reap a $750,000 financial windfall by preventing the
transfer of the Pittsburgh stores to Patel so that plaintiffs could
obtain the stores for no consideration and be free to sell those stores
to another franchisee. The parties agree that since the tortious
interference claim relates to the attempt by the defendants to purchase
the Pittsburgh stores, rather than the franchise agreements, Pennsylvania
law applies to this claim.
Plaintiffs contend that they cannot be liable for tortuous interference
with the Pittsburgh contracts because sections 10.1 and 10.2 of the
franchise agreements provide that any sale must have the prior written
consent of Dunkin' Donuts. However, the franchise agreements also provide
that the consent shall not be unreasonably withheld. If the approval
would be withheld for the reasons alleged by the defendants, a reasonable
jury could conclude that the approval was unreasonably withheld for an
improper reason resulting in interference with defendants' contractual
and prospective contractual relations with another. There are genuine
issues of material fact and plaintiffs are not entitled to judgment as a
matter of law. Plaintiffs'
motion for summary judgment will be denied on
this claim.
Finally, defendants submit a claim for slander, libel and defamation
because Patel was labeled "a criminal" and his Dunkin' Donuts store in
Media ...