Opinion
CV 01-09971 RSWL (JWJx)
October 6, 2003
RULING
Before the Court are Plaintiffs, Baskin-Robbins, Incorporated and Baskin-Robbins, USA, claims against Defendants Taj California, Incorporated, Aijaz Ali Taj, and Fatima Ali Taj for Breach of their Franchise Agreements for underreporting of sales and failure to comply with the "obey all laws" and goodwill clauses. Plaintiffs also claim Defendants breached their post-termination obligations under the Franchise Agreements and as a result violated laws against trademark infringement and unfair competition. Finally, Plaintiffs claim Defendants breached the Moorpark Store Sublease Agreement for underreporting sales and failing to quit the premises upon termination of their Moorpark Franchise Agreement.
Defendants filed counter claims for reimbursement of $25,000 (plus interest) of their money held in escrow from the sale of their Simi Valley Store, reimbursement for over-collection of franchise fees from their Moorpark Store, reimbursement for $12,000 (plus interest) spent on extensions of Franchise Agreements, and $8,448 (plus interest) for improvements made to the Simi Valley store in May 1994.
The Court carefully reviewed and considered all the testimony and documentary evidence presented in this trial. The Court rules as follows:
The Defendant, Aijaz Ali Taj's testimony lacked credibility and his accountant, Gerald Hartzell's testimony was less than completely credible.
Plaintiffs' witnesses (Jack Laudermilk, Joanna Siback, Keith Bakker, Scott Cooper, Robert Taylor, and Michael Durney) were all credible.
Defendants have breached their Franchise Agreements by underreporting their sales, failing to obey all laws, injuring Baskin-Robbins' good will, failing to maintain adequate books and records and comply with generally accepted accounting principles, and failing to comply with their post-termination obligations. These breaches have damaged Plaintiffs who have suffered damages equal to $38,277 plus interest of $20,630 accrued as stated in the Franchise Agreements at 1.5 percent. Thus, the damages total $58,907 as of September 18, 2003, the date Robert Taylor testified.
Defendants have breached the Moorpark Store Sublease by underreporting sales and failing to comply with post-termination obligations. The sublease is terminated with no further monetary damages awarded to Plaintiffs.
Defendants are liable for trademark infringement and unfair competition after notice of termination. No monetary damages are awarded on this claim.
Due to Defendants' breaches, this Court finds appropriate the termination of the Franchise Agreements and the Moorpark Store Sublease Agreement. Therefore, this Court grants Plaintiffs' request for a preliminary injunction enforcing any post-termination obligations of the Franchise Agreements and the Moorpark Store Sublease.
Finally, Defendants are granted attorneys' fees and costs resulting from breach of the Franchise Agreements, as provided in the Franchise Agreements.
As to the Counter Claims, the Court awards the $25,000 in escrow plus any interest accrued in the escrow account on the $25,000 to Plaintiffs to offset damages owed by Defendants.
The Court finds no over collection of franchise fees from the Moorpark store. Plaintiffs collected fees according to the Moorpark Store Franchise Agreement and Moorpark Store Sublease. But even if there were any claim of over collection, it is barred by general release.
As to the $12,000 Defendants paid for extensions to their Franchise Agreements, Plaintiffs agreed that if they prevailed, they would credit Defendants the $12,000 to offset damages owed by Defendants. This offset is granted.
Defendants cannot recover the $8,448 they spent to improve the Simi Valley store because the claim is' barred by the statute of limitations, the general release, and their counsel's failure to originally plead the counterclaim.
Accordingly, the total damages for Plaintiffs are $58,907 less the $25,000 in escrow and $12,000 offset. Judgment is for Plaintiffs in the amount of $21,907 plus additional interest accrued on the $38,277 since September 18, 2003 until judgment is entered — calculated according to the Franchise Agreement. Costs and attorneys' fees are granted to Plaintiffs.
The Court adopts the findings of fact and conclusions of law proposed by Plaintiffs and modified by the Court.