Huddle House, Inc. v. Paragon Foods, Inc.

587 S.E.2d 845, 263 Ga. App. 382, 2003 Fulton County D. Rep. 3022, 2003 Ga. App. LEXIS 1227
CourtCourt of Appeals of Georgia
DecidedSeptember 25, 2003
DocketA03A0962
StatusPublished
Cited by5 cases

This text of 587 S.E.2d 845 (Huddle House, Inc. v. Paragon Foods, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Huddle House, Inc. v. Paragon Foods, Inc., 587 S.E.2d 845, 263 Ga. App. 382, 2003 Fulton County D. Rep. 3022, 2003 Ga. App. LEXIS 1227 (Ga. Ct. App. 2003).

Opinion

Johnson, Presiding Judge.

Paragon Foods, Inc. and its principal owners, Robert L. New-some III and W. Clay Chester, sued Huddle House, Inc. in the Superior Court of Dougherty County for trespass, breach of contract, and tortious interference with contractual relations. Following our grant of its application for interlocutory appeal, Huddle House appeals the trial court’s order denying in part its motion to transfer venue to DeKalb County. We reverse for the reasons set forth below.

Paragon entered into a franchise agreement with Huddle House for the operation of seven Huddle House restaurants in Georgia, including two restaurants in Dougherty County. In their August 3, 2001 complaint, Paragon, Newsome, and Chester (collectively, “Paragon”) alleged that on August 1 and August 2, 2001, Huddle House sent its representatives to Paragon’s franchise locations for the purpose of taking physical control of the premises. Paragon claimed that Huddle House padlocked doors, changed locks on doors, informed the employees that they no longer worked for Paragon, turned off grills, deep fryers, and other equipment, and required customers to leave the stores. On August 3, 2001, the trial court issued a temporary restraining order preventing Huddle House from taking control of the franchise locations.

[383]*383Huddle House filed a motion to dismiss for improper venue, or in the alternative, to transfer the case to the Superior Court of DeKalb County. Huddle House also raised improper venue as an affirmative defense in its answer. After a hearing, the trial court ruled that the claims for breach of contract asserted in Counts 2 and 3 of the complaint must be made in DeKalb County Superior Court or the United States District Court for the Northern District of Georgia, as provided by the forum selection provisions of the franchise agreement. The trial court also ruled that the tort claims asserted in Count 1 of the complaint were not controlled by the forum selection provision of the franchise agreement and those claims were properly before the court.

A preliminary hearing over defenses of lack of jurisdiction over the person or subject matter and improper venue whether made in a pleading or by motion may be heard and determined before trial . . . and when the trial judge conducts a hearing on a motion to dismiss or transfer for improper venue, his findings, as a trier of fact, are tested by the any evidence rule.1

1. Huddle House claims that the trial court erred in denying in part its motion to transfer venue because all of Paragon’s claims were covered by the forum selection provisions in the franchise agreement. We disagree.

The franchise agreement between Paragon and Huddle House provides that venue for all “lawsuits relating to or arising out of this Agreement and related agreements” shall be in the state or superior court where Huddle House has its principal place of business, which is DeKalb County, or in the United States District Court for the Northern District of Georgia. In Brinson v. Martin,2 which is relied upon by Huddle House, we held that in cases “where no Georgia law specifically governs venue, and where more than one state and its citizens are involved, [forum selection] clauses are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be ‘unreasonable’ under the circumstances.”3 In this case, however, both Paragon and Huddle House are Georgia corporations4 and all acts giving rise to the action were alleged to have occurred in Georgia. Fidelity &c. Co. of Maryland v. Gainesville Iron Works5 [384]*384applies to this action because this is an intrastate conflict and there is an applicable Georgia statute, OCGA § 14-2-510, which governs venue.6 In such a case, Fidelity holds that a contractual provision limiting venue is unenforceable against public policy.7

In arguing its motion to transfer venue before the trial court, Huddle House contended that the forum selection provisions of the franchise agreement required all claims to be transferred to DeKalb County. Paragon agreed with Huddle House as to the effect of the forum selection clause, but only insofar as the breach of contract claims. The trial court ordered that Paragon could not proceed with the breach of contract claims in Dougherty County, but could proceed with the tort claims in Dougherty County because they were unrelated to the breach of contract claims. Although we do not agree with the trial court’s reasoning, we conclude that because the venue selection provisions were unenforceable the trial court did not err to the extent that it found those provisions did not apply to the tort claims.

2. Huddle House claims the trial court erred in finding that venue in Dougherty County was proper under OCGA § 14-2-510 (b) (3). We agree.

OCGA § 14-2-510 (b) (3) provides that a corporation is subject to venue, “[i]n actions for damages because of torts, wrong, or injury done, in the county where the cause of action originated, if the corporation has an office and transacts business in that county.” For this purpose, an office is synonymous with a place of business.8 The general counsel of Huddle House averred that Huddle House maintains no offices in the state other than its DeKalb County office.

The trial court ruled that although the franchise agreement purports to create an independent contract relationship and not an agency relationship,

the [franchise agreement] give[s] Huddle House the right to not only limit the use of the trademarks, it gives defendant rights regarding site selection for the actual restaurants, it obligates Paragon to pay a weekly fee based on business volume, it gives Huddle House approval rights for all site plans, building specifications and leases, it gives Huddle House control over the purchase of all fixtures, furnishings and supplies, reserving the right to require Paragon to purchase food and supplies from Huddle House, it gives [385]*385Huddle House oversight on repair issues, and gives Huddle House management rights in the event of incapacity. ... In sum, the relationship between the parties gives defendant a great deal of input and control over the actual location and operation of the restaurants in question. The restaurants are marketed to the public as Huddle House restaurants and listed as same in the local telephone directory.

Although the trial court accurately describes the obligations imposed by the franchise agreement on Paragon, we disagree with the trial court’s conclusion that these obligations show that Huddle House had established an office in Dougherty County. Because the record does not show that Huddle House employed anyone in Dough-erty County, the trial court apparently found that Huddle House was conducting business in Dougherty County through Paragon as its agent. Where the question of agency rests upon a written document and inferences deduced therefrom, as in the instant case, the issue presented is a question of law.9

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Cite This Page — Counsel Stack

Bluebook (online)
587 S.E.2d 845, 263 Ga. App. 382, 2003 Fulton County D. Rep. 3022, 2003 Ga. App. LEXIS 1227, Counsel Stack Legal Research, https://law.counselstack.com/opinion/huddle-house-inc-v-paragon-foods-inc-gactapp-2003.