Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—Ohio App.: Buffalo Wings & Rings’ breach of contract claims time-barred, (Sep 23, 2015)

By Greg Hammond, J.D.

A buffalo wings restaurant franchisor’s breach of contract, breach of guaranty, quantum meruit, and money owed on account claims against its franchisee were barred by a franchise agreement provision requiring the filing of damage claims within one year, the Ohio Court of Appeals in Columbus has decided. In affirming the lower court’s order, the appellate court determined that the franchisor’s reading of the franchise agreement, allowing the claims under an exception to the one-year requirement, would result in “awkward phrasing, at best, and non-sensical phrasing, at worst” (Buffalo Wings & Rings, LLC v. M3 Restaurant Group, LLC, September 22, 2015, Brown, S.).

M3 Restaurant Group, LLC entered into a franchise agreement with Buffalo Wings & Rings, LLC in 2008 to operate a restaurant. In March 2011, M3 sent a letter to Buffalo Wings, stating disputes it had with the franchisor and proposing to end the business relationship. A second letter was sent to Buffalo Wings in April 2011, stating M3’s assumption that Buffalo Wings had no objection to the proposed termination, given its failure to reply to the first letter. Buffalo Wings filed suit against M3 in November 2012, bringing claims for breach of contract, breach of guaranty, quantum meruit, and money owed on an account.

The trial court granted summary judgment in favor of M3, finding that Buffalo Wings & Rings’ claims were time-barred under the franchise agreement’s one-year statute of limitations and that the exception for claims for injunctive relief was inapplicable because Buffalo Wings was seeking monetary damages. Buffalo Wings appealed the lower court’s decision, arguing that the court erred in granting summary judgment in favor of M3.

The appellate court affirmed the lower court’s decision, finding that a reading of the exceptions to the one-year statute of limitations in the franchise agreement was unambiguous. Buffalo Wings’ reading, which would add “claims for injunctive relief to enforce” before each exception, would result in “awkward phrasing, at best, and non-sensical phrasing, at worst,” the court concluded. M3’s reading, however, reflected the most natural reading of the provision. The appellate court therefore affirmed the lower court’s order granting M3 summary judgment, noting that “contracts should be read and understood according to the natural and most obvious import of the language, without resorting to subtle and forced constructions.”

The case is number 14AP-980.

Attorneys: Michael L. Gay (Cors & Bassett, LLC) for Buffalo Wings & Rings, LLC. Dan L. Cvetanovich (Bailey Cavalieri, LLC) for M3 Restaurant Group, LLC.

Companies: Buffalo Wings & Rings, LLC; M3 Restaurant Group, LLC

Cases: FranchisingDistribution OhioNews