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Meineke Car Care Centers, LLC v. Juliano

United States District Court, D. New Jersey, Camden Vicinage

September 26, 2018




         This matter arises out of Meineke Car Care Centers, LLC's (“Meineke” or “Plaintiff”) claims against James Juliano, Sr., Nicholas Juliano, James Juliano, Jr., JNMVR Enterprises, Inc., (“JNMVR”) and My Family Car Care, LLC, (“MFCC”) (collectively, “Defendants”) for allegedly breaching a franchise agreement, among other things. (Doc. No. 1.) Defendants[1]asserted six Amended Counterclaims against Meineke. (Doc. No. 18 (“Countercl.”).) Pursuant to Federal Rule of Civil Procedure 12(b)(6), Meineke now moves to dismiss each counterclaim but the first. (Doc. No. 19.) Although Defendants had ample opportunity to oppose the motion, they did not do so. For the following reasons, Meineke's motion is GRANTED in part and DENIED in part.

         I. BACKGROUND [2]

         In February 2011, Meineke entered into a Franchise Agreement (the “Agreement”) with JNMVR. (Countercl. at ¶ 3.) The Agreement, guaranteed by Juliano, Sr., granted JNMVR the right to operate a franchise at 912 Haddonfield Road in Cherry Hill, New Jersey. (Id. at ¶¶ 3-4.) Among its many provisions, the Agreement prohibited Juliano, Sr. from operating the franchise elsewhere without Meineke's consent. (Agreement at § 2.1.) It also required Juliano, Sr. to obtain approval before relocating the franchise, (e.g., id. at §§ 2.2, 2.6) and before selling or transferring it (id. at art. 12). And importantly, the Agreement contained a territorial protection clause. (Id. at § 2.3.) In that clause, Meineke promised, among other things, not to grant others the right to operate a franchise within a 3-mile radius of JNMVR without first giving the JNMVR Defendants a 30-day right of first refusal. (Id.) This same protection was also afforded to another franchisee in Cinnaminson (the “Cinnaminson franchisees”) in their franchise agreement.[3] (See Pl. Br., Ex. A.)

         Around August 2013, JNMVR learned that its landlord intended to sell its property by 2016 and terminate JNMVR's lease early. (Countercl. at ¶¶ 5-7.) Thereafter, the landlord made an offer to buy the franchise, but Meineke's representative, Mr. Fillman, notified Juliano, Sr. that the landlord was not approved as a franchisee. (Id. at ¶¶ 9-10.) Although for the next two years, the landlord maintained interest in buying the franchise, (id. at ¶ 11), this relationship eventually soured; both parties sued each other over the property's proposed sale, and they reached a settlement requiring JNMVR to leave 912 Haddonfield Road by August 1, 2017. (Id. at ¶¶ 18- 20.) The relocation process thus began.

         First, Juliano, Sr. found a potential purchaser and a new location on Route 70 in Cherry Hill, New Jersey, that Meineke approved, but the lease and purchase both fell through. (Id. at ¶¶ 13-17, 22.) In May 2017, “Plaintiff insisted on payment of all unpaid royalty and advertising fees before they would approve relocation of JNMVR's franchise location.” (Id. at ¶ 23.) JNMVR paid these fees (id.), and Juliano, Sr. found a second relocation option at 326 Haddonfield Road in Cherry Hill. (Id. at ¶ 24.) Meineke approved that property soon after, (id. at ¶ 25), but the lease again fell through. (Id. at ¶ 26.) At this point, Juliano, Sr. “requested help from the Plaintiff to find a new location, ” but “never received a response.” (Id. at ¶ 27.) Juliano, Sr. would continue requesting Meineke's help, but Meineke “never substantively responded to” Juliano, Sr.'s “multiple emails.” (Id. at ¶ 58.)

         On July 10, 2017, Juliano, Sr. found a third option at 54 Haddonfield Road in Cherry Hill. (Id. at ¶ 28.) With JNMVR's August 1, 2017 move-out deadline approaching, (id. at ¶ 20), Juliano, Sr., notified Mr. Fillman that if this relocation failed, JNMVR would close. (Id. at ¶ 29.) Accordingly, Juliano, Sr. requested expedited approval from Mr. Fillman and began lease negotiations. (Id. at ¶¶ 29-30.) A month later, Mr. Fillman responded to Juliano, Sr. and requested that Juliano, Sr. provide more information about the proposed relocation site. (Id. at ¶ 33.) “On August 14, 2017, more than six (6) weeks after it was first proposed, JNMVR was notified by the Plaintiff that the proposed location at 54 Haddonfield Road was .2 of a mile within another Meineke franchisees' territory in Cinnaminson, New Jersey, even though it was only 800 yards from the approved location at 326 Haddonfield Rd. and 1.2 miles from the original location at 912 Haddonfield Road.” (Id. at ¶ 34.)[4] This triggered the Cinnaminson franchisees' rights under their territorial protection clause. (Id. at ¶ 35.)

         Accordingly, Mr. Fillman informed Juliano, Sr. that “before Plaintiff could approve the relocation, [the Cinnaminson franchisees] would be entitled to a right of first refusal” under their franchise agreement, which permitted them “to purchase a new franchise license and negotiate a lease with the landlord at the proposed location, within 30 days.” (Id.) On August 18, 2017, Juliano, Sr. asked Meineke to initiate “the supposed 30-day right of first refusal processes” with the Cinnaminson franchisees for 54 Haddonfield Road. (Id. at ¶ 38.)

         That same day, the landlord at 54 Haddonfield Road gave JNMVR permission to move belongings into the premises without a lease, which they would finalize after Meineke's approval. (Id. at ¶ 39.) While moving in, Juliano, Sr. “requested that Plaintiff update their web site to reflect the new location, until the territorial issue with the Cinnaminson franchisees was resolved, ” but “Plaintiff responded that they could not update the website as requested, at that time.” (Id. at ¶ 41.) Around September 5, 2017, after the move was complete, Juliano, Sr. “was informed verbally, that the right of first refusal details that were given to him by Mr. Fillman, were incorrect, and that the owners of the Cinnaminson franchise did not have to negotiate a lease at 54 Haddonfield Road, but instead had a year to find another location within that territory.” (Id. at ¶ 42.)

         Two days later, Juliano, Sr. received an email “from the Plaintiff, that they had not approved the relocation to 54 Haddonfield Road, and that JNMVR should close the Center, until the right of first refusal process was completed.” (Id. at ¶ 43.) On September 11, 2017, Juliano, Sr. contacted Meineke's general counsel to clarify the right of first refusal details and learned that he “was correct in his original interpretation of the process, but the circumstances in JNMVR's situation were somehow different.” (Id. at ¶ 44.) All the while, from August 15, 2017 to September 12, 2017, Juliano, Sr. continued negotiating-unsuccessfully-with the Cinnaminson franchisees so JNMVR could relocate to 54 Haddonfield Road. (Id. at ¶ 45.) Juliano, Sr. “repeatedly requested help from the Plaintiff's representatives to mediate these negotiations as they promised to do, ” but “Plaintiff never complied with those promises.” (Id. at ¶ 45.) Ultimately, JNMVR rescinded its relocation request and shut down at 54 Haddonfield Road. (Id. at ¶¶ 48-49.) Juliano, Sr. also advised Meineke's representatives that JNMVR was selling its assets to another entity, My Family Car Care, which would run an independent car care business at 54 Haddonfield Road. (Id. at ¶¶ 49-51.) My Family Car Care was formed by James Juliano, Jr. and Nicholas Juliano, who signed a lease at 54 Haddonfield Road on September 18, 2017. (Id. at ¶¶ 50-51.)

         On September 28, 2017, Juliano, Sr. attended Meineke's regional sales meeting, when he spoke with Meineke's President, Mr. Daniel Rivera. (Id. at ¶ 55.) “Mr. Rivera asked Mr. Juliano, Sr. if he would accept the Plaintiff as a mediator” in the Cinnaminson franchisee dispute. (Id. at ¶ 56.) “Mr. Rivera promised that he would reach out to [them], ” but “to date, Mr. Rivera has never followed through with this promise.” (Id. at ¶ 57.) On November 7, 2017, Juliano, Sr. proposed one final relocation site to Mr. Fillman, who responded about two weeks later asking for more information. (Id. at ¶ 60-61.) Thereafter, Mr. Fillman advised Juliano, Sr. that Meineke would not approve the proposed site or any other, and around December 4, 2017, Meineke filed the Complaint in this matter. (Id. at ¶¶ 63-65.)

         Meineke's suit alleges that when Defendants began operating MFCC, which it calls a “copy-cat, knock off business offering the same types of goods and services” as Meineke, they breached their franchise agreement and infringed Meineke's trademarks. (Pl. Br. at 1.) The Defendants filed an Amended Answer and Counterclaims, asserting six counterclaims for breach of contract, breach of the implied covenant of good faith and fair dealing, fraudulent misrepresentation, negligent misrepresentation, tortious interference with contract/prospective contractual relations, and unfair competition. (Doc. No. 18.) Meineke now moves to dismiss each counterclaim but the first. Defendants have not opposed the motion, but the Court must still analyze whether they have stated claims on the merits. See Stackhouse v. Mazurkiewicz, 951 F.2d 29, 30 (3d Cir. 1991).


         “A motion to dismiss a counterclaim is properly evaluated under the familiar Rule 12(b)(6) standard.” Signature Bank v. Check-X-Change, LLC, No. 12-2802, 2013 WL 3286154, at *2 (D.N.J. June 27, 2013). Under that standard, “courts accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (quoting Phillips v. Cty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)). In other words, a complaint survives a motion to dismiss if it contains enough factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007).

         To make this determination, a court conducts a three-part analysis. Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010). First, the court must “tak[e] note of the elements a plaintiff must plead to state a claim.” Id. (quoting Iqbal, 556 U.S. at 675). Second, the court should identify allegations that, “because they are no more than conclusions, are not entitled to the assumption of truth.” Id. at 131 (quoting Iqbal, 556 U.S. at 680). Finally, “where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief.” Id. (quoting Iqbal, 556 U.S. at 680). This plausibility determination is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679. A complaint cannot survive where a court can only infer that a claim is merely possible rather than plausible. Id.

         III. ...

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