AFC Franchising LLC v. Purugganan

CourtDistrict Court, N.D. Alabama
DecidedSeptember 14, 2020
Docket2:20-cv-00456
StatusUnknown

This text of AFC Franchising LLC v. Purugganan (AFC Franchising LLC v. Purugganan) is published on Counsel Stack Legal Research, covering District Court, N.D. Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
AFC Franchising LLC v. Purugganan, (N.D. Ala. 2020).

Opinion

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

AFC FRANCHISING, LLC., ) ) Plaintiff, ) ) v. ) Case Number: 2:20-cv-00456-JHE ) DANILO PURUGGANAN, ) ) Defendant. ) )

MEMORANDUM OPINION1 Plaintiff AFC Franchising, LLC (“AFC” or “Plaintiff”) commenced this action in the Circuit Court of Shelby County, Alabama asserting two declaratory judgment counts as to provisions of a Master Development Agreement and one count for attorneys’ fees and costs. (Doc. 1-1). On April 2, 2020, Defendant Danilo Purugganan (“Purugganan” or “Defendant”) removed this action to this Court. (Doc. 1). Purugganan then moved to dismiss this action pursuant to Federal Rule of Civil Procedure 12(b)(2) and 12(b)(3), for lack of personal jurisdiction and improper venue, or, alternatively, for transfer of venue. (Doc. 3). The motion to dismiss is fully briefed. (Docs. 7 & 12). Thereafter, Plaintiff AFC timely moved to remand this action to the state court. (Doc. 13). AFC argues this Court lacks subject matter jurisdiction because, although the parties are diverse, the amount-in-controversy is not met. (Id.). Alternatively, AFC argues the forum selection clause in the Master Development Agreement requires this action be pursued in

1 In accordance with the provisions of 28 U.S.C. § 636(c) and Federal Rule of Civil Procedure 73, the parties have voluntarily consented to have a United States Magistrate Judge conduct any and all proceedings, including trial and the entry of final judgment. (Doc. 14). state court in Shelby County. (Id.). The motion to remand is also fully briefed. (Doc. 21, 25, & 26). For the reasons stated below, AFC’s motion to remand (doc. 13) is DENIED, and Purugganan’s motion to dismiss (doc. 3) is GRANTED on the basis that this Court lacks personal jurisdiction over the defendant.

I. Background The following factual allegations are contained in the complaint: AFC is an Alabama limited liability company with its principal place of business in Shelby County, Alabama. (Doc. 1-1 at ¶ 2). Purugganan is a resident individual of the state of New York. (Id. at ¶ 2). On August 26, 2009, Purugganan executed a Master Developer Agreement (also referred to as the Master Development Agreement). (Id. at ¶ 4; see doc. 1-2). At the time the Master Development Agreement was executed, the franchisor was Doctors Express Franchising, LLC (“DEF”). (Doc. 1-1 at ¶ 5). In 2012, DRX Urgent Care, (“DRX”) acquired the assets of the “Doctors Express” system

from DEF. (Doc. 1-1 at ¶ 6). DRX took assignment of the “Doctors Express” Master Development Agreement from DEF, including that of Purugganan. (Id.). The parties succeeded to the terms of the Master Development Agreement (id.), including § 19.7 (“Consent to Jurisdiction”), which provides in pertinent part as follows: You and your owners agree that all actions arising under this Agreement or otherwise as a result of the relationship between you and us must be commenced in a state or federal court of competent jurisdiction within such state or judicial district in which we have our principal place of business at the time the action is commenced, and you (and each owner) irrevocably submit to the jurisdiction of those courts and waive any objection you (or the owner) might have to either the jurisdiction of or venue in those courts.

(Doc. 1-2 at 31, § 19.7). A dispute has arisen over the interpretation of the Master Development Agreement, and the parties have engaged in negotiations. (Doc. 1-1 at ¶ 9). Purugganan has threatened to file suit in venues other than Alabama, which AFC contends would breach the forum selection clause. (Id.). Additionally, the initial dispute over the interpretation of the Master Services Agreement involves AFC’s right to operate company-owned franchises in the territory defined in the Master

Services Agreement. (Id. at ¶ 10). Purugganan contends that ACF cannot develop such franchises. (Id.). AFC contends that § 1.4 (“Limited Exclusivity”) of the Master Development Agreement allows for it to develop such franchises because the Master Services Agreement did not grant exclusive development rights to Purugganan and reserved AFC’s right to develop such company- owned franchises. (Id.). Section 1.4 states as follows: Provided that you are in compliance with the terms of this Agreement, we will not grant another master developer the right to solicit Prospects for Doctors Express Urgent Care Businesses in the Territory. Except as expressly granted by this Section 1.4, we and our affiliates retain all rights with respect to identification of Prospects and Franchisees for Doctors Express Urgent Care Businesses and Doctors Express Urgent Care Centers, the System, operation of business under the Marks, the sale of franchises for similar or dissimilar services, the operation of businesses offering similar or dissimilar services and any other activities we deem appropriate whenever and wherever we desire and you acknowledge that we have not granted you any exclusive rights.

(Doc. 1-2 at 8, § 1.4)

In light of Purugganan’s threat to breach the forum selection clause, AFC initiated this action to seek a declaration construing the forum selection clause according to its terms and to enter judgment requiring the parties to litigate any issues in Alabama. (Doc. 1-1 at ¶ 11). AFC also seeks a declaration construing the limited exclusivity clause according to its terms and to enter judgment declaring AFC’s rights with respect to its development of company-owned franchises in the territory embraced by the Master Development Agreement. (Id. at ¶12). II. Analysis The motions present several distinct challenges to this Court’s jurisdiction; specifically, challenges to personal jurisdiction, venue, and subject-matter jurisdiction through both a challenge to the amount-in-controversy requirement being met and the forum selection clause. A. Subject Matter Jurisdiction: Amount-in-Controversy

AFC contends this action should be remanded to the Circuit Court of Shelby County because this Court lacks subject matter jurisdiction. (Doc. 13 at 1). Federal courts are courts of limited jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (1994); Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994). Accordingly, this Court is “empowered to hear only those cases within the judicial power of the United States as defined by Article III of the Constitution.” Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 409 (11th Cir. 1999) (citing Taylor v. Appleton, 30 F.3d 1365, 1367 (11th Cir. 1994)). To establish diversity jurisdiction pursuant to 28 U.S.C. § 1332, Purugganan must demonstrate (1) every plaintiff is diverse from every defendant, Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998), and

(2) the amount in controversy exceeds $75,000.00. See e.g., Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 752 (11th Cir. 2010).

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Bluebook (online)
AFC Franchising LLC v. Purugganan, Counsel Stack Legal Research, https://law.counselstack.com/opinion/afc-franchising-llc-v-purugganan-alnd-2020.