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Maaco Franchising, Inc. v. Augustin

August 12, 2010


The opinion of the court was delivered by: Pollak, J.


Plaintiff, Maaco Franchising, Inc., requests preclusion of evidence and sanctions (docket no. 44) against defendants Philippe Augustin, Virginie Augustin, and Phil's Auto Body, Inc., (the Augustin defendants) for alleged misconduct during the present litigation. Maaco requests exclusion of certain evidence at trial, the striking of the Augustin defendants' answer, affirmative defenses, and counterclaim, and costs and attorney's fees.

I. Facts and Procedural History

Plaintiff, Maaco Franchising, licenses and trains franchisees to use the Maaco name and methods for auto body repair and painting. In October of 2002, defendants Pierre and Virginie Augustin entered into a franchise agreement with Maaco's predecessor in interest, Maaco Enterprises, Inc., to last fifteen years. As part of the franchise agreement, the Augustins agreed not to disclose Maaco's trade secrets. Franchise Agreement ¶¶ 10, 17.C. In addition, the franchise agreement contained a covenant not to compete. Franchise Agreement, at ¶ 17.B(1)-(2), 17.C.

Maaco alleges that the Augustin defendants failed to make payments to Maaco under the franchise agreement, report their weekly gross receipts, or make their advertising contributions, which resulted in Maaco terminating the franchise agreement after notice and an opportunity to cure.

Pierre Augustin, after vacating the premises of the Augustins' former Maaco franchise, allegedly started a competing auto body shop one half-mile from their former Maaco franchise. Maaco alleges this operation entails use of the "Maaco System" (its purported trade secrets) and has been advertised as "Palm Beach Auto formerly Maaco Auto Pain[t]ing." Am. Compl. ¶¶ 45, 49.

On October 2, 2009, Maaco filed the present suit against the defendants for violation of the franchise agreement and for preliminary and permanent injunctions to enforce the non-compete clause and to protect Maaco's trade secrets. Maaco has also sued for trademark infringement and unfair competition, breach of the covenant of confidentiality, breach of the covenant of good faith and fair dealing, conspiracy, tortious interference, and unjust enrichment. Am. Compl. ¶ 50-51. I granted Maaco's request for a preliminary injunction in part and required that Philippe Augustin not compete with his former Maaco franchise for the remainder of the term of the covenant not to compete (docket nos. 58 & 59). That period has since expired.

Maaco alleges that during the litigation the Augustin defendants have engaged in conduct deserving of sanctions. Maaco alleges there are three categories of misconduct:

(1) the alleged destruction of documents during the early stages of litigation, (2) the alleged failure to produce requested documents in a timely manner or at all, and (3) the making of allegedly false and misleading statements in pleadings verified by Philippe Augustin.

Maaco has provided several declarations of those who allegedly witnessed litigation misconduct. Indira Bellino states that she assisted Philippe Augustin in his attempts to hide documents and manuals at her house to prevent Maaco from gaining access to them. Bellino Decl. ¶ 8-9. She states that in late October or early November she assisted Philippe Augustin in shredding boxes of documents from the Augustins' old Maaco franchise. Id. at ¶ 14. Shereena Hyatt, who occasionally helped out at the Augustins' shop, states that she also shredded documents for Philippe Augustin, including invoices from the Augustins' former Maaco center, letters, and bank statements. Shereena Hyatt Decl. ¶ 6. Philippe Augustin, at the preliminary injunction hearing, admitted he directed the shredding of documents. Tr. of Hr'g of March 18, 2010, at 101.

Sheik Hyatt, a former employee of the Augustins, states that, based on his knowledge, statements in the Augustins' joint answer and brief in opposition to the preliminary injunction were false and that Philippe Augustin knew them to be false.

Sheik Hyatt Decl. ¶ 19. Sheik Hyatt declares that the false statements included statements that (1) Philippe Augustin did not manage, own, or have day-to-day involvement in the Palm Beach Auto shop and (2) that Palm Beach Auto did not advertise itself as a current or former Maaco franchise. Id.

Maaco's counsel, Constantine Fournaris, provided a declaration that states that, despite several demands for documents, the Augustin defendants have failed to provide Maaco with requested discovery in whole ...

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