Best Law Firms | Ranked By Best Lawyers | United States | Franchise law | Tier 1 | 2024

National Leading Franchise Law And Commercial Litigation Firm

Powerhouse Trial Lawyers And Strategic Problem-Solvers In Complex Business Disputes And Transactions

ZESB Exemplifies Commitment to Client Success in 7 Year Dispute Between Subfranchisor and Franchisor

On Behalf of | Mar 3, 2019 | Franchise Law |

In 2008, Anago Franchising, Inc. sought to terminate its franchise relationship with its Subfranchisor Shaz, LLC. Although Shaz disputed the termination, Shaz immediately ceased using all of Anago’s trademarks, ended its affiliation with the Anago brand. After Shaz’s successful de-identification from the Anago brand, Anago sued Shaz in the Southern District of Florida. Anago Franchising, Inc. v. Shaz, LLC, S.D. Fla. 08-cv-61445. Shaz counterclaimed for wrongful termination of its franchise agreement, among other things. The 2008 lawsuit was successfully resolved through settlement in February 2009 and the parties voluntarily dismissed their respective claims. The District Court did not retain jurisdiction to enforce the settlement. Following the settlement, Anago claimed that Shaz breached certain confidentiality provisions of the Settlement Agreement and refused to tender the balance of the settlement payment. Shaz sought to reopen the litigation to enforce its rights under the Settlement Agreement. In the litigation that followed, Judge Bandstra erroneously determined that Shaz breached the confidentiality provision of the Settlement Agreement. Shaz appealed the ruling to the Eleventh Circuit Court of Appeals, which determined that because the District Court did not reserve jurisdiction over the Settlement Agreement, Judge Bandstra was without jurisdiction to make his findings. In a published decision entitled Anago Franchising, Inc. v. Shaz, LLC, 677 F.3d 1272 (11th Cir. 2012), the Eleventh Circuit vacated Judge Bandstra’s ruling.

In November 2010, while the appeal of Judge Bandstra’s ruling was pending, Anago commenced a collateral litigation against Shaz and other defendants captioned Anago Franchising, LLC v. Shaz, LLC et al, S.D. Fla. 10-cv-62273. In the 2010 litigation, Anago again contended that Shaz breached the confidentiality provision of the Settlement Agreement from the 2008 litigation. Shaz counterclaimed on the basis that Anago failed to make required settlement payments under the Settlement Agreement. The parties filed cross-motions for summary judgment. In its motion, Anago relied heavily on the vacated Bandstra Order. This proved to be an ill-advised decision. In a sealed Order, Judge Rosenbaum granted summary judgment in favor of Shaz and against Anago. Judge Rosenbaum determined that Shaz did not materially breach the Settlement Agreement and that even if it did, Anago did not provide proof of any damages. In reaching her decision, Judge Rosenbaum rejected Anago’s argument that she should apply findings of fact from Judge Bandstra’s vacated Order, instead agreeing with Shaz that the vacated Bandstra Order had no preclusive effect. Judge Rosenbaum further found that the undisputed facts proved that Anago, not Shaz, had breached the Settlement Agreement. After appropriate motion practice on the limited issue of damages, Judge Rosenbaum entered Final Judgment of damages, attorneys’ fees and costs in Shaz’s favor. Anago appealed the underlying summary judgment order on the basis that Judge Rosenbaum erred by failing to consider the findings of fact contained in the Bandstra Order and another order entered in a separate litigation between Anago and another franchisee. On April 14, 2015, Robert Einhorn and Siminovsky represented Shaz in an oral argument the Eleventh Circuit. Judges Jordan, Carnes and Linn, expeditiously affirmed the Final Judgment in Shaz’s favor on April 17, 2015 in an unpublished decision. Per the Final Judgment [10-cv-62273 at ECF 165], Shaz is entitled to recover a total of $231,779.79 in damages, pre-judgment interest, attorneys’ fees and costs.