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Aamco Transmissions, Inc. v. Romano

United States District Court, E.D. Pennsylvania

August 21, 2014

AAMCO TRANSMISSIONS, INC., Plaintiff,
v.
ROBERT V. ROMANO and LINDA ROMANO, Defendants

Page 701

[Copyrighted Material Omitted]

Page 702

For AAMCO TRANSMISSIONS, INC., Plaintiff: JAMES C. RUBINGER, LEAD ATTORNEY, PLAVE KOCH PLC, RESTON, VA; WILLIAM B. JAMESON, LEAD ATTORNEY, COTTMAN TRANSMISSION SYSTEMS, LLC, HORSHAM, PA.

ROBERT V. ROMANO, Defendant, Pro se, STUART, FL.

LINDA ROMANO, Defendant, Pro se, STUART, FL.

Page 703

MEMORANDUM

ANITA B. BRODY, J.

Plaintiff Aamco Transmissions, Inc. (" AAMCO" ) brings suit against its former franchisee Defendant Robert Romano and his wife Defendant Linda Romano (collectively, the " Romanos" ). AAMCO alleges that the Romanos breached a covenant not-to-compete by operating a new transmission repair business in close proximity to an AAMCO center. AAMCO seeks specific performance of the covenant not-to-compete as well as costs and attorneys' fees. I have subject matter jurisdiction

Page 704

over AAMCO's claims pursuant to 28 U.S.C. § 1332.[1]

The Romanos move to dismiss AAMCO's suit on several grounds; they also move for a transfer of venue to the Southern District of Florida. I will deny their motions for the reasons discussed below.

I. BACKGROUND[2]

AAMCO, a Pennsylvania corporation with its principal place of business in Horsham, Pennsylvania, franchises the AAMCO name and trademark to transmission and general automotive repair centers throughout the United States and Canada. Compl. ¶ 6. On August 18, 1992, Robert Romano, a citizen of Florida, entered into a franchise agreement (the " Franchise Agreement" ) with AAMCO. The Franchise Agreement permitted Robert Romano to operate an automotive repair center located at 1631 North 60th Avenue, Hollywood, Florida under the AAMCO name and trademark. Compl. ¶ 7. At all times, his wife Linda Romano, also a citizen of Florida, acted as his agent in business. Compl. ¶ 8. In August 1992, just prior to opening his franchise, Robert Romano attended AAMCO's owner training class and was provided with AAMCO's proprietary manuals, customer lists, and software. Compl. ¶ 10. AAMCO also disclosed to Robert Romano its proprietary systems and trade secrets for operating a successful automotive repair business. Compl. ¶ 9. In return, Robert Romano agreed to pay to AAMCO a weekly franchise fee of seven percent of his franchise's gross receipts from the previous week. Compl. Ex. A § 4.2.

The Franchise Agreement also contained the following terms:

o Section 16.1 -- " Duration of the Franchise. This Agreement shall begin as of the date set forth above, and shall continue for a term of fifteen (15) years. Unless either party gives written notice of its intention not to renew at least one (1) year prior to the expiration of the fifteen (15) year term, then this franchise shall be renewed for fifteen (15) years."
o Section 19.2(b) -- " For a period of two (2) years after the termination of Expiration of this Agreement, Franchisee shall not directly or indirectly

Page 705

engage in the transmission repair business within a radius of ten (10) miles of the former center or any other AAMCO center. The two (2) year period shall not begin to run until Franchisee commences to comply with all obligations stated in this section 19.2(b)."
o Section 19.2(c) -- " Franchisee acknowledges that because of the business of AAMCO and the strength of the AAMCO name and trademark, the restrictions contained in this section 19.2 are reasonable and necessary to protect the legitimate interests of AAMCO and that any violation of these restrictions will result in irreparable injury to AAMCO."
o Section 21.1 -- " Jurisdiction. This Agreement shall be deemed to have been made within the Commonwealth of Pennsylvania and shall be interpreted according to the laws of Pennsylvania. . . . Franchisee further agrees to the jurisdiction and venue of any proper court of general jurisdiction in either Pennsylvania County, Pennsylvania, Montgomery County, Pennsylvania or in the county in which AAMCO has its principal place of business. Franchisee more particularly agrees to the jurisdiction and venue of the United States District Court for the Eastern District of Pennsylvania with respect to any proceedings which arise out of or are connected in any way with this Agreement or its performance, and Franchisee specifically agrees not to bring suit against AAMCO in any other jurisdiction or venue."

Robert Romano operated his franchise at the Hollywood location until February 20, 2013, at which time Robert Romano and AAMCO mutually accepted and signed a Termination of Franchise Agreement (the " Termination Agreement" ). Compl. ¶ 11. Under the Termination Agreement, Robert Romano released all rights he had under the Franchise Agreement and AAMCO released Robert Romano from all obligations he had under the Franchise Agreement with the exception of the obligations set forth in Sections 12.2, 18.1, 19.1, and 19.2 of the Franchise Agreement. Compl. Ex. B. By explicitly extending the obligations owed under Section 19.2, Robert Romano agreed to comply post-termination with the covenant not-to-compete. Compl. ¶ 12. The earliest date on which the covenant not-to-compete could expire is February 19, 2015. Compl. ¶ 14.

The Romanos are currently operating a transmission repair business under the name Treasure Coast Transmissions located at 2801 S.E. Monroe Street, Stuart, Florida.[3] Compl. Ex. C. The Romanos' new business is roughly 100 miles north of the Romanos' Hollywood franchise, but less than 1.5 miles ...


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