Franchisee’s Naked Physical and Mental Setbacks Insufficient to Justify Franchisee’s Breaches and Faulty Legal Assistance

Little Caesar Enterprises, Inc. v. S&S Pizza Enterprises, Inc., 2024 U.S. Dist. LEXIS 89645 (E.D. Mich. May 17, 2024)

Prior ruling challenged by the Franchisee Defendants:

In the original Judgment, the Court:

• granted Plaintiffs’ request for declaratory relief that S & S committed material breaches of the franchise agreements between the parties, giving Plaintiffs good cause to terminate the agreements;
• ordered Defendants and anyone acting in active concert or participation with them to immediately and fully comply with the post-termination obligations in the franchise agreements;
• entered Judgment in favor of Plaintiffs and against Defendants S & S, Claeys, and Matthews, jointly and severally, in the amount of $128,818.56, plus interest, representing the liquidated damages due under the franchise agreements.

After the ruling against them, the Franchisee Defendants challenged the initial ruling arguing the following:

Defendants, through counsel, now seek to alter or amend the judgment pursuant to Federal Rule of Civil Procedure 59(e) or request relief from judgment pursuant to Federal Rule of Civil Procedure 60(b)(1) or (2). (ECF No. 37.) In support of their motion, Defendants assert that Claeys and Matthews discovered previously misplaced documents during the past several weeks suggesting that Matthews was released and discharged from any obligation as a personal guarantor. Defendants attach these three documents to their motion: two franchise agreements and a document terminating a franchise located in Troy, Michigan. (ECF Nos. 37-2, 37-3, and 37-4.) They attach no evidence, however, supporting their assertion that these documents were only recently discovered.

Defendants further state that “Claeys has suffered from various physical and mental health setbacks over the past several years which made it difficult or impossible to present defenses to Plaintiffs’ claims for liquidated damages.” (Id. at PageID. 392.) These alleged setbacks include anxiety and depression, failed suicide attempts, mild restrictive lung disease, a fall from a bicycle due to dizziness, trace leakage of her mitral, tricuspid, [*5]  and pulmonic valves, scoliosis, osteoarthritis, white matter changes to her brain, complications from physical therapy causing dizziness, vertigo, and ears ringing, adult onset inattentive ADHD, and sleep apnea. (Id. at 398.) Defendants offer no documentation supporting Claeys’ asserted mental and physical issues or their assertion that these conditions interfered with their ability to defend this action. Defendants indicate that Claeys’ affidavit will be forthcoming (see ECF No. 37 at PageID. 398 n.1); however, a month after their motion was filed, no such affidavit has been presented.

1. Parties InvolvedA. Plaintiff: Little Caesar Enterprises, Inc. B. Defendants: S&S Pizza Enterprises, Inc., Sheryl Claeys, and Suzanne L. Matthews
2. JurisdictionA. United States District Court for the Eastern District of Michigan, Southern Division B. Case Number: 21-cv-11776

III. Franchisees’ Alleged Conduct Defendants, including S&S Pizza Enterprises, were accused of the following misconduct:

1. Breach of the franchise agreements: The defendants were contractually obligated under agreements with Little Caesar Enterprises and were accused of not fulfilling these obligations.
2. Trademark infringement: The defendants allegedly used Little Caesar Enterprises’ trademark unlawfully.
3. Unfair competition: The conduct of the defendants was alleged to be unlawful or deceptive, negatively affecting Little Caesar Enterprises’ competitive advantage.
4. Trade dress infringement: The defendants were accused of using product design or packaging that was too similar to that of Little Caesar Enterprises, causing confusion among consumers as to the source of the products.
5. BackgroundA. Involvement of two Little Caesar franchise locations in Michigan B. Allegations by the plaintiff include: 1. Breach of contract 2. Trademark infringement 3. Unfair competition 4. Trade dress infringement
6. Procedural HistoryA. Defendants’ failure to respond to the motion for partial summary judgment B. Court’s grant of summary judgment due to no genuine issue of material fact C. Awarding of liquidated damages, costs, and attorneys’ fees to plaintiffs
7. Plaintiff’s MotionA. To remove all claims but breach of contract from the complaint B. Granted by the court

VII. Court Judgment A. In favor of the plaintiffs, with post-termination obligations and damages imposed on the defendants

VIII. Defendants’ Motion for Alteration or Amendment of Judgment

1. Based on “newly discovered” evidence suggesting release from personal guarantor obligations
2. Setbacks including mental and physical health issues claimed by the defendants
3. Evidence and Standard of LawA. Lack of “newly discovered” evidence as per court’s finding B. Applicable standards for Rule 59(e) (alteration/amendment due to error, new evidence, change in law, or to prevent injustice) C. Rule 60(b) allows for relief from a judgment for mistake or new evidence, which was not adequately demonstrated
4. Court’s Ruling
5. Defendants’ documents do not suggest release from guarantees or contracts
6. Assertions regarding Claeys’ health challenges are unsupported by evidence
7. Defendants fail to demonstrate grounds for relief
8. The motion to amend or correct the judgment is denied
9. Conclusion
10. Defendants do not meet the legal threshold for post-judgment relief
11. The court maintains the original judgment in favor of Little Caesar Enterprises, Inc.