Mister Sparky Franchising, LLC v. On Time Electricians, Inc.

Filing 24

ORDER: Defendant On Time Electricians, Inc.'s Motion to Dismiss or in the Alternative Motion to Stay 12 is DENIED. Defendant has until and including May 5, 2015, to file its Answer to the Complaint. Signed by Judge Virginia M. Hernandez Covington on 4/21/2015. (KNC)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
MISTER SPARKY FRANCHISING, LLC,
Plaintiff,
v.

Case No.

8:15-cv-164-T-33TGW

ON TIME ELECTRICIANS, INC.,
Defendant.
______________________________/
ORDER
This cause is before the Court pursuant to Defendant On
Time

Electricians,

Inc.’s

Motion

to

Dismiss

or,

in

the

Alternative, Motion to Stay (Doc. # 12), filed on March 24,
2015. The Motion is ripe for this Court’s review. (See Doc.
# 23). For the reasons that follow, the Court denies the
Motion.
I.

Background
According to the Complaint, Plaintiff Mister Sparky

Franchising, LLC “is in the business of franchising and
licensing its distinctive business format and system and
related standards, specifications, and procedures . . . using
the name and service mark ‘MISTER SPARKY®’ and associated
marks and logos . . . for the operation of residential
electrical services businesses.” (Doc. # 1 at ¶ 9). Plaintiff

and Defendant entered into a Franchise Agreement on February
8, 2013. (Id. at ¶ 1). Article 2.1(E) of the Franchise
Agreement

provides

in

relevant

part:

“[t]his

Agreement

represents a valid, binding obligation of [Defendant] and
each of [Defendant’s] owners, jointly or severally. . . .”
(Id. at ¶ 10). Exhibit C to the Franchise Agreement identifies
George Donaldson as Defendant’s sole owner. (Id.).
Plaintiff submits that “[u]pon information and belief,
Donaldson . . . accepted employment as Division President
with American Residential Services, LLC (‘ARS’) in December
2014. ARS provides residential electrical services in the
United States.” (Id. at ¶ 11).
amended,

of

the

Franchise

According to Article 14.1, as

Agreement:

“Commencing

on

the

Effective Date and for the balance of the Term, Franchisee
(and its Owners if Franchisee is a business entity) shall not
. . . be involved with a Competitive Business.” (Id. at ¶
12).
Plaintiff argues that Donaldson’s employment with ARS
constitutes involvement with a Competitive Business in direct
violation of the non-competition provisions in Article 14.1,
as amended, of the Franchise Agreement. (Id. at ¶ 13).
Therefore,

Plaintiff

contends

that

such

violation

“constitutes grounds for immediate termination under Article

2

16.1(E)

of

the

Franchise

Agreement

because

it

adversely

affects the goodwill associated with Mister Sparky.” (Id. at
¶ 14).
Plaintiff initiated this action on January 26, 2015,
“seek[ing] a declaration, pursuant to 28 U.S.C. §§ 2201 and
2202, that [Plaintiff] may properly terminate the Franchise
Agreement based on Donaldson’s employment with ARS because it
violates

the

non-competition

provision

of

the

Franchise

Agreement, and because Donaldson has failed to cure such
violation.” (See Doc. # 1). Defendant filed the present Motion
on March 24, 2015. (Doc. # 12). The Motion is ripe for this
Court’s review.
II.

Analysis
A. Motion to Dismiss
According to Defendant, the relevant Franchise Agreement

is:
[A]lready the subject of litigation between several
Donaldson Franchises and Plaintiff’s parent company
in the U.S. District Court, Central District of
California . . . pending since January 31, 2014
[(“California Lawsuit”)]. In addition, a related
entity
to
the
Plaintiff,
Benjamin
Franklin
Franchising LLC, previously brought essentially the
same claim based on a nearly identical franchise
agreement, which seeks to terminate the agreement
based on the same alleged employment by Mr.
Donaldson with ARS. This related action [was] filed

3

with this Court . . . on [May] 21, 2014 [(“First
Florida Lawsuit”)].
(Id. at 2).
It is Defendant’s position that the “first-filed rule”
requires that this Court defer to the action pending in the
Central District of California as “the California Lawsuit (in
which Defendant and Plaintiff’s sole member are parties) (a)
was pending in the Central District of California prior to
the initiation of the present matter and has been advancing
to an expected trial date; and (b) the issues in both matters
involve Donaldson’s obligation under a non-compete agreement
and the impact of the LOI on the Franchise Agreement.” (Id.
at 9).
The “first to file” rule states that “where two actions
involving overlapping issues and parties are pending in two
federal courts, there is a strong presumption across the
federal circuits that favors the forum of the first-filed
suit under the first-filed rule.” Manuel v. Convergys Corp.,
430 F.3d 1132, 1135 (11th Cir. 2005). The case pending before
the Central District of California, styled Venvest Ballard,
Inc. et al. v. Clockwork, Inc. et al., Case No. 14-cv-195,
was filed on January 31, 2014, whereas the case before this
Court was filed on January 26, 2015. (See Doc. ## 1, 12).

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“[T]he ‘first to file rule’ not only determines which
court may decide the merits of substantially similar issues,
but also establishes which court may decide whether the second
suit filed must be dismissed, stayed or transferred and
consolidated.” Cadle Co. v. Whataburger of Alice, Inc., 174
F.3d 599, 606 (5th Cir. 1999);(quoting Sutter Corp. v. P & P
Indus., Inc., 125 F.3d 914, 920 (5th Cir. 1997)). Courts
applying this rule generally agree “that the court in which
an action is first filed is the appropriate court to determine
whether

subsequently

filed

cases

involving

substantially

similar issues should proceed.” (Id.) (quotations omitted);
e.g., Perkins v. Am. Nat. Ins. Co., 446 F. Supp. 2d 1350,
1353 (M.D. Ga. 2006) (“[U]nder the ‘first-filed rule,’ the
court where the subsequently filed action has been filed
should defer to the court where the first action was filed to
allow

that

court

to

decide

whether

it

should

exercise

jurisdiction over both cases in a consolidated action.”).
This Court notes that the application of the first-filed
rule is not mandatory, but rather committed soundly to the
district court’s discretion. Allstate Ins. Co. v. Clohessy,
9 F.3d 1314, 1316 (M.D. Fla. 1998). Furthermore, “district
courts have the discretion to dispense with the first-to-file

5

rule where equity so demands.” Barnett v. Ala., 171 F. Supp.
2d 1292, 1296 (S.D. Ala. 2001).
Here,

Defendant

suggests

that

the

present

action

“involves similar facts and issues that are at the heart of
the dispute in the California lawsuit;” specifically the
application
Furthermore,

of

the

“10/25/13

Defendant

LOI.”

argues

that

(Doc.

#

12

“[j]udicial

at

11).

economy

strongly favors dismissing this action” in favor of the
California lawsuit, as the “issues at the heart of this case
are

already

pending

before

the

Central

District

of

California, and the litigation is further advanced in that
matter.” (Id. at 12). Thus, according to Defendant, “allowing
this case to proceed would waste judicial resources and
potentially produce conflicting rulings. . . .” (Id.).
The

Court

recognizes

that

Defendant

made

similar

arguments in the First Florida Lawsuit, which the Court found
to be unavailing. Benjamin Franklin Franchising, LLC v. On
Time

Plumbers,

Inc.,

No.

8:14-CV-1209-T-30AEP,

2014

WL

4683271, at *3-5 (M.D. Fla. Sept. 19, 2014). Upon review,
this Court arrives at the same conclusion – dismissal of this
action would be improper, and therefore, the Motion is denied
to the extent that it requests dismissal on grounds of
improper venue pursuant to the “first-filed rule.”

6

Although there are commonalities between this action and
the California Lawsuit, the cases involve different parties
and

issues,

as

well

as

separate

and

distinct

franchise

agreements. At the time the instant action was filed, the
complaint in the California Lawsuit did not overlap with the
subject matter contained in the instant case. See Benjamin
Franklin Franchising, LLC, 2014 WL 4683271, at *3-5.
The Court acknowledges Defendant’s concern for potential
inconsistent judgments if this case is not dismissed in favor
of the California Lawsuit. However, as stated by Defendant,
“the California Law[suit] is much further advanced and is
actually set for trial on May 19, 2015.” (Doc. # 12 at 13).
Thus, as this action is on the Court’s June, 2016, trial term,
this Court will have ample time to review all relevant
documents and rulings by the California court; specifically,
the application of the “10/25/13 LOI” to aid in the Court’s
determination in this action. Therefore, the Court finds that
dismissing this action under the “first-filed rule” would be
improper.

Accordingly,

Defendant’s

Motion

to

Dismiss

is

denied.
B. Motion to Stay
In the alternative, Defendant requests that this Court
stay this action “until the resolution of the California

7

Lawsuit

and

the

First

Florida

Lawsuit

.

.

.

to

avoid

duplication in litigation and prevent inconsistencies in
judgments.” (Id. at 12). Defendant argues that:
If it is determined in the California Lawsuit that
Clockwork entities breached the LOI and that breach
occurred prior to Donaldson’s association with ARS,
the impact would be significant on the issues
before this Court on whether Donaldson’s actions
could sustain a judgment in favor of the
Plaintiff[] in this action. It is clear that the
issues are substantially related and resolution of
the California Lawsuit would substantially resolve
[the] issues in the present case.
Additionally, the risk of inconsistent judgments is
great as the allegations in the Complaint in the
present matter are identical to the allegations in
Count II of the Amended Complaint in the First
Florida Lawsuit, which is set for trial in October
2015. The allegations are that the same person
(George Donaldson) made an alleged single act
(employment with ARS) and that single act violated
nearly identical non-compete clauses in nearly
identical
Franchise
Agreements
(the
only
substantive differences are in the names of the
entity) entered into on the same day and include
amendments that reference each other. Additionally,
the parent entity of each party in both Florida
lawsuits is identical. Without a stay, it is a
feasible outcome that this same act is found to be
a violation of the agreement in one case, but not
be a violation of the agreement in the other case.
Such outcome would confuse the issues between the
parties and only lead to additional litigation or
appeals.
(Id. at 12-13).

8

Upon review of the allegations contained in this action,
the First Florida Lawsuit, and the California Lawsuit, this
Court

finds

that

circumstances.

The

a

stay

First

is

inappropriate

Florida

lawsuit

under
brought

by

–

the

Plaintiff Benjamin Franklin Franchising LLC - relates to a
separate franchise agreement with Defendant On Time Plumbers,
Inc. There are commonalities between the two cases: there is
a relationship between the two plaintiffs (i.e. they have a
common owner – George Donaldson) and, as argued by Defendant,
the two relevant franchise agreements contain “similar terms
and references the other agreement by way of an amendment. .
. .” (Id. at 5). However, the cases involve different parties
and

issues,

Therefore,

as

well

although

as

the

distinct
actions

franchise

are

agreements.

similar,

they

are

separate and distinct cases that have to be decided under the
terms

of

recognizes

the

relevant

Defendant’s

franchise
concern

agreement.

for

the

This

Court

possibility

of

inconsistent judgments if a stay is not granted. However,
this Court is more than capable of reviewing all pertinent
documents

and

determination

precedent
on

the

rulings

issues

in

relevant

9

order
to

this

to

make

a

particular

action. Thus, for the reasons set forth above, Defendant’s
Motion is denied.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
(1)

Defendant

On

Time

Electricians,

Inc.’s

Motion

to

Dismiss or in the Alternative Motion to Stay (Doc. #
12) is DENIED.
(2)

Defendant has until and including May 5, 2015, to file
its Answer to the Complaint.
DONE and ORDERED in Chambers, in Tampa, Florida, this

21st day of April, 2015.

Copies:

All Counsel of Record

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