A group of holding companies' battle over a purchase of Church's Chicken franchises has continued as the Middle District of Florida's Ft. Myers Division granted in part and denied in part the defendants' motion to dismiss.
QSR Southern Group, LLC, QSR Midwest Group, LLC and QSR Michigan-Ohio, LLC took legal action against A&A Restaurant Holdings, LLC, N&A Restaurant Holdings Group, LLC, E&A Restaurant Holdings, Savannah Holding Group, LLC, Midwest Hospitality, LLC, Falcon Holdings, LLC and Aslam Khan, LLC. The plaintiffs alleged that the defendants didn't hold their end of the agreement concerning the Church's Chicken location purchases.
U.S. District Judge Paul A. Magnuson granted the defendants' motion in part.
In the first three counts, the plaintiffs accused the corporate defendants of still getting cash and credit-card purchases from the restaurant, even after closing, which the plaintiffs said violated the Asset Purchase Agreement (APA). The court denied the defendants' motion to dismiss the claims.
Judge Magnuson wrote, "Defendants point to the civil-theft statute's demand requirement and argue that plaintiffs did not comply with this requirement, and because of that, defendants cannot answer the allegation." Still, the court noted that other courts have emulated the demand requirement previously "and have declined to dismiss nonconforming claims," according to the opinion.
The plaintiffs also wanted the defendants to issue relevant documents to the franchises' operations. The defendants said these should be breach of contract claims, not specific performance, but the court ruled that making the plaintiffs re-plead again would be frivolous, especially because the plaintiffs already lack a proper remedy to the injuries they say they've suffered.
Still, since the plaintiffs failed to state a claim for the breach of contract allegation, that claim was dismissed.
But they did properly plead the common law fraud allegation as they accuse Khan of falsifying details like code compliance and licenses, causing the judge to deny the defendants' motion to dismiss this claim.
The issue started shortly the Askar family used Unified Holdings to purchase 45 Church's Chicken restaurants from Khan. The purchases were completed through the APA. Ahead of closing, Unified gave its rights to the plaintiffs, and Khan's holding companies, which are the other defendants, then sold 43 of the franchises to the plaintiffs.
But after closing, the plaintiffs said that they ran into several issues with the defendants, including the defendants allegedly defaulting on their agreements. They said they incurred several fees after the defendants allegedly didn't purchase licenses for the business. They also accused the defendants of not telling them about the health code and building code infringements. While the defendants asked the court to dismiss all the claims, Judge Magnuson only granted the motion in part.