SAT Agiyar LLC v. 7 Eleven Inc

• Court: Court of Appeals for the Third Circuit
• Decided: March 4, 2026
• Docket: 24-2609
• Status: Unpublished

Opinion

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT ______________ Nos. 24-2609 and 25-1051 ______________ SAT AGIYAR, LLC,

v.

7 ELEVEN, INC.

NARESH R. PATEL

SAT Agiyar, LLC, Appellant in Nos. 24-2609 and 25-1051 Naresh R. Patel Appellant in No. 25-1051 ______________ On Appeal from the United States District Court for the District of New Jersey (D.C. Civil No. 3:19-cv-19994) District Judge: Honorable Michael A. Shipp ______________ Submitted Under Third Circuit L.A.R. 34.1(a) February 3, 2026

Before: HARDIMAN, MONTGOMERY-REEVES, and ROTH, Circuit Judges.

(Opinion filed: March 4, 2026) ______________ OPINION ______________

 This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent. MONTGOMERY-REEVES, Circuit Judge.

SAT Agiyar, LLC (“SAT”) operated a 7-Eleven franchise in Princeton, New Jersey

under a franchise agreement (the “Franchise Agreement”) with 7-Eleven, Inc. (“7-

Eleven”). After 7-Eleven rescinded SAT’s franchise, SAT alleged that 7-Eleven’s conduct

violated the New Jersey Franchise Practices Act (the “NJFPA”) and the implied covenant

of good faith and fair dealing. 7-Eleven counterclaimed that SAT breached the Franchise

Agreement and impleaded SAT’s guarantor, Naresh R. Patel, alleging breach of guaranty.

The District Court granted summary judgment for 7-Eleven on all claims. We will affirm

the District Court’s judgment.

I. BACKGROUND

In September 2015, SAT and 7-Eleven signed the Franchise Agreement, which

permitted SAT to operate a 7-Eleven store in Princeton under certain conditions. One

condition required SAT to maintain its 7-Eleven store “as a 24-Hour Operation, unless

prohibited by law or [7-Eleven] agree[d] in writing to different operating hours.” Appendix

(hereinafter “App. __”) 61. The parties agreed that if SAT failed to operate the store

twenty-four hours per day, 7-Eleven would assess a penalty fee that escalated in proportion

to the number of hours per week the store was closed. Another condition required SAT to

maintain a minimum net worth of $15,000. Failure to maintain such a net worth was a

2 “Material Breach and constitute[d] good cause” for 7-Eleven to terminate the Franchise

Agreement, which it could do on three business days’ notice. App. 68.

When SAT and 7-Eleven signed the Franchise Agreement, Princeton prohibited

businesses from operating between 2 a.m. and 5 a.m.1 So SAT and 7-Eleven amended the

Franchise Agreement to waive the twenty-four-hour-operation requirement and the penalty

fee for (i) the first two years of the Princeton store’s operation, or (ii) until Princeton

allowed SAT to operate the store twenty-four hours per day—whichever occurred first.

By January 2018, Princeton had not amended its ordinance, and the two-year period

had run, so 7-Eleven began penalizing SAT for closing between 2 a.m. and 5 a.m. In March

2018, SAT asked 7-Eleven to waive the penalty fee permanently. 7-Eleven declined to do

so but offered to waive the twenty-four-hour requirement and penalty fee for an additional

two years. SAT declined the offer. Thus, the status quo continued; SAT closed its

Princeton store from 2 a.m. to 5 a.m., and 7-Eleven assessed penalty fees under the

Franchise Agreement.2

On November 9, 2020, 7-Eleven told SAT that its net worth was below $15,000 and

gave SAT until the 18th to cure its alleged breach. When SAT did not, 7-Eleven terminated

1 At one point in its Opening Brief, SAT claims that Princeton’s prohibition operated from midnight to 5 a.m. Later, SAT claims that the bar existed from 2 a.m. to 5 a.m. The relevant ordinance, on which both parties rely, confirms that the hours of prohibited operation were 2 a.m. to 5 a.m. 2 7-Eleven claims that it suspended the twenty-four-hour-operation requirement and penalty fee for SAT and all other franchisees from March through December 2020, due to the COVID-19 pandemic. SAT disputes that 7-Eleven waived the fee for the Princeton store, but offers no support for its assertion.

3 the Franchise Agreement and assumed control of the Princeton store. After 7-Eleven took

over the store, it calculated that SAT owed it $94,756.68, which neither SAT nor Patel, its

guarantor, have paid.

SAT sued, and 7-Eleven counterclaimed. After discovery, the following claims

remained: (1) violation of the NJFPA (by SAT against 7-Eleven), (2) breach of the implied

covenant of good faith and fair dealing (by SAT against 7-Eleven), (3) breach of contract

(by 7-Eleven against SAT), and (4) breach of guaranty (by 7-Eleven against Patel, whom

7-Eleven impleaded). The District Court granted summary judgment for 7-Eleven on all

claims. SAT and Patel appealed.

II. DISCUSSION3

We note at the outset that the parties’ four claims are not totally independent. As

explained below, 7-Eleven claims it is not liable for violating the NJFPA because SAT

breached the Franchise Agreement—the same conduct underlying 7-Eleven’s breach-of-

3 The District Court had jurisdiction under 28 U.S.C. §§ 1332 and 1367. We have jurisdiction under 28 U.S.C. § 1291. We review de novo a District Court’s disposition of a motion for summary judgment, “meaning we review anew the District Court’s summary judgment decisions, applying the same standard it must apply.” Ellis v. Westinghouse Elec. Co., 11 F.4th 221, 229 (3d Cir. 2021). “To prevail on a motion for summary judgment, the moving party must demonstrate ‘that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.’” Rivas v. City of Passaic, 365 F.3d 181, 193 (3d Cir. 2004) (quoting Fed. R. Civ. P. 56(c)). “The mere existence of a scintilla of evidence in support of the plaintiff’s position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). Any “inferences to be drawn from the underlying facts must be viewed in the light most favorable to the party opposing the motion.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (internal quotation marks and alterations omitted).

4 contract counterclaim. And 7-Eleven alleges that the damages from SAT’s breach are the

same funds Patel has not paid as guarantor. So SAT’s NJFPA claim is inextricably

intertwined with 7-Eleven’s counterclaims for breach of contract and breach of guaranty.

Thus, we address below only the NJFPA claim—and conclude that SAT breached,

warranting summary judgment for 7-Eleven on SAT’s NJFPA claim and 7-Eleven’s

counterclaims. We then address SAT’s implied-covenant claim, which, unlike the three

other claims, stands on its own. There, too, we agree with the District Court that 7-Eleven

is entitled to summary judgment.

A. The NJFPA

The NJFPA prevents franchisors from “impos[ing] unreasonable standards of

performance upon a franchisee,” N.J. Stat. Ann. § 56:10-7(e), but franchisors have a

defense when the franchisee “has failed to substantially comply with” the franchise

agreement, id. § 56:10-9. SAT does not dispute that it breached the Franchise Agreement’s

minimum-net-worth condition, or that that breach constituted a “fail[ure] to substantially

comply with” the Franchise Agreement. Id. The District Court held that SAT’s

noncompliance gave 7-Eleven a statutory defense and eliminated any reasonable dispute

about its liability.

In SAT’s view, the District Court ignored that an unreasonable standard of

performance caused its breach in the first place. SAT claims that by penalizing it for failing

to operate twenty-four hours per day when it was prohibited by local law from so operating,

7-Eleven left SAT with a “Hobson’s choice – either operate the Princeton [s]tore at a loss

or not at all.” Opening Br. 18. In SAT’s view, such a false choice embodies the

5 “arbitrariness, bad intent, or economic ruin” that are hallmarks of unreasonable standards

of performance under the NJFPA. Id. at 22.

We agree with the District Court. Accepting, arguendo, that “arbitrariness, bad

intent, or economic ruin” is the standard for an unreasonable-standards claim,4 we cannot

see how 7-Eleven’s behavior qualifies. To the contrary, 7-Eleven offered not to charge

SAT the penalty fee during the period when SAT’s net worth declined and ultimately fell

below the minimum. SAT simply chose not to accept the extension because it wanted a

better deal in the form of a permanent waiver. We credit SAT’s representations that 7-

Eleven knew when it built SAT’s store that Princeton would not allow operations from

2 a.m. to 5 a.m. (a fact SAT also knew), and that 7-Eleven permanently waived the penalty

fee for some other stores prohibited from twenty-four-hour operation by local law. Even

so, 7-Eleven’s imposition of the fee after SAT turned down 7-Eleven’s waiver offer was

not unreasonable—it was the product of the parties’ original agreement, which did not

promise a permanent waiver.5 Thus, there is no reason to excuse SAT’s failure to

4 SAT cites no precedential authority from our Court or any New Jersey state court setting forth its proffered standard, and we have found none. 5 To the extent that SAT claims 7-Eleven’s purported failure to waive the penalty fee during the COVID-19 pandemic supports its unreasonable-standards claim, we disagree. SAT has not supported that assertion, in the District Court or before us, by “citing to particular parts of materials in the record,” Fed. R. Civ. P. 56(c)(1)(A), so its bald claim of differential treatment does not create a genuine dispute of fact, see id. 56(e)(2). Nor would such a dispute be material, for the reasons discussed.

6 substantially comply with the Franchise Agreement’s minimum-net-worth condition, and

SAT’s NJFPA claim fails.6

B. Implied Covenant of Good Faith and Fair Dealing

SAT also claims that 7-Eleven’s refusal to permanently waive the penalty fee

violated the implied covenant of good faith and fair dealing that, in New Jersey, inheres in

all contracts. See Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Assocs.,

864 A.2d 387, 395 (N.J. 2005) (“Every party to a contract, including one with an option

provision, is bound by a duty of good faith and fair dealing in both the performance and

enforcement of the contract.”). When 7-Eleven moved for summary judgment, SAT failed

to respond to 7-Eleven’s implied-covenant arguments. Granting summary judgment, the

District Court addressed, and rejected, SAT’s arguments about “bad faith” in the context

of the implied covenant.

Now, SAT argues “[t]he District Court ignored evidence . . . of 7-Eleven’s bad faith

course of conduct.” Opening Br. 31. But by failing to brief its implied-covenant claim

before the District Court, SAT forfeited arguments about that claim on appeal. See, e.g.,

Fletcher-Harlee Corp. v. Pote Concrete Contractors, Inc., 482 F.3d 247, 253 (3d Cir.

2007) (“[A]bsent exceptional circumstances, issues not raised before the district court are

6 Because SAT breached the minimum-net-worth condition, the District Court properly granted 7-Eleven’s breach-of-contract and breach-of-guaranty counterclaims, which stem from SAT’s failure to maintain the required minimum net worth and Patel’s failure to pay SAT’s resulting liabilities to 7-Eleven, respectively. 7 [forfeited] on appeal.”). Even if we considered SAT’s arguments, however, we would see

no disputes of material fact precluding summary judgment for 7-Eleven.

As “[t]he party claiming a breach of the covenant,” SAT “must provide evidence

sufficient to support a conclusion that [7-Eleven] has engaged in some conduct that denied

the benefit of the bargain originally intended by the parties.” Brunswick Hills Racquet

Club, 864 A.2d at 396 (internal quotation marks omitted). To make that showing, evidence

of “[b]ad motive or intention is essential.” Wilson v. Amerada Hess Corp., 773 A.2d 1121,

1130 (N.J. 2001). Here, there is no genuine dispute that 7-Eleven behaved without the “ill

motive[],” and did not make the “intentional[ly] misleading assertions,” that might offend

the implied covenant. Brunswick Hills Racquet Club, 864 A.2d at 396. When the parties

signed the Franchise Agreement, they knew that SAT’s Princeton store would have to close

from 2 a.m. to 5 a.m. They knew that 7-Eleven’s waiver of the penalty fee would last only

two years. There is no evidence that 7-Eleven led SAT to believe that it would extend the

waiver permanently or otherwise misled SAT about the terms of an extension. When SAT

rejected the terms of 7-Eleven’s proposed fee-waiver extension and 7-Eleven began

penalizing SAT for closing, 7-Eleven did what the Franchise Agreement expressly allowed.

Thus, there is no genuine dispute that 7-Eleven’s behavior did not violate the implied

covenant of good faith and fair dealing.

SAT’s counterarguments are unpersuasive. First, it claims that 7-Eleven failed to

disclose that it agreed to the operating-hours restriction “during the land development

approval process.” Opening Br. 31. But the restriction was not a backroom agreement

between 7-Eleven and Princeton; it was a municipal law that Princeton enacted the year

8 before SAT and 7-Eleven signed the Franchise Agreement, and which the parties knew

about when they initially agreed to waive the penalty fee. SAT also argues that 7-Eleven

imposed a “bad faith standard . . . by forcing” it to ask Princeton to “overturn” the

operating-hours restriction before extending the penalty fee waiver. Id. That is not what

the record shows; instead, 7-Eleven asked SAT to explain what it had “done to strengthen

[its] relationship in the community or with local government,” App. 611, and after

receiving SAT’s response 7-Eleven offered to extend the waiver for two years. Finally,

even if 7-Eleven stalled when SAT requested an extension, or granted perpetual fee waivers

“to similar franchisees in similar situations,” as SAT contends, Opening Br. 31, there is no

evidence that 7-Eleven misled SAT or “withheld vital information” to “exploit[] the terms

of the” Franchise Agreement. Brunswick Hills Racquet Club, 864 A.2d at 397. We thus

agree with the District Court that 7-Eleven’s decision not to permanently waive the twenty-

four-hour-operation requirement or the penalty fee did not violate New Jersey’s implied

III. CONCLUSION

For the foregoing reasons, we will affirm the District Court’s judgment.