Domino's Pizza Franchising LLC v. VTM Pizza, Inc. et al

Filing 25

OPINION & ORDER granting 23 Motion for Contempt. Defts VTM Pizza, Inc. and Terrence M. Williams are in contempt. Defts are ordered to take any and all actions necessary to immediately comply with the Court's order of 12/31/15 judgment and or der. Deft Deft shall pay to pltf a civil penalty of $100 per day per outline and increase to $300.00 per outline until cured. Further penalties may issue. Pltf awarded reasonable attorney fees and costs incurred between 12/31/15 and the date of this order. Court will enter a separate order awarding the attorney fees and costs. Signed by District Judge Nancy G. Edmunds. (CBet)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

Domino's Pizza Franchising, LLC,
Case No. 15-13312
Plaintiff,
Honorable Nancy G. Edmunds
v.
VTM Pizza, Inc., and Terrence M. Williams,
Defendants.
/
OPINION AND ORDER OF CONTEMPT
This matter comes before the Court on Plaintiff Domino's Pizza Franchising, LLC's
motion to hold defendants in contempt for violating the Court's December 31, 2015
judgment and permanent injunction order. (Dkt. 23.) The Court held a hearing on this
matter on May 18, 2016 and granted Plaintiff's motion, finding Defendants VTM Pizza, Inc.,
and Terrence M. Williams in contempt for the reasons set forth herein.
A.

BACKGROUND
Plaintiff Domino's Pizza Franchising, LLC, brought this breach of contract action

against Defendants VTM Pizza, Inc., and Terrence M. Williams on September 18, 2015,
based on a franchise agreement entered into by the parties on or about December 16,
2009. (Compl. ¶ 8, dkt. 1.) The court clerk entered defaults as to each defendant on
October 28, 2015. (Dkt. nos. 11, 12.) Following a December 7, 2015 hearing on Plaintiff's
motion for default judgment (dkt. 18), the Court granted Plaintiff's motion and entered an
opinion and order granting Plaintiff's motion and a default judgment on December 31, 2015,
dismissing the case. (Dkt. 21, 22.) Plaintiff alleges that Defendants have not complied with

the Court's prior order and now Plaintiff brings a motion to hold Defendants in contempt.
(Dkt. 23.) This Court served notice of hearing on both Defendants on April 12, 2016. (Dkt.
Text Entry 4/12/16.)
The Court's December 31, 2015 judgment (dkt. 22), and opinion and order (dkt. 21),
each provided the following permanent injunctive relief to address breaches of the posttermination provisions of the franchise agreement:
[Enjoining Defendants from] a. Directly or indirectly, or through or on behalf
of or in conjunction with any other person, partnership or corporation, owning,
engaging in, being employed by, advising, assisting, investing in, franchising,
making loans to, or having any other interest, whether financial or otherwise,
in any carry-out or delivery pizza store business located at, or within 10 miles
of, Highway 27 (Alberta Street) and Church Avenue in Oneida, Tennessee
(the location of the former Domino's Pizza store), for a period of one (1) year
from entry of this judgment;
b. Using the telephone numbers used in connection with the operation of
Defendants' former Domino's Store, including the number 423-569-2000.
2. Defendants VTM Pizza, Inc. and Terrence M. Williams shall immediately
execute such documents and/or take such steps as may be necessary or
appropriate to assign the telephone number 423-569-2000 to Plaintiff Domino's
Pizza Franchising, LLC or its designee; and
3. Defendants VTM Pizza, Inc. and Terrence M. Williams shall immediately take
such steps as may be necessary or appropriate to delete the listings for their former
Domino's Store in the Yellow Pages and any other published or online directory, and
to terminate any other directory listing that indicates that the telephone number
423-569-2000 is affiliated in any respect with Defendants' current pizza business
Five Kids' Pizza.
Defendant Williams was personally delivered a copy of the judgment containing this
injunctive order on January 11, 2016, while he was at the premises of the former Domino's
Pizza Store, now Five Kids' Pizza, located at 18750 Alberta Street, Oneida, Tennessee
37841. (Hembree Decl. ¶¶ 5-7.) On February 4, 2016, the private investigator again visited
the Five Kids' Pizza premises and observed that Defendants continue to operate a carry2

out and delivery pizza business, and continue to display the telephone number of the prior
Domino's Pizza business (569-2000), both in violation of the injunctive order. (Hembree
Decl. ¶¶ 8-11) In his declaration, the investigator set forth in detail his observations which
lead him to conclude that a pizza take-out and delivery business continues to be run from
that location. (Pl.'s Mot. Contempt Ex. A, ¶¶ 8-11.)
Plaintiff now seeks a contempt order from the Court finding that Defendants are in
contempt for failing to comply with the express terms of the permanent injunction, and
further requests that the Court order each Defendant to pay a conditional fine of $100 per
day beginning on the date that the contempt order is entered until Defendants comply with
the permanent injunction, and if Defendants have not complied within 21 days, then the fine
be increased to $500 per day for each Defendant. (Pl.'s Mot. Contempt, dkt. 23.)
B.

Analysis
"A decision on a contempt petition is within the sound discretion of the trial court . .

. ." Electrical Workers Pension Trust Fun of Local Union #58 v. Gary's Electric Service, 340
F.3d 373, 378 (6th Cir. 2003) (citing Peppers v. Barry, 873 F.2d 967, 968 (6th Cir. 1989)).
"When a court seeks to enforce its order or supervise its judgment, one weapon in its
arsenal is contempt of court." Id. (citation omitted). "In order to hold a litigant in contempt,
the movant must produce clear and convincing evidence that shows that 'he violated a
definite and specific order of the court requiring him to perform or refrain from performing
a particular act or acts with knowledge of the court's order.'" Id. at 379 (citation omitted).
"Once the movant establishes his prima facie case, the burden shifts to the contemnor who
may defend by coming forward with evidence showing that he is presently unable to comply
with the court's order." Id. (citation omitted) (emphasis in original).
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Plaintiff shows, by the declaration, that Defendants fail to comply with the Court's prior
order by continuing to operate a carry-out or pizza delivery store at the prior Domino's
location and continuing to use the telephone number 569-2000 of the former Domino's
store. (Pl.'s Mot. Contempt Ex. A, dkt. 23-2.) Despite Defendant Terrence Williams having
been provided a copy on January 11, 2016, of this Court's December 31, 2015 judgment,
Defendants have not yet appeared in this case and produce no evidence in response to
Plaintiff's prima facie case. (Hembree Decl. ¶ 7.) There is no evidence that Defendants
have taken any steps to comply with the Court's December 31, 2015 judgment and order.
"With respect to civil contempt proceedings, '[j]udicial sanctions . . . may, in a proper
case, be employed for either or both of two purposes; to coerce the defendant into
compliance with the court's order, and to compensate the complainant for losses
sustained.'" Electrical Workers, 340 F.3d at 379 (citation omitted.) "The magnitude of the
sanctions imposed should be assessed by weighing the harm caused by noncompliance,
'and the probable effectiveness of any suggested sanction in bringing about the result
desired.'" Glover v. Johnson, 199 F.3d 310, 312 (6th Cir. 1999). Here, Plaintiff argues for
sanctions starting in the amount of $100 per day against each Defendant for purposes of
both compelling compliance with the Court's injunction and because Plaintiff "is suffering
harm as a result of Defendants' continuing violations of the Permanent Injunction." (Pl.'s
Mot. 4.) Plaintiff argues that, due to Defendants' continuing violation of the injunction,
Plaintiff is unable to prevent Defendants from trading on Domino's good will and is unable
to refranchise that market to a new franchisee. The docket evidences proof of service on
Defendants at multiple points in these proceedings, yet Defendants remain unwilling to
defend or otherwise participate and there is no evidence of their compliance or attempt to
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comply with this Court's December 31, 2015 judgment and order.
The Court finds that a daily sanction is necessary to force Defendants' compliance
with the order and address Plaintiff's harm. The amount sought by Plaintiff, $100 per day
per Defendant for the first 21 days, is an amount likely and necessary to capture
Defendants' attention and address Plaintiff's harm. The Court finds that after 21 days $300
per Defendant per day is an amount sufficient to compel compliance, in light of what would
already be substantial monetary sanctions should Defendants fail to comply within the first
21 days.
For the reasons set forth above, Plaintiff has shown both the necessary requirements
for Defendants to be found in contempt and that some sort of sanction is necessary to
compel Defendants' compliance with the judgment and order.
IT IS THEREFORE ORDERED THAT
Defendants VTM Pizza, Inc., and Terrence M. Williams are in CONTEMPT.
As a result, Defendants are ORDERED to take any and all actions necessary to
immediately comply with this Court's December 31, 2015 judgment and order.
IT IS FURTHERED ORDERED that EACH Defendant shall pay to Plaintiff Domino's
Pizza Franchising, LLC, a civil penalty of $100.00 per day beginning on the date of this
order, and continuing until they have complied with this order, or for twenty-one days,
whichever is first. If Defendants have not complied with the order after twenty-one days,
the civil penalty against each Defendant shall increase to $300.00 per day and continue
until cured.
IT IS FURTHER ORDERED that if Defendants still have not complied with this order
at the end of that period, the Court may order further penalties.
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IT IS FURTHER ORDERED that Plaintiff is awarded its reasonable attorneys' fees
and costs incurred between December 31, 2015 and the date of this order in prosecuting
its motion for an order for contempt. The Court will enter a separate order awarding the
attorneys' fees and costs.
SO ORDERED.

s/Nancy G. Edmunds
Nancy G. Edmunds
United States District Judge
Dated: May 19, 2016

I hereby certify that a copy of the foregoing document was served upon counsel of
record on May 19, 2016, by electronic and/or ordinary mail.

s/Carol J. Bethel
Case Manager

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