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Dunkin' Donuts Franchised Rests., LLC v. Claudia I, LLC

United States District Court, E.D. Pennsylvania

February 10, 2014

DUNKIN' DONUTS FRANCHISED RESTAURANTS, LLC, et. al., Plaintiffs,
v.
CLAUDIA I, LLC, et. al, Defendants; and CLAUDIA I, LLC, et. al., Third Party Plaintiffs
v.
SPRING HILL REALTY, INC., et. al., Third Party Defendants

Page 384

[Copyrighted Material Omitted]

Page 385

For DD IP HOLDER LLC, DB REAL ESTATE ASSETS I, LLC, DUNKIN' DONUTS FRANCHISING, LLC, BASKIN-ROBBINS FRANCHISING LLC, BR IP HOLDER LLC, Plaintiffs, Counter Defendants: CRAIG R. TRACTENBERG, LEAD ATTORNEY, NIXON PEABODY LLP, PHILADELPHIA, PA.

For CLAUDIA I, LLC, MANFRED P. MAROTTA, LYNNE K. MAROTTA, Defendants, ThirdParty Plaintiffs, Counter Claimants: AYESHA KRISHMAN HAMILTON, LEAD ATTORNEY, HAMILTON LAW FIRM, PC, LANSDALE, PA.

For THIRD DUNKIN DONUTS REALTY, INC., ThirdParty Defendant: CRAIG R. TRACTENBERG, LEAD ATTORNEY, NIXON PEABODY LLP, PHILADELPHIA, PA.

For SPRING HILL REALTY, INC., ThirdParty Defendant: JOSHUA J. KNAPP, LEAD ATTORNEY, BARLEY SNYDER LLC, LANCASTER, PA.

OPINION

Page 386

MEMORANDUM

STENGEL, J.

This dispute involves a franchising relationship gone awry. Plaintiffs, Dunkin' Donuts Franchised Restaurants, LLC, DD IP Holder, LLC, Baskin-Robbins Franchised Restaurants, LLC and DB Real Estate Assets I, LLC (Collectively " Dunkin'" ) filed this action against its Franchisee Claudia I LLC and its members Manfred and Lynne Marotta (" Claudia" or " the Marottas" )seeking relief for breach of the franchise agreement.[1] Claudia answered the complaint and filed a counterclaim against Dunkin'. Claudia also filed a third party complaint against Third Dunkin Donuts Realty, Inc. (" TDDR" ) and Spring Hill Realty, Inc. (" Spring Hill" ). Dunkin' and TDDR now move for summary judgment on Claudia's counterclaim and third party complaint. For the reasons that follow, I will partially grant Dunkin's motion.

I. Background

The Dunkin' Donuts store that is at the center of this franchise dispute was located at 505 Old York Road in Jenkintown, Pennsylvania. Pls.' Statement of Undisputed Facts (doc. no. 69) ¶ 3. This property is owned by Spring Hill. Prime Lease, Certification of Manfred Marotta (" Certification" ) Ex. B (doc. no. 77-20). TDDR and Spring Hill executed a lease (" the prime lease" ) for the Jenkintown property on March 1, 2002. Id. TDDR entered into a sublease for the premises with the original franchisee on December 20, 2002. Sublease, Certification Ex. C (doc. no. 77-3). Thereafter, TDDR merged into DB Real Estate Assets I, LLC and DB Real Estate became the sublandlord for the store. Pls.' Statement of Undisputed Facts ¶ 9. On July 16, 2009, Claudia purchased the franchise and took the seller's tenant interest at the Jenkintown store by a transfer agreement executed by the seller, Claudia and Dunkin'. Transfer Agreement, Decl. of Gary Zullig Ex. B (doc. no 53-2). Claudia and Dunkin' then entered into a franchise agreement. Franchise Agreement, Certification Ex. A (doc,. no. 77-1). Dunkin' reserved the right to terminate the franchise agreement if it terminated the sublease to the store. Id. ¶ 14.2.

Claudia had multiple complaints about Spring Hill and wanted to relocate the store. First, Claudia has presented evidence that Spring Hill failed to maintain the property as required by the prime lease. Defs.' Statement of Undisputed Facts (doc. no. 78) ¶ ¶ 37-52. As a result, the exterior of the store deteriorated which may have hurt business. Second, Claudia paid a monthly base rent of $8,750 which amounted to $36 per square foot; however, the Marottas found that fair market rent for comparable properties in Jenkintown ranged from $18 ...


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