Prince Heaton Enterprises, Inc. v. Buffalo's Franchise Concepts, Inc.

117 F. Supp. 2d 1357, 2000 U.S. Dist. LEXIS 8258, 2000 WL 1277598
CourtDistrict Court, N.D. Georgia
DecidedMarch 17, 2000
Docket4:99-cv-00258
StatusPublished
Cited by23 cases

This text of 117 F. Supp. 2d 1357 (Prince Heaton Enterprises, Inc. v. Buffalo's Franchise Concepts, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Prince Heaton Enterprises, Inc. v. Buffalo's Franchise Concepts, Inc., 117 F. Supp. 2d 1357, 2000 U.S. Dist. LEXIS 8258, 2000 WL 1277598 (N.D. Ga. 2000).

Opinion

ORDER

THRASH, District Judge.

This is an antitrust and civil RICO action with pendant state claims. The case is before the Court for consideration of Defendants’ Motion to Dismiss the First Amended Complaint [Doc. 19]. For the reasons set forth below, the motion will be granted in part and denied in part.

I. BACKGROUND

This is a dispute between a group of Buffalo’s Café franchisees and their franchisor. 1 Buffalo’s Cafes are medium-priced, casual dining restaurants specializing in Buffalo-style chicken wings. Plaintiffs are several incorporated Buffalo’s Café franchisees, their parent corporation, and a principal. Plaintiff James R. Prince is a citizen of Georgia and the sole or majority shareholder of each of the corporate Plaintiffs. Plaintiff Prince Heaton Enterprises, Inc. (hereafter “Prince Hea-ton”), the parent corporation, is a Florida corporation with its principal place of business in Fulton County, Georgia. The remaining corporate plaintiffs, all Georgia corporations, each operate or have operated a Buffalo’s restaurant in various locations. Defendants are Buffalo’s Franchise Concepts, Inc. (hereafter “Buffalo’s, Inc.”) and two principals of that corporation. Buffalo’s, Inc. is a franchisor that sells the rights to operate Buffalo’s franchises and to use the Buffalo’s Café restaurant system. Buffalo’s, Inc. is a Georgia corporation with its principal place of business in Cobb County, Georgia. The individual Defendants are Messrs. David Hyde and Ralph Perrella. Mr. Hyde is Vice-President for International Development, Secretary and Director for Buffalo’s, Inc. Mr. Perrella is Vice-President of Design, Architecture and Construction, Treasurer and Chairman of the Board of Directors for Buffalo’s, Inc.

All Buffalo’s franchises are operated pursuant to a franchise agreement prepared by Defendants. In addition to selling individual franchises, Defendants sell area development rights. These rights are memorialized in area development agreements which give the purchaser the exclusive right to operate franchises and enter into franchise agreements for defined areas. At issue here are two area development agreements Mr. Prince and Buffalo’s, Inc. entered into in 1991. In January, 1991, Mr. Prince obtained the exclusive right to operate Buffalo’s franchises in a portion of Fulton County, Georgia and all of Forsyth County, Georgia. In August, 1991, Mr. Prince and Buffalo’s, Inc. entered into another area development agreement for a portion of Cobb County, Georgia and all of Paulding, Douglas and Carroll Counties.

Each of the corporate Plaintiffs — except for the parent company, Prince Heaton *1360 and Prince Heaton Orlando — operates or operated a Buffalo’s restaurant. Between 1990 and 1997, the corporate Plaintiffs entered into eight or more franchise agreements with Buffalo’s, Inc. for the operation of 12 franchise locations. Each of the 12 were opened and operated in accordance with the agreements. Presently, four of those 12 locations are in operation. Each of these corporate Plaintiffs alleges it paid at least fair market value for a Buffalo’s, Inc. restaurant franchise. Alternatively, Plaintiffs allege that the sum they paid for all of their franchises equaled or exceeded the franchises’ total fair market value. Plaintiffs allege, among other things, that Buffalo’s, Inc. breached the franchise and development agreements entered into with Plaintiffs. Plaintiffs also allege fraud, negligent misrepresentation, conversion, breach of fiduciary duty, violations of federal and state RICO law, and antitrust violations

II. MOTION TO DISMISS STANDARD

A complaint should be dismissed under Rule 12(b)(6) only where it appears beyond doubt that no set of facts could support the plaintiffs claims for relief. Fed.R.Civ.P. 12(b)(6); see Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Linder v. Portocarrero, 963 F.2d 332 (11th Cir.1992). In ruling on a motion to dismiss, the court must accept the facts pleaded in the complaint as true and construes them in the light most favorable to the plaintiff. See Quality Foods de Centro America, S.A. v. Latin American Agribusiness Dev. Corp., S.A, 711 F.2d 989, 994-95 (11th Cir.1983). Notice pleading is all that is required for a valid complaint. See Lombard’s, Inc. v. Prince Mfg., Inc., 753 F.2d 974, 975 (11th Cir.1985), cert. denied, 474 U.S. 1082, 106 S.Ct. 851, 88 L.Ed.2d 892 (1986). Under notice pleading, plaintiff need only give the defendant fair notice of the plaintiffs claim and the grounds upon which it rests.. Id.

III. DISCUSSION

Plaintiffs allege 22 counts against Defendants. [Doe. 8]. Defendants have moved to dismiss ten of those counts: Counts II, III, IV, V, VI, VII, IX, X, XI, and XV. The Court will address first the allegations of fraud and negligent misrepresentation in Counts VII and XI, respectively. Next, the Court will address Counts V, VI, IX, and X concerning federal and state RICO violations. Third, the Court will address alleged antitrust violations in Counts II, III and IV. Finally, the Court will address the conversion and breach of fiduciary duty claims in Count XV.

A FRAUD AND NEGLIGENT MISREPRESENTATION

Plaintiffs allege in Count VII that Defendants committed fraud during the franchise negotiations. Plaintiffs allege negligent misrepresentation in Count XI. In Georgia, the common law tort of fraud requires five elements: (1) a false representation by the defendant; (2) with scienter, or knowledge of the falsity; (3) with intent to deceive the plaintiff or to induce the plaintiff into acting or refraining from acting; (4) on which the plaintiff justifiably relied; (5) with the proximate cause of damages to the plaintiff. Williams v. Dresser Industries, 120 F.3d 1163 (11th Cir.1997); Sears Mortgage Corp. v. Leeds Bldg. Products, Inc., 219 Ga.App. 349, 464 S.E.2d 907 (1995), rev’d on other grounds by 267 Ga. 300, 477 S.E.2d 565 (1996). Each of these elements must be stated with particularity. Fed. R.Civ.P. 9(b); Brooks v. Blue Cross and Blue Shield of Florida, Inc., 116 F.3d 1364, 1370 (11th Cir.1997). Negligent misrepresentation is a similar cause of action substituting negligence for the intent to deceive element. See Robert & Co. Assoc, v.

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Bluebook (online)
117 F. Supp. 2d 1357, 2000 U.S. Dist. LEXIS 8258, 2000 WL 1277598, Counsel Stack Legal Research, https://law.counselstack.com/opinion/prince-heaton-enterprises-inc-v-buffalos-franchise-concepts-inc-gand-2000.