US-DIST-CT, FRANCHISE-GUIDE ¶10,116, Sparks Tune-Up Centers, Inc. v. Samuel L. Panchevre, Maricela Panchevre, Fred Hobbs, Alamo City Investments, and C & H Corp., (Aug. 19, 1992)

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U.S. District Court, Northern District of Illinois, Eastern Division. No. 90 C 4369. Dated August 19, 1992.

Common Law--Existence of Franchise License--Failure to Fulfill Conditions Precedent--Delivery of Certificate of Insurance--Payment of Franchise and Advertising Fees.--Prospective franchisees that failed to provide a certificate of insurance and failed to pay initial franchise and advertising fees were not licensed as franchisees. The franchise agreement expressly made the delivery of a certificate of insurance and payment of initial fees conditions precedent to the issuance of a franchise license. In their answer and counterclaims, the prospective franchisees admitted that they never obtained a franchise license.

Common Law--Coercion and Duress--Fraudulent Inducement--Opportunity to Review Agreement, Obtain Representation--Requiring Franchisees to Sign in Individual Capacities.--A franchise agreement between an automobile tune-up shop franchisor and prospective franchisees was not the product of coercion, duress, or fraud in the inducement. The fact that the franchise license was conditioned upon the signing of a franchise agreement did not constitute duress or fraud. There was no evidence suggesting that the franchisor forced the prospective franchisees to sign the agreement without first giving them an opportunity to review it. The prospective franchisees were given a copy of the agreement at their first meeting with the franchisor--approximately three months before the agreement was actually signed. The prospective franchisees never requested a continuance or representation by an attorney. Furthermore, the franchisor’s requirement that prospective franchisees and their spouses sign franchise agreements in their individual capacities was not fraudulent. The policy was intended to discourage fraudulent conveyances, and the parties were free to contract as they saw fit.

Trademarks and Trade Names--Infringement--Use by Nonfranchisee--Likelihood of Confusion--Individual Liability.--Use of an automobile tune-up shop franchisor’s trademarks by persons who were never licensed as franchisees constituted infringement under the federal trademark law. The prospective franchisees were never legally entitled to use the trademarks. Their employment of the trademarks on a nonfranchised automotive shop and in advertising was likely to confuse consumers by leading them to believe that the shop was an authorized franchise. Contentions that the prospective franchisees could not be personally liable for infringement were wholly unsupported by evidence because (1) the shop was opened and maintained by a corporation and (2) they sold their interest in the corporation before the infringement. The individuals were not shielded from liability by their status as corporate officers, since officers are individually liable for torts that they personally commit.

Common Law--Breach of Contract--Refusal to Execute License--Refund of Downpayment--Payment of Projected Annual Income.--Prospective automobile tune-up shop franchisees who signed a franchise agreement but never received a license to operate a franchise were not entitled to recover their $5,000 downpayment or the $50,000 projected annual income for the 15-year term of their franchise agreement because they did not meet all of the conditions precedent to the granting of a license. There was no license agreement between the parties because the prospective franchisees failed to provide a certificate of insurance or to pay initial franchise and advertising fees. Even if the license agreement had become effective, the prospective franchisees would have breached it. A written offer to refund the down payment if the prospective franchisees immediately ceased infringing the franchisor’s trademarks was not made pursuant to any contractual obligation. In any event, the prospective franchisees failed to comply with the terms of the offer. A claim that the franchisor represented that the prospective franchisees would make a guaranteed income of $50,000 per year was contrary to the testimony of a representative of the franchisor and a statement disclaiming any such representations signed by the prospective franchisees.

Fraud--Failure to Provide Sublease--Failure to Reveal Obligation to Negotiate Own Lease--Written Instruction to Negotiate Lease--Contractual Obligation.--An automobile tune-up franchisor’s failure to provide a sublease for prospective franchisees, failure to inform them that a lease did not exist at the selected location, and failure to tell them of their responsibility to negotiate their own lease did not constitute fraud. Letters between the parties demonstrated that the prospective franchisees knew that the franchisor did not have a sublease for them. Another letter instructed the prospective franchisees to negotiate directly with the lessor of the site selected for the franchise. In addition, the franchise agreement clearly stated the prospective franchisees’ obligation to obtain a lease.

WILLIAMS, D.J.: Plaintiff Sparks Tune-Up Centers, Inc. ("Sparks") has brought this action against defendants Samuel and Maricela Panchevre (the "Panchevres") and Fred Hobbs ("Hobbs"), alleging trademark infringement and unfair competition. Specifically, Sparks claims that the Panchevres and Hobbs opened and operated a Sparks tune-up center without a valid franchise license. This case is before the court on plaintiff’s motion for summary judgment on Counts I, II and IV of plaintiff’s First Amended Complaint and on Counts I and II of defendant’s counterclaim, as well as defendants’ motion to dismiss plaintiff’s motion for summary judgment. ¹ For the reasons stated below, plaintiff’s motion for summary judgment is granted.

Sparks is a national franchisor of automotive centers which are run under a standard, unique and uniform system developed by Sparks. Sparks has federally registered proprietary service marks and trademarks for computerized automotive tune-up services and for rendering technical aid and assistance in the establishment and/or operation of automotive maintenance and repair shops. At the time this cause of action arose, Sparks had approximately 135 franchisees nationwide.

On July 31, 1989, Samuel Panchevre and Hobbs met with Sparks’ director of franchise sales to discuss obtaining a Sparks franchise to be operated at Castleton Mall in Indianapolis, Indiana. Defendants represented themselves as partners of a company called Alamo City Investments ("Alamo"). ² At the meeting, defendants received a copy of the Sparks Uniform Franchise Offering Circular which contained, among other things, a complete copy of the Franchise Agreement ("Agreement"). On November 9, 1989 Samuel Panchevre and his wife Maricela personally executed the Agreement and other related documents, and paid $5000 toward the required $20,000 initial franchise fee.

Between November 1989 and March 1990, Panchevre and Hobbs took steps to open their franchise by ordering equipment, overseeing leasehold improvements on the franchise site, and hiring Walter Rogers ("Rogers") to be their on-site manager. Rogers was sent to the Sparks training class in Downers Grove, Illinois after Panchevre promised Sparks that the remaining balance of the franchise fee, as well as the required advertising fee, would be paid. When these fees were not paid and other conditions precedent to the granting of a Sparks franchise were not met, Sparks informed Panchevre and Hobbs that they would not receive a Sparks franchise license.

Despite warnings by Sparks that they were not authorized to open a Sparks franchise, defendants opened a Sparks Tune-Up Center in Indianapolis on March 24, 1990. In July 1990, defendants changed the exterior signs on the shop to "Alamo Brake & Tune." Thereafter, Sparks sought a temporary restraining order ("TRO") to prevent defendants and their agents from continuing to use the Sparks trademark. After this court issued the TRO on August 2, 1990, defendants’ shop was closed.

Federal Rule of Civil Procedure 56(c) provides that summary judgment is appropriate "if the pleading, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." A party seeking summary judgment bears the initial burden of informing the court of the basis of its motion and identifying those portions of the record which demonstrate that there is no genuine issue of material fact. Celotex v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553 (1986). In responding to a properly supported motion for summary judgment, a nonmoving party "may not rest upon mere allegation or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, 477 U.S. 242, 256, 106 S.Ct. 2505, 2510 (1986). When reviewing such a motion, a court is required to take the nonmoving party’s evidence as true and draw all justifiable inferences in the nonmoving party’s favor. Id. at 255, 106 S.Ct. at 2513. In addition, where, as here, defendants are proceeding pro se, defendants are not held to stringent standards of formally trained attorneys and their pleadings are to be liberally construed. Jamison-Bey v. Thieret, 867 F.2d 1046, 1047 (7th Cir. 1989) (citing Caldwell v. Miller, 790 F.2d 589, 595 (7th Cir. 1986)).

[Existence of License]

In the present case, plaintiff seeks summary judgment on Counts I, II, and IV of its First Amended Complaint, and Counts I and II of the defendants’ Counterclaim. In Count I of plaintiffs amended complaint, Sparks seeks a declaratory judgment against the Panchevres, finding that they were never licensed as Sparks franchisees. ³ Plaintiff contends that the Panchevres are not licensed as franchisees because they failed to fulfill the conditions precedent to the issuance of a franchise license. The Franchise Agreement entered into by the Panchevres and Sparks contained very specific requirements for the granting of a franchise license. According to Paragraph 1.3 of the Agreement, defendants were required to: (a) open an automotive center at an approved site, (b) give Sparks a certificate of insurance explaining the types and limits of coverage under the policy and listing Sparks, Sparks’ parent, PIC and GKN North America as additional insureds, and (c) successfully complete the required training. Paragraph 1.5 also required defendants to pay an initial franchise fee of $20,000 payable in two installments. ⁴ Finally, under Paragraph 1.6, defendants were required to pay Sparks an initial advertising fee of $8000 sixty days prior to the scheduled opening of the center. See Plaintiff’s Joint Response to Defendants’ Motion in Opposition, Exhibit A.

Plaintiff contends that because the Panchevres did not submit the required certificate of insurance, they were not licensed as Sparks franchisees. Plaintiff’s claim is supported by the affidavit of Joan M. Koeck ("Koeck"), a Sparks dealer development coordinator. In her affidavit, Koeck states that the Panchevres did not provide the requisite insurance certificate prior to opening as required by the Franchise Agreement. The Panchevres opened for business in March 1990, but their insurance certificate was not received until June 1990. Koeck further states that the insurance certificate which was eventually received by Sparks did not comply with the requirements of the Agreement. See Plaintiff’s Motion for Summary Judgment, Exhibit A. Plaintiff also claims that defendants were not licensed franchisees because they did not pay the majority of the initial franchise fee or the advertising fee. This claim is properly supported by the affidavit of Celia Davis ("Davis"), Sparks’ Accounting Manager. In her affidavit, Davis states that the Panchevres failed to pay the initial $8000 advertising fee and only paid $5000 of the initial $20,000 franchise fee. See Plaintiff’s Motion for Summary Judgment, Exhibit B.

[Coercion or Duress]

Defendants do not deny that they entered into the Franchise Agreement or that they were not licensed as franchisees. Indeed, in Paragraphs 11 and 13 of their answer and counterclaim to plaintiff’s First Amended Complaint, they admit that they never obtained a franchise license. See Plaintiff’s Motion for Judgment on the Pleading, Exhibit B. Defendants instead argue that they entered into the Agreement based upon plaintiff’s fraudulent misrepresentation that unless defendants signed the Agreement in their individual capacity, "[p]laintiff would take away the right to the franchise." ⁵ Defendants further argue that Maricela Panchevre was induced to sign the Agreement without being permitted to read the document or having the opportunity to have an attorney examine it. In other words, defendants claim that they were forced to sign the Agreement under coercion or economic duress.

Duress has been defined as including the imposition, oppression, undue influence or the taking of undue advantage of the business or financial stress of another, whereby his free will is overcome. Continental Illinois National Bank v. Stanley, 606 F. Supp. 558, 562 (N.D.Ill. 1985). In order to invalidate an agreement based upon duress, a party must show that he was induced to execute a contract by a wrongful act or threat under circumstances which deprived him of the exercise of his free will. Id.

This court finds that, even construing defendants’ arguments liberally as is required with pro se litigants, defendants’ duress and coercion claims are not supported by the evidence. Defendants seem to suggest that the duress in this case resulted from their being required to sign a contract in order to receive the pertinent franchise license. This argument is frivolous. Parties are free to contract as they see fit. The fact that a Sparks franchise license is conditioned upon the signing of a Franchise Agreement does not constitute duress or fraud. Further, the Panchevres incurred no obligations until they executed the Agreement. Therefore, defendants cannot claim that they were forced to sign the document because of any action taken as a prerequisite to the obtaining of a license.

Moreover, there is no evidence suggesting that Sparks forced defendants to sign the Agreement without first giving them the opportunity to review it. Ralph Loberger ("Loberger"), Director of Franchise Sales for Sparks at the time of this action, handled the transaction with Samuel and Maricela Panchevre. In his sworn affidavit, Loberger states that the Panchevres received a copy of the Franchise Agreement at their first meeting on July 31, 1989, approximately three months before the Agreement was actually signed. Loberger further states in his affidavit that the Panchevres never requested a continuance or that an attorney be present, and that the entire meeting was very relaxed. See Memorandum of Law in Support of Plaintiff’s Joint Response to Defendants’ Motion in Opposition, Exhibit A. Therefore, defendants were never deprived of legal representation nor were they deprived of the opportunity to have the document reviewed as they suggest.

[Fraudulent Inducement]

Similarly, there is no evidence suggesting that plaintiff fraudulently misrepresented that unless defendants signed the Agreement in their individual capacity, defendants could not obtain a Sparks franchise. In his affidavit, Loberger states that it is Sparks’ policy to have individuals, rather than corporations, execute Franchise Agreements, and that if a person requesting a franchise is married, corporate policy requires that the spouse also execute the agreement. According to Loberger, this policy is intended to eliminate the possibility of fraudulent conveyances. The fact that a Sparks franchise license is conditioned upon potential franchisees signing a Franchise Agreement in their individual capacity does not constitute duress or fraud. As previously explained, parties are free to contract as they see fit. The Panchevres were under no obligation to sign the Franchise Agreement in their individual capacities. And, since they incurred no obligations prior to signing the Franchise Agreement, defendants could have opted not to enter into an agreement with Sparks. This court is not persuaded by defendants’ allegations that they were fraudulently induced to sign the Agreement.

In sum, defendants have offered no evidence to refute Loberger’s testimony nor to support their claims of coercion, duress, or fraudulent misrepresentation. Defendants’ claims, without the support of affidavits or other evidence, do not suffice to avoid a motion for summary judgment. See Continental Illinois National Bank, 606 F.2d 558. Plaintiff adequately demonstrates, and defendants do not refute, that they did not fulfill the requirements of the Franchise Agreement and that a franchise license was never granted. Since there is no genuine dispute regarding the fact that Samuel and Maricela Panchevre were not Sparks franchisees, this court grants plaintiffs motion for summary judgment on Count I.

[Trademark Infringement]

Plaintiff also seeks summary judgment on Count II of its amended complaint. In Count II, plaintiff seeks judgment against Samuel and Maricela Panchevre for trademark infringement and unfair competition based upon their unauthorized opening and operation of a Sparks automotive center without a franchise license. Plaintiff argues that defendants have violated the Trademark Laws of the United States ("Lanham Act"), 15 U.S.C. §1051, et seq.

The Lanham Act states that any person who shall, without the consent of the owner of the trademark:

15 U.S.C. §1114(1)(a). According to the Seventh Circuit, the purpose of a trademark is to identify the good or service to consumers. A trademark creates a duty that the registrant ensure the consistency of the trademarked good or service. Gorenstein Enterprises v. Quality Care-USA, 874 F.2d 431, 435 (7th Cir. 1989). The Seventh Circuit has also stated that when the owner of the trademark breaks off business relations with a licensee, he cannot insure the continued quality of the ex-licensee’s operation. Therefore, the ex-licensee’s continued use of the trademark is considered a violation of trademark law. Id. It is also well established that "falsely suggesting affiliation with the trademark owner in a manner likely to cause confusion as to source or sponsorship constitutes infringement." Burger King Corp. v. Mason, 710 F.2d 1480, 1492 (7th Cir. 1983) (citing Professional Golfers Ass’n of America v. Bankers Life & Casualty Co., 514 F.2d 665, 670 (5th Cir. 1975)). Once it is established that a trademark has been used without the owner’s consent, a party claiming trademark infringement need only show that the trademarks were employed in a manner that was likely to cause confusion, cause mistakes or to deceive. Burger King Corp., 710 F.2d at 1492.

Plaintiff argues that the Panchevres opened and operated a Sparks shop without Sparks’ consent, and that this was done in a manner which was likely to confuse or deceive the public in violation of the Lanham Act. This court has already determined that the Panchevres were not legally entitled to use the Sparks name because they were not licensed as Sparks franchisees. The remaining question is whether defendants’ opening and operation of a Sparks automotive center was done in a manner likely to confuse or lead the public to believe that the automotive shop in Indianapolis was a licensed Sparks franchise. Plaintiff argues that defendants encouraged the public to believe that their shop was operating as an authorized Sparks automotive center by using the Sparks name. Plaintiff also asserts that since defendants were not operating under a valid Sparks franchise agreement, plaintiff was unable to supervise, inspect or police defendants’ shop to ensure that approved procedures were being employed and quality service was being provided to the public. Therefore, plaintiff argues, Sparks was unable to protect its good name and overall reputation with consumers.

Plaintiff has provided this court with ample evidence to support its claim. For example, plaintiff submits the deposition of Walter Rogers, the manager of defendants’ shop, to support its claim that the Panchevres opened and operated the Indianapolis shop as a Sparks Tune-up Center. Based upon a review of the shop’s work orders and invoices, Rogers confirms that the Panchevres’ store opened under the Sparks name on March 24, 1990. (Deposition of Walter Rogers at 53.) Rogers further states in his affidavit that he placed advertisements for the Panchevres’ shop in The Indianapolis Star, and that these ads ran from March 31, 1990 through May 30, 1990. These advertisements used the Sparks name and logo, and offered special prices on certain car services. The ads also mentioned the Sparks "Triple Guarantee," and gave the address of the defendants’ shop at the Castleton Mall. (Deposition of Samuel Panchevre, Exhibit 71.) Plaintiff’s claim that the store in Indianapolis was opened and operated under the Sparks name is further supported by the deposition of Samuel Panchevre himself. Panchevre admits that the store was opened on March 24, 1990 under the Sparks name, and he also concedes that the Sparks name was being used at the shop as late as August, 1990. (Deposition of Samuel Panchevre at 196-207.) Finally, plaintiff supports its claim that the Indianapolis shop was operating under the Sparks name as late as August, 1990 with the deposition of Steven Halbert ("Halbert"). Halbert states that on August 6, 1990, he received a work order/invoice for an oil change prominently displaying the service mark "Sparks Computerized Car Care," as well as an estimate form and a promotional litter bag also displaying the Sparks logo. See Plaintiff’s Motion for Summary Judgment, Exhibit D, Based upon this evidence that the Panchevres opened and operated the Indianapolis store under the Sparks name, plaintiff argues that its trademark has been violated. Since the public had no way of knowing that the shop was not actually licensed as a Sparks franchise, they were made to believe that they were dealing with a fully licensed Sparks dealership, when in reality, they were not. A customer receiving poor service, plaintiff argues, would immediately attribute the problem to other, fully licensed Sparks shops, while Sparks remained unable to police or inspect the Panchevres’ store.

Defendants do not assert that plaintiff has misstated the applicable law or provide this court with evidence demonstrating that the shop was not opened and operated as a Sparks center. Defendants also do not offer any evidence to contradict the evidence submitted by plaintiff. Instead, defendants argue that they cannot be held liable because they were not personally involved in the opening or the operation of the shop. They contend that the shop was opened and maintained by Alamo and that they sold their interest in Alamo before Sparks began complaining about the unauthorized use of its trademarks.

This court is not persuaded by defendants’ wholly unsupported arguments. Samuel and Maricela personally executed the Franchise Agreement with Sparks on November 9, 1989. Defendants have provided this court with no evidence showing that this Agreement was assigned or transferred to another party prior to the opening of the automotive center. Indeed, Panchevre concedes in his deposition that Alamo’s records indicate that defendants did not transfer his interest in the corporation until June 19, 1990, more than three months after the shop had been open. (Deposition of Samuel Panchevre at 208-210.) In his deposition, Panchevre also admits receiving a letter dated March 28, 1990 from James Lentz, Sparks’ Vice President, informing him that he had failed to meet the pre-opening requirements to become a Sparks franchisee. (Deposition of Samuel Panchevre at 196-197.) Defendant did not state that the letter should have been directed to another party and, in fact, Panchevre admits to responding to the letter with his own letter dated April 26, 1990, requesting that a meeting be held between himself and Sparks to resolve the matter. (Deposition of Samuel Panchevre at 198-199.) Moreover, store manager Rogers states in his deposition that he was hired by Samuel Panchevre to manage the automotive center. (Deposition of Walter Rogers at 12-18.) Thus, the evidence presented clearly contradicts defendants’ claim that they were not involved in the opening or operation of a Sparks shop.

Defendants’ claim that they are shielded from liability by their status as officers of Alamo is also unpersuasive. It is well established that a corporate officer is individually liable for the torts he personally commits. He cannot shield himself behind a corporation when he is an actual participant in the tort. See, e.g., Donsco, Inc. v. Casper Corp., 587 F.2d 602, 606 (3rd Cir. 1978), Solo Cup Company v. Paper Machinery Corp., 359 F.2d 754, 760 (7th Cir 1966). Indeed, it has been held that a corporate officer is individually liable for trademark infringement when he "performs the act or does the things that the patent or trademark law protects against." Mead Johnson and Company w. Babies Formula Service, Inc., 402 F.2d 19, 23 (5th Cir. 1968). See also Brandywine Mushroom Co. v. Hockessin Mushroom Products, Inc., 682 F. Supp. 1307 (D.Del. 1988), Polo Fashions, Inc. v. Branded Apparel Merchandising, Inc., 592 F. Supp. 648 (D.Mass. 1984). Thus, even if defendants acted as officers of Alamo, they are liable for their unauthorized use of the Sparks trademark. The mere fact that they were officers of a corporation cannot shield the Panchevres from liability for their unlawful infringement of Sparks’ trademarks. Accordingly, the court grants plaintiffs motion for summary judgment on Count II of plaintiff’s First Amended Complaint.

Plaintiff next moves for summary judgment on Count IV of the Complaint. In Count IV, Sparks seeks judgment against Hobbs for his conduct in opening and operating the Sparks shop without authorization. Plaintiff contends that the evidence clearly demonstrates that Hobbs knowingly operated the Sparks center without a franchise license. For example, Hobbs admits his role in operating the shop in the answer and counterclaim filed jointly by all three defendants. In his answer, Hobbs does not deny that he hired Rogers to manage the shop. Hobbs also admits that from November 1989 to March 1990, he was involved in and was instrumental in preparing for the opening of the Sparks center. Hobbs further admits having personal knowledge of the Franchise Agreement entered into by the Panchevres, and the terms of that Agreement. See Defendants’ Answer and Counterclaim to First Amended Complaint at ¶IV.

Plaintiff also relies on Hobbs’ deposition in which he states that in March, 1990, when the shop opened, he knew that the Panchevres had not met all the requirements for receiving a franchise license. Hobbs also admits that he removed the Sparks sign after being contacted by Sparks and told to cease operations as a Sparks store. (Deposition of Fred Hobbs at 51.) Plaintiff also relies on Rogers’ deposition in which he states that Hobbs continued to use the Sparks name on warranties, work orders and invoices even after the exterior sign was changed to read "Alamo Brake and Tune." Rogers states that Hobbs told him to continue using the forms "until they are gone." (Deposition of Walter Rogers at 73-77.) Plaintiff contends that this evidence clearly demonstrates that Hobbs knowingly opened and operated a Sparks center without a franchise license in violation of the trademark laws.

Hobbs’ response to Sparks’ claim is similar to that offered by the Panchevres. Hobbs does not argue that the applicable law has been misstated or that the shop was never operated as a Sparks store. Instead, he insists that he is not liable because he was not personally involved in the business. Hobbs states that it was Alamo, of which he became an officer in February, 1990, who was actually involved in the operation of the shop. Hobbs argues that his actions were merely undertaken on behalf of Alamo or the C & H Corporation. Therefore, Hobbs argues, he only hired Rogers and assisted in the opening of Sparks’ shop in his capacity as an officer of Alamo. Defendant further argues that when Rogers testified in his deposition, he did so "out of context", knowing that Alamo, and not Hobbs, was the owner and operator of the shop.

Like the Panchevres, however, Hobbs provides no evidence whatsoever to support his claims. Moreover, defendant has provided no evidence to the court to contradict or discredit Rogers’ sworn testimony. Rogers’ testimony clearly demonstrates that Hobbs was personally involved and, indeed, instrumental in the opening and operation of the Indianapolis shop. In the absence of proof from the nonmoving party, the evidence of the moving party is to be accepted as true. See Kaszuk v. Bakery and Confectionery Union, 791 F.2d 548, 558 (7th Cir. 1986) (citing Wang v. Lake Maxinhall Estates, Inc., 531 F.2d 832, 835 n. 10 (7th Cir. 1976). Therefore, the court has no choice but to rely upon plaintiff’s evidence of Hobbs’ personal involvement with the shop.

Further, as stated previously, a corporate officer cannot use the corporate entity as a shield, but is personally liable for the torts he commits. See e.g., Donsco, Inc. v. Casper Corp., 587 F.2d at 606; Solo Cup Company v. Paper Machinery Corp., 359 F.2d at 760. Therefore, even if the court accept Hobbs’ assertions that he participated in the opening and operation of the Sparks shop as an officer of Alamo, that fact does not excuse Hobbs’ own tortious conduct. Since the evidence shows that Hobbs was intricately involved in the opening and operation of the Sparks store without authorization to use the Sparks trademark, this court finds that Hobbs is liable for trademark infringement and unfair competition. Therefore, plaintiff’s motion for summary judgment on. Count IV is granted.

Plaintiff further seeks summary judgment on Count I of defendants Panchevres’ counterclaim. In Count I of the Counterclaim, the Panchevres assert that they are entitled to a refund of their $5,000 down payment on the initial franchise fee from Sparks because they were never licensed as franchisees. The Panchevres further contend that they are entitled to $50,000 per year for the fifteen year term of the Franchise Agreement because Sparks represented to them that a Sparks franchise would have a minimum net income of $50,000 per year. Plaintiff contends that it is entitled to summary judgment on this claim because it was defendants who were responsible for their failure to obtain a franchise license. According to plaintiff, the Panchevres cannot claim that the Agreement was breached because they never performed their obligations under the Agreement, and hence the contract was never operational. In the alternative, Sparks argues that even if the contract had gone into effect, it was defendants and not plaintiff who breached the contract. Therefore, plaintiff argues, the Panchevres are in no position to demand a refund.

This court agrees with plaintiff that the Panchevres have no contractual remedy in this case, and that the defendants cannot request a refund based upon a contract which was never fully performed. Because all the conditions precedent were not met by the Panchevres, there was no contract. The court is equally convinced that even if this contract has gone into effect the Panchevres breached the Agreement by failing to comply with its conditions. Therefore, as plaintiff suggests, they have no right to a refund. Moreover, the contract itself provides no right to a refund for any of the parties.

Defendants contend that they are entitled to a refund under a letter written by Sparks on May 14, 1990. In this letter, Sparks offered to refund the $5000 payment if the Panchevres immediately removed any and all Sparks identification from the exterior and interior of the Indianapolis store. Defendants suggest that this letter created a legal obligation on the part of Sparks to refund their money. This court disagrees. While this court recognizes that this offer was made by Sparks, the court finds that Sparks’ offer to refund the money was not made pursuant to any contractual obligation. Moreover, it was conditioned upon the removal of "any and all Sparks identification from both the interior and exterior of the building." Indeed, the letter stated that a refund would only be sent after Sparks received photographs evidencing the absence of Sparks identification in and around the shop. Deposition of Samuel Panchevre, Exhibit 68.

This court has previously determined that the Sparks name was being used at the Panchevres’ shop as late as August, 1990. Thus, the Panchevres clearly failed to meet the requirements of the May 14, 1990 letter. Therefore, plaintiff was free to rescind its offer. Defendants have failed to provide this court with any evidence to the contrary. Therefore, this court finds that Sparks’ letter did not create a legal obligation on the part of Sparks to refund the Panchevres’ down payment.

This court also finds that defendants’ claim that they are entitled to receive $50,000 per year for the full fifteen year term of the Franchise Agreement is without merit. According to Loberger, the Sparks representative who handled the execution of the Franchise Agreement, Sparks never represented to the Panchevres that they would have a guaranteed income of $50,000 per year. See Plaintiff’s Motion for Summary Judgment, Exhibit E. The fact that Sparks never made such representations is further evidenced by the fact that Samuel Panchevre signed Business Risk Acknowledgment Statements (the "Statements") on two separate occasions. By signing these Statements, Panchevre acknowledged that he had not received any information regarding actual, average, projected or forecasted franchise sales profits or earnings. (Deposition of Samuel Panchevre, Exhibit 11.) Moreover, the Agreement signed by the Panchevres and Sparks never suggested that Sparks would pay the Panchevres any amount for expected profits that are not reached. See Plaintiff’s Joint Response to Defendants’ Motion in Opposition, Exhibit A. Thus, there is no contractual basis for the Panchevres’ claim. Accordingly, the court finds that the Panchevres are not entitled to receive $50,000 per year for 15 years from Sparks for lost projected earnings. Plaintiff’s motion for summary judgment on Count I of the defendants’ Counterclaim is granted.

[Fraud]

Finally, plaintiff seeks summary judgment on Count II of defendants’ Counterclaim. In Count II of their Counterclaim, defendants allege that Sparks committed fraud because it did not provide defendants with a sublease for their automotive center. The Panchevres contend that Sparks never told them that a lease did not exist for the Castleton Mall location, and that because of their inability to obtain a lease, defendants were unable to obtain adequate financing. Defendants allege that Sparks did not inform them of the fact that negotiating a lease would be their responsibility because Sparks never intended to license the Panchevres as franchisees.

This court agrees with plaintiff that defendants’ claim is not supported by the evidence. Sparks has submitted copies of two letters it sent to Samuel Panchevre dated October 11, 1989 and October 25, 1989, which demonstrate that Panchevre knew that Sparks did not have a lease for the Castleton Mall property with the landlord, Eastline. (Deposition of Samuel Panchevre, Exhibits 16 and 24.) Indeed, in the letter of October 25, 1989, Sparks advised Panchevre to negotiate a lease directly with Eastline. (Deposition of Samuel Panchevre, Exhibit 24.) In addition, the Franchise Agreement clearly states that it is the franchisees’ obligation to obtain a lease for its franchise. See Plaintiff’s Joint Response to Defendants’ Motion in Opposition, Exhibit A at §5.1.

Once again, defendants do not submit any evidence to support their claims or to contradict Sparks’ evidence. Therefore, this court accepts the evidence of the plaintiff as true and finds that defendants were adequately informed that they were responsible for obtaining a lease for their franchise. Since no evidence of fraud has been provided to this court, plaintiff’s motion for summary judgment on Count II of defendants’ Counterclaim is granted.

Plaintiff Sparks moves for judgment on the pleadings against Maricela Panchevre on Counts VII, IX and X of the First Amended Complaint, and against Samuel Panchevre on Count IX of the First Amended Complaint. ⁶ Plaintiff argues that defendants’ failure to answer with respect to these counts constitutes an admission of liability.

Defendants counter that their failure to deny the disputed counts was not intended as an admission of liability. Rather, it was merely an oversight or a typographical error. Since defendants are proceeding pro se, this court finds that defendants’ failure to deny these counts was inadvertent and not intended to constitute an admission. Accordingly, the court will excuse defendants’ error and deny plaintiff’s motion for judgment on the pleadings. Defendants are ordered to file an amended answer by September 7, 1992.

For the foregoing reasons, plaintiffs motion for summary judgment as to Counts I, II and IV of the First Amended Complaint and as to Counts I and II of the defendants’ Counterclaim is granted. Plaintiffs motion to dismiss Counts VII, IX and X of the First Amended Complaint is denied. Defendants are ordered to file an amended answer by September 7, 1992.