Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—M.D. Fla.: Fact issues preclude summary judgment in franchisor’s post-termination breach of contract suit, (Sep 14, 2015)

By Linda O’Brien, J.D., LL.M.

Material issues of fact precluded the grant of summary judgment in an action by a home air conditioning and heating system franchisor against a former franchisee for breach of contract regarding the franchisee’s continued operation of an air conditioning service after the termination of the franchise agreement, the federal district court in Tampa, Florida had decided (One Hour Air Conditioning Franchising, LLC v. Dallas Unique Indoor Comfort, Ltd., September 11, 2015, Moody, J.).

One Hour Air Conditioning Franchising developed a business system for residential air conditioning and heating services. The franchisor operates through authorized franchisees and focuses its business on the punctuality of its service. In 2004, Dallas Unique Indoor Comfort executed five separate but identical franchise agreements with One Hour for territories in the Dallas-Fort Worth metropolitan area. The agreements allowed Dallas to operate One Hour franchises for a ten-year term.

In December 2013, Dallas unilaterally terminated the franchise agreements with One Hour and notified the franchisor that it would continue to operate a residential air conditioning business under the name “On Time Experts.” One Hour filed suit against Dallas, alleging breach of contract, unfair competition, trademark infringement, and false designation of origin. Before the court were the parties’ cross-motions for summary judgment on the breach of contract claim.

The court found that the evidence reflected numerous material issues of fact. One Hour contended that the manner in which Dallas continued its residential air conditioning and heating service business materially breached the franchise agreement. However, it was disputed whether Dallas’ business was sufficiently similar to One Hour’s to constitute a breach of the franchise agreement. It was also disputed that, assuming a breach of the post-termination obligations occurred, the breach was material.

Furthermore, both parties presented conflicting evidence and expert testimony on the issue of One Hour’s damages. The court noted that, at trial, it would have to weigh the evidence and decide the disputed issues. Thus, it was inappropriate to grant summary judgment to either party at the current stage of the litigation.

The case is No. 8:13-cv-3278-T-30JSS.

Attorneys: Darrell Christopher Robinson (Frost Brown Todd, LLC ) and John H. Dannecker (Shutts & Bowen, LLP ) for One Hour Air Conditioning Franchising, LLC. Cheryl Mullin (Mullin Russ Kilejian, PC) and Richard Anthony Harrison (Richard A. Harrison, PA) for Dallas Unique Indoor Comfort, Ltd.

Companies: One Hour Air Conditioning Franchising, LLC; Dallas Unique Indoor Comfort, Ltd.

Cases: FranchisingDistribution FloridaNews