Jani-King Franchising Inc v. Jani-King (GB) Ltd
MEMORANDUM OPINION AND ORDER granting 179 Motion for Summary Judgment and denying 185 Motion for Summary Judgment. (Ordered by Judge Jane J. Boyle on 10/20/2017) (ran)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
JANI-KING FRANCHISING, INC.,
§ CIVIL ACTION NO. 3:13-CV-4136-B
JANI-KING (GB) LTD. and IAN §
MEMORANDUM OPINION AND ORDER
Before the Court are the parties’ motions for summary judgment. Docs. 179 & 185. For the
reasons that follow, the Court GRANTS Plaintiff’s, Doc. 179, and DENIES Defendants’, Doc. 185.
This case arises out of a contract dispute. Plaintiff Jani-King Franchising, Inc (Jani-King) is
a commercial cleaning company. In 1992, Defendant Jani-King GB LTD (JKGB) became Jani-King’s
regional franchisee in Great Britain. Doc. 189, Pl.’s Resp., 2. Its task was to license unit franchisees,
entities responsible for doing the actual cleaning.
In April 2005, JKGB and Jani-King entered into an agreement (Agreement) to extend their
business relationship to 2029. Doc. 186, Defs.’ Br. in Supp., 3. Under the Agreement, Jani-King
allowed JKGB to continue operating as its franchisee in exchange for franchisee fees and royalties
The facts are derived from the parties’ pleadings, summary-judgment briefs, and evidentiary
submissions. Unless characterized as a contention by one of the parties, the facts are undisputed.
(Fees). Defendant Ian Thomas, JKGB’s majority shareholder and director, signed a personal guaranty
in connection with the Agreement. He promised to pay Jani-King “all monies due . . . under the
[Agreement]” if JKGB could not. Doc. 181, App’x to Pl.’s Mot. for Summ. J., 13. JKGB stopped
paying its Fees in 2011 and terminated the Agreement in 2014. Doc. 186, Defs.’ Br. in Supp., 3–4.
Thomas refused to pay the Fees that accrued before JKGB terminated the Agreement. Doc. 189, Pl.’s
Jani-King brought this breach-of-contract suit against Defendants JKGB and Thomas
(collectively Thomas) to recover Fees from October 2011 to January 2014, plus interest. Doc. 189,
Pl.’s Resp., 3. In April 2016, the Court granted summary judgment in favor of Jani-King on its
breach-of-contract claim and against Thomas on his breach-of-contract counterclaim. Doc. 148,
Order, at 6–7. Thomas filed a motion for reconsideration, Doc. 151, which this Court denied, Doc.
160, Order. The Court administratively closed this case after determining that “all claims between
all parties ha[d] been adjudicated.” Doc. 161, Order. Thomas appealed. Doc. 173, Notice of Appeal.
The Fifth Circuit dismissed the appeal for lack of appellate jurisdiction because this Court had not
resolved the personal-guaranty claim against Thomas. Doc. 174, J. of Fifth Cir. Thus, this case has
been whittled down to one issue: whether Thomas is liable to Jani-King for unpaid Fees that accrued
before the termination of the Agreement under the personal guaranty. Both parties have treated this
issue in their motions for summary judgment, which are ripe for review.
Summary judgment is appropriate “if the movant shows that there is no genuine dispute as
to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
A dispute “is ‘genuine’ if the evidence is sufficient for a reasonable jury to return a verdict for the
non-moving party.” Burrell v. Dr. Pepper/Seven Up Bottling Grp., 482 F.3d 408, 411 (5th Cir. 2007).
And a fact “is ‘material’ if its resolution could affect the outcome of the action.” Id.
The summary judgment movant bears the burden of proving that no genuine issue of material
fact exists. Latimer v. Smithkline & French Labs., 919 F.2d 301, 303 (5th Cir. 1990). Usually this
requires the movant to identify “those portions of the pleadings, depositions, answers to
interrogatories, and admissions on file, together with affidavits, if any, which it believes demonstrate
the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)
(internal quotation marks omitted). But if the non-movant ultimately bears the burden of proof at
trial, the movant may satisfy its burden just by pointing to the absence of evidence supporting the
non-movant’s case. Id. at 322–23.
If the movant meets that burden, then the non-movant must “show with significant probative
evidence that there exists a genuine issue of material fact.” Hamilton v. Segue Software Inc., 232 F.3d
473, 477 (5th Cir. 2000) (internal quotation marks omitted). And significant probative evidence is
just that: significant. See Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (per curiam).
“[M]etaphysical doubt as to material facts,” “conclusory allegations,” “unsubstantiated assertions,”
or a mere “scintilla of evidence” will not do. Id.(internal citations and internal quotation marks
omitted). Rather, “the non-movant must go beyond the pleadings and present specific facts
indicating a genuine issue for trial.” Bluebonnet Hotel Ventures, L.L.C. v. Wells Fargo Bank, N.A., 754
F.3d 272, 276 (5th Cir. 2014).
To be sure, the court views evidence in the light most favorable to the non-movant when
determining whether a genuine issue exists. Munoz v. Orr, 200 F.3d 291, 302 (5th Cir. 2000). The
presence of cross-motions does not change this approach: The court will “review each party’s motion
independently, viewing the evidence and inferences in the light most favorable to the non-moving
party.” Ford Motor Co. v. Tex. Dep’t of Transp., 264 F.3d 493, 498 (5th Cir. 2001). But it need not
“sift through the record in search of evidence to support a party’s opposition to summary judgment.”
Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998) (quoting Skotak v. Tenneco Resins,
Inc., 953 F.2d 909, 915–16 & n.7 (5th Cir. 1992)). Simply put, the non-movant must “identify
specific evidence in the record” and “articulate the precise manner in which that evidence supports
[its] claim.” Id. If it cannot, then the court must grant summary judgment. Little, 37 F.3d at 1076.
Jani-King argues that Thomas breached his personal guaranty and is therefore liable for
JKGB’s unpaid Fees. Doc. 180, Pl.’s Br. in Supp., 1–2. Thomas asserts that Jani-King cannot invoke
the personal guaranty because it has not mitigated its termination-related damages, which Thomas
contends is a condition precedent to enforcement of the personal guaranty. Doc. 186, Defs.’ Br. in
Supp., 2. Thomas also argues Jani-King cannot enforce the personal guaranty because JKGB’s failure
to pay the Fees was outside of JKGB’s control. Id. at 9.
“A guaranty is an undertaking by the guarantor to answer for the payment of some debt . .
. of another person in the event of default.” United States v. Vahlco Corp., 800 F.2d 462, 465 (5th Cir.
1986). To enforce the personal guaranty, Jani-King must establish “proof of (1) the existence and
ownership of the guaranty contract, (2) the terms of the underlying contract by the holder, (3) the
occurrence of the conditions upon which liability is based, and (4) the failure or refusal to perform
the promise by the guarantor.” Marshall v. Ford Motor Co., 878 S.W.2d 629, 631 (Tex. App.—Dallas,
1994, no writ). Thomas argues Jani-King cannot establish the third element because Jani-King has
not fulfilled the mitigation condition and because JKGB’s failure to pay the fees was outside of its
control. Doc. 186, Defs.’ Br. in Supp., 2, 9.
The Texas2 rules for interpreting personal guaranties are well established. Resolution Tr. Corp.
v. Northpark Joint Venture, 958 F.2d 1313, 1320 (5th Cir. 1992). When reviewing a personal
guaranty, the court’s primary goal is to ascertain the parties’ intent. Id.; see Coker v. Coker, 650
S.W.2d 391, 393 (Tex. 1983). To do so, the court “analyz[es] . . . the language of the [personal
guaranty] itself.” FDIC v. Woolard, 889 F.2d 1477, 1480 (5th Cir. 1989). If the personal guaranty
is “so worded that it can be given a certain or definite legal meaning or interpretation, then . . . the
court will construe [it] as a matter of law.” Coker, 650 S.W.2d at 393. Indeed, personal guaranties
must “be strictly construed, and may not be extended beyond [their] precise terms by construction
or implication.” Woolard, 889 F.2d at 1480. But if the personal guaranty is ambiguous, then granting
summary judgment for either party is improper. Id.
Thomas first argues that Jani-King cannot enforce the personal guaranty because it has not
mitigated its termination-related damages, which Thomas argues is a condition precedent to
enforcement. Doc. 186, Defs.’ Br. in Supp., 8. Although the personal guaranty contains a mitigation
condition, it does not apply to this case. The personal guaranty states, “As [a] pre-condition to the
enforcement of [the personal guaranty] . . . Jani-King must mitigate its losses arising from any
The Agreement indicates that disputes regarding the personal guaranty must be resolved under
English law. Doc. 181, App’x to Pl.’s Mot. for Summ. J., 16. The parties agree that Texas law and English
law do not materially differ when it comes to personal guaranties. See Doc. 180, Pl.’s Br. in Supp., 3; Doc.
186, Defs.’ Br. in Supp., 2 n.2. The Court agrees, so “there is no need to resolve the choice-of-law
question.” Playboy Enters., Inc. v. Sanchez-Campuzano, 519 F. App’x 219, 225 (5th Cir. 2013) (per curiam).
termination of the [Agreement].” Doc. 181, App’x to Pl.’s Mot. for Summ. J., 15. According to its
plain language, the mitigation condition only applies to damages “arising from . . . termination,” not
to the Fees. Jani-King seeks only the Fees JKGB owed before termination occurred. And the
termination-related damages in this case, if any, are unrelated to the damages Jani-King seeks.
Thomas’s duty to pay the Fees arises from the Agreement, not from a termination thereof. So the
mitigation condition does not apply here.
Thomas next argues that Jani-King cannot enforce the personal guaranty because its failure
to pay Jani-King the Fees was out of its control. Doc. 186, Defs.’ Br. in Supp., 9. Under the personal
Thomas shall not be responsible for guaranteeing . . . any losses, damages, or claims
arising out of or in connection with any business failure of [JKGB] . . . which is
caused directly or indirectly by . . . any act outside of the control of Thomas and/or
[JKGB] which could not be avoided by exercise of due care.
Doc. 181, App’x to Pl.’s Mot. for Summ. J., 15. Thomas asserts that JKGB could not pay the Fees
because Jani-King’s alleged fraudulent business practices prompted unit franchisees to post negative
online reviews about JKGB, which he says caused an eighty-percent decrease in JKGB’s revenue.
Doc. 186, Defs.’ Br. in Supp., 9. Without that revenue, JKGB could no longer afford to pay the Fees.
Id. And because its revenue reduction was Jani-King’s fault, and therefore out of JKGB’s control,
Thomas argues that he should not be liable for the Fees under the personal guaranty. Id.
The Court is not persuaded. This provision creates an exception for “losses, damages, or
claims,” not for the Fees, which are what Jani-King seeks. The Fees are simply what JKGB promised
to pay Jani-King in exchange for Jani-King’s permission to operate as its franchisee; they do not
constitute “losses, damages, or claims.” And even if the Fees could be considered “losses, damages,
or claims,” they did not “aris[e] out of . . . [a] business failure” —they arose out of the Agreement
The Court must enforce the personal guaranty; Thomas is required to pay the Fees because
Jani-King has demonstrated that the personal guaranty’s conditions to enforcement have been
satisfied. See Marshall, 878 S.W.2d at 631. Accordingly, the Court GRANTS Jani-King’s Motion
for Summary Judgment, Doc. 179, and DENIES Thomas’s, Doc. 185.
SIGNED: October 20, 2017.
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