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Albarqawi v. 7-Eleven, Inc.

United States District Court, E.D. Pennsylvania

February 13, 2014

BAHER ALBARQAWI
v.
7-ELEVEN, Inc.

MEMORANDUM

MARY A. McLAUGHLIN, District Judge.

This case arises from a franchise agreement between the plaintiff, Baher Al-Barqawi ("Al-Barqawi"), and the defendant, 7-Eleven, Inc. ("7-Eleven"), for a 7-Eleven franchise located in Southwest Philadelphia. Al-Barqawi entered into a franchise agreement with 7-Eleven in August 2008. In doing so, Al-Barqawi relied on statements made by 7-Eleven representatives indicating that the 7-Eleven store he was franchising did not have any problems with crime. During the first week that Al-Barqawi operated the store, he discovered that the store had been subject to frequent criminal activity. Nonetheless, Al-Barqawi operated the store for more than two years.

In 2011, after 7-Eleven terminated Al-Barqawi's franchise for violations of the franchise agreement, Al-Barqawi brought this suit. Al-Barqawi brings claims for breach of contract, negligent and intentional misrepresentation, rescission, and promissory estoppel. Before the Court is the defendant's motion for partial summary judgment. 7-Eleven argues that it is entitled to summary judgment on the plaintiff's promissory estoppel, rescission, and negligent and intentional misrepresentation claims. The Court agrees and will grant summary judgment for the defendant. This case will move forward on the plaintiff's breach of contract claim.

II. Factual Record[1]

In January 2008, the plaintiff, Baher Al-Barqawi, sought to become a franchisee of 7-Eleven. Al-Barqawi's initial application was rejected. On June 12, 2008, a 7-Eleven Franchise Sales Manager contacted Al-Barqawi about a newly available franchise opportunity located in Southwest Philadelphia at 1337 S. 58th Street (the "Store"). Al-Barqawi and his wife were unfamiliar with the location. They visited the Store and asked 7-Eleven representatives about the neighborhood. They were told that the neighborhood and Store were safe and that there was no problem with crime. The only issue with crime reported by 7-Eleven was one incident with a robber who had since been killed. Al-Barqawi submitted a franchise application and was approved. He signed a franchise agreement on August 22, 2008. Compl. ¶¶ 5-8; Decl. of Baher Al-Barqawi ¶¶ 2-5; Def.'s Mot. for Summary Judgment, Exh. C1, Franchise Agreement.

Al-Barqawi began operating the Store on October 8, 2008. On Al-Barqawi's first day as franchisee, $50, 000 worth of money orders was stolen by employees of the former franchisee of the Store. Two days later, Al-Barqawi was robbed at gunpoint in the Store. A day or two after that, a police officer who was visiting the Store informed Al-Barqawi that the Store had been robbed several times, and that the former franchisee kept a baseball bat under the counter to chase away potential robbers and shoplifters. Compl. ¶¶ 10-11; Answer ¶ 50; Pl.'s Resp. to Answer ¶ 50; Decl. of Baher Al-Barqawi ¶ 8; 1/17/13 Al-Barqawi Dep. Trans. at 179: 13-21.

In September 2009, Al-Barqawi asked 7-Eleven if he could do a "BCP Conversion" of the Store. This would have required Al-Barqawi to purchase the property, store, and equipment in return for an increase of his share of the gross profits. Al-Barqawi was prepared to invest an additional $100, 000 for this purpose. 7-Eleven denied the request. 1/30/13 Al-Barqawi Dep. Trans. at 44:7-45:21.

On April 18, 2011, 7-Eleven terminated the franchise agreement with Al-Barqawi, purportedly due to his failure to meet 7-Eleven's minimum net worth requirement and because of cleanliness violations. After the franchise agreement was terminated, Al-Barqawi learned from the former franchisee that the Store had previously encountered frequent criminal activity that was not disclosed to Al-Barqawi before he purchased the franchise. Compl. ¶ 17, Exh. F; Decl. of Baher Al-Barqawi ¶ 15.

IV. Discussion[2]

A. Standard of Review

A party is entitled to summary judgment if there "is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The moving party bears the initial burden of demonstrating the basis of its motion. Celotex Corp. v. Catrett , 477 U.S. 317, 323 (1986). Once a properly supported motion for summary judgment is made, the burden of production shifts to the nonmoving party, who must set forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 250 (1986). In reviewing a motion for summary judgment, the court does not resolve factual disputes or make credibility determinations, and must view facts and inferences in the light most favorable to the party opposing the motion. Siegel Transfer, Inc. v. Carrier Express, Inc. , 54 F.3d 1125, 1127 (3d Cir. 1995).

B. Promissory Estoppel Claim

The defendant argues that it is entitled to summary judgment on the plaintiff's claim for promissory estoppel (Count V) because a promissory estoppel claim "can only exist in the absence of a contract." Iversen Baking Co. v. Weston Foods, Ltd. , 874 F.Supp. 96, 102 (E.D. Pa. 1995) (citing Carlson v. Arnot-Ogden Mem. Hosp. , 918 F.2d 411, 416 (3d Cir. 1990). The plaintiff does not ...


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