Reed v. Doctor's Associates, Inc.

824 N.E.2d 1198, 355 Ill. App. 3d 865, 291 Ill. Dec. 948
CourtAppellate Court of Illinois
DecidedMarch 3, 2005
Docket5-03-0390
StatusPublished
Cited by13 cases

This text of 824 N.E.2d 1198 (Reed v. Doctor's Associates, Inc.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Reed v. Doctor's Associates, Inc., 824 N.E.2d 1198, 355 Ill. App. 3d 865, 291 Ill. Dec. 948 (Ill. Ct. App. 2005).

Opinion

PRESIDING JUSTICE DONOVAN

delivered the opinion of the court:

The appellants, Ruth Reed, Dan Keating, Dennis DeSpain, Terry DeSpain, and Charles Mansfield Smith III, along with more than 50 other named plaintiffs-franchisees, brought an action on behalf of themselves and as representatives of a proposed class of Subway sandwich shop franchisees, against the defendants, Doctor’s Associates, Inc., Frederick DeLuca, and Peter H. Buck, alleging that they had breached the Subway franchise agreements and engaged in malicious prosecution and abuse of process and that the arbitration clause in the franchise agreements was invalid. The Madison County circuit court dismissed with prejudice the claims of malicious prosecution and abuse of process and denied the motions to vacate the order staying the declaratory-judgment and breach-of-contract claims in favor of arbitration. On appeal, the appellants contend that the circuit court (1) erred in dismissing the counts for malicious prosecution and abuse of process because the pleadings, affidavits, and documents on file do not affirmatively negate those claims and (2) abused its discretion in refusing to vacate the stay order.

I. Introduction and Procedural History

A. Introduction

Doctor’s Associates, Inc. (DAI), is the national franchisor of Subway sandwich shops. It is a Florida corporation that maintains an office in Connecticut. Frederick DeLuca and Peter H. Buck are the co-owners of DAI. Ruth Reed, Dennis DeSpain, Terry DeSpain, and Charles Mansfield Smith III are residents of Florida. Dan Keating is a resident of Connecticut. Each appellant is a present or former Subway franchisee. Each entered into a written franchise agreement with DAI. The franchise agreements contain an arbitration clause that states in pertinent part as follows: “Any controversy or claim arising out of or relating to this contract or the breach thereof shall be settled by Arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association at a hearing to be held in Bridgeport Connecticut ***.”

On May 28, 1998, more than 50 named franchisees, including the appellants, filed a three-count complaint in the Madison County circuit court against DAI, DeLuca, and Buck, styled Wolf v. Doctor’s Associates, Inc., No. 98 — LM—652. The complaint was filed on behalf of the named franchisees and “all other Subway franchisees, past or present, similarly situated.” In count I, the franchisees moved to certify the case as a class action and sought damages for breach of the franchise agreements. In count II, the franchisees alleged that the defendants had violated sections 5, 6, and 26 of the Franchise Disclosure Act of 1987 (815 ILCS 705/5, 6, 26 (West 1996)), but that claim was abandoned in a later version of the complaint. In count III, the franchisees asked the court to enter a judgment declaring the arbitration clause in the franchise agreements to be void and unenforceable.

We pause to note that in Madison County circuit court, cause No. 98 — LM—652 (Wolf) was the third case alleging a breach of the Subway franchise agreements and seeking class certification. Hargett v. Doctor’s Associates, Inc., No. 96—L—410, and Hollingsworth v. Hart, No. 96—L—525, preceded it. Attorney David Duree represented the franchisees in all three actions. A discernable pattern of litigation developed in these cases. Typically, DAI made an arbitration demand shortly after the plaintiffs-franchisees filed their action in Madison County circuit court. When the demand was ignored or rejected, DAI brought an action in federal court in Connecticut to compel the plaintiffs-franchisees to arbitrate the contractual issues in Connecticut and to enjoin the state court proceedings. A summary of the Connecticut proceedings will be interwoven with the description of the Madison County proceedings in order to paint a more complete picture of the breadth of this litigation. Our summary of the Connecticut litigation is based primarily on the statements of facts and the findings contained in written decisions of the United States District Court for the District of Connecticut (Connecticut district court) and the United States Court of Appeals for the Second Circuit (Second Circuit).

B. The Circumstances of the First Challenged Injunction

In July 1998, the Connecticut district court issued injunctions in three consolidated cases, including Doctor’s Associates, Inc. v. Hollingsworth, 949 F. Supp. 77 (D. Conn. 1996). DAI had filed a petition in the Connecticut district court seeking to compel arbitration and to enjoin state court litigation against 31 of 34 Subway franchisees who had filed an as-yet-uncertified class action in the circuit court of Madison County, Illinois, in No. 96—L—525 (Hollingsworth). Hollingsworth, 949 F. Supp. 77. The three franchisees who were excluded were Florida residents, and their inclusion would have destroyed federal diversity jurisdiction. The defendants-franchisees moved to dismiss the petition on the grounds that DAI was not an aggrieved party entitled to compel arbitration because it was not a named defendant in cause No. 96—L—525 (Hollingsworth).

Following a hearing, the Connecticut district court rejected that contention. The district court compelled the 31 defendants-franchisees to arbitrate and enjoined the prosecution of the state court action. Hollingsworth, 949 F. Supp. at 80, 86. The district court concluded that the defendants-franchisees had attempted to avoid arbitration by suing individual agents rather than the party to the arbitration clause in the Illinois case, that DAI was an aggrieved party entitled to petition to compel arbitration after the franchisees refused to arbitrate, and that the allegations in the state court action arose from and related to the franchise agreement and were proper subjects for arbitration. Hollingsworth, 949 F. Supp. at 83-84. The decision compelling arbitration and granting injunctive relief was summarily affirmed. Doctor’s Associates, Inc. v. Reinert & Duree, P.C., 191 F.3d 297, 300 (2d Cir. 1999).

On June 25, 1998, DAI filed a motion in the Connecticut district court asking it to hold attorney Duree in contempt and to order sanctions because he continued to represent enjoined franchisees in the state court actions (Nos. 98—LM—652 (Wolf) and 96—L—410 (Hargett)) in Madison County, Illinois, in violation of the aforementioned injunction. Reinert & Duree, P.C., 191 F.3d at 301. It is worth mentioning that 37 of the 40 named plaintiffs-franchisees in cause No. 96—L—410 (Hargett) were also defendants-franchisees who had been enjoined from prosecuting their claims in Doctor’s Associates, Inc. v. Hollingsworth. At some point prior to a hearing on DATs contempt petition, the Madison County circuit court granted attorney Duree’s request to voluntarily dismiss those 37 franchisees from cause No. 96—L—410 (Hargett). Reinert & Duree, P.C., 191 F.3d at 301.

On July 15, 1998, the Connecticut district court conducted a hearing on the contempt petition. Though it was unable to conclude that Duree had violated the injunctions by continuing to prosecute cause Nos.

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

Related

Henson v. Espejo
C.D. Illinois, 2025
Shelter Mutal Insurance Co. v. Flynn
2023 IL App (1st) 221151-U (Appellate Court of Illinois, 2023)
St. Paul Fire and Marine Insurance Co. v. City of Zion
2014 IL App (2d) 131212 (Appellate Court of Illinois, 2014)
St. Paul Fire and Marine Insurance Company v. The City of Zion
2014 IL App (2d) 131212 (Appellate Court of Illinois, 2014)
World Outreach Conference Center v. City of Chicago
949 F. Supp. 2d 836 (N.D. Illinois, 2013)
Independence Plus, Inc. v. Walter
2012 IL App (1st) 111877 (Appellate Court of Illinois, 2012)
World Outreach Conference Center v. City of Chicago
591 F.3d 531 (Seventh Circuit, 2009)
Lewis v. Weiss
631 F. Supp. 2d 1063 (N.D. Illinois, 2009)

Cite This Page — Counsel Stack

Bluebook (online)
824 N.E.2d 1198, 355 Ill. App. 3d 865, 291 Ill. Dec. 948, Counsel Stack Legal Research, https://law.counselstack.com/opinion/reed-v-doctors-associates-inc-illappct-2005.