Opinion
CASE NO.: 05-61304-CIV-COHN/JOHNSON.
February 10, 2006
THIS CAUSE is before the Court upon Plaintiff/Counter-Defendant Lady of America Franchise Corporation's Motion to Dismiss Defendant/Counter-Plaintiff's Counterclaim [DE 23]. The Court has carefully considered the Motion, Defendant/Counter-Plaintiff's Response [DE 28] and Plaintiff/Counter-Defendant's Reply [DE 34], and is otherwise fully advised in the premises.
I. BACKGROUND
Defendant/Counter-Plaintiff Susan Malone ("Malone") is a former franchisee of Plaintiff/Counter-Defendant Lady of America Franchise Corporation ("LOA"). On August 3, 2005, LOA filed this action against Malone alleging breach of the parties' Franchise Agreement. [DE 1]. On October 11, 2005, Malone responded by filing an Answer and Counterclaims [DE 11] alleging causes of action for the following: 1) violation of the Florida Franchise Act, Fla. Stat. § 817.416 (Count I); 2) violation of the Florida Deceptive and Unfair Trade Practices Act, Fla. Stat. § 501.201, et. seq. (Count II); 3) violation of the Florida Sale of Business Opportunity Act, Fla. Stat. § 559.80, et. seq. (Count III); 4) violation of the Michigan Franchise Investment Law, Mich. Comp. Laws § 445.1501, et. seq. (Count IV); 5) fraudulent inducement and concealment (Count V); and 6) negligent misrepresentations and omissions (Count VI). LOA seeks to dismiss all counts of Malone's Counterclaim.
Each of Malone's counterclaims is premised upon statements allegedly made by LOA during the period of time that Malone was deciding whether she wanted to open an LOA franchise. During this time Malone received franchise information via an internet presentation, an in-person presentation, and LOA's Uniform Financial Offering Circular ("UFOC"). (Counterclaims ¶ 22 [DE 11].) Malone asserts that the presentations provided information about the LOA franchise including the success rate of franchisees, average profits, membership expectations and specific franchisee success stories. (Id. ¶¶ 40 — 46.) Malone alleges that these statements were misleading, primarily because they focused on the success rate of LOA franchises and referred to exceptional franchisee success stories rather than average success rates. (Id. ¶¶ 41, 42, 46.) But for these statements, Malone alleges that she would not have entered into the Franchise Agreement. (Id. ¶ 50.) Further, Malone alleges that the statements were inconsistent with the information contained in the UFOC. (Id. ¶ 45.) She states that the UFOC was provided for a brief review during the in-person meeting, and again for Malone to keep after she made a $2,500 payment. (Id.) Malone is now seeking injunctive and monetary relief.
II. ANALYSIS A. Motion to Dismiss Standard
In its Motion to Dismiss, LOA asserts that Malone's counterclaims should be dismissed for failure to state a claim upon which relief may be granted. It is long settled that "a complaint should not be dismissed for failure to state a claim unless it appears beyond a doubt that the plaintiff could prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41 (1957); Marsh v. Butler County, 268 F.3d 1014, 1022 (11th Cir. 2001). The allegations of the claim must be taken as true and must be read to include any theory on which the plaintiff may recover. Cramer v. Florida, 117 F.3d 1258, 1262 n. 8 (11th Cir. 1997); see also 268 F.3d at 1023;Linder v. Portocarrero, 963 F.2d 332, 334-36 (11th Cir. 1992) (citing Robertson v. Johnston, 376 F.2d 43 (5th Cir. 1967)).B. Counterclaim Alleging Violation of the Florida Franchise Act (Count I)
LOA seeks to dismiss Count I of Malone's Counterclaims which alleges a violation of the Florida Franchise Act ("FFA"), Fla. Stat. § 817.416 (2005). The FFA states, in relevant part:
(1) Definitions — For the purpose of this section:
(a) The term "person" means an individual, partnership, corporation, association, or other entity doing business in Florida.
. . . .
(2) Declarations. —
(a) It is unlawful, when selling or establishing a franchise or distributorship, for any person:
1. Intentionally to misrepresent the prospects or chances for success of a proposed or existing franchise or distributorship;
2. Intentionally to misrepresent, by failure to disclose or otherwise, the known required total investment for such franchise or distributorship
(3) Civil provisions. — Any person, who shows in a civil court of law a violation of this section may receive a judgment for all moneys invested in such franchise or distributorship.
LOA alleges that Malone: 1) does not have standing to maintain this claim because Malone is not "doing business in Florida;" and 2) Malone's alleged reliance on LOA's oral statements is unjustified because the plain language of the Franchise Agreement contains a clear and unambiguous disclaimer. Malone alleges that she is protected by the FFA because the Franchise Agreement contains a Florida choice of law provision. Additionally, Malone states that the parol evidence rule does not prohibit the introduction of evidence of prior oral agreements and representations even though the written agreement contains an integration clause.
1. "Doing Business in Florida" pursuant to the Florida Franchise Act
The parties do not dispute the fact that Malone's franchise was located in Michigan, not Florida. However, they disagree as to whether Malone is protected by the FFA in light of the Florida choice of law clause contained in the Franchise Agreement. The parties correctly assert that neither the Eleventh Circuit nor Florida state courts have addressed the issue of what constitutes "doing business in Florida" under the FFA. The leading case precedent on this issue is derived from three cases decided by other courts in this District.
For a further summary of the debate discussed herein, see Glenn J. Waldman, The Florida Franchise Act — Protection for the In-State Franchisor or Out-of-State Franchisee, 73 Fla. B.J. 42 (Nov. 1999) (calling for clarification by the legislature to resolve the scope of the term "doing business" in the FFA).
In both Burger King Corp. v. Holder and Burger King v. Austin, the courts denied the plaintiff's motion to dismiss the defendant's counterclaim alleging violation of the FFA, even though the defendant's franchise was not based in Florida.Holder, 844 F. Supp. 1528, 1530-31 (S.D. Fla. 1993); Austin, 805 F. Supp. 1007, 1022 (S.D. Fla. 1992). In Holder, the court reasoned that the FFA applied because the plaintiff, who allegedly made the misrepresentations, "[did] business in Florida and that portions of [the] transaction were conducted in Florida." 844 F. Supp. at 1531. In Austin, the Court found that:
by including a choice of law provision in its Franchise Agreement that provides for Florida law to govern the Agreement, [the plaintiff] is subject to the dictate of the Florida Franchise Act. Such intent to have the Agreement be subject to the laws of the State of Florida demonstrates that both [the plaintiff and the defendant] intended that they be regarded as doing business in Florida. Any other decision would be unjust; this Court and other courts have determined that the choice of law provision in [the plaintiff's] franchise agreement renders the franchisee's home state franchise act inapplicable to a dispute between [the plaintiff] and the franchisee.805 F. Supp. at 1022 (citations omitted). Following this reasoning, any contrary decision would allow Florida franchisors that include a Florida choice of law provision in their franchise agreements an effectively impenetrable advantage to state law franchise acts.
In Barnes v. Burger King Corp., the court granted the defendant's motion to dismiss the plaintiff's claim for violation of the FFA for lack of subject matter jurisdiction even though the franchise agreement contained a Florida choice of law clause. 932 F. Supp. 1441, 1442 (S.D. Fla. 1996). In so holding, the court cited to the above-referenced language in Austin, but held that an injustice would not result if the plaintiff was unable to pursue her claim under the FFA because there were other potential remedies available to the plaintiff. Id. at 1443. The court further noted that in choosing to apply Florida law, the parties effectively incorporated the FFA in its entirety, including its residency limitation, into their agreement thereby barring plaintiff from making a claim under the FFA. Id.
In this case, by including a choice of law provision, the parties made an affirmative decision to apply Florida law, as written, to disputes arising under the Franchise Agreement. In deciding whether to dismiss this claim for lack of standing, this Court looks to the plain language of the statute rather than to whether any particular holding would cause an unjust result. A reading of the statute indicates that its application is limited to situations in which both the franchisor and the franchisee do business in Florida. Section 817.416(2)(a) prohibits any "person" doing business in Florida from making intentional misrepresentations. As stated in Holder, it therefore follows that even though Malone's franchise was not located in Florida, LOA, a franchisor that does business in Florida, is the "person" that allegedly made the misrepresentations.
Having determined that LOA can be accused of violating this statute, the Court must then look to § 817.416(3) to determine whether Malone has standing to bring this claim. This section again uses the term "person" to describe those eligible to bring a claim under the FFA. This term's application to Malone is not as clear because neither the legislature nor the courts have provided guidance as to the definition of "doing business" with regards to a claim for violation of the FFA.
The Court finds the widely litigated issue of the application of Florida's long-arm statute, Fla. Stat. § 48.193 (2005), to be of assistance in this analysis. Section 48.193(1)(a) provides for jurisdiction over a person "[o]perating, conducting, engaging in, or carrying on a business or business venture in this state." In determining whether they have jurisdiction, Florida's courts are repeatedly faced with deciding whether a defendant's actions constitute "doing business in Florida." E.g. Dolphin Aviation, Inc. v. High Country Helicopters, Inc., 695 So. 2d 811, 812 (Fla. 2d DCA 1997); Vacation Ventures, Inc. v. Holiday Promotions, Inc., 687 So. 2d 286, 289 (Fla. 5th DCA 1997); McKenzie v. Bonning, 474 So. 2d 1241, 1242 (Fla. 3d DCA 1985). Some courts have interpreted this section to allow for jurisdiction over defendants who are in Florida in the "general course of business activity . . . [and] for pecuniary benefit." Meterlogic, Inc. v. Copier Solutions, Inc., 126 F. Supp. 2d 1346, 1353 (S.D. Fla. 2000) (quoting Future Technology Today, Inc. v. OSF Healthcare Sys., 218 F.3d 1247, 1249 (11th Cir. 2000)). However, in Dolphin, Florida's Second District Court of Appeals held that a non-resident defendant was doing business in Florida, and therefore subject to long-arm jurisdiction. The court based its holding on the Florida forum selection clause contained in the contract in question. The clause provided that the execution of the agreement constituted doing business in Florida, and payments were to be made to the plaintiff's office in Florida. 695 So. 2d at 812.
In this case, the Franchise Agreement contains a Florida choice of law clause. The clause states:
The Franchisee is deliberately causing the Franchisor to undertake activities and incur expenses at the Franchisor's headquarters, is aware that substantial supervision and other activities will occur and continue to occur there due to this Agreement, will direct his or her payments and communications there and has and will develop a substantial and continuing relationship with the Franchisor there.
(Motion [DE 23], Attachment B, Franchise Agreement § 11.3.) This clause provides credence to the parties' intent to establish that both Malone and LOA were doing business in Florida. Following the reasoning in Dolphin, the Court holds that this provision in conjunction with Malone's continuous relationship with LOA in Florida satisfies the residency requirement of the FFA. As such, this Court finds that Malone has standing to bring this claim under the FFA.
2. Justifiable Reliance on Oral Statements in Light of a Disclaimer in the Franchise Agreement to the Contrary
To recover under the FFA, a franchisee must demonstrate "proof of intentional words or conduct by the franchisor, concerning the prospects or chances of success of the enterprise, which were relied upon by the franchisee to his detriment, and which are not in accordance with the facts." Travelodge Int'l, Inc. v. Eastern Inns, Inc., 382 So.2d 789, 791 (Fla. 1st DCA 1980). The parties debate whether Malone's reliance on the alleged intentional misrepresentations were justified in light of the comprehensive disclaimer provision contained in the Franchise Agreement. (Mot. to Dismiss [DE 23], Ex. A, Franchise Agreement § 12.2.) The Franchise Agreement also contains a merger an integration clause. (Id. § 11.1.)
Malone correctly notes that there is a stark difference between the applicability of the parol evidence rule to common law fraud claims and statutory claims. (Resp. p. 5 n. 6 [DE 28].) A strict reading of the FFA indicates that the relevant portions of the FFA evaluate the state of mind of the franchisor and the contents of the statements or omissions made by the franchisor. The language of the statute does not dictate a need for a subjective analysis of the franchisee's reliance on the statements. Regardless, this Court is bound by Florida law and state court interpretations of the statute. The Court must conduct a subjective evaluation of the franchisee's reliance as delineated in Travelodge. This requirement differs from the interpretation of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), Fla. Stat. § 501.201, et. seq. (discussed herein in Section C), under which no subjective evidence of reliance is required. Davis v. Powertel, Inc., 776 So.2d 971, 974 (Fla. 1st DCA 2000). This distinction arises from the Legislature's clear intent to model the FDUTPA after the Federal Trade Commission Act which does not provide for a subjective reliance inquiry. This intent is included in the plain language of the FDUTPA, § 501.201(2). The FFA does not contain a similar provision.
Section 12.2 of the Franchise Agreement states:
THE FRANCHISEE AND ALL PERSONS SIGNING WITH OR FOR HIM OR HER ACKNOWLEDGE THAT THEY HAVE CONDUCTED AN INDEPENDENT INVESTIGATION OF THE SYSTEM AND THIS BUSINESS VENTURE; THIS AGREEMENT INVOLVES A HIGH DEGREE OF BUSINESS AND FINANCIAL RISK; AND ITS SUCCESS WILL BE LARGELY DEPENDENT ON THEIR ABILITY AS INDEPENDENT BUSINESSPERSONS, THEIR FINANCIAL STRENGTH AND LOCAL MARKET CONDITIONS. THE FRANCHISEE HAS INVESTIGATED HIS OR HER TRADE AREA AND BELIEVES IT WILL SUPPORT THE BUSINESS VENTURE. THE FRANCHISOR EXPRESSLY DISCLAIMS THE MAKING OF, AND THE FRANCHISEE ACKNOWLEDGES THAT HE OR SHE HAS NOT RECEIVED, ANY PROMISES OR REPRESENTATIONS, EXPRESS OR IMPLIED, ORALLY, IN WRITING OR OTHERWISE OF ASSISTANCE, EXPENSES, BENEFITS, SALES VOLUMES, PROFITS, SUCCESS OR ANY OTHER MATTER EXCEPT AS EXPRESSLY MADE IN THIS AGREEMENT OR THE FRANCHISOR'S FRANCHISE OFFERING CIRCULAR. IF ANY PROMISES OR REPRESENTATIONS HAVE BEEN MADE, THE FRANCHISEE MUST LIST THEM BELOW. THE FRANCHISOR IS RELYING ON THE FRANCHISEE TO SEE THAT ALL MATTERS ARE INCLUDED IN WRITING IN THIS AGREEMENT, IF THEY ARE NOT, THE FRANCHISEE WILL NOT BE ABLE TO RELY IN ANY WAY ON ANY PROMISES OR REPRESENTATIONS AND THE FRANCHISOR WILL NOT BE BOUND BY THEM. THE FRANCHISEE ACKNOWLEDGES THAT THE FRANCHISEE HAS HAD AMPLE TIME TO CONSULT WITH ADVISORS OF HIS OR HER OWN CHOOSING ABOUT THE POTENTIAL BENEFITS AND RISKS OF THIS AGREEMENT AND THAT HE OR SHE HAS READ AND UNDERSTOOD IT.
Section 11.1 of the Franchise Agreement states in pertinent part, "This Agreement . . . comprise[s] the entire agreement of the parties and supersede[s] all prior representations and agreements with respect to its subject matter. No representations have been made to induce execution of the Agreement that are not included."
The issue before the Court is whether the parol evidence rule bars admission of the alleged misrepresentations made by LOA. In Florida, "evidence of a prior or contemporaneous oral agreement is inadmissible to vary or contradict the unambiguous language of a valid contract." Johnson, 162 F.3d at 1309. However, there are several exceptions to this rule. In this case, the Court must determine whether the "inducement exception" applies. The "inducement exception" allows admission of parol evidence "to establish a contemporaneous oral agreement which induced the execution of a written contract, though it may vary, change, or reform the instrument." Id. at 1309-10. The party seeking to introduce the evidence bears the burden of proof. Id. at 1310. This party must submit evidence of the oral agreement that is "'clear, precise and indubitable'" and that is supported by credible witnesses who "'distinctly remember the facts to which they testify, and that they narrate the details exactly and that their statements are true.'" Id. (quoting Mallard v. Ewing, 164 So. 674, 678 (Fla. 1936) (emphasis in original).
The parol evidence rule is a substantive, not evidentiary, rule of law. Therefore, Florida law is applied to this issue. Johnson Enterprises of Jacksonville, Inc. v. FPL Group, Inc., 162 F.3d 1290, 1309 n. 47 (11th Cir. 1998).
LOA relies on Hall v. Burger King Corp., 912 F.Supp. 1509, 1529 (S.D. Fla. 1995), to support its proposition that evidence of any prior statements are inadmissible in this case. In Hall, another court in this district was faced with an identical factual scenario. Applying the test stated in Travelodge, the court granted summary judgment in favor of the franchisor and held that "[a]s a matter of law, [the franchisees] could not have justifiably relied on any alleged misrepresentations by [the franchisor] concerning the prospects of success" because of the unambiguous disclaimer clause contained in the franchise agreement. Id. at 1529. The disclaimer clause in that agreement certified that the franchisee conducted an independent investigation and had not relied on any representations or promises made by the franchisor. Id.
Malone does not address or attempt to distinguish Hall in her pleadings. Rather, Malone relies on cases which evaluate the admissibility of parol evidence to support common law fraud claims notwithstanding merger and integration clauses.Meterlogic, Inc. v. Copier Solutions. Inc., 126 F. Supp. 2d 1346 (S.D. Fla. 2000); Meiia v. Jurich, 781 So. 2d 1175 (Fla. 3d DCA 2001). In these cases, the courts held that parol evidence is admissible if "a party alleges that a contract was procured by fraud or misrepresentation as to a material fact." 126 F. Supp. 2d at 1363. An integration clause does not "'cloak defendants with immunity'" from fraudulent statements. Id.
LOA responds that although this exception seemingly applies to this case, Florida state courts have limited it to situations in which the statements were not adequately or expressly addressed by the subsequent contract. Advanced Marketing Sys. Corp. v. ZK Yacht Sales, 830 So. 2d 924, 928 (Fla. 4th DCA 2002) (limiting the application of Mejia). Such clear and unambiguous disclaimers have been found to bar admission of parol evidence because "'a person who signs a contract is presumed to know its contents.'" Hall, 912 F. Supp. at 1521 (quoting Swift v. N. Am. Co. for Life Health Ins., 677 F. Supp. 1145, 1150 (S.D. Fla. 1987)). "'[A] party cannot recover in fraud for alleged oral representations that are adequately covered or expressly contradicted in a later written contract.'" Id. (quotingHillcrest Pacific Corp. v. Yamamura, 727 So. 2d 1053, 1056 (Fla. 4th DCA 1999) (dismissing a claim for fraud because the contract contained an unambiguous disclaimer and the complaint did not evince any indication of inducement)). Other courts have placed emphasis on whether the party alleging fraud aided in drafting the agreement and/or was given opportunities to reduce any prior representations to writing. SEB S.A. v. Sunbeam Corp., No. 04-12065, 2005 WL 1926418 (11th Cir. Aug. 12, 2005) (citing Johnson v. Davis, 480 So. 2d 625, 627 (Fla. 1985)).
It should also be noted that the integration clause inMeterlogic was not as specific as those in the cases cited by LOA or in this case. See 126 F. Supp. 2d at 1362 n. 14.
In this case, Malone asserts that the integration and disclaimer clauses contained in her Franchise Agreement do not bar her from alleging reliance on statements made by LOA regarding the past performance of other LOA franchises. However, like the disclaimer in Hall, Malone's Franchise Agreement contains an extremely comprehensive and unambiguous disclaimer that directly addresses all the statements Malone seeks to introduce. The clause expressly disclaims any representations received regarding profits and successes. The clause also states the risk associated with entering into the franchise. Malone does not allege that this was anything but an arms-length transaction. The contract contained both a merger and integration clause and a complete disclaimer. The disclaimer appeared in all capital letters and there is no indication that LOA attempted to conceal its importance. It allowed for Malone to conduct an independent investigation. Malone has not alleged any facts which could lead the court to believe that LOA induced her to sign the agreement before conducting an independent review of LOA and its franchises. Additionally, the disclaimer provided an opportunity for Malone to expressly list any representations she received from LOA. Malone did not list the information she received via the internet or in-person meetings. Malone therefore disclaimed any reliance on these statements. Following the test in Travelodge, Malone cannot now establish that she relied on them to her detriment. Based on the narrow use of the parol evidence rule exception, Malone has failed to establish any set of facts which circumvent the unambiguous disclaimer contained in the Franchise Agreement. Therefore, Malone's claim for violation of the FFA is dismissed.
Malone does allege that the UFOC was not provided in accordance with FTC Rules and that hard copies of the slide presentations were collected at the conclusion of the in-person presentation. (Counterclaim [DE 11] ¶¶ 36, 39.) However, these allegations go to Malone's claim under the Florida Deceptive and Unfair Trade Practices Act, Fla. Stat. § 501.201 (2005), et. seq. ("FDUTPA"), discussed in Section C of this Order. They do not provide support for Malone's claim under the FFA because there is no indication that Malone was induced to sign the Franchise Agreement without being afforded sufficient time to review all the documents provided to her.
C. Counterclaim Alleging Violation of the Florida Deceptive and Unfair Trade Practices Act (Count II)
LOA next seeks to dismiss Count II of Malone's Counterclaims which alleges a violation of the Florida Deceptive and Unfair Trade Practices Act, Fla. Stat. § 501.201 (2005), et. seq. ("FDUTPA"). LOA alleges that this count should be dismissed because: 1) Malone lacks standing because she is not a Florida resident; and 2) Malone has failed to properly allege a cause of action under FDUTPA.
1. Standing to Allege a Claim for Violation of the Florida Deceptive and Unfair Trade Practices Act
LOA alleges that Malone's claim for violation of the FDUTPA should be dismissed because Malone is a resident of Michigan, not Florida. The FDUTPA states in relevant part, "[u]nfair methods of competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful." Fla. Stat. § 501.204(1). The plain language of the statute contains no citizenship requirement. Nonetheless, state courts in Florida are in conflict as to whether the FDUTPA applies to non-citizens.
Many Florida courts have held that in promulgating the FDUTPA, the Florida legislature intended to "bestow additional substantive remedies on the citizens of this state." Tuckish v. Pompano Motor Co., 337 F. Supp. 2d 1313, 1319 (S.D. Fla. 2004) (emphasis added); Oce Printing Sys. ISA, Inc. v. Mailers Data Services, Inc., 760 So. 2d 1037, 1042 (Fla. 2d DCA 2000); Fort Lauderdale Lincoln-Mercury, Inc. v. Corgnati, 715 So. 2d 311, 313 (Fla. 4th DCA 1998); Delgado v. J.W. Courtesy Pontiac GMC-Truck, Inc., 693 So.2d 602, 606 (Fla. 2d DCA 1997). Some courts have found this protection so important to the citizens of Florida that they have refused to give effect to forum selection clauses that preclude Florida citizens from a similar remedy in the other state. America Online, Inc. v. Pasieka, 870 So. 2d 170, 171-72 (Fla. 1st DCA 2004).
Other decisions have strictly construed the statute and found that a violation of the FDUTPA can be claimed by citizens and non-citizens alike. Millennium Communications Fulfillment, Inc. v. Office of Attorney General, Dep't of Legal Affairs, 761 So. 2d 1256 (Fla. 3d DCA 2000); Renaissance Cruises, Inc. v. Glassman, 738 So. 2d 436 (Fla. 4th DCA 1999). In Renaissance, the court was faced with whether to certify a class composed of resident and non-resident members. The court found a host of connections between the class members' trade violation claims and the state of Florida, and therefore, found that the law could apply to all members of the class. 738 So. 2d at 439. This distinction has been further supported by more recent case law which looks at whether there were sufficient contacts with Florida to warrant standing under the FDUTPA. Hutson v. Rexall Sundown, Inc., 837 So. 2d 1090 (Fla. 4th DCA 2003) (citing Stone v. Compuserve Interactive Services, Inc., 804 So. 2d 383 (4th DCA 2001).
In this case, the Court agrees with the recent holdings evaluating the level of contact with the state. Unlike the FFA discussed above, the plain language of this statute contains no reference to Florida. The Florida Legislature specifically enacted the statute to closely mimic the broad applicability of the Federal Trade Commission Act, 15 U.S.C. § 45(a)(1) (2005). Fla. Stat. § 501.204(2) ("It is the intent of the Legislature that, in construing subsection (1), due consideration and great weight shall be given to the interpretations of the . . . Federal Trade Commission Act."). Additionally, the parties specifically contracted to apply the laws of the state of Florida to any disagreements between the parties, effectually indicating that they intended to allow residents and non-residents to receive the protection of Florida laws.
Here, the alleged misrepresentations were made by LOA, a Florida corporation. Malone initially contacted LOA in Florida to inquire about the possibility of opening a LOA franchise. From that initial contact, she was given access to the internet presentation. Although Malone did not view the internet presentation in Florida, it can be inferred that it was, at least in part, designed by LOA employees located in Florida. The entire in-person meeting was conducted in Florida and Malone received all of her franchise information from LOA employees in the state. Finally, the parties clearly intended, pursuant to the forum selection clause, that Florida be the primary location for disputes regarding the Franchise Agreement. Therefore, Malone has demonstrated sufficient contacts with Florida in connection with the alleged misrepresentations to establish standing under the FDUTPA.
2. Establishing a Valid Claim for Violation of the FDUTPA
LOA alleges that even if Malone has standing to bring a claim for violation of the FDUPTA, she has failed to allege a cause of action. First, LOA alleges that Malone has failed to identify a law under which her claim arises. LOA bases this claim upon Fla. Stat. § 501.203(3)(c) which states that a violation of the FDUTPA "may be based upon . . . [a]ny law, statute, rule, regulation, or ordinance which proscribes unfair methods of competition, or unfair, deceptive, or unconscionable acts or practices." LOA alleges that Malone has failed to identify the specific law under which her claim arises. To the contrary, as noted by Malone in her response, Malone's counterclaim unambiguously references LOA's alleged violations of the rules promulgated by the Federal Trade Commission to govern disclosure to prospective franchisees, 16 C.F.R. § 436.1 (2005), et. seq. (Counterclaim [DE 11] ¶¶ 6 — 10.) Malone then indicates that the FDUPTA expressly provides that alleged violations of the FTC Rules allow for a claim for violation of the FDUPTA. (Id. ¶ 11.) Therefore, Malone has stated a claim under the FDUPTA.
Next, LOA alleges that Malone has failed to allege how LOA's actions fall within the definition of "trade and commerce." Malone alleges that she has met all of these requirements, especially in light of Fed.R.Civ.P. 8(a) which requires that a complaint set forth "a short and plain statement of the claim." The FDUPTA defines "trade or commerce" as "the advertising, soliciting, providing, offering, or distributing, whether by sale, rental, or otherwise, of any good or service, or any property, whether tangible or intangible, or any other article, commodity, or thing of value, wherever situated." Fla. Stat. § 501.203(8). Malone's failure to specifically define her interaction with LOA does not negate the fact that her counterclaim is replete with examples of instances falling within the definition of "trade or commerce." Malone's entire counterclaim is based upon alleged misrepresentations made via internet and in-person meetings in which LOA was advertising and distributing information regarding its franchises. Therefore, Malone has sufficiently plead a claim for violation of the FDUTPA.
D. Counterclaim Alleging Violation of the Florida Sale of Business Opportunities Act (Count III)
LOA seeks to dismiss Count III of Malone's Counterclaim alleging that Malone's franchise is not a "business opportunity" as defined by the Florida Sale of Business Opportunities Act, Fla. Stat. § 559.801 (2005). Malone does not dispute this allegation and notes in her response that she "is no longer pursuing violation of the Florida Sale of Business Opportunit[ies] Act." (Resp. [DE 28] p. 1 n. 1.) Therefore, Malone's Counterclaim alleging violation of the Florida Sale of Business Opportunities Act is dismissed.
E. Counterclaim Alleging Violation of the Michigan Franchise Investment Law (Count IV)
LOA seeks to dismiss Count IV of Malone's Counterclaim which alleges violation of the Michigan Franchise Investment Law ("MFIL"), Mich. Comp. Laws § 445.1501 (2005), et. seq. because: 1) given the Florida choice of law clause contained in the Franchise Agreement, this claim is barred as a matter of law; and 2) Malone cannot demonstrate justifiable reliance as required to succeed in a claim under this statute. The Court agrees with LOA's assertion that this claim is barred because of the choice of law clause contained in the Franchise Agreement, and therefore, does not reach the merits of Malone's claim under this statute.
In diversity cases, this Court must apply Florida's choice of law rules. See Forzley v. AVCO Corp. Elecs. Div., 826 F.2d 974, 978 (11th Cir. 1987) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941)). "Under Florida law, '[w]hen the parties to a contract have indicated their intention as to the law which is to govern, [the case] will be governed in accordance with the intent of the parties." Id. (quoting Dep't of Motor Vehicles v. Mercedes-Benz of North America, Inc., 408 So. 2d 627, 629 (Fla. 2d DCA 1981)); see also Mazzoni Farms, Inc. v. E.I. DuPont de Numours Co., 761 So. 2d 306, 311 (Fla. 2000).
In this case, the parties clearly contracted to apply Florida law to disputes arising from the Franchise Agreement. Malone alleges that the choice of law clause does not bar her from bringing a claim for violation of the MFIL because Michigan courts, when faced with claims from Michigan franchisees, have held that choice of law provisions do not apply to such claims. (Resp. p. 13.) Malone's contention is not supported by Florida's choice of law rules. The Franchise Agreement contains an unambiguous Florida choice of law clause. Therefore, Florida law applies to this case and Malone is barred from bringing a claim for violation of the MFIL in this Court.
F. Counterclaims Alleging Fraudulent Inducement and Concealment (Count V) and Negligent Misrepresentations and Omissions (Count VI)
Florida law states that a claim for fraudulent inducement is established by a showing that: "(1) there was a false statement concerning a material fact; (2) the representor knew or should have known that the representation was false; (3) the representor intended to induce another party to act in reliance on the false statement; and (4) that the party acted in reliance on the representation and was injured as a result." SEB S.A. v. Sunbeam Corp., No. 04-12065, 2005 WL 1926418 (11th Cir. Aug. 12, 2005) (citingJohnson v. Davis, 480 So. 2d 625, 627 (Fla. 1985)). To establish a claim for negligent misrepresentation, Malone must establish that LOA: 1) made a false statement of fact; 2) negligently failed to ascertain the truth of the statement at the time it was made; 3) made the statement with the purpose of inducing Malone to act in reliance; 4) Malone acted in reliance; and 5) Malone suffered damage as a result of the reliance. Hasenfus v. Secord, 962 F.2d 1556, 1561-62 (11th Cir. 1992) (citations omitted).
Both claims require Malone to establish that she relied on the alleged misrepresentations. The Court adopts its discussion set forth in Section B.2 above and finds that, in light of the disclaimer contained in the Franchise Agreement, there is no evidence to support Malone's claim that she justifiably relied on the statements made by LOA.
III. CONCLUSION
Based on the foregoing, it is ordered and adjudged as follows:
1. Plaintiff/Counter-Defendant Lady of America Franchise Corporation's Motion to Dismiss Defendant/Counter-Plaintiff's Counterclaim [DE 23] is GRANTED as to Counts I, III, and IV, V, and VI.
2. Plaintiff/Counter-Defendant Lady of America Franchise Corporation's Motion to Dismiss Defendant/Counter-Plaintiff's Counterclaim [DE 23] is DENIED as to Count II.
DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County, Florida.