MY FAVORITE
MUFFIN, TOO, INC. v. WU,
00 C 7820
ORAL RULING,
May 1, 2001
Before
the court in Defendants Maosheng Wu and Pichu Wu’s Motion to Dismiss.
In the court’s April 20, 2001 oral ruling on the Wus’ Emergency
Motion to Quash or Modify Preliminary Injunction Order, the court discussed the
factual and procedural background of this case.
It will not be repeated here, except to state that Plaintiff My Favorite
Muffin filed its complaint on December 14, 2000, and the Wus filed an answer on
January 8, 2001. The Wus
subsequently filed this motion to dismiss on March 9, 2001.
The
Wus allege several grounds for dismissal of the complaint.
First, they argue that this action should be dismissed for improper venue
because the Franchise Agreement prohibits Plaintiff from bringing suit in this
court. In support of this argument the Wus cite the following
portion of the Franchise Agreement: “Except
as otherwise provided in this Agreement including. . . any claim of breach. . .
shall be submitted to final and binding arbitration as the sole and exclusive
remedy.” Franchise Agreement, ¶
24. The Franchise Agreement further
provides that the Federal Arbitration Act shall govern any disputes and that the
“arbitration shall be held at the office of the American Arbitration
Association in New Jersey closest to Franchisor’s principal place of
business.”
The
Wus argue that Plaintiff’s action here violates the Agreement because the
provision is all-inclusive and requires that these claims should be submitted to
arbitration. Further, the Wus argue
that the Franchise Agreement requires Plaintiff to bring any disputes in New
Jersey. The Franchise Agreement
states that it “shall be governed by, interpreted and construed under, the
laws of the State of New Jersey. . . the parties hereto agree that any action .
. . whether federal or state, or any arbitration proceedings, shall be brought
within the State of New Jersey.” Agreement, ¶ 22.2
Paragraph
22.4 of the Agreement titled “Provisional Remedies” states that “[e]ach
party shall have the right to seek from an appropriate court provisional
remedies, including. . . temporary restraining orders or preliminary injunctions
before, during or after arbitration. . . Any
such action shall be brought by franchisor or franchisee in the. . . Federal
judicial district where franchisor has its principal place of business.”
The provision further states that the parties consent to both personal
jurisdiction and the propriety of venue in that district.
As the Plaintiff’s principal place of business is in this District,
venue is proper.
Although
conceding the validity of the Agreement for their venue argument, the Wus also
argue that the Agreement violates the Illinois Statute of Frauds because it is
not signed by both of the parties. Although
not specifically stated by the Wus, the court will assume that this is a motion
for dismiss for failure to state a claim upon which relief can be granted
pursuant to Rule 12(b)(6).
As
a preliminary matter, neither party discusses what state’s law applies.
In their previous arguments, the Wus cite the provision in the Franchise
Agreement stating that New Jersey law applies to any dispute regarding the
Franchise Agreement, but in this argument the Wus cite to the Georgia statute of
the frauds sections. Plaintiff, on
the other hand, points to the Illinois statute of frauds and cites Illinois case
law. While Section 22.4 of the
Franchise Agreement states that the provisional remedies the parties consent to
both the exercise of personal jurisdiction and the propriety of venue in the
federal judicial district where franchisor has its principal place of business,
it does not discuss choice of law. Courts
do not worry about conflict of laws unless the parties disagree on which
state’s law applies. See Wood v. Mid-Valley Inc., 942 F.2d 425, 426-47 (7th Cir. 1991).
Where neither party argues that the forum state’s choice of law rules
require the court to apply the substantive law of another state, the court
should apply the forum state’s substantive law.
See Echo, Inc. v. Whitson Co. Inc., 52 F.3d 702, 707 (7th Cir.
1995). Here, the result is the same
whether the court applies the forum state’s law or New Jersey law as stated in
the Franchise Agreement.
The
statute of frauds requires contracts that cannot be fully performed within a
year of their making to be in writing. See
Ill.Rev.Stat.ch 59, § 1; N.J.S.A. §§ 25:1-5 to 1-16.
The writing may consist of several documents and it must contain the
agreement’s essential terms and be signed by the party against whom
enforcement is sought. When several
different documents are used, “they need not all be signed, so long as the
signed writing expressly refers to the unsigned writing or the documents are so
connected, physically or otherwise, as to show that they relate to the same
contract.” Bower
v. Jones, 978 F.2d 1004, 1008 (7th Cir. 1992).
Although
the Franchise Agreement is not signed by either party, Plaintiff attached a copy
of the April 2, 1996 Transfer Agreement to the complaint, which was signed by
the Wus. The Transfer Agreement
effectuated the transfer of the Franchise Agreement from the prior franchisees
to the Wus. Paragraph 7 of the Transfer Agreement provides that “[a]ll
terms and conditions of the new Franchise Agreement are incorporated herein as
fully set forth.” Further, the
1997 Mutual Release, which was also signed by the Wus, refers to the Franchise
Agreement and reiterates that the Wus were bound by the Franchise Agreement.
Based on the complaint and the reasonable inferences that can be drawn
from it, the court cannot say that these documents together fail to satisfy the
statute of frauds. See Midwest
Manufacturing Holding, LLC v. Donnelly Corp., 975 F.Supp. 1061 (N.D.Ill.
1997).
Last,
in their motion to dismiss the Wus moved to dismiss the complaint because
Plaintiff failed to comply with the Illinois Franchise Disclosure Act of 1987.
The Wus did not, however, give any more explanation of this claim nor
state how the Plaintiff failed to comply. As
such, the court will assume that the Wus have dropped this argument.