Robinson v. Charter Practices International, LLC et al (PLR1)

Filing 42

OPINION & ORDER: Defendants' Motion to Dismiss 31 is Granted in its entirety, each of Robinson's claims is Dismissed with prejudice, and Defendants' alternative Motion to Strike 31 is Denied as Moot. Signed on 4/16/15 by Magistrate Judge Paul Papak. (gm)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

JAMES W. ROBINSON,

3:14-CV-1736-PK
OPINION AND
ORDER

Plaintiff,

v.
CHARTER PRACTICES INTERNATIONAL
LLC, MEDICAL MANAGEMENT
INTERNATIONAL, INC., and MMI
HOLDINGS, INC.

Defendants.

PAPAK, Magistrate Judge:
Plaintiff James W. Robinson filed this action against defendants Charter Practices
International LLC ("CPI"), Medical Management International, Inc. ("MMI"), and MMI
Holdings, Inc. ("MMIH"), in the Chancery Court of Knox County, Tennessee, on September 24,

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2014. Defendants removed Robinson's action to the United States District Court for the Eastern
District of Tennessee on October 13, 2014. On the stipulation of the patties, Robinson's action
was transfened to this court effective October 31, 2014. On December 18, 2014, Robinson
amended his complaint in this cou11.
By and through his amended complaint, Robinson alleges that he purchased a veterinary
hospital franchise from the defendants in 2004, and that defendants subsequently improperly
refused to renew the parties' franchise agreement when its original term expired in 2014.
Robinson alleges defendants' liability for breach of contract in three separately pied counts (one
of which is pled as a "count" of breach of contract, one of which is pied as a "count" of
promissory estoppel, and one of which is pied as a "count" of declaratory judgment that a
provision of the parties' 2004 franchise-purchase agreement is unenforceable), for breach of the
implied covenant of good faith and fair dealing (pied as an additional "count" of the breach of
contract claim), and for intentional interference with economic relations, and seeks disregard of
defendants' corporate formalities, this court's declaration that a covenant not to compete with
defendants during the term of the parties' franchise-purchase agreement is unenforceable as a
matter of law, not less than $2 million in economic damages, $10 million in punitive damages,
and/or specific performance of defendants' purported contractual obligation to renew the parties'
franchise agreement for an additional term of five years. This court has subject-matter
jurisdiction over Robinson's action pursuant to 28 U.S.C. § 1332, based on the complete diversity
of the patties and the amount in controversy.
Now before the court is defendants' motion (#31) to dismiss Robinson's claims or, in the
alternative, to strike his prayer for monetaty damages. I have considered the motion, oral

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argument on behalf of the parties, and all of the pleadings and papers on file. For the reasons set
foiih below, defendants' motion to dismiss is granted in its entirety, each of Robinson's claims is
dismissed with prejudice, and defendants' alternative motion to strike is denied as moot.

LEGAL STANDARD
To survive dismissal for failure to state a claim pursuant to Rule 12(b)(6), a complaint
must contain more than a "f01mulaic recitation of the elements of a cause of action;" specifically,
it must contain factual allegations sufficient to "raise a right to relief above the speculative level."
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). To raise a right to relief above the
speculative level, "[t]he pleading must contain something more ... than ... a statement of facts
that merely creates a suspicion [of! a legally cognizable right of action." Id, quoting 5 C. Wright
& A. Miller, Federal Practice and Procedure§ 1216, pp. 235-236 (3d ed. 2004); see also Fed. R.

Civ. P. 8(a). Instead, the plaintiff must plead affirmative factual content, as opposed to any
merely conclusory recitation that the elements of a claim have been satisfied, that "allows the
court to draw the reasonable inference that the defendant is liable for the misconduct alleged."
Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949 (2009). "In sum, for a complaint to
survive a motion to dismiss, the non-conclusory 'factual content,' and reasonable inferences from
that content, must be plausibly suggestive ofa claim entitling the plaintiff to relief." 1Vfoss v.
United States Secret Serv., 572 F.3d 962, 970 (9th Cir. 2009), citing Iqbal, 129 S. Ct. at 1949.
"In ruling on a 12(b)(6) motion, a court may generally consider only allegations contained
in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial
notice." Swartz v. KP1vfG LLP, 476 F.3d 756, 763 (9th Cir. 2007). In considering a motion to
dismiss, this court accepts all of the allegations in the complaint as true and construes them in the

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light most favorable to the plaintiff. See Kahle v. Gonzales, 474 F.3d 665, 667 (9th Cir. 2007).
Moreover, the court "presume[s] that general allegations embrace those specific facts that are
necessmy to support the claim." Nat'! Org. for Women v. Scheidler, 510 U.S. 249, 256 (1994),

quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). The court need not, however,
accept legal conclusions "cast in the f01m of factual allegations." Western }vfining Council v.

Watt, 643 F.2d 618, 624 (9th Cir. 1981).
INCORPORATION BY REFERENCE
As a preliminary matter, I note that Robinson attached six documents as exhibits to his
complaint as filed in the Chancery Court of Knox County, Tennessee, none of which appear as
exhibits to his currently operative complaint as amended in this comi. The parties appear to
agree (and, following analysis of Robinson's claims, I so find) that two of those six documents
underlie Robinson's claims in significant part, namely a Charter Practice Agreement dated
August 16, 2004, executed by CPI, Robinson, and a third patiy (see Docket No. 1, Exh. 1, 151198) and a letter from CPI to Robinson dated November 25, 2013 (see Docket No. 1, Exh. 1,
283-284). Moreover, Robinson's amended complaint refers extensively to both documents, and
in addition quotes extensively from the letter of November 25, 2013. In consequence, I find that
under the Ninth Circuit's doctrine of incorporation by reference the comi may properly consider
both the Charter Practices Agreement of August 16, 2004, and the letter ofNovember 25, 2013,
without converting defendants' motion into a motion for summmy judgment. See, e.g.,

Daniels-Hall v. Nat'/ Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010); 1\1arder v. Lopez, 450 F.3d
445, 448 (9th Cir. 2006); United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). In
connection with the analysis that follows, I have disregarded the other documents filed as

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exhibits to Robinson's complaint as originally filed, all other evidence outside Robinson's
cmTently operative pleading, and all proffered argument premised on any such evidence.

FACTUAL BACKGROUND
I.

The Parties
Plaintiff Robinson is a resident of Carter County, Tennessee. Robinson is a doctor of

veterinary medicine, and practices as a veterinarian.
Defendants CPI, MMI, and MMIH are corporate entities organized under the laws of the
State of Delaware, each with its principal place of business in P011land, Oregon. MMIH is the
corporate parent of both CPI and MMI. Defendants developed and own a business method
refe11'ed to by the parties as the "Banfield System" for the operation of full-service veterinary
hospitals. Defendants own over 850 veterinary hospitals worldwide and, in addition, franchise
veterinary hospitals (each, a "Banfield Pet Hospital") to independent veterinarians.

II.

Robinson's Allegations Regarding the Parties' Dispute'
Since approximately 1992, Robinson has owned and operated the Robinson Animal

Hospital, a veterinary practice comprised of two clinics located in and around Johnson City,
Tennessee. On October 25, 2002, Robinson applied to become a franchisee of a Banfield Pet
Hospital, to be located in Johnson City, Tennessee. By and tlll'ough his application and cover
letter, Robinson advised defendants that he owned and operated the Robinson Animal Hospital
and intended to continue doing so in the event he became a Banfield Pet Hospital franchisee.
On or around March 31, 2003, CPI and Robinson (together with Robinson's wife, Kim

1

Except where otherwise indicated, the following recitation constitutes my construal of
the allegations of Robinson's complaint and of the matters incorporated by reference therein in
the light most favorable to Robinson.
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Robinson) entered into a Chaiier Practice Agreement (the "2003 Franchise Agreement") pursuant
to which Robinson purchased the Johnson City Banfield Pet Hospital franchise (the "Johnson
City franchise") from the defendants for a te1m often years. Although the 2003 Franchise
Agreement contained a provision expressly prohibiting Robinson from owning, operating, or
being employed by any competing veterinary hospital either during the term of the agreement or
(under some circumstances) for a period of two years following its expiration, by letter dated
March 7, 2003, and signed by both CPI and Ro]?inson, the parties modified their agreement to
state that Robinson's ownership and operation of the Robinson Animal Hospital would not be
deemed to violate that provision. The 2003 Franchise Agreement further provided a mechanism
by and through which the pmiies could elect to renew their agreement for an additional term
following expiration of the original ten-year te1m.
Approximately two years later, Robinson and a pminer, veterinarian Holly McLain,
applied for a second Banfield Pet Hospital franchise to be located in Knoxville, Tennessee. Once
again, Robinson advised defendants in connection with his application that he was the owner and
operator of the Robinson Animal Hospital. CPI granted Robinson and McLain's application, and
on or around August 16, 2004, CPI, Robinson, and McLain entered into a Chmier Practice
Agreement (the "2004 Franchise Agreement" filed at Docket No. 1, Exh. 1, 151-198) pursuant to
which Robinson purchased the Johnson City Banfield Pet Hospital franchise (the "Knoxville
franchise") from the defendants for a te1m often years from the date the franchise opened for
business. See 2004 Franchise Agreement, § 2.2. The agreement required Robinson to pay
defendants an initial payment of$50,000 and monthly payments of9.0% of monthly revenue for
each of the last nine months of the first year of operations, of 11.5% for each month of the

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second year of operation, of 13.0% for each month of the third year of operation, of 14.5% for
each month of the fourth year of operation, and of 15.0% for each subsequent month of
operation. See id.,§§ 3.1, 3.2. Robinson's rights as a franchisee were expressly conditioned on
his achievement of specified qumierly and annual revenue benchmarks. See id., § 3.5. The 2004
Franchise Agreement required that Robinson comply with the terms and conditions of
defendants' Banfield System in the operation of the franchise, see id.,§ 6.1, and that either
Robinson or a manager approved by the defendants devote full-time efforts to the operation
thereof, see id., § 6.2.
The 2004 Franchise Agreement contained provisions expressly prohibiting Robinson
from owning, operating, or being employed by any competing veterinmy hospital at any time
during the term of the agreement (the "original-term non-competition provision"), see id.,§
6.20. l(a), or for a period of two years following its expiration where such hospital was within
five miles of the franchise location (the "post-te1mination non-competition provision"), see id.,§
6.20.2. It does not appear that the pmiies expressly modified that provision as they did with the
analogous provision of the 2003 Franchise Agreement, but as noted above CPI was on notice at
the time it executed the 2004 Franchise Agreement that Robinson owned and operated the
Robinson Animal Hospital and intended to continue doing so while owning and operating the
Knoxville franchise. At no time during the original ten-year te1m of the 2004 Franchise
Agreement did defendants make any attempt to enforce Sections 6.20.1 (a) or 6.20.2 in
connection with Robinson's ownership and operation of the Robinson Animal Hospital.
The 2004 Franchise Agreement contained a provision that the franchisees could renew
the agreement for "one (1) additional term of five (5) years," provided ce1iain specified te1ms and

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conditions were met. kl, § 8.1. In the event the franchisees elected to seek renewal of the
parties' agreement, they were required to provide notice of their intent to renew fewer than 360
and more than 180 days prior to the expiration of the agreement's ten-year te1m, see id, § 8.1.2,
and to pay a renewal fee of $15,000, see id, § 8.1.5. The agreement provided that the franchisees
would not have the right to renew the agreement if at that time "there exist[ ed] any uncured
breach" thereof, or if, in the exclusive good-faith discretion of CPI, the franchisees had failed to
"satisfactorily comply" with the agreement during its initial term. Id.,§ 8.1.1. In addition, CPI
could refuse to renew the agreement based on its decision either to terminate its franchise
program generally or in the franchisees' market area in particular, or for other, unspecified
reasons. See id, § 8.1.2. Renewal of the agreement would be subject to the franchisees'
execution of an agreement "substantially on the terms and conditions of CPI's then-current form
of Charter Practice Agreement." Id., § 8.1.4. The 2004 Franchise Agreement expressly provided
that "[t]he te1ms of [such] renewal agreement may differ from the te1ms of th[e 2004 Franchise]
Agreement .... " Id., see also id, § 8.1.2 (referencing the possibility that requirements "relating
to the image, appearance, operation, fumishing, equipping and stocking" of a franchise could
likewise change in connection with such a renewal). The agreement expressly provided CPI the
right to treat the franchisees' failure to execute such a renewal agreement within thirty days after
delive1y thereof as an election by the franchisees not to renew. Id, § 8.1.4.
In the event of the expiration of the 2004 Franchise Agreement, CPI had the option either
to permit a franchisee to continue operating the formerly franchised veterinaiy hospital after
modifying it to distinguish it from a Banfield Pet Hospital or to purchase the hospital's equipment
and continue operating the facility as a defendants-owned Banfield Pet Hospital. See id.,§§ 8.5,

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8.5.1-8.5.7. In the event CPI elected to purchase the hospital's equipment, CPI and the franchisee
would attempt to agree upon purchase price or te1ms within ten days following expiration of the
agreement or, upon failure to do so, hire independent appraisers to determine the fair market
value of the equipment at issue. See id,§ 8.5.7.
The 2004 Franchise Agreement expressly provided that, before a franchisee could sell any
ownership interest in the franchise, the franchisee was required to provide CPI with a right of
first refusal to purchase that ownership interest. See id, § 9.5. Moreover, any transfer of a
franchisee's interest in a franchise was expressly conditioned on CPI's prior inf01med and written
consent to the transfer. See id.,§ 9.2. The agreement provided that CPI had the right to withhold
its consent to any such transfer "on any grounds CPI deem[ed] sufficient in its absolute
discretion," id.,§ 9.2.1, and that CPI had the right to condition any such transfer on, inter alia, its
waiver of its right of first refusal under Section 9.5, see id., § 9.2. l(c).
The 2004 Franchise Agreement additionally contained a provision that its terms could not
be modified except by and through a written agreement signed by the parties. See id., § 11. 7.
The agreement provided that it was to be govemed by Oregon law, and that any legal proceedings
relating to its provisions must take place in Pmiland, Oregon. See id., § 11.10. The agreement
fmiher provided, in majuscule font, that:
UNDER NO CIRCUMSTANCES WILL CPI BE LIABLE TO [THE
FRANCHISEES] OR ANY OTHER PERSON OR ENTITY FOR SERIAL,
INCIDENTAL, CONSEQUENTIAL, OR INDIRECT DAMAGES, LOSS OF
GOOD WILL OR BUSINESS PROFITS, OR EXEMPLARY OR PUNITIVE
DAMAGES.

Id.,§ 11.13.
The Knoxville franchise opened for business on or around November 13, 2004. In 2008,

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Robinson purchased McLain's interest in the Knoxville Franchise for $75,000, and thereafter
acted as the sole franchisee under the 2004 Franchise Agreement.
In 2012, CPI notified Robinson of its decision to tenninate its franchise program in the
Johnson City market area. On that basis, the parties did not renew the 2003 Franchise
Agreement when its te1m expired as of March 30, 2013.
In 2013, Robinson provided CPI with notice of his intent to renew the 2004 Franchise
Agreement. On or around November 25, 2013, CPI advised Robinson by letter (the "November
25, 2013, Letter" filed at Docket No. 1, Exh. 1, 283-284) of its decision to deny the requested
renewal. The November 25, 2013, Letter stated inter alia as follows:
Beginning in mid-2012, CPI notified [Robinson] through a series of in-person,
telephone and written communications that CPI would not renew the [2004
Franchise Agreement] unless [Robinson] divested [him]self of any and all interests
in [his] non-Banfield veterinary hospitals, including but not limited to any and all
interests [he might] have in the Robinson Animal Hospital[] .... Specifically, CPI
notified [Robinson] of the risk ofnomenewal of the [2004 Franchise Agreement]
in the following nonexclusive list of communications: (1) conversations with
Vincent Bradley near the time of the Johnson City [franchise] closing and briefly at
the 2013 National Field Leadership conference; (2) telephone conversation with
Chris Stinnett in June 2103; (3) telephone conversation with Chris Stinnett and
Troy Bischoff in August 2013; (4) Charter State of the Practice webinar on August
28, 2013; (5) letter from CPI sent by email on September 6, 2013; and (6) email
from Chris Stinnett on October 25, 2013, reaffirming CPI's position. On
September 12, 2013, [Robinson] stated in an email to Kelly Orfield that [he did]
not plan to sell [his] non-Banfield hospital(s). As a result of this and as further
discussed in this letter, CPI will not renew the [2004 Franchise Agreement].
Section 7.21.l(a) of the cunent version ofCPI's Charter Practice Agreement
prohibits a [franchisee] from "owning, operating, maintaining, managing,
participating or engaging in, being ... employed at or working at, advising,
assisting, investing in, or having any interest in any other veterinary hospital or
related veterinaiy business or facility" during the te1m of the Chaiter Practice
Agreement. The 2014 version of the [Charter Practice Agreement], which you
would be required to sign as a condition of renewal, will include a substantially
similar version of this provision.

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There are a number of reasons CPI does not allow [franchisees] to be involved with
non-Banfield veterinary businesses. The primmy reason is that CPI believes the
quality of preventive care and client experience directly correlates to an owner's
full time efforts in the [franchised] Hospital. In addition, [defendants'] operating
systems, policies, procedures and protocols are confidential and proprietmy. To
maintain its competitive advantage, CPI cannot allow a [franchisee] who is privy to
the continual innovation in operational improvements and efficiencies to have the
opportunity to apply those innovations to a business which competes with
[defendants]. For this reason, CPI cannot allow [Robinson] to continue to operate
a Banfield Hospital, and will not renew the [2004 Franchise Agreement].
November 25, 2013, Letter, 1-2.
After being informed that CPI would not renew the 2004 Franchise Agreement, Robinson
attempted to sell the Knoxville franchise to a bona fide purchaser with no interest in any other
veterinary hospital or related business, but defendants refused to approve the sale. On or around
November 12, 2014, defendants took over operations of the Knoxville franchise. 2 At that time,
the Knoxville franchise was fully operational, fully staffed, fully equipped, and profitable. It is
Robinson's position that, notwithstanding the statements made in the November 25, 2013, letter,
defendants' decision to deny renewal of the 2004 Franchise Agreement was motivated by an
intent to capture profits generated by the Knoxville franchise by taking over its operations and
operating it directly and/or by an intent to tenninate the franchise program generally.

ANALYSIS
Defendants move for dismissal of all of Robinson's claims, and in the alternative move to
strike Robinson's claims for money damages. Robinson takes the position that each of his claims
has merit, and in the alternative asserts the right to replead his allegations in support of each in

2

Robinson offers no allegation that he did not receive payment for the fair market value
of the equipment used in operation of the Knoxville Franchise as provided under Section 8.5.7 of
the parties' 2004 Franchise Agreement.
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order to cure any deficiencies therein, in lieu of dismissal of his claims with prejudice. The
pmties tacitly agree - and I concur - that, pursuant to Section 11.10 of the 2004 Franchise
Agreement, Robinson's claims are governed by Oregon law.

I.

Construal of Robinson's Claims
By and through his amended complaint, Robinson expressly alleges (i) one claim of

breach of contract, which he divides into four separately pied "counts," (ii) one claim of
intentional interference with economic relations, (iii) one claim characterized as a claim for
"specific performance" of the renewal provisions of the 2004 Franchise Agreement, and (iv) one
claim characterized as a claim for "disregard" of defendants' corporate fonnalities. The
separately pied "counts" of the breach of contract claim are characterized as counts (i)(a) for
breach of the renewal provisions of the 2004 Franchise Agreement, (i)(b) for promissory estoppel
preventing defendants from "asse1ting that Dr. Robinson is not in compliance with the [originalterm non-competition provision] of the [2004 Franchise Agreement]," (i)(c) for breach of the
implied covenant of good faith and fair dealing, and (i)(d) for this comt's declaration that the
original-term non-competition provision of the 2004 Franchise Agreement is unenforceable as a
matter of law.
Properly construed, Robinson alleges only a single breach of contract, namely defendants'
alleged breach of the renewal provisions of the 2004 Franchise Agreement. The first pied count
of the breach of contract claim states this claim, while the second pied count (promissory
estoppel from asse1ting Robinson's noncompliance with the original-term non-competition
provision of the 2004 Franchise Agreement) and fomth pied count (declaratory judgment that the
original-term non-competition provision of the 2004 Franchise Agreement is unenforceable)

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articulate related, alternative theories of how defendants' refusal to renew the agreement
constituted breach of the patties' agreement. The "claim" styled as a claim for specific
performance is not, properly construed, an independent cause of action (notwithstanding the
manner in which it is pied), but rather a remedy potentially available in the event Robinson
succeeds in establishing breach of the 2004 Franchise Agreement.
The third pied count of the breach of contract claim (breach of the implied covenant of
goof faith and fair dealing), properly construed, is not premised on defendants' breach of contract
but rather is necessarily asserted in the alternative to breach of the express provisions of the
parties' agreement, and constitutes an independent (if alternative) cause of action. The
intentional interference claim is appropriately pied as a third independent cause of action. The
"claim" styled as a claim for disregard of defendants' corporate formalities is not, properly
construed, an independent cause of action (notwithstanding the manner in which it is pied), but
rather a mechanism for recove1y of damages potentially available in the event Robinson succeeds
in establishing the liability of one or more defendants for award of monetaiy damages in
connection with any one or more of his independent causes of action.
In the analysis which follows, I construe and address Robinson's claims in keeping with
the foregoing construction.

II.

Robinson's "Group" Pleading of Defendants' Liability
Defendants challenge the adequacy of Robinson's allegations in support of his claims on

the grounds that Robinson alleges all three defendants' collective paiticipation in the misconduct
underlying his claims without differentiating among them or alleging separate grounds for the
liability of each. I disagree with the defendants that Robinson's "group" pleading of his

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allegations falls afoul of the requirements of Federal Civil Procedure Rule 8(a)(2). 3 On their
face, Robinson's allegations are sufficiently detailed to give defendants notice of the nature of
Robinson's claims and to permit them to prepare their defense (as is evidenced by the defenses
raised by and through defendants' motion to dismiss). To the extent defendants simply disagree
with Robinson that all defendants did, as a matter of fact, participate in the complained-of
conduct, that disagreement cannot properly be resolved through a motion to dismiss, but rather
would be a matter for dete1mination at summary judgment. I therefore decline to grant
defendants' motion to dismiss to the extent premised on Robinson's "group" pleading.

III.

Robinson's Breach of Contract Claim(s) (Breach of Contract Claim Counts 1, 2, and
4; Claim Styled as "Specific Performance")
Under Oregon, law, a plaintiff in a breach of contract action "has the burden to establish

the existence of a valid contract and the breach thereof." Pendleton Grain Growers v. Pedro,
271 Or. 24, 28 (1975). In addition, "[t]he rule in Oregon is that a party seeking to recover
damages for an alleged breach of contract must plead and prove either substantial performance
on his part or a valid excuse for his own failure to perfo1m." Aurora Aviation, Inc. v. AAR

Western Skyways, Inc., 75 Or. App. 598, 602 (1985), citing Wasserburger v. American Scientific
Chemical, Inc., 267 Or. 77, 82 (1973). The parties do not dispute that the parties' 2004 Franchise
Agreement was valid and enforceable, and defendants do not take the position that Robinson
failed substantially to perform all of his obligations thereunder (except to the extent that it may

3

Rule 8(a)(2) requires that "[a] pleading that states a claim for relief must contain ... a
short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ.
P. 8(a)(2). To satisfy the requirements of Rule 8(a)(2), such a statement must give notice to the
defendant of the nature of the claim at issue, and provide the defendant a fair opportunity to
litigate a defense against it. See, e.g., Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).
Page 14- OPINION AND ORDER

be their position that he did not perfo1m all conditions precedent to imposing a contractual
obligation on CPI to renew the agreement for an additional te1m). The critical question in
connection with each of Robinson's various aiiiculations of his breach of contract claim is,
therefore, whether CPI's refusal to renew the Knoxville franchise for an additional five-year tenn
in 2014 could have been in breach of any contractual obligation owed by any defendant to
Robinson.
Robinson offers several related theories of breach: (i) that defendants breached the
express terms of the 2004 Franchise Agreement by requiring Robinson, as a condition of
renewal, to execute a f01m of Charter Practices Agreement that contained a provision requiring
him to refrain from operating any competing veterinaiy hospital notwithstanding defendants'
partial waiver of the analogous provision of the 2004 Franchise Agreement to permit Robinson to
continue operating the Robinson Animal Hospital while operating the Knoxville franchise,

(ii) that by so doing defendants breached the te1ms of their agreement because defendants' paiiial
waiver of the non-competition provision of the 2004 Franchise Agreement was irrevocable as
applied both to the original term of the agreement and to any renewal term thereof, (iii) that by so
doing defendants breached the te1ms of their agreement because defendants are estopped as a
matter of law from attempting to enforce any non-competition provision of any renewal
agreement that would be more restrictive than the non-competition provision of the 2004
Franchise Agreement as modified by and through defendants' paiiial waiver thereof, and (iv) that
by so doing defendants breached the terms of their agreement because the non-competition
provision of the 2014 version of defendants' Chatier Practices Agreement is unenforceable as a
matter of law as an impe1missible restriction on Robinson's right to pursue his livelihood. In the

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analysis that follows, I address each of Robinson's theories.
Three of Robinson's four theories are premised on the proposition that defendants
(through the actions of CPI) waived enforcement of the noncompetition provisions (Sections
6.20. l(a) and 6.20.2) of the 2004 Franchise Agreement in connection with his ownership and
operation of the Robinson Animal Hospital. I agree with Robinson that CPI waived enforcement
of those provisions during the entire ten-year term of the 2004 Franchise Agreement by and
through its course of conduct. 4 Under Oregon law, "adults with the capacity to do so generally
are free to waive a panoply of rights, statuto1y and constitutional, so long as the waiver is
knowing and intentional." lvfcinnis & i\ifclnnis, 199 Or. App. 223, 236 (2005) (citations
omitted); see also, e.g., Bennett v. Farmers Ins. Co., 332 Or. 138, 156-157 (2001)(noting that
"waiver ... appl[ies] broadly to any contract term" and finding waiver of contractual rights
enforceable where both voluntaiy and unequivocal). "A contractual waiver requires the
intentional relinquishment of a known right, manifested in an unequivocal manner." lvfc1Willan v.

Follansbee, 194 Or. App. 145, 153 (2004). Even where an agreement contains a provision
expressly requiring any waiver or modification of any other provision of the agreement to be in
writing, any party thereto may waive any provision thereof either orally or through course of
conduct. See, e.g., Anderson v. Divito, 138 Or. App. 272, 281 (1995); citing 1\1oore v. 1vfutual of

Enumclaw Ins. Co., 317 Or. 235, 241 (1993). However, where waiver is effected through course
of conduct, it must be through "a clear and unequivocal act" manifesting the party's intent to
waive the provision. Id., citing Bank ofEastern Oregon v. Griffith, 101 Or. App. 528, 534

4

It is clear that the letter of March 7, 2003, constituted an express paiiial waiver of the
non-competition provisions of the 2003 Franchise Agreement only.

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(1990). Here, CPI accepted Robinson's application for the Knoxville franchise with clear
advance notice that Robinson intended to continue owning and operating the Robinson Animal
Hospital during the term of the proposed franchise and moreover suffered Robinson to continue
owning and operating the Robinson Animal Hospital without objection and without attempting to
enforce Sections 6.20.l(a) or 6.20.2 of the 2004 Franchise Agreement in connection with the
Robinson Animal Hospital at any time during the original ten-year te1m of the agreement. For
purposes of the motion now before the court, I find that this conduct constituted an unequivocal
manifestation of CPI's intent to treat Robinson's continued affiliation with the Robinson Animal
Hospital as nonviolative of the 2004 Franchise Agreement's non-competition provisions.
The first matter for the court's disposition, then, is whether CPI's pmtial waiver of the
non-competition provisions of the 2004 Franchise Agreement necessarily bound defendants by
operation of contract to offer a renewal agreement that likewise exempted Robinson's continued
affiliation with the Robinson Animal Hospital from its non-competition provisions. Robinson
takes the position that the 2004 Franchise Agreement bound defendants to offer as a renewal
agreement a foim of Chmter Practices Agreement substantially similar (other than in its
"financial" te1ms) to the original agreement as modified by the pmties; Robinson takes the further
position that defendants' inclusion of an unwaived non-competition provision in the 2014
renewal agreement was in violation of that obligation.
Robinson's position is not persuasive. As noted above, the 2004 Franchise Agreement
expressly provided that "[t]he terms of [the protforedj renewal agreement may differ from the
tem1s ofth[e 2004 Franchise] Agreement .... " 2004 Franchise Agreement,§ 8.14. The
agreement specified that the tenns of the renewal agreement could differ in respects "including a

Page 17 - OPINION AND ORDER

different Royalty and Service Fee and other new financial requirements," id. (emphasis supplied),
but did not in any sense suggest the terms could differ only in those respects. To the contraty,
Section 8.12 of the parties' agreement non-exhaustively recites additional respects in which the
renewal agreement might differ from the original agteement, including "requirements relating to
the image, appearance, operation, furnishing, equipping and stocking of Hospital facilities." Id.,
§ 8.12. Moreover, the agreement afforded CPI the express right to refuse to renew based on its
decision either to terminate its franchise program generally or in the franchisees' market area in
particular, or for other reasons not exhaustively specified in the contract. See id. Because the
renewal provisions of the 2004 Franchise Agreement specified that renewal would be
conditioned on Robinson's execution of "CPI's then-current fotm of Chatter Practice Agreement"
and that the terms of that fmm of agreement could differ in both specified and unspecified ways
from the te1ms of the original agreement, CPI's insistence that Robinson execute a fmm of
agreement that contained unwaived non-competition provisions notwithstanding its partial
waiver of the analogous provisions of the original agreement was not in violation of the express
terms of the parties' contract. See e.g., Fisher v. Tiffin, 275 Or. 437, 441 (1976) ("[p]arties to a
contract can not, even by an express provision in that contract, deprive themselves of the power
to alter or vaty or discharge it by subsequent agreement"). In consequence, I find that Robinson
cannot state a claim for breach premised on the themy that proffer of a renewal agreement
containing unwaived non-competition provisions violated the express terms of the patties'
agreement.
The second matter for the court's disposition is whether CPI's conduct manifesting intent
pattially to waive the non-competition provisions of the 2004 Franchise Agreement effected an

Page 18 - OPINION AND ORDER

irrevocable waiver applicable with equal force to the original term of the parties' agreement and
to any renewal term thereof, notwithstanding CPI's notice to Robinson of not later than mid-2012
that it intended to enforce the non-competition provisions of a 2014 renewal agreement in
connection with the Robinson Animal Hospital. CPI's conduct in accepting Robinson's
application with knowledge that he intended to continue owning and operating the Robinson
Animal Hospital during the term of the proposed franchise and in refraining from seeking to
enforce the agreement's non-competition provisions as to the Robinson Animal Hospital during
its original ten-year term - particularly when considered in connection with the provisions of the
pmties' agreement indicating that any renewal term thereof would be governed by a new written
agreement the terms of which could differ from the parties' original written agreement - simply
does not constitute a clear and unequivocal manifestation of CPI's intent to bind itself irrevocably
to its partial waiver not merely as to the ten-year term governed by the 2004 Franchise
Agreement but also as to any future te1m of the pmties' contractual relationship governed by the
contemplated future agreement. In this connection, I note moreover that as a general rule, "[a]
prior course of conduct under previous contracts will not operate as a waiver of an express
stipulation in a new contract," Weyerhaeuser Timber Co. v. First Nat'! Bank ofPortland, 150 Or.
172, 195 (1934), and that Oregon law pe1mits a party that has waived strict compliance with an
express contractual term to revoke its waiver by giving reasonable advance notice of its intent to
require strict compliance in the future, see Fisher, 275 Or. at 442 (standing for that proposition);
here the operative fact is that CPI provided Robinson with approximately 18 months' notice of its
intention to require strict compliance with the non-competition provisions of the pmties'
contemplated new agreement. Because CPI did not unequivocably manifest an intention to effect

Page 19 - OPINION AND ORDER

an irrevocable waiver, because even if it had done so, it would have lacked the capacity so to
bind itself (see Fisher, 275 Or. at 441), and because CPI provided Robinson with reasonable
notice of its intent not to waive the non-competition provisions of the 2014 Charter Practices
Agreement execution of which was a condition precedent of its obligation to renew the Knoxville
franchise, I find that Robinson cannot state a claim for breach premised on a theory that CPI's
partial waiver was irrevocable.
The third matter for the court's disposition is whether, under all of the circumstances,
defendants could be estopped from seeking to enforce the non-competition provisions of the
2014 Charter Practices Agreement against Robinson in connection with his affiliation with the
Robinson Animal Hospital. Robinson expressly invokes the doctrine of promissory estoppel in
support of this themy, but largely cites cases construing equitable estoppel in suppo1t of his
argument. In the analysis that follows, I address both doctrines.
Under Oregon law, the elements of promisso1y estoppel are:
( 1)

(2)
(3)
(4)

a promise
which the promisor, as a reasonable person, could foresee would induce
conduct of the kind which occurred,
actual reliance on the promise,
resulting in a substantial change in position.

Neiss v. Ehlers, 135 Or. App. 218, 223 (1995) (internal quotation marks omitted), quoting Bixler
v. First National Bank, 49 Or. App. 195, 199-200 (1980). "Promissory estoppel is not an
independent cause of action. It is a substitute for consideration, and provides a basis for
enforcing a promise as a contract despite a lack of consideration, when the promisee has relied on
a promise to his or her detriment." Natkin & Co. v. HD. Fowler Co., 128 Or. App. 311, 314
(1994), citing City ofAshlandv. Hoffarth, 84 Or. App. 265, 270 (1987). "The doctrine is applied

Page 20 - OPINION AND ORDER

if'injustice can be avoided only by enforcement of the promise."' Id., quoting Restatement of
Contracts§ 90 (1932). That is, promissory estoppel is a means of establishing the existence of a
valid contract, and is unnecessmy where the existence of an enforceable contract is established.

See id. at 316. Effectively, then, it is Robinson's theo1y that CPI's partial waiver of Sections
6.20. l(a) and 6.20.2 of the 2004 Franchise Agreement constituted a promise never to enforce the
non-competition provisions of the parties' agreement as to Robinson's affiliation with the
Robinson Animal Hospital, not merely in connection with the original ten-year term of the
parties' agreement but also in connection with any future renewal term thereof to be governed by
a different agreement, and that this promise foreseeably induced Robinson to enter into the
agreement in the expectation of fifteen rather than ten years of forbearance.
Robinson's theo1y is fatally flawed in two respects. First, unlike in connection with the
2003 Franchise Agreement, in connection with the 2004 Franchise Agreement CPI did not make
any express promise to waive enforcement of the non-competition provisions, but rather merely
refrained from enforcing them. While this course of conduct, under the circumstances, is
sufficient to effect a waiver thereof, for the same reasons discussed above in connection with
Robinson's theo1y of irrevocable waiver, it is not sufficient to imply a promise that such waiver
would govem any future agreement the parties might execute. Second, the promise implied by
. CPI's acceptance of Robinson's application and forbearance from seeking to enforce its
noncompetition provisions as to the Robinson Animal Hospital during the original ten-year term
of the parties' agreement could not reasonably have been foreseen by CPI as likely to induce
Robinson to believe that if he entered into the 2004 Franchise Agreement he would as a matter of
course be entitled thereunder to a renewal tenn of five additional years during which such

Page 21 - OPINION AND ORDER

forbearance would necessarily continue. To the contrmy, the renewal provisions of the 2004
Franchise Agreement make clear that no franchisee thereunder could reasonably expect that any
particular provision of the renewal agreement would be identical to the analogous provision the
parties agreed upon in connection with the original tenn of the agreement, or indeed - given
CPI's express right to refuse renewal for precisely the reasons Robinson now asse1is as
defendants' true motivation, namely its decision either to terminate its franchise program
generally or in the franchisees' market area in particular, or for other unspecified reasons - that
the franchise relationship would necessarily survive expiration of the initial ten-year te1m.
Indeed, it would affirmatively have been umeasonable, in light of the case law discussed above
establishing that " [a] prior course of conduct under previous contracts will not operate as a
waiver of an express stipulation in a new contract," Weyerhaeuser Timber Co., 150 Or. at 195,
for Robinson so to have inferred from CPI's implied promise. I therefore find that Robinson's
breach claim cannot survive defendants' motion on a theory of promiss01y estoppel.
As to the possibility that Robinson intends to pursue his breach claim on a theory of
equitable estoppel, the analysis follows a similar course to the identical conclusion. "To
constitute an equitable estoppel, or estoppel by conduct," under Oregon law:
(1) there must be a false representation; (2) it must be made with knowledge of
the facts; (3) the other pmiy must have been ignorant of the truth; (4) it must have
been made with the intention that it should be acted upon by the other party; and
(5) the other pmiy must have been induced to act upon it.

Guardian 1\£g111t., LLC v. Zamiello, 194 Or. App. 524, 530 (2004), quoting Bennett v. City of
Salem et al., 192 Or. 531, 541 (1951 ). For reasons discussed above, any "representation" that
may have been inferrable from CPI's conduct could not either as a matter of reasonable
interpretation or as a matter of law have bound CPI as to any renewal term of the parties'
Page 22 - OPINION AND ORDER

agreement; because the implied representation can only have applied to the initial ten-year te1m
of the parties' agreement, and because CPI in fact refrained from seeking to enforce the noncompetition provisions of the 2004 Franchise Agreement during the entirety of its initial term,
there is no sense in which such implied representation may properly be constrned as false. In
consequence, Robinson's breach claim cannot survive defendants' motion on a theory of equitable
estoppel.
The fomth matter for the court's disposition is whether Robinson can state a claim for
breach premised on the theory that the non-competition provisions of defendants' 2014 Charter
Practices Agreement are unenforceable as a matter of law by vhtue of imposing an impermissible
restriction on Robinson's right to pursue his livelihood. While I have concerns regarding the
coherence of Robinson's apparent theo1y that defendants' inclusion of a purportedly
unenforceable provision in a form of agreement that Robinson never signed could constitute
breach of contract, I need not address that issue because, for the following reasons, I conclude
that the non-competition provisions of the 2014 Charter Practices Agreement are enforceable
under Oregon law.
On or around November 25, 2013, CPI advised Robinson by letter that Section 7.21. l(a)
of the then-cunent version of defendants' Chatter Practices Agreement would prohibit a
franchisee from "owning, operating, maintaining, managing, paiticipating or engaging in, being
... employed at or working at, advising, assisting, investing in, or having any interest in any
other veterinmy hospital or related velerinmy business or facility" during any tenn of any
franchise relationship it governed. Because Robinson advised defendants that he would not
disaffiliate from the Robinson Animal Hospital to bring himself into compliance with that

Page 23 - OPINION AND ORDER

provision, defendants refused to renew the Knoxville franchise when it expired in 2014.
Oregon law pe1mits and enforces covenants not to compete, under certain conditions, but
imposes restrictions on the ability of one party to a contract to restrict another party from
pursuing his or her livelihood within the profession of his or her choice following dissolution of
the employment relationship, paiinership, or joint venture governed by the contract. See, e.g.,

kfcGee v. Coe 1\Ifg. Co., 203 Or. App. 10, 15-17(2005);1\IcCallum v. Asbwy, 238 Or. 257,
263-264 (1964); Or. Rev. Stat. 653.295. By contrast, where, as here, a covenant not to compete
is applicable according to its terms only during the term of an employment relationship,
partnership, joint venture, or like relationship, Oregon imposes only a rule of reasonableness: the
restrictions must be "paiiial or restricted in ... operation in respect either to time or place," they
must be imposed in exchange for "good consideration," and they must be "reasonable, that is,
[they] should afford only a fair protection to the interests of the party in whose favor [the
covenant] is made, and must not be so large in [their] operation as to interfere with the interests
of the public." North Pacific Lumber Co. v. 1\Ioore, 275 Or. 359, 364 (1976); quoting Eldridge

v. Johnston, 195 Or. 379, 403 (1952). Here, it is clear that the restraints that would have been
imposed by the non-competition provisions of the 2014 Charter Practices Agreement would have
been partial or restricted in operation in respect to time, in that they would not have persisted past
the expiration of the paiiies' agreement, and equally clear that they would have been imposed in
exchange for good consideration, namely renewal of the parties' franchise agreement for a period
of five additional years. Moreover, I find that the restriction would as a matter of law have been
reasonable, in that it was calculated to require Robinson, as defendants' franchisee, to devote his
full-time professional efforts to the Knoxville franchise rather than permit him to devote some of

Page 24 - OPINION AND ORDER

his professional efforts to a competing business enterprise. In addition, the restriction prohibiting
Robinson from professional affiliation with a competing business enterprise during the term of
his franchise would prevent him from using defendants' proprietmy procedures and protocols for
the benefit of the competing enterprise while still affiliated with defendants. Under those
circumstances, Oregon law would enforce the non-competition provisions of the 2014 Charter
Practices Agreement. In consequence, I find that Robinson is not entitled to this cou1i's
declaration that those provisions were unenforceable as a matter of Oregon law, and that
Robinson cannot state a claim for breach premised on those provisions' unenforceability.
Because Robinson cannot state a claim for breach of contract premised on any of his
proffered legal theories, it follows that his so-styled "claim" for specific performance of CPI's
contractual obligations to him necessarily fails. Specific performance is merely a remedy for
breach of contract, and does not constitute a cause of action. See, e.g., Combs v. Loehner, 315
Or. 444, 450 (1993).
Because the foregoing analysis flows from consideration of the express terms of the
pmiies' contract and material written communications, which speak for themselves and are
incorporated by reference into Robinson's complaint, the deficiencies identified above cannot be
cured by amendment of Robinson's pleading. As a result, it would be futile to grant Robinson
leave to amend, and Robinson's breach of contract claim (the first, second, and fou1ih counts of
his first enumerated claim for relief and the entirety of his third enumerated claim for relief) is
dismissed with prejudice.

IV.

Robinson's Claim for Breach of the Implied Covenant of Good Faith and Fair
Dealing (Breach of Contract Claim Count 3)
Robinson takes the position that defendants violated the covenant of good faith and fair

Page 25 - OPINION AND ORDER

dealing implied in the parties' 2004 Franchise Agreement by conditioning renewal thereof on
Robinson's agreement to be governed by a non-competition provision that would require him to
disaffiliate from the Robinson Animal Hospital notwithstanding defendants' waiver of the
analogous provision of the agreement governing the initial ten-year term of the franchise
relationship. Under applicable Oregon jurisprudence, it is well settled that:
the law imposes a duty of good faith and fair dealing with respect to all contracts
to facilitate perfonnance and enforcement of the contract where it is consistent
with and in furtherance of the agreed-upon terms of the contract or where it
effectuates the reasonable contractual expectations of the parties.

Brown v. American Prop. }.Igmt. Corp., 167 Or. App. 53, 63 (2000) (internal quotation marks
omitted), quoting Sheets v. Knight, 308 Or. 220, 233 (1989). Moreover, "it is only the
objectively reasonable expectations of parties that will be examined in determining whether the
obligation of good faith has been met." Tolbert v. First Nat'! Bank, 1991 Or. 312 Or. 485, 494
(1991 ). However, it is also settled Oregon law that:
the implied duty of good faith and fair dealing ... cannot expand the parties'
substantive duties under a contract; rather, it relates to the perfornmnce of the
contract. See Zygar v. Johnson, 169 Ore. App. 638, 646, 10 P.3d 326 (2000), rev
den, 331 Ore. 584, 19 P.3d 356 (2001) (a party's duty of good faith in the
performance of a contract cannot contradict an express contractual term nor
otherwise provide a remedy for an unpleasantly motivated act that is expressly
permitted by the contract). Thus, the duty of good faith and fair dealing--which
serves to effectuate the objectively reasonable expectations of the patiies--may be
implied as to a disputed issue only if the parties have not agreed to an express
term that governs that issue; indeed, the reasonable expectations of the patiies
are irrelevant if the parties have agreed to an express tenn governing the issue.

Gibson v. Douglas County, 197 Or. App. 204, 217 (2005) (emphasis supplied; some citations
omitted).
Robinson's claim fails for two independent reasons. First, renewal of the parties'
franchise relationship was governed by the express renewal provisions of the 2004 Franchise
Page 26 - OPINION AND ORDER

Agreement, such that a claim for breach of the implied covenant will not lie under Oregon law.
Second, for reasons discussed at length above, Robinson could have had no objectively
reasonable expectation of entitlement to renewal of the franchise agreement on any teims, let
alone on the same terms that permitted him to continue operating the Robinson Animal Hospital
during the initial term of the franchise. In consequence, Robinson cannot state a claim for breach
of the implied covenant. For the same reasons adduced above in connection with Robinson's
breach of contract claim, the deficiencies in his claim cannot be cured by amendment, and the
claim for breach of the implied covenant (the third count of Robinson's first enumerated claim
for relief) is dismissed with prejudice.

V.

Robinson's Claim for Intentional Interference with Economic Relations
Robinson takes the position that, by imposing purportedly improper conditions on its

consent to renewal of the 2004 Franchise Agreement, defendants intentionally interfered with his
economic relations with the customers and clients of the Knoxville franchise. Under Oregon
law:
To state a claim for intentional interference with economic relations, a plaintiff
must allege: (I) the existence of a professional or business relationship;
(2) intentional interference with that relationship; (3) by a third party;
(4) accomplished through improper means or for an improper purpose; (5) a
causal effect between the interference and damage to the economic relations; and
(6) damages.

Northwest Natural Gas Co. v. Chase Gardens, Inc., 328 Or. 487, 498 (1999), citing 11IcGanty v.
Staudenraus, 321 Or. 532, 535 (1995). "Deliberate interference alone does not give rise to tort
liability." Id.; see also Top Service Body Shop v. Allstate Ins. Co., 283 Or. 20 l, 209-210 (1973)
("[A] claim [ofto1i liability for intentional interference with economic relations] is made out
when interference resulting in injury to another is wrongful by some measure beyond the fact of
Page 27 - OPINION AND ORDER

the interference itself. Defendant's liability may arise from improper motives or from the use of
improper means. They may be wrongful by reason of a statute or other regulation, or a
recognized rule of common law, or perhaps an established standard of a trade or profession.").
The Northwest Natural Gas court specified that:
To be entitled to reach a jmy, a plaintiff must not only prove that defendant[s]
intentionally interfered with [its] business relationship but also that defendant had
a duty of non-interference; i.e., that [they] interfered for an improper purpose
rather than for a legitimate one, or that defendant[ s] used improper means which
resulted in injury to plaintiff. Therefore, a case is made out which entitles
plaintiff to go to a jury only when interference resulting in injury to another is
wrongful by some measure beyond the fact of the interference itself.
Northwest Natural Gas, 328 Or. at 498 (citations, internal quotation marks omitted). The court

further explained that:
[I]fliability in tort is to be based on an actor's purpose, then the purpose must be
to inflict irtjury on the plaintiff "as such." And, if liability in tort is based on an
actor's means, then the means must violate some objective, identifiable standard,
such as a statute or other regulation, or a recognized rule of common law, or,
perhaps, an established standard of a trade or profession.
Id. (citations omitted). Under Oregon law, therefore, a third-party's interference with another

party's economic relations is not improperly motivated when its purpose is the pursuit of the third
parties' own interests. See, e.g., Eusterman v. Northwest Permanente, P.C., 204 Or. App. 224,
23 8 (2006) ("not improper" for a corporate party's actions to be motivated to maximize its
profits); Top Service, 283 Or. at 212 (not improper for a patiy to be motivated to pursue its own
business purposes "as it saw them").
Moreover:
"Improper purpose" in interference with economic relations cases (sometimes
referred to as "improper motive") is analyzed under Oregon law by reference to
ce1iain provisions of the Restatement (Second) of Torts (1974). See, e.g., Uptown
Heights Associates v. Seafirst Corp., 320 Ore. 638, 653, 891P.2d639 (1995)
Page 28 - OPINION AND ORDER

(refening to Restatement at § 766); Top Service Body Shop v. Allstate Ins. Co.,
283 Ore. 201, 206-10, 582 P.2d 1365 (1978) (referring to section 766 of the
original Restatement ofT01is (1939) as well as to sections 766, 776B, and 767 of
the tentative draft of the Restatement (Second) concerning "improper motives" and
"improper means"). While Restatement section 766 generally describes the
components of the tort, section 768 specifically concerns intentional interference
with business relations when the parties are business competitors. Section 768(1)
provides:
"One who intentionally causes a third person not to enter into a
prospective contractual relation with another who is his competitor or not
to continue an existing contract tenninable at will does not interfere
improperly with the other's relation if
"(a) the relation concerns a matter involved in the competition between
the actor and the other and
"(b) the actor does not employ wrongful means and
"(c) his action does not create or continue an unlawful restraint of trade
and
"(d) his purpose is at least in part to advance his interest in competing
with the other."
(Emphasis added.) Comment g to section 768 amplifies subsection (d):
"The rule stated in this Section developed to advance the actor's
competitive interest and the supposed social benefits arising from it. If his
conduct is directed, at least in part, to that end, the fact that he is also
motivated by other impulses, as, for example, hatred or a desire for
revenge is not alone s1d]icient to make his interference improper. But if
his conduct is directed solely to the satisfaction of his spite or ill will and
not at all to the advancement of his competitive interests over the person
harmed, his interference is held to be improper."
(Emphasis added.)
Douglas lvfed. Ctr. LLC v. }vfercy }.fed. Ctr., 203 Or. App. 619, 630-631 (2006) (footnote
omitted; emphasis original). By contrast, where the pmiies to an intentional interference with
economic relations claim are not business competitors, the improper purpose requirement is

Page 29 - OPINION AND ORDER

satisfied where the interfering party's motive is in part improper, without regard to whether that
party's motive is, in addition, in part to advance that paiiy's own business interests. See, e.g., Top

Service, 283 Or. at 209-211; Restat 2d. ofT01ts, § 766.
Notwithstanding the foregoing:
When a party invokes an express contractual remedy in circumstances specified in
the written contract -- conduct that reflects, by definition, the reasonable
expectations of the parties -- that party cannot be liable for intentional interference
with economic relations based solely on that party's reason for invoking the
express contractual remedy. That is because, if the defendant has interfered with
the plaintiff's economic relations, the defendant has done so for a "legitimate"
purpose, Straube [v. Larson], [287 Or. 357,] 361 [(1979)] -- invocation of an
express, written contractual remedy -- in such circumstances.

Uptown Heights Assocs. Ltd. Partnership v. Seafirst Corp., 320 Or. 638, 651-652 (1995).
As pied in his Amended Complaint, Robinson's theory of defendants' intentional
interference is premised solely on defendants' purp01tedly "wrongful conduct" - that is to say,
improper means - in failing to renew the Knoxville franchise, in assuming ownership and
operation thereof following the expiration of the initial ten-year tenn of the parties' agreement,
and in forming relationships with the then-existing customers of the franchise. See Amended
Complaint, if 63; see also id. at if 65. In his briefing in opposition to defendants' motion to
dismiss and at oral argument in connection therewith, Robinson additionally argued that in so
doing defendants acted with improper purpose, namely the purpose(s) of increasing the
profitability of their business enterprises generally·and of eliminating the Banfield franchise
program in paiticular in order to capture the profits therefrom for themselves.
Because Robinson does not plead it, this court arguably is under no obligation to consider
Robinson's theoty of improper purpose in evaluating the merits of defendants' motion. See, e.g.,

Pickern v. Pier I Imps. (US.), Inc., 457 F.3d 963, 968-969 (9th Cir. 2006). However, I note that
Page 30 - OPINION AND ORDER

it would be futile to permit Robinson to amend his complaint a second time to allege defendants'
improper purpose. It is clear that Robinson and the defendants are business competitors, and it is
Robinson's express position that defendants' purp01iedly improper purpose has been - at least in
pati but apparently in its entirety- to increase its own profits at Robinson's expense, including by
eliminating the Banfield franchise program. Not only is the elimination of the franchise program
a proper purpose both for refusing to renew and for taking over a franchise and its customers as
expressly provided for in the parties' agreement, and not only is profit-seeking a proper purpose
as a matter of law among business competitors, but also, as discussed above, even where profitseeking constitutes only a component of a business-competitor's purpose, the effect of its
presence is to render nugatory any additional, otherwise improper animus for purposes of the tort.

See Eusterman, 204 Or. App. at 238; Top Service, 283 Or. at 212; Douglas i\!led Ctr., 203 Or.
App. at 630-631. As a matter of law, therefore, Robinson cannot establish defendants' actionably
improper purpose underlying their complained-of conduct.
As to Robinson's theory of improper means, as discussed at length above defendants'
conduct in refusing to renew the Knoxville franchise was, under the circumstances, proper and
permitted under the patiies' contract, and Robinson's claim cannot survive on the basis of
defendants' refusal to renew. Also as discussed above, the parties' agreement expressly provided
that defendants would have the right to assume ownership and operation of the fotmer Knoxville
franchise following expiration of its terin, and therefore defendants' conduct in so doing similarly
cannot supp01i Robinson's tort claim. See Uptown Heights, 320 Or. at 651-652. Finally,
defendants' conduct in forming relationships with the customers of the former Knoxville
franchise after assuming ownership and operation thereof is patently not improper in light of the

Page 31 - OPINION AND ORDER

provisions affording defendants the express right to begin operating the former franchise after
expiration of the parties' agreement. In consequence, Robinson has likewise failed to allege
improper conduct sufficient to state a claim for intentional interference.
Because Robinson's theory of improper means is premised on the inaccurate proposition
that defendants breached the paiiies' agreement by conditioning renewal of the Knoxville
franchise on Robinson's compliance with the non-competition provisions of the 2014 Chatier
Practices Agreement, and because Robinson expressly concedes that defendants' purpose was at
least in part to increase its own profits, the deficiencies in Robinson's claim cannot be cured by
amendment. Robinson's intentional interference claim is therefore dismissed with prejudice.

VI.

Robinson's So-Styled "Claim" for Disregard of Defendants' Corporate Formalities
As noted above, disregard of corporate formalities, or piercing the corporate veil, is a

mechanism for recovery of damages, and is not an independent cause of action. Because, for
reasons discussed above, Robinson's pleading does not otherwise state any claim for relief, it is
unnecessary to consider the "claim" for disregard.' To whatever extent Robinson intended the
so-styled claim for disregard of defendants' corporate formalities to state a claim for relief, it is
therefore dismissed with prejudice.

VII.

Robinson's Prayer for Damages
Because Robinson's pleading does not state a claim for relief, it is unnecessary to consider

defendants' alternative motion to strike his prayer for damages. The alternative motion is
therefore denied as moot.

5

Robinson expressly concedes that this "claim" is "premature" at this stage of these
proceedings.
Page 32 - OPINION AND ORDER

CONCLUSION
For the reasons set forth above, defendants' motion (#31) to dismiss is granted in its
entirety, each of Robinson's claims is dismissed with prejudice, and defendants' alternative
motion to strike is denied as moot.
(

Dated this 16th day of April, 2015.

).

(

~·tLM.lIJ·r-rrL\rt/(/'>
'\ .)
,
.

Honorable Paul Papak ~
United States Magistrate Judge

Page 33 - OPINION AND ORDER