Opinion
NO. COA12-930
01-15-2013
LIVE, INC., Plaintiff, v. DOMINO'S PIZZA, LLC, MARK RUDD, GERALD CARPENTER, & STEVE KUONE, Defendants.
The Farrell Law Group, P.C., by Richard W. Farrell, for Plaintiff. Nexsen Pruet, PLLC, by Corby C. Anderson, and Gray, Plant, Mooty, Mooty & Bennett, P.A., by Quentin R. Wittrock, for Defendant Domino's Pizza, LLC.
An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.
Vance County
No. 12 CVS 164
Appeal by Defendants from injunction entered 23 April 2012 and order entered 7 May 2012 by Judge Carl R. Fox in Vance County Superior Court. Heard in the Court of Appeals 12 December 2012.
The Farrell Law Group, P.C., by Richard W. Farrell, for Plaintiff.
Nexsen Pruet, PLLC, by Corby C. Anderson, and Gray, Plant, Mooty, Mooty & Bennett, P.A., by Quentin R. Wittrock, for Defendant Domino's Pizza, LLC.
STEPHENS, Judge.
Procedural History and Factual Background
This appeal is interlocutory, arising from the trial court's entry on 23 April 2012 of a preliminary injunction prohibiting Defendant Domino's Pizza, LLC, from terminating Plaintiff Live, Inc.'s Domino's Pizza franchise.
Defendant Domino's also appeals from the trial court's denial of its motion to dissolve the preliminary injunction by order entered 7 May 2012.
Domino's is the franchisor of pizza stores across the country. In 2006, Conan Mak signed a franchise agreement with Domino's to operate a pizza store in Henderson, North Carolina. That same year, Mak began operating the store through a corporation he formed for that purpose, Plaintiff Live, Inc. In 2009, Plaintiff began receiving notices from Domino's that its franchise was in default on certain obligations regarding quality, cleanliness, and food safety under the franchise agreement. On 21 October 2010, Domino's delivered to Plaintiff a notice of termination of Plaintiff's franchise. However, Domino's never attempted to enforce the notice of termination, but rather stayed its enforcement of the notice for some 17 months. During this time, Plaintiff continued to operate the pizza store as usual.
In early 2012, Domino's notified Plaintiff that the previously-noticed termination would take effect on 25 February 2012. In response, on 23 February 2012, Plaintiff sought and obtained an ex parte temporary restraining order to block termination of the franchise. Plaintiff also moved for a preliminary injunction. Following a hearing on the motion, the trial court entered an order granting Plaintiff a preliminary injunction on 23 April 2012. The preliminary injunction ordered that the franchise relationship between the parties continue to operate per the franchise agreement "except as to the terms of Section 18.2.1 "Immediate Termination by Domino's — Upon Written Notice" of the Franchise Agreement, or any other term of the Franchise Agreement providing for termination of the Franchise Agreement by . . . Domino's[.]" Domino's then moved to dissolve the preliminary injunction, and on 7 May 2012, the court denied that motion. From the injunction and order, Domino's appeals. On 4 September 2012, Plaintiff moved this Court to dismiss the appeal as interlocutory and to impose sanctions for the "frivolous appeal" by Domino's. That motion was referred to this panel. Additionally, on 13 August 2012 Plaintiff moved to continue the trial court proceedings during the pendency of this appeal. This Court allowed that motion by order entered 29 August 2012.
As discussed below, we dismiss this appeal. However, we deny Plaintiff's motion for sanctions.
Grounds for Appellate Review
"In general, only final orders and judgments may be appealed." J & B Slurry Seal Co. v. Mid-South Aviation, Inc., 88 N.C. App. 1, 4, 362 S.E.2d 812, 814 (1987).
The purpose of a preliminary injunction is ordinarily to preserve the status quo pending trial on the merits. Its impact is temporary and lasts no longer than the pendency of the action. Its decree bears no precedent to guide the final determination of the rights of the parties. In form, purpose, and effect, it is purely interlocutory. As a result, issuance of a preliminary injunction cannot be appealed prior to final judgment absent a showing that the appellant has been deprived of a substantial right which will be lost should the order escape appellate review before final judgment. The appellant has the burden of showing that a substantial right would be prejudiced without immediate review.CB&I Constructors, Inc. v. Town of Wake Forest, 157 N.C. App. 545, 549, 579 S.E.2d 502, 504 (2003) (citations and quotation marks omitted).
There has . . . evolved a two-part test of the appealability of interlocutory orders under the "substantial right" exception . . . . First, the right itself must be "substantial." Second, the enforcement of the substantial right must be lost, prejudiced or be less than adequatelyJ & B Slurry Seal Co., 88 N.C. App. at 5-6, 362 S.E.2d at 815 (citations omitted).
protected by exception to entry of the interlocutory order.
Here, Domino's asserts that the substantial right at risk "is Domino's ability to control its brand and to enforce its contractual right to terminate a franchisee whose failure to comply with Domino's standards not only does irreparable harm to the franchise system's goodwill, but also poses a health risk." There is no case law in this State suggesting that a party's desire to enforce the terms of a common business contract such as the franchise agreement between the parties here rises to the level of an immediately appealable substantial right.
Further, the main case relied upon by Domino's, Town of Knightdale v. Vaughn, 95 N.C. App. 649, 383 S.E.2d 460 (1989), is easily distinguishable from the present appeal. Vaughn involved a preliminary injunction which prevented the defendant from operating his used car lot which the plaintiff town asserted was in violation of local zoning ordinances. Id. at 650, 383 S.E.2d at 461. This Court held that, "although [the] defendant's appeal [wa]s from an interlocutory order, [the] defendant would be deprived of a substantial right — the right to operate his business — absent a review prior to determination on the merits." Id. at 651, 383 S.E.2d at 461.
Here, Domino's is not being prevented from operating its business as was the defendant in Vaughn. The preliminary injunction affects only a single franchise location in Domino's nationwide network of pizza stores. Domino's continues to operate its corporate business and to oversee its franchises, including that owned by Plaintiff. The preliminary injunction merely prevents Domino's from unilaterally terminating Plaintiff's franchise pending the outcome of the underlying action. Indeed, as Plaintiff notes, the preliminary injunction has actually had the effect of preserving the franchise operated by Plaintiff, such that the franchise continues to order and pay for food and other supplies from Domino's, to pay royalty and other fees to Domino's, and to be subject to supervision and inspection by Domino's.
More analogous is City of Fayetteville v. E & J Investments, Inc., in which the defendant appealed from an order granting a preliminary injunction that prevented it from offering topless dancing. 90 N.C. App. 268, 269-70, 368 S.E.2d 20, 21, disc. review denied, 323 N.C. 171, 373 S.E.2d 105 (1988). This Court determined that no substantial right of the defendant was affected because the defendant could still operate its lounge business, serve alcohol, and offer non-topless dancing. Id. at 270, 368 S.E.2d at 21. Because the impact of the injunction on the defendant's business was so limited, no irreparable harm to the defendant was foreseen. Id. In dismissing the interlocutory appeal, this Court observed that "[i]f [the] defendant [wa]s eager for an expeditious vindication of any right, privilege, or defense, it should seek a speedy determination on the merits." Id.
Here, the impact of the preliminary injunction is more like that in E & J Investments, where the appellant's business was only partially affected, and unlike the complete halt on all business activities present in Vaughn. Thus, as in E & J Investments, we see no substantial right that will be lost by Domino's nor can we foresee any irreparable harm to Domino's by preservation of the status quo pending a resolution of the case on the merits. Accordingly, this interlocutory appeal is dismissed. Plaintiff's motion for sanctions is denied.
DISMISSED.
Judges STEELMAN and MCCULLOUGH concur.
Report per Rule 30(e).