GRSM Partner Calvin Davis and Associate Rebecca Krikorian secured a complete dismissal of a multi-million dollar lawsuit against a major national franchisor alleging involvement in a scheme to hide assets from a creditor.
The plaintiffs were victims of an assault by a part-owner of an independently owned and operated franchise. After the part-owner was convicted of a felony, the GRSM client forced a sale of his ownership as his conviction made him ineligible to be a franchisee under the terms of his franchise agreement.
When the plaintiffs later secured a civil judgment against the former owner, they claimed that GRSM’s client was somehow involved in a plot to have the guilty party sell his ownership for a below-market price, thus supposedly assisting in the fraudulent transfer of assets.
We successfully demurred to the original pleading, arguing that our client received nothing of value in the sale transaction, which is a requirement to be held liable under the applicable statutes and common law. After our demurrer to the amended pleading was also sustained, the plaintiff filed yet another pleading alleging new claims for aiding, abetting, and civil conspiracy. The court sustained our demurrer to these new causes of action as improper for being filed without court permission. Finally, our demurrer to the plaintiffs’ cause of action for violation of Business & Professions Code 17200 was sustained based on the plaintiffs’ failure to establish any duty on the part of GRSM’s client with respect to the transaction in issue.
As a result, while the matter will continue against the other alleged tortfeasors, the claim against our client was dismissed with prejudice after over two and half years of litigation.
GRSM represents franchisors, licensors, and suppliers in all aspects of national and international franchising. Our clients manage networks with dozens to thousands of outlets. They rely on our 50-state platform for consistent, integrated, comprehensive counsel.
Learn more about GRSM’s Franchise legal services.