Doctor's Associates, Inc. And Franchise World Headquarters, Inc. v. John M. Weible

92 F.3d 108, 1996 U.S. App. LEXIS 20497
CourtCourt of Appeals for the Second Circuit
DecidedAugust 12, 1996
Docket18-313
StatusPublished
Cited by66 cases

This text of 92 F.3d 108 (Doctor's Associates, Inc. And Franchise World Headquarters, Inc. v. John M. Weible) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Doctor's Associates, Inc. And Franchise World Headquarters, Inc. v. John M. Weible, 92 F.3d 108, 1996 U.S. App. LEXIS 20497 (2d Cir. 1996).

Opinion

McLAUGHLIN, Circuit Judge:

Plaintiffs appeal from an order of the United States District Court for the District of Connecticut (Gerard L. Goettel, Judge), denying their motion for judgment notwithstanding the verdict after a jury found them liable for abuse of process under Connecticut law. Defendant cross-appeals from the district court’s order reducing the jury’s compensatory damages award to him on his counterclaim.

BACKGROUND

Plaintiff Doctor’s Associates, Inc. (“DAI”) is the national franchisor of Subway sandwich shops. It is a Florida corporation with its principal place of business in Florida. The other plaintiff is Franchise World Headquarters, Inc. (“FWHI”), a corporation that provides administrative services to DAI and is located in Connecticut.

In 1988, Defendant John Weible bought a Subway franchise in California. As part of his purchase agreement, Weible entered intp a standard franchise contract with DAI; and he also subleased his store premises from Subway Sandwich Shop, Inc. (“SSS”), one of DAI’s affiliated leasing companies.

The franchise agreement contained one of DAI’s standard arbitration clauses, calling for arbitration of “[a]ny controversy or claim arising out of or relating to this contract.” The arbitration would take place “in Bridgeport, Connecticut, or whichever city in which [DAI] is then headquartered.” Weible’s sublease for the shop contained a “cross-default provision,” which allowed the sublessor, SSS, to bring an eviction action against Weible if he breached the franchise agreement with DAI.

A dispute arose between DAI and Weible over his right to buy a second Subway franchise for a reduced franchise fee. Weible stopped paying royalties to DAI, allegedly under a clause in the franchise agreement permitting the franchisee to withhold payment in the event of default by DAI.

SSS, as lessor of the California shop, filed an eviction action against Weible in California state court. Weible appeared pro se, but then failed to file an answer; and a default judgment was entered against him in California.

Weible, still pro se, then sued DAI for more than $26 million in California state court, alleging numerous common law violations in connection with his franchise agreement. Pursuant to the arbitration clause in the franchise agreement, the California court stayed the action to allow the parties to arbitrate.

Weible then filed a demand for arbitration with the American Arbitration Association *110 against DAI, seeking $800,000 in compensatory damages and $30 million in punitive damages.

In January 1992, while Weible’s California lawsuit and arbitration demand were pending, officials at DAI and FWHI detected that someone had gained unauthorized access to the voice mailboxes of Frederick Deluca, the President of DAI, and Leonard Axelrod, Vice-President and Chief In-House Counsel for DAI and FWHI. Their suspicions had been aroused when they learned that a ribald message, left by a co-worker on Axelrod’s voice mailbox, had been transferred to the voice mailbox of another employee, and subsequently “shared” with other co-workers. Shaken by the security breach, the companies conducted an investigation, which led them to point the finger at Weible.

Axelrod allegedly threatened Weible that, unless he abandoned both his arbitration and his California lawsuit against DAI, DAI and FWHI would pursue claims against him for the voice mail “break-in.” Weible refused to drop his claims.

DAI sought permission from the arbitrators to add a counterclaim against Weible in the pending arbitration, based on the alleged intrusions into its voice mail system. The arbitrators denied DATs request, finding that the counterclaim was not covered by the arbitration clause in the franchise agreement.

In the meantime, DAI and FWHI filed a damage action against Weible, in the United States District Court for the District of Connecticut, alleging violations of the Oral Communications Act, 18 U.S.C. § 2510 et seq., and the Stored Wire and Electronic Communications and Transactional Records Access Act, 18 U.S.C. § 2701 et seq. Weible counterclaimed for common law abuse of process under Connecticut law, claiming that Plaintiffs filed the federal suit solely to strong-arm him into settling or dropping his arbitration demand and his California lawsuit. .

DAI and FWHI moved to dismiss the counterclaim for failure to state a claim, pursuant to Federal Rule of Civil Procedure 12(b)(6). They argued that because Weible’s counterclaim stated that the abuse of process occurred upon the mere filing by Plaintiffs of their complaint, the counterclaim was really a claim for malicious prosecution (or, as it is quaintly called in Connecticut, vexatious litigation) and, as such, that it lacked an essential element of that tort — namely termination of the lawsuit in Weible’s favor.

The motion was referred to a magistrate judge (Joan Glazer Margolis, Magistrate Judge), who recommended that the motion to dismiss be denied. The district court (T.F. Gilroy Daly, Judge) endorsed that recommendation., The case was then transferred to another district judge (Gerard L. Goettel, Judge), and proceeded to trial.

In the midst of these federal proceedings, the arbitrators awarded Weible $219,900 on all his arbitration claims. DAI paid the award in full.

The Trial

Plaintiffs’ Voice Mail Claims

DAI and FWHI introduced telephone records demonstrating that, during the seven months between July 1, 1991 and January 31, 1992, about 900 phone calls (aggregating about 124 hours) were made from Weible’s home telephone to the toll-free number that, by use of confidential access codes, provides outside access to Plaintiffs’ voice mail system. Weible had no business relationship with either DAI or FWHI during that seven-month period.

There was further evidence that, after Plaintiffs learned of the alleged security breach of their voice mail system, they changed the security codes for Axelrod’s and DeLuca’s voice mailboxes. In the twenty-four hours after the change, 105 calls were made from Weible’s home telephone to the toll-free voice mail number. According to computer records, the majority of those calls corresponded to possible unsuccessful attempts to “hack” into the DeLuca and Axel-rod mailboxes during the same period.

Defendant’s Abuse of Process Counterclaim

At trial, Weible presented the following evidence on his counterclaim: (1) Axelrod conceded that DAI and FWHI pursued charges against Weible, but not against another employee who also had gained unau *111

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Cite This Page — Counsel Stack

Bluebook (online)
92 F.3d 108, 1996 U.S. App. LEXIS 20497, Counsel Stack Legal Research, https://law.counselstack.com/opinion/doctors-associates-inc-and-franchise-world-headquarters-inc-v-john-m-ca2-1996.