Barrett-O'Neill v. LALO, LLC et al
Filing
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OPINION AND ORDER granting 14 Motion for Judgment on the Pleadings. Signed by Magistrate Judge Norah McCann King on 8/8/2014. (pes1)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
LYNDA BARRETT-O’NEILL,
Plaintiff,
vs.
Civil Action 2:14-cv-194
Magistrate Judge King
LALO, LLC, et al.,
Defendants.
OPINION AND ORDER
Plaintiff Lynda Barrett-O’Neill asserts a claim under the Ohio
Consumer Sales Practices Act, O.R.C. § 1345.01 et seq., and claims for
breach of contract and fraudulent misrepresentation in connection with
the sale of her antiques and other personal belongings by defendant
Lalo, LLC d/b/a Caring Transitions of North Central Ohio (“Caring
Transitions”).
Plaintiff also seeks recovery from Caring Transitions’
franchisor, C.T. Franchising Systems, Inc. d/b/a Caring Transitions
(“CTFSI”), under theories of agency and vicarious liability.
This matter is before the Court, with the consent of the parties
pursuant to 28 U.S.C. § 636(c), for consideration of Defendant CT
Franchising Systems, Inc.’s Motion for Judgment on the Pleadings
(“CTFSI’s Motion”), Doc. No. 14.
Plaintiff opposes CTFSI’s Motion,
Plaintiff Lynda Barrett-O’Neil’s Memorandum Contra Defendant’s Motion
for Judgment on the Pleadings (“Plaintiff’s Response”), Doc. No. 16,
and CTFSI has filed a reply.
Doc. No. 17.
follow, CTFSI’s Motion is GRANTED.
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For the reasons that
I.
Background
The Complaint, Doc. No. 1, alleges that plaintiff entered into a
contract with Caring Transitions in January 2013, whereby Caring
Transitions agreed “to attempt to sell” plaintiff’s household goods on
commission.
Id. at ¶¶ 30, 34.
Caring Transitions picked up most of
plaintiff’s household goods from her home in Marin, Ohio, in February
and March 2013.
Id. at ¶¶ 43, 48.
Months later, it is alleged,
plaintiff “had still received no explanation regarding the status of
her Household Goods, nor did she receive her proceeds from the sale of
the items.”
Id. at ¶¶ 51-70.
Plaintiff then “called Defendant CTFSI
to express her concerns and discuss her complaints regarding Caring
Transitions.”
Id. at ¶ 71.
“In her initial call to CTFSI on or
around June 26, 2013, Ms. Barrett-O’Neill requested to speak with
someone from the corporate office directly.”
Id. at ¶ 72.
“CTFSI did
not contact Ms. Barrett-O’Neill directly in response to her June 26,
2013 call.”
Id. at ¶ 73.
“Instead, a CTFSI representative, Joel
Roadruck, contacted Milt and Julie Law of Caring Transitions to alarm
[sic] them of Ms. Barrett-O’Neill’s complaint and requested the Laws
inform him of their ‘side before [he had] to talk with her.’”
Id. at
¶ 74.
Caring Transactions sent plaintiff a “Client Statement to Date”
on June 27, 2013.
Id. at ¶ 75.
According to the statement, Caring
Transactions had sold $3,672 of plaintiff’s household goods and had
incurred $3,310 in expenses.
Id. at ¶¶ 76-79.
Enclosed with the
statement was a check for $276.80, “which was [plaintiff’s] purported
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account balance after giving her a ‘CT Goodwill Credit’ of $1,000.”
Id. at ¶ 80.
On July 12, 2013, Caring Transitions emailed plaintiff a “plan”
to sell plaintiff’s remaining household goods.
Id. at ¶ 82.
On July
13, 2013, plaintiff “informed Caring Transitions that she preferred
nothing more be done regarding the sale . . . and that she would make
arrangements to pick up her remaining items.”
Id. at ¶ 83.
On July
20, 2013, Caring Transitions informed plaintiff that only four items
remained for her to pick up and that all of her other items “were
sold, donated or otherwise liquidated per the terms of [their]
contract.”
Id. at ¶¶ 84-85 (quotations omitted; alteration in
original).
When plaintiff returned to Caring Transitions’ showroom in
August 2013, “she discovered that there were actually dozens of her
Household Goods left within Caring Transitions’ possession, including
many items up for sale around their warehouse/showroom with price
tags.”
Id. at ¶ 87.
Plaintiff also viewed her household goods for
sale on numerous websites as late as January 2014.
Id. at ¶¶ 90-95.
The Complaint alleges that
[CTFSI] is a national franchise company founded in 2006 and
is based out of Cincinnati, Ohio.
CTFSI fields more than
140 franchise offices nationwide.
According to its
website, “Caring Transitions is the leader and total
solution for Senior Moving, Downsizing and Estate Sales,
including full and partial liquidations.
You’ll have the
comfort of knowing that our associates are compassionate,
experienced
professionals
who
are
bonded
and
fully
insured.” Further, its “promise” is “[t]o help people in a
compassionate
and
caring
manner
during
life’s
many
transitions.
Caring Transitions’ goal is to provide a
total and easy solution for our clients in their time of
need.”
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Id. at ¶ 14.
“CTFSI is part of the International Franchise
Association, the Small Business Association’s Franchise Registry,
VetFran and Minority Fran.”
Id. at ¶ 15.
“Defendant CTFSI also holds
a national meeting ‘during more than two days of informational
sessions, networking opportunities, and roundtable meetings,’ wherein
it presents its franchises with various awards.”
Id. at ¶ 16.
“In
additional [sic] to national meetings, Defendant CTFSI provides its
franchises with five full days of initial training at its Corporate
Office and pre-approved advertising and public relations materials,
including professionally-designed advertising artwork, press releases,
enewsletters, and a wide range of promotional and collateral
materials.”
Id. at ¶ 17.
The Complaint further alleges that “Defendant Caring Transitions
was the agent for Defendant CTFSI at all times relevant to this
Complaint.”
Id. at ¶ 18.
“At all times relevant to this Complaint,
Defendant CTFSI was aware, or should have been aware, of its agent’s
actions.”
Id. at ¶ 19.
See also id. at ¶¶ 3, 128.
“Defendant CTFSI
is liable for all actions undertaken by its franchisee, Defendant
Caring Transitions, at all times relevant to this Complaint via at
least agency law and through vicarious liability.”
172.
II.
Id. at ¶¶ 20, 156,
See also id. at ¶¶ 3, 129.
Standard
Defendant CTFSI moves for judgment on the pleadings pursuant to
Fed. R. Civ. P. 12(c).
A motion for judgment on the pleadings is to
be evaluated by reference to the same standard as is a motion to
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dismiss under Rule 12(b)(6).
Cir. 2011).
Roth v. Guzman, 650 F.3d 603, 605 (6th
In determining whether dismissal on this basis is
appropriate, the complaint must be construed in the light most
favorable to the plaintiff, and all well-pleaded facts must be
accepted as true.
See Bower v. Fed. Express Corp., 96 F.3d 200, 203
(6th Cir. 1996); Misch v. Cmty. Mut. Ins. Co., 896 F. Supp. 734, 738
(S.D. Ohio 1994).
The United States Supreme Court has explained that,
“once a claim has been stated adequately, it may be supported by
showing any set of facts consistent with the allegations in the
complaint.”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 546 (2007).
However, a plaintiff’s claim for relief “requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of
action will not do.”
Id. at 555.
“Factual allegations must be enough
to raise a right to relief above the speculative level[.]”
Id.
Accordingly, a complaint must be dismissed if it does not plead
“enough facts to state a claim to relief that is plausible on its
face.”
Id. at 570.
III. Discussion
CTSFI argues that it is entitled to judgment on the pleadings
because the Complaint fails to plead facts sufficient to demonstrate
the existence of a principal-agent relationship between CTSFI and
Caring Transitions.
The Court agrees.
In determining whether an agency relationship exists under
Ohio law,1 the Court first notes that the existence of a
franchisor-franchisee relationship between persons does not
1
The parties agree that Ohio agency law applies.
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in itself preclude the existence of a principal-agent
relationship between them. See Arnson v. General Motors
Corp., 377 F.Supp. 209, 212–14 (N.D.Ohio 1974) (finding no
agency, but basing analysis on lack of a right of control
as demonstrated by uncontradicted facts). The Court must
scrutinize
the
relationship
between
persons
who
are
franchisor-franchisee just as it would scrutinize any
relationship in determining whether an agency relationship
exists. The central factor under Ohio law in determining
whether an agency relationship exists is the right of
control vested in the principal. See Priess v. Fisherfolk,
535 F.Supp. 1271, 1279 (S.D.Ohio 1982) (“The most important
element in determining whether an agency exists in the
presence of some control over the conduct of the agent.”);
Arnson, 377 F.Supp. at 213; Griffith v. Rutledge, 110 Ohio
App. 301, 304, 169 N.E.2d 464 (1960) (“[T]he existence of
the relationship of principal and agent depends, not upon
any exercise of control at the moment, but upon the right
of control.”); see also Note, Theories of Liability for
Retail Franchisors: A Theme and Four Variations, 39
Md.L.Rev. 264, 267 (1979) (“Because a franchise is
something of a hybrid business form, resembling both an
association of independent businessmen and a company-owned
chain, the primary problem in ascertaining franchise
liability
has
been
fitting
the
franchiser-franchisee
relationship into one of the two traditional categories of
agency law, principal-independent contractor or masterservant.... The central question in the courts' analysis
has been the extent of control exercised by the franchisor
over the franchise operations....”).
Taylor v. Checkrite, Ltd., 627 F. Supp. 415, 416-17 (S.D. Ohio 1986)
(footnote omitted).
See also Bricker v. R & A Pizza, Inc., 804 F.
Supp. 2d 615, 623 (S.D. Ohio 2011).
“̔While the existence and extent of the agency relationship is a
question of fact, the plaintiff must sufficiently allege that an
agency relationship existed in order to survive a Rule 12(b)(6) motion
to dismiss.’”
The Wooster Brush Co. v. Bercom Int'l, LLC, 5:06-CV-
474, 2008 WL 1744782, at *3 (N.D. Ohio Apr. 11, 2008) (quoting Bird v.
Delacruz, 2:04-CV-661, 2005 WL 1625303 (S.D. Ohio July 6, 2005)).
However, “[i]t is insufficient to merely plead the legal conclusions
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of agency.”
Bird, 2005 WL 1625303 at *4 (collecting cases) (internal
quotations omitted).
“[A] complaint relying on agency must plead
facts which, if proved, could establish the existence of an agency
relationship.”
Id. (collecting cases) (internal quotations omitted).
See also In re Commercial Money Ctr., Inc., 1:02-CV-16000, 2005 WL
2233233, at *18 (N.D. Ohio Aug. 19, 2005) (“In addition, several
district courts have held that ‘[m]ere legal conclusions are
insufficient to state a claim based on agency.
Instead, a claimant
must plead facts that would support a finding that the alleged agents
had actual or apparent authority to act on behalf of another . . .
.’”) aff'd sub nom. Commercial Money Ctr., Inc. v. Illinois Union Ins.
Co., 508 F.3d 327 (6th Cir. 2007).
In the case presently before the Court, plaintiff argues that
“the law does not require [her] to actually plead CTFSI controlled
Caring Transitions.
It is enough that she pled Caring Transitions was
CTFSI’s agent, which incorporates the right to control.”
Response, p. 6.
The Court disagrees.
Plaintiff’s
The Complaint alleges that
“Caring Transitions was the agent for Defendant CTFSI at all times
relevant to th[e] Complaint,” Complaint, ¶ 18, and that CTFSI “is
liable for all actions undertaken by . . . Caring Transitions . . .
via at least agency law and through vicarious liability.”
20, 156, 172.
See also id. at ¶¶ 3, 129.
Id. at ¶¶
These allegations are legal
conclusions and are insufficient under Rule 12(b)(6) to establish an
agency relationship.
See Hensley Mfg., Inc. v. ProPride, Inc., 579
F.3d 603, 609 (6th Cir. 2009) (“[A]lthough we must accept all well-
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pleaded factual allegations in the complaint as true, we need not
‘accept as true a legal conclusion couched as a factual allegation.’”)
(quoting Twombly, 550 U.S. at 555).
Plaintiff next argues that she sufficiently plead an agency
relationship by alleging that “CTFSI provides training and collateral
materials for its franchisees’ use.
[Plaintiff] also called CTFSI,
and only after CTFSI contacted Caring Transitions did [Caring
Transitions] send [plaintiff] a statement.”
6.
Plaintiff’s Response, p.
According to plaintiff, these factual allegations demonstrate
CTFSI’s right to control Caring Transitions.
Again, the Court
disagrees.
As noted supra, “[u]nder Ohio law, ‘[t]he determinative factor in
deciding whether an agency relationship exists between a franchisor
and a franchisee is the degree of control the franchisor has over the
operations of the franchisee's business.’”
Bricker, 804 F. Supp. 2d
at 623 (quoting Coleman v. Chen, 712 F. Supp. 117, 124 (S.D. Ohio
1988)).
The Complaint alleges that CTFSI “holds a national meeting
‘during more than two days of informational sessions, networking
opportunities, and roundtable meetings,’ wherein it presents its
franchises with various awards.”
Complaint, ¶ 16.
“In additional to
national meetings, Defendant CTFSI provides its franchises with five
full days of initial training at its Corporate Office and pre-approved
advertising and public relations materials, including professionallydesigned advertising artwork, press releases, enewsletters, and a wide
range of promotional and collateral materials.”
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Id. at ¶ 17.
The
Complaint also alleges that plaintiff called CTFSI to “discuss her
[previous] complaints regarding Caring Transactions” and that Caring
Transactions responded to plaintiff’s complaints only after being
contacted by CTFSI.
Id. at ¶¶ 71-75.
Notably, the Complaint does not
allege that CTFSI controlled or had the right to control any portion
of Caring Transitions’ operations.
Holding a meeting with
“informational sessions, networking opportunities, [] roundtable
meetings,” presenting awards, and providing marketing materials does
not suggest that CTFSI had the right to control the means or method by
which Caring Transitions conducted its business.
See Broock v.
Nutri/Sys., Inc., 654 F. Supp. 7, 10 (S.D. Ohio 1986) (“The right to
require that all products be purchased from the franchisor, however,
in itself does not indicate that a right of control over the
franchisee vested in the franchisor.”) (emphasis in original); Viches
v. MLT, Inc., 127 F. Supp. 2d 828, 832 (E.D. Mich. 2000) (“All that
the franchise agreement in this case does is give Defendants control
over the quality of services its franchisee provides.
A franchisor's
insuring the ‘uniformity and standardization of . . . services,’
however, does not give rise to an agency relationship.”) (citations
omitted); Puente v. Garcia, No. L-86-134, 1986 WL 14372, at *2 (Ohio
Ct. App. Dec. 12, 1986) (“If the franchisor has no power over the
daily operations of the business, so as to vest the franchisor with
control within the definition of agency, the franchisor cannot be held
vicariously liable for the negligence of a franchisee.”).
Moreover,
the Complaint does not allege that Caring Transitions’ response to
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plaintiff’s complaints was any way mandated or controlled by CTFSI,
and there is no suggestion that CTFSI held Caring Transitions out to
the public as possessing authority to act on its behalf.
See Koczan
v. Graham, 98CA007248, 2000 WL 1420342, at *10 (Ohio Ct. App. Sept.
27, 2000) (“Agency may also exist where the principal intentionally or
negligently held out the agent to the public as possessing authority
to act on the principal's behalf.”) (citing Puente, 1986 WL 14372).
Finally, plaintiff argues that she adequately plead the existence
of an agency relationship by alleging that “CTFSI was aware, or should
have been aware, of Caring Transitions’ misconduct.”
Response, pp. 7-9 (citing Complaint, ¶ 19).
Plaintiff’s
Plaintiff has not,
however, offered any support for her argument that mere knowledge of
another’s actions can give rise to an agency relationship.
Plaintiff has failed to plead facts sufficient to demonstrate the
existence of an agency relationship between CTFSI and Caring
Transitions.
Because plaintiff’s claims against CTFSI are dependent
on a theory of agency, see Plaintiff’s Response, pp. 8-9; Complaint, ¶
23 (“The CSPA applies to Defendant Caring Transitions, and as Caring
Transitions’ principal, CTFSI is vicariously liable for its
franchisee’s actions.”), the Court concludes that plaintiff has failed
to state a claim upon which relief can be granted against CTFSI.
Accordingly, Defendant CT Franchising Systems, Inc.’s Motion for
Judgment on the Pleadings, Doc. No. 14, is GRANTED.
August 8, 2014
s/Norah McCann King_______
Norah McCann King
United States Magistrate Judge
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