Frusher v. Baskin-Robbins Ice Cream Co. (In re Frusher)

146 B.R. 594, 1992 Bankr. LEXIS 1720
CourtDistrict Court, D. Rhode Island
DecidedOctober 27, 1992
DocketBankruptcy No. 91-10120; Adv. No. 91-1108
StatusPublished

This text of 146 B.R. 594 (Frusher v. Baskin-Robbins Ice Cream Co. (In re Frusher)) is published on Counsel Stack Legal Research, covering District Court, D. Rhode Island primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Frusher v. Baskin-Robbins Ice Cream Co. (In re Frusher), 146 B.R. 594, 1992 Bankr. LEXIS 1720 (D.R.I. 1992).

Opinion

ARTHUR N. VOTOLATO, Jr., Bankruptcy Judge.

Heard over the course of six trial days in June, 1992, on the Plaintiff/Debtor’s five count Complaint alleging: (1) negligent misrepresentation; (2) breach of contract; (3) intentional misrepresentation; (4) fraud and deceit; and (5) violation of the Rhode Island Deceptive Trade Practices Act. R.I.Gen.Laws § 6-13.1-1 et seq. Baskin-Robbins has counterclaimed for franchise fee arrearages in the amount of $20,476.

At the close of the Plaintiff-Frusher’s case, Defendants Baskin-Robbins Ice Cream Co. and Baskin-Robbins, Inc. moved for dismissal of all counts except the breach of contract claim. At the same time, Frusher waived Count V, Deceptive Trade Practices. We denied dismissal as to Count I, negligent misrepresentation, and dismissed in part Counts III and IV.1 We also rejected Frusher’s offer of proof of medical testimony regarding alleged emotional harm, in the absence of proof of physical manifestation of such injury. See Reilly v. United States, 547 A.2d 894, 896 (R.I.1988), answering certified question, 665 F.Supp. 976, 987 (D.R.I.1987), aff'd in part, remanded in part, 863 F.2d 149 (1st Cir.1988).

The parties have stipulated to the following, which we adopt herein as our findings of fact and conclusions of law.

From 1980 through September 1990, Cecelia Frusher operated a Baskin-Robbins store in Cranston, Rhode Island. About [596]*596midway through that period, in March, 1985, Frusher attended a regional franchisee meeting in Danbury, Connecticut. Present on behalf of the franchisor, among others, were Ronald Marley, then President of Baskin-Robbins, and James Earnhardt, a then-vice president of the company. At the meeting, Mr. Marley introduced a new concept of franchise agreement which was designed in part to allow franchisees to sell a wider range of non-Baskin-Robbins products such as Coca-Cola, as well as certain new products, especially frozen yogurt which was coming into popular demand and being sold by the competition.

As an incentive for franchisees to switch over promptly from their existing contracts which limited them to the sale of traditional ice cream products, Baskin-Robbins offered for a limited time to waive fees and royalties for the first six months of any new agreement.2

After attending the March 1985 meeting, Frusher, apparently persuaded by Baskin-Robbins’ promotion of its new franchise agreement, decided to go with the new offering. After a short period of operation under an interim arrangement, Frusher entered into one of Baskin-Robbins’ “new” franchise agreements, which was to run through January 31, 1991. The parties embarked in business under the new agreement, which contained certain renewal options that were conditioned expressly upon Frusher meeting certain criteria, including remodeling and refurbishing, and “better” (than her previous) compliance with Bas-kin-Robbins operational standards.

Several years thereafter, and in response to repeated requests by Frusher for frozen yogurt dispensing equipment and product, particularly by a letter dated November 6, 1989, Baskin-Robbins formally turned down her request. As reasons, Baskin-Robbins informed Frusher that she had failed to implement required changes, including remodeling, refurbishing, and operational procedures as previously discussed, as well as her refusal to purchase and install certain dispensing/display equipment.

In September, 1990, after a prolonged period of continuing losses, and ongoing but unresolved disputes with the franchisor, Frusher closed the store, at that time owing Baskin-Robbins overdue rental and unpaid product charges. On January 17, 1991, Frusher filed for bankruptcy under Chapter 7. On March 20, 1991, Frusher converted her case to one under Chapter 11 wherein the underpinning is the successful financial outcome of the within adversary proceeding against her former franchisor.

DISCUSSION

1. Negligent Misrepresentation

The tort of negligent misrepresentation has been recognized by the Rhode Island Supreme Court only in passing, and even then has not been squarely addressed. See Ostalkiewicz v. Guardian Alarm, 520 A.2d 563, 569 (R.I.1987) (“assuming without deciding that a separate or distinct action might be brought for negligent misrepresentation....”); Banco Totta e Acores v. Fleet Nat’l Bank, 768 F.Supp. 943, 946-47 (D.R.I.1991). In a federal case controlled by Rhode Island law, the District Court has held that an action for negligent misrepresentation could be maintained against an accountant for negligent preparation of financial statements. Rusch Factors, Inc. v. Levin, 284 F.Supp. 85 (D.R.I.1968). In the course of this analysis, Judge Pettine cited § 552(1) of the Restatement (Second) of Torts.3 Rusch Factors, 284 F.Supp. at 91-92.

[597]*597Liability for this type of conduct arises only where false information, negligently obtained or communicated by the alleged tortfeasor, causes pecuniary loss to one who reasonably relied on that information. Looking at the evidence before us, we cannot find that false information was given by Baskin-Robbins’ agents or employees to Mrs. Frusher. Clearly there were representations made by then-president Marley, regarding anticipated sales increases for those signing up with the new franchise agreement, and the attendant expansion of saleable products. But given the nature of those representations (sales promotion), and the uncertain state of the industry at that point time, those representations have not been shown to be false when made, nor could the certainty of such projections have been reasonably relied upon by Frusher. Statements of opinion cannot form the basis for a misrepresentation claim, see Grassi v. Gomberg, 81 R.I. 302, 102 A.2d 523 (1954), and Frusher’s claim for negligent misrepresentation must, therefore, be denied.

2.Intentional Misrepresentation

Unlike as with negligent misrepresentation, the tort of intentional misrepresentation is well established in Rhode Island law, where the plaintiff must prove:

1. That defendant made a false representation;
2. That defendant intended thereby to deceive the plaintiff;
3. That defendant intended that plaintiff rely on the representation;
4. That plaintiff did in fact rely on the misrepresentation; and,
5. That plaintiff was injured as a result.

Banco Totta, 768 F.Supp. at 947 (citing Cliftex Clothing Co., Inc. v. DiSanto, 88 R.I. 338, 148 A.2d 273 (1959)).

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

Related

Donna Reilly, Etc. v. United States
863 F.2d 149 (First Circuit, 1988)
Regan v. Cherry Corp.
706 F. Supp. 145 (D. Rhode Island, 1989)
Reilly v. United States
665 F. Supp. 976 (D. Rhode Island, 1987)
Rusch Factors, Inc. v. Levin
284 F. Supp. 85 (D. Rhode Island, 1968)
Donna Reilly v. United States
547 A.2d 894 (Supreme Court of Rhode Island, 1988)
T & S Service Associates Inc. v. Crenson
505 F. Supp. 938 (D. Rhode Island, 1981)
Kelley v. Medeiros (In Re Kelley)
131 B.R. 532 (D. Rhode Island, 1991)
Cliftex Clothing Co. v. Di Santo
148 A.2d 273 (Supreme Court of Rhode Island, 1959)
Halpert v. Rosenthal
267 A.2d 730 (Supreme Court of Rhode Island, 1970)
Morin v. Aetna Casualty & Surety Co.
478 A.2d 964 (Supreme Court of Rhode Island, 1984)
Banco Totta E Acores v. Fleet National Bank
768 F. Supp. 943 (D. Rhode Island, 1991)
LaFazia v. Howe
575 A.2d 182 (Supreme Court of Rhode Island, 1990)
Grassi v. Gomberg
102 A.2d 523 (Supreme Court of Rhode Island, 1954)

Cite This Page — Counsel Stack

Bluebook (online)
146 B.R. 594, 1992 Bankr. LEXIS 1720, Counsel Stack Legal Research, https://law.counselstack.com/opinion/frusher-v-baskin-robbins-ice-cream-co-in-re-frusher-rid-1992.