Anne Janai and NEBO & FINCH, Inc. v. Sanford Rose Associates International, Inc.

Court of Appeals of Texas·Decided February 13, 2020·No. 05-18-01079-CV·Published

Opinion

AFFIRMED and Opinion Filed February 13, 2020

In The

Court of Appeals

Fifth District of Texas at Dallas No. 05-18-01079-CV

ANNE JANAI AND NEBO & FINCH, INC., Appellant V.

SANFORD ROSE ASSOCIATES INTERNATIONAL, INC., Appellee

On Appeal from the 219th Judicial District Court Collin County, Texas

Trial Court Cause No. 219-05695-2016

MEMORANDUM OPINION

Before Justices Osborne, Partida-Kipness, and Pedersen, III Opinion by Justice Partida-Kipness

Anne Janai and Nebo & Finch, Inc. (Nebo) (collectively, Janai-Nebo) appeal the trial court’s grant of summary judgment to Sanford Rose Associates International, Inc. (Sanford) on Sanford’s claims against Janai-Nebo for breach of a franchise agreement and associated personal guaranty, Janai’s counterclaims, and Sanford’s claim for actual damages and attorney’s fees. In nine issues, Janai-Nebo contend that the trial court erred in granting Sanford’s motions for summary judgment, sustaining Sanford’s objections to Janai-Nebo’s summary judgment evidence, and awarding damages and attorney’s fees. We affirm the trial court’s judgment in all respects.

BACKGROUND

This case arises from a franchise agreement between Sanford, a Texas-based executive search firm and franchisor, and Nebo, the franchisee. On August 22, 2016, Janai signed the

agreement (Franchise Agreement) to establish a Sanford franchise in New Hampshire. One day later, the parties executed First and Second Amendments to the Franchise Agreement to modify certain terms and assign Janai’s interests to Nebo, a New Hampshire corporation Janai established to operate the franchise. Janai is Nebo’s sole member. Janai also executed a personal guaranty of Nebo’s performance under the Franchise Agreement.

As modified by the First Amendment, the Franchise Agreement required Nebo to pay Sanford a franchise fee of $88,000, with 10% due at signing. The remainder was due on the later of: (1) the first day of Phase I New Franchisee training or (2) the date the franchisee’s self-funding process was complete. “Self-funding” is a process in which the franchisee employs a third-party service provider to transfer personal retirement funds into a new investment vehicle from which the franchise fee is paid. Should the self-funding process fail, the franchisee must pay $31,200 within five days of notification of the failure, with the remaining $48,000, plus a $7,500 “payment plan fee,” due twenty-four months after the Franchise Agreement effective date. Janai elected the self-funding option.

The Franchise Agreement also required Nebo to pay a periodic royalty to Sanford.

Relevant to Sanford’s claims, the Franchise Agreement required a minimum royalty of $2,500 per quarter starting ninety days after the franchisee began operations.

Janai paid Sanford $8,800 (10% of the franchise fee) upon signing the Franchise Agreement and attended Sanford’s Phase I training in Dallas on or about September 26, 2016. Janai did not pay the remainder of the franchise fee at training, claiming the self-funding process was not complete.

On November 7, 2016, Janai sent an email to Nicholas Turner, Sanford’s Co-CEO, in which she stated that she wished to terminate her franchise agreement. Turner responded that he regretted Janai did not wish to move forward with the franchise, but that Janai still owed the

remainder of the franchise fee and minimum royalties. Turner asked Janai to “make an offer to exit and buyout of the legal agreement . . . .” Janai replied and confirmed her desire to terminate the relationship. Janai stated, “It is not in my best interest to move forward with [Sanford] at present” and indicated that she would draft a termination letter. Janai confirmed in a later email to Turner that the “termination letter will not include a proposal that I pay a fee.”

On November 9, 2016, Janai also informed her self-funding service provider that she had “put this on hold for a while” and asked the service provider to discontinue sending documents for her signature. Janai did not notify Sanford that she had discontinued the self-funding process.

Sanford sent a notice of default to Janai on November 11, 2016, giving Janai-Nebo ten days to cure the default by paying the remainder of the franchise fee. Janai-Nebo did not pay the remainder of the franchise fee, and Sanford sent a letter to Janai on November 28, 2016, terminating the Franchise Agreement.

PROCEDURAL HISTORY

Sanford filed suit on December 28, 2016, seeking recovery of the unpaid franchise fee and royalties. Sanford brought claims for breach of the Franchise Agreement against both Janai and Nebo, breach of the personal guaranty against Janai, and quantum meruit and promissory estoppel against both Janai and Nebo. Sanford later amended its petition to add a claim of anticipatory breach of contract based on Janai’s November 7, 2016 emails.

Janai-Nebo answered Sanford’s original and amended petitions and filed counterclaims for violations of the Texas Deceptive Trade Practices Act (DTPA), common law fraud, fraud in the inducement, fraud in the factum, breach of the Franchise Agreement, negligent misrepresentation, per se DTPA violation through non-compliance with the Texas Business Opportunities Act (TBOA), and rescission.

The parties filed a series of motions for partial summary judgment. At issue in this appeal are five motions for partial summary judgment filed by Sanford:

 No-Evidence Summary Judgment on Janai’s Counterclaims,  Traditional Summary Judgment on Janai’s Counterclaims,  Summary Judgment as to Liability on Sanford’s Anticipatory Breach Claims,  Summary Judgment on Sanford’s Breach of Contract Claim, and  Summary Judgment on Damages.

The trial court granted these motions for summary judgment and issued a final judgment on August 21, 2018, awarding $125,308.46 in actual damages, $216,797.81 in attorney’s fees, $895 in paralegal fees, $4,951.65 in litigation expenses, and $46,600.00 in appellate attorney’s fees should Janai-Nebo unsuccessfully appeal. Janai-Nebo timely filed their notice of appeal on September 18, 2018.

STANDARD OF REVIEW

We review a trial court’s summary judgment ruling de novo. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010). We consider the evidence presented in the light most favorable to the nonmovant, crediting evidence favorable to the nonmovant if reasonable jurors could, and disregarding evidence contrary to the nonmovant unless reasonable jurors could not. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We indulge every reasonable inference and resolve any doubts in the nonmovant’s favor. 20801, Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008).

A party without the burden of proof who conclusively negates at least one essential element of a cause of action is entitled to summary judgment on that claim. Frost Nat’l Bank v. Fernandez, 315 S.W.3d 494, 508 (Tex. 2010); see TEX. R. CIV. P. 166a(b), (c). Once the movant produces sufficient evidence to establish the right to summary judgment, the burden shifts to the claimant

to come forward with competent controverting evidence that raises a fact issue. Van v. Pena, 990 S.W.2d 751, 753 (Tex. 1999). A plaintiff is entitled to summary judgment on a cause of action if it conclusively proves all essential elements of the claim. See TEX. R. CIV. P. 166a(a), (c); MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986).

Free access — add to your briefcase to read the full text and ask questions with AI

Anne Janai and NEBO & FINCH, Inc. v. Sanford Rose Associates International, Inc., (Tex. Ct. App. 2020).

Anne Janai and NEBO & FINCH, Inc. v. Sanford Rose Associates International, Inc. (Anne Janai and NEBO & FINCH, Inc. v. Sanford Rose Associates International, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Ford Motor Co. v. Ridgway
135 S.W.3d 598 (Texas Supreme Court, 2004)
Frost National Bank v. L & F Distributors, Ltd.
165 S.W.3d 310 (Texas Supreme Court, 2005)
Hamilton v. Wilson
249 S.W.3d 425 (Texas Supreme Court, 2008)
20801, INC. v. Parker
249 S.W.3d 392 (Texas Supreme Court, 2008)
Kerlin v. Arias
274 S.W.3d 666 (Texas Supreme Court, 2008)
Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding
289 S.W.3d 844 (Texas Supreme Court, 2009)
Timpte Industries, Inc. v. Gish
286 S.W.3d 306 (Texas Supreme Court, 2009)
Frost National Bank v. Fernandez
315 S.W.3d 494 (Texas Supreme Court, 2010)
Travelers Insurance Co. v. Joachim
315 S.W.3d 860 (Texas Supreme Court, 2010)
In Re 24R, Inc.
324 S.W.3d 564 (Texas Supreme Court, 2010)
Brown v. Brown
145 S.W.3d 745 (Court of Appeals of Texas, 2004)
Huey v. Huey
200 S.W.3d 851 (Court of Appeals of Texas, 2006)
Earle v. Ratliff
998 S.W.2d 882 (Texas Supreme Court, 1999)
Brownlee v. Brownlee
665 S.W.2d 111 (Texas Supreme Court, 1984)
Jenkins v. Jenkins
991 S.W.2d 440 (Court of Appeals of Texas, 1999)
Robertson v. Southwestern Bell Yellow Pages, Inc.
190 S.W.3d 899 (Court of Appeals of Texas, 2006)
Cooper v. Circle Ten Council Boy Scouts of America
254 S.W.3d 689 (Court of Appeals of Texas, 2008)
Thompson v. Curtis
127 S.W.3d 446 (Court of Appeals of Texas, 2004)
Fredonia State Bank v. General American Life Insurance Co.
881 S.W.2d 279 (Texas Supreme Court, 1994)