Doyle International, Inc. v. SCM I Investments LLC et al

Filing 51

ORDER & REASONS granting 49 Motion for Summary Judgment. The plaintiff's claims are dismissed with prejudice. Signed by Judge Martin L.C. Feldman. (cml)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

DOYLE INTERNATIONAL, INC.

CIVIL ACTION

v.

NO. 13-5978

SCM I INVESTMENTS, LLC, ET AL.

SECTION "F"

ORDER AND REASONS
Local Rule 7.5 of the Eastern District of Louisiana requires
that memoranda in opposition to a motion be filed eight days prior
to the noticed submission date.

No memoranda in opposition to the

motion for summary judgment filed by the defendants, noticed for
submission on January 14, 2015, has been submitted.
Accordingly,

the

motion

is

deemed

to

be

unopposed,

and

further, it appearing to the Court that the motion has merit,1 IT

1

Plaintiff,
Doyle
International,
Inc.,
sued
the
defendants, Michael Kearney, Sarah Kearney, and SCM I Investments,
LLC, to recover unpaid franchise fees. The defendants submit that
they
are
entitled
to
summary
judgment
dismissing
Doyle
International's claims with prejudice on the ground that the
defendants' rescinded the franchise agreement for fraud and error;
alternatively, the defendants urge the Court to recognize the
defendants' dissolution of the franchise agreement for nonperformance or breach of contract. The plaintiff has failed to
submit any evidence or argument opposing the defendants'
submission.
Applying Louisiana law, the defendants submit that the
franchise agreement is a nullity because the agreement was properly
rescinded for fraud because (1) Doyle International suppressed the
truth about the adverse litigation involving Doyle and Doyle
Restaurant Group, (2) Doyle International intended to obtain an
unjust advantage from this suppression, namely, the ability to
1

IS ORDERED: that the defendants' motion for summary judgment is
hereby GRANTED as unopposed.

The plaintiff's claims are dismissed

with prejudice.

present its principal officer Doyle and its predecessor Doyle
Restaurant Group as free from the stigma of millions of dollars in
fraud judgments, and (3) the Kearneys and SCM never would have
consented to the franchise agreement had they known the truth about
Doyle and Doyle International, because their intention was to do
business with a viable and reputable franchisor. The defendants
invoke the FTC's Franchise Rule, which imposed a duty to disclose,
and submit that Doyle International was required to disclose, but
failed to disclose, at least nine lawsuits involving Doyle and
Doyle Restaurant Group.
The plaintiff has failed to submit any papers or evidence
opposing the defendants' motion for summary judgment. The Court
finds that there is no genuine dispute as to any material fact
regarding whether the franchise agreement is a nullity and properly
rescinded for fraud. See La. Civ. Code art. 2032, 2031, 1948; see
also La. Civ. Code art. 1953 and D & J Tire, Inc. v. Hercules Tire
& Rubber Co., 598 F.3d 200, 205 (5th Cir. 2010)(identifying the
necessary elements of a Louisiana fraud claim). Accordingly, the
Court finds that the defendants are entitled to judgment as a
matter of law that the franchise agreement was properly rescinded
for fraud.
First, as urged by the defendants, the Court takes
judicial notice of the nine lawsuits identified in the defendants'
summary judgment papers; several lawsuits (indeed, judgments)
involve allegations of fraud, others involve allegations of fraud
or otherwise concern the franchise relationship.
Second, the
defendants submit and the record supports a finding that the
suppression of Doyle's litigation history was intended to allow
Doyle International to lure unsuspecting prospective franchisees
into investing money. Third, the defendants submit and the record
supports a finding that the defendants would not have consented to
the franchise agreement had they known that Doyle had been cast in
judgment for fraud.
Because each of the elements of fraud are
satisfied on this record, the defendants are entitled to a
declaration that the franchise agreement and all accessory
agreements are null; rescission is an appropriate remedy.
Because the Court finds that the defendants have
established fraud by a preponderance of the evidence, the Court
does not reach the defendants' alternative argument that the
Kearneys properly rescinded the franchise agreement for error.
2

New Orleans, Louisiana, January 12, 2015

______________________________
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE

3