Coffee Beanery Franchisees Win on Appeal; Arbitration Decision Vacated
ANN ARBOR, Mich. (Blue MauMau) - After the long, strenuous legal battle between The Coffee Beanery and two of its franchisees, the Court of Appeals issued its opinion yesterday in favor of the coffee shop owners. Deborah Williams and Richard Welshans, under WW LLC, appealed the district court's denial of their motion to vacate the American Arbitration Award. The opinion of the three-judge panel stated that at issue was whether the Arbitrator showed manifest disregard of the law when she issued her ruling. They stated, "Because we conclude that the failure to disclose a prior felony conviction for grand larceny violates the Maryland Franchise Registration and Disclosure Law, and because the Arbitrator showed a manifest disregard of the law in concluding otherwise, we REVERSE the judgment of the district court and VACATE the Arbitrator's award."
In an interview today with the franchisees and attorney Harry Rifkin, Williams said, "We've lost over a million dollars, we've lost our home and our credit standing. We have lived without medical insurance for five years. We can't get back those five years." She said they have gone through mental anguish and torture every day knowing that there was a predator franchisor out there that not only ruined their lives, but also the lives of 99 other franchisees of Coffee Beanery.
Welshans agreed, but feels the opinion is their vindication. "Barron basically said on every point going down that we didn't prove our case and in the end decided that we lost the case 150 percent. Thankfully, there were three judges who took a look at the hard facts of our case and said this is the most egregious thing we've ever seen and ruled in our favor."
Arbitrator JoAnne Barron had made her decision based on her findings that the franchisees did not prove their claims of common law fraud or fraudulent inducement and misrepresentation by Coffee Beanery and its officers, or their violations of the Michigan and Maryland franchise investment laws. She also ruled that the franchisees were not entitled to rescission of their franchise agreement, and they did not prove damages.
As part of her award, she ruled that Coffee Beanery was not required to disclose that Kevin Shaw, son of CEO JoAnne Shaw and officer of the company, had a felony conviction for grand larceny, as it was not the type of felony subject to disclosure.
Williams and Welshans were held liable for past due royalties and other Coffee Beanery expenses, and for AAA fees and compensations.
Attorney Harry F. Rifkin, Cohan, West, Rifkin & Cohen, P.C., said their intent is to pursue their case to a jury trial. "We believe that we will be able to obtain a substantial judgment, and that after we get the pending case reopened we can move for summary judgment on liability and get a jury trial on damages."
Rifkin said they are confident that justice will finally be done, although nothing will provide a full recovery no matter how much money they obtain. "Nothing will fully restore the victims of Coffee Beanery, Joanne Shaw, Kevin Shaw and the others to the positions they were in beforehand." But he added, "We hope this will prevent them from victimizing more people in the future and help the people who are already involved in The Coffee Beanery to get justice."
--
Related readings:
- Coffee Beanery Franchisees Fight On Despite Losses
- Coffee Beanery Franchisees Uncover New Evidence
- Coffee Beanery Franchisees Testify for Arbitration Fairness Act
- Coffee Beanery Story To Be Presented to Congress
- Coffee Beanery Violates Illinois Franchise Act
- Coffee Beanery Not To Sell Franchises in Illinois
- Maryland Launches New Probe into Coffee Beanery Violations
- AAA Responds to Alleged Bias in Coffee Beanery Award
- Coffee Beanery Brief Attacks Franchisees on Jurisdiction, Issues
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| Coffee Beanery-Sixth Circuit opinion.pdf | 306.83 KB |
| CoffeeBeaneryReplyBriefforAppellants.doc | 89 KB |
Quiznos too?
I wonder if this could apply to the Schadens of Quiznos infamy as they lost a fraud suit in the not too distant past? I believe Michigan law doesn't allow any one convicted or a participant in a fraud to actually sell franchises in the state. Any comments?
Ripped off
check the facts
The arbitration was overturned on a "false" premise...Kevin Shaw was not convicted of "Grand Larceny" a felony....I checked the 67th court records and it was a misdemeanor of larceny under $100...I am sure the appeal will be appealed
Check the facts
You need to check the facts. Kevin Shaw was indeed convicted of a felony of grand larceny. Moreover, Kevin Shaw admitted to a felony conviction for grand larceny in the arbitration. Additionally, as the judges stated, Kevin Shaw made an illegal earnings claim. I also ask that you look at the consent order. The Coffee Beanery admitted all of the factual statements in the consent order under questioning in the arbitration.
As for your ad hominem attacks against me, I must give it what it is worth, nothing. You do not know me or my clients or anything about this case. Remember, it is better to keep your mouth shut and have people think you are a fool than to open it and prove it.
Harry Rifkin, Esquire
www.marylandfranchiselawyer.com
IMHO thought for Rifkin
I do understand that the felony conviction proved a mechanism for vacatur and getting this case into court.
Michael Webster has noted that the BMM comments can serve as an (imperfect) mock jury. In that vein, I would humbly suggest to Mr. Rifkin that normal folks are much more likely to be disturbed by the bogus earnings claim and "rebates" (and perhaps the fundamental flaws in the unprofitable business model) than any prank with traffic cones.
There are legitimate claims against Coffee Beanery but cone conversion is not one of them.
In fact, discussion of this "grand larceny" may well engender a backlash among jurors, and even the judge. We all have embarrasing incidents in our personal lives; that's why we don't buy Dunkin' franchises.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Re: IMHO
I agree with you Paul, but Mr. Rifkin might want to actually figure out what those damages are, because when asked about how much they lost on the Pepsi Contract, the answer was 'We don't know'.
I'd be curious to see the 'bogus' earnings claim in comparison to the R&D financials and see where the big differences are. Let's not forget that R&D stated that they felt that they could do better than what the earnings claim showed. I'm sure that question will be asked.
Webster & Shay should agree
JD's point on damages is well-taken (though the Pepsi contract was hardly Mr. Rifkin's central point), and also raises the broader issue noted by Michael Webster.
Webster noted that the "vendor rebates" and other such hidden charges are in fact disguised royalty payments, particularly where they are for raw materials used in the ongoing course of producing products sold at retail on which royalty payments (and "ad fund" contributions, which are often not spent on marketing purposes) are due.
Since the position of the franchise industry has always been that pre-purchase disclosure will cure cancer and bring peace to the Middle East, surely Matt Shay could not object to quantifying such supra-competitive pricing and disclosing that in the Offering Circular.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Hidden Charges and Disclosure
Paul, I actually saw a pleading which, in my opinion, correctly laid out the basis for a material misleading rep based on the Item 8 recommended disclosure.
I will try to locate it and post it.
Michael Webster PhD LLB
Franchise News
Rifkin is one good driver
To us non-lawyers, I must confess that you gentlemen make persuasive arguments but I just want to point out that Rifkin was right in using the felony charge that succeeded in a rare overturn of an arbitration ruling when the rest of you legal backseat drivers were saying there was no case.
Now that we've stated the obvious, please proceed.
Okay Harry
this has bugged me since reading the reversal.
If the larceny conviction was such a 'material' event, why were there no questions to the UFOC experts (either side) during the arbitration as to why it should have been disclosed. Instead you were more concerned about 'interpretations' of the different types of cafes/drive-thrus, etc, and with the gift cards and Pepsi contract.
Check the facts
You need to check the facts. Kevin Shaw was indeed convicted of a felony of grand larceny. Moreover, Kevin Shaw admitted to a felony conviction for grand larceny in the arbitration. Additionally, as the judges stated, Kevin Shaw made an illegal earnings claim. I also ask that you look at the consent order. The Coffee Beanery admitted all of the factual statements in the consent order under questioning in the arbitration.
As for your ad hominem attacks against me, I must give it what it is worth, nothing. You do not know me or my clients or anything about this case. Remember, it is better to keep your mouth shut and have people think you are a fool than to open it and prove it.
Harry Rifkin, Esquire
www.marylandfranchiselawyer.com
Re: Check the facts
harry check the 67th district court in Michigan...the initial charge was possesion of stolen property...with a final conclusion of misdemeanor larceny under $100....sorry to burst your bubble...http://co.genesee.mi.us/districtcourt/
go to records check type in case # cro8419519....speaking of removing all doubt!
You don't have all the facts
Sorry, but that is both irrelevant and not probative. First, Kevin Shaw is the one who testified that it was a felony conviction for grand larceny. Second, he stated he never completed his probation. The failure to complete probation could have resulted in a restoration of the original charge and a conviction for it. You cannot tell from the record. Third, I do not know if that is the right court and right case. The felony was in 1987. This case is in 1985. By the way, Kevin had also testified to a felony conviction in another case previously. He should know. Also, remember that this was only one of many things wrong with the disclosure.
Harry M. Rifkin
harry you the man
you are a great lawyer, you got kevin to testify to something that is not a "fact"....that makes you a great attorney and him an idiot...that being said unless you can produce a felony conviction case it also makes you "WRONG" regarding your facts.
Shaw's Felony
Harry, could you post the felony conviction? Thanks.
Could you also straighten out some of the crowd here by pointing out that the undisclosed felony removed the jurisdiction from the arbitrator, but is quite unlikely to be a source of damages.
Or correct me if I am wrong, thanks.
Michael Webster PhD LLB
Franchise News
Coffee Beanery Arbitration
Can any of the legal beagals tell us wht is next for CB?
Can they have the decision thrown out, or appeal again?
Coffee Beanery Arbitration
Who knows what will happen? The Wilshan's are back to ground zero and have been told by the high court that they can take their claim for fraudulent inducement to the courts.
The Wilshan's and their attorney are to be congratulated for exposing the injustice of the arbitration and warning others. Let's hope that the final outcome for them will result in damages that are proximate to all of the misrepresentations and omissions in and out of the FDD.
Will the Coffee Beanery defend themselves in court by indicating that they have already been punished by the Maryland State Rescission and Consent Decree for their transgressions, to which they pled guilty to the State, and that they can't be further punished by a Civil Action under Maryland Franchise law? Will the matter of the Rescission that ended their rights to recover under the Maryland Statute whether or not they accepted the rescission be brought up in any new trial or is this now a dead issue?
Re: Coffee Beanery Arbitration
After hearing there was no felony (way to check the facts harry) the only congratulations is to harry for continuing to milk money out of his clients...wilshans wake up and smell the coffee!
Coffee Beanery
If there was no Felony, then I suggest Harry would be every mans attorney
What other attorney could get Kevin to admit that he was a convicted Felon and then have his attorney agree.
HARRY YOU THE MAN
Coffee Beanery
No the States Case was independent from the Wilshens. They would only forfiet thier right of Private Action if they had accepted the Resicion.
If I read the Judges Decision right, they have determined the Wilshens can seek recision as well as damages
Coffee Beanery Arbitration
No! I think you misunderstand me. When a Rescission is negotiated by the State, it appears to be NASAA policy, in cooperation with federal regulatory policy that WHETHER OR NOT THE RESCISSION IS ACCEPTED OR REJECTED, this ends any private right of action for the franchisee under State Franchise Statutes. When the franchisee rejects the rescission, they, in effect, relinquish their claim and return to operate the business under the terms of the franchise agreement, and are subject to all of the terms of the franchise agreement.
When the Wilshan's rejected the rescission, they didn't know this, of course. The rescission negotiated by the State offered about $100,000, and this wouldn't have saved them from bankruptcy and they rejected the rescission thinking that they could or would have an opportunity to recover in a private right of action in the courts or in arbitration for fraudulent inducement to contract under the Maryland Franchise Laws.
The FTC Rule clearly indicates that there will be NO private right of action for violation of the Rule, and the UFOC's/FDD's must be in compliance with the Rule, and, in the effect of the FTC Rule, there is no frudulent inducement to contract unless there is a violation of the FTC Rule. Not fair and moral but it does protect the franchisors.
Franchisees don't get two bites out of the apple. They get one bite in court OR one bite when the State negotiates a Rescission. They don't get both. It makes one wonder what is the purpose of the little anti-fraud FTC statutes.
The Rescission won in a court of law is an entirely different matter and, of course, this kind of rescission can only be won when there is NO State Action already taken to punish the "fraud" of misrepresentation in the disclosure document. Catch 22. If the franchisor is found guilty of fraud under a State Statute, wouldn't the State Regulators have to take some action to protect the public, if they haven't already been made aware of the fraud by the court and negotiated a rescission and a consent degree with the franchisor who has violated disclosure laws? Catch 22.
Franchisors get special treatment under the law.
Coffee Beanery
I think that you are the one who is musunderstanding. You GOOGLE Maryland Franchise Registration and Disclosure Laws or read the Decision.
They are now able to sue for Resicion, Restitution, and Damages. That is Md. Law.
Not one or the other all of them. GOOGLE it and read the Decision
no so fast...
"...They have determined that we can file a case in Civil Court for 1) rescind the franchise and 2)restitution..."
So they're not anywhere near actually winning anything yet, instead what has been decided is that they are still in the game, that they can START another suit that they would then need to win? So they'll get recission since a statutory requirement was not met. The big Q is, does the failure to meet the requirement mean that EVERYTHING that happened later is thus chargeable to CB??? Or is it, "okay so CB can't hold them to the agreement, but let's see how the stolen traffic cones (and the other allegations) were the proximate cause of the losses..."
And BTW, the screen name Granville Bean is a take-off on the character Granville Pollard in The Beans of Egypt Maine. Nothing to do with this TIF person.
Granville_Bean Reply
GB, could you use the "reply" function rather than "add new comment". Your comments are on top and I have to search for what you are replying to.
In this case, you are wrong. There is no automatic rescission, although the Court may order it. The statutory failure to disclose only means that a lawsuit in the Maryland courts is the proper jurisdiction, notwithstanding the arbitration clause.
Complicating matters is that R&D used the trademark for quite sometime while arguing that they were rescinding the agreement.
Richard S was quite right to point out that this was sucking and blowing. A quaint legal term meaning: trying to eat your cake and have it too.
Michael Webster PhD LLB
Franchise News
In my efforts to learn to play my DidgereeDoo,
I learnt that sucking and blowing at the same time is called circular breathing. You can obtain info regarding how to do this on line by doing a Google search on circular breathing or on How to play a didgereeDoo.
Other than in that musical context - if you consider that to be music, it isd frequently referred to as esroppel or waiver and ratification--
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Michael
The Decision that was just handed down from the 6th Circuit is like Summary Judgement. Go to page 11. The Decision is that fraud was commited and now we only have to prove our damages to a Jury
Fraud Damages
Hmm, ok, lets accept your theory of summary judgment on liability.
You have to link a) misrepresentation with b) losses such that a) is the proximate cause of b).
So what do you say is in column a, column b, and how are they linked?
Michael Webster PhD LLB
Franchise News
Now Only Need to Prove DAMAGES to a Jury
"Go to page 11. The Decision is that fraud was commited and now we only have to prove our damages to a Jury" - Guest
I think the guest is referring to this:
yes, Michael
you are wrong, they are right. They've always been right, get that into your head.
R&D, I'm curious, what $ amount will you be happy with in damages, because I don't see you getting everything you've lost back?
As Sad As That Is...
...Williams said, "We've lost over a million dollars, we've lost our home and our credit standing. We have lived without medical insurance for five years. We can't get back those five years." ...
As sad as that sob story is, from that alone I can't tell if the cocnept sux or if the Zees couldn't run a business. The sob story goes to damages, not liability. Looks to me like the specific issue was a technicality. An office stole TRAFIIC CONES??? How long ago? Is that material to someone deciding to go into the coffee business?
Now, apprarently there are other issues too. But I can't say that it makes the case that these Zees lost their shirts. Where was their due diligence?
RE: As Sad As That Is...
Hey tiffy, who you think you're kidding as Mr. Bean, you phony.
Sob Stories
Were never our intent. If not for our DD we would not have known the law and how it needed to be applied.
All of rambling on by someone who can't even spell. Kevin Shaw was not in College when he stole those, he was with a friend from college. He was married with children when this happened.
No, we do have to convince any court that stealing cones damaged us.
We have shared from start to finish our story with the BMM Community. It was never for anything other then to give everyone a glimpse into the world of what really goes on with a predatory zor.
You read and learn or you can continue to spin this story for anything other then what it is. CB sold more than 100 flawed concepts. They got caught. Grand Larceny is THEFT. It cost them.
You really should read the Decision before you rant and look like a fool. I believe it's called DD.
We did ours. We have always said that MD Law governed the contract and the Courts agreed
Re: Sob Stories
I wonder out of the Millions lost how much of that has gone to harry Rifkin the lawyer...when will he stop trying to convince the welshans he has a way to win a case that has no merit.
Looks to me
like the specific issue is a breach of a legal requirement. Suspicious little me thinks these failures are often deliberate.
So many sob stories; so many Zees that can't run businesses; so many Zors that are treated badly; so little useful DD information; so many Zees who don't do DD; so many Zors that don't either. You must drive the bus "from time to time".
Not a bus
I think the reference is to GB driving the truck that Cher refers to. A big powerful truck.
Coffee Beanery & Ketchell [Australia]
"Because we conclude that the failure to disclose a prior felony conviction for grand larceny violates the Maryland Franchise Registration and Disclosure Law, and because the Arbitrator showed a manifest disregard of the law in concluding otherwise, we REVERSE the judgment of the district court and VACATE the Arbitrator's award."
In Australia at the moment we await a High Court ruling on the appeal in Ketchell v Master of Education Services case where the original decision was in favour of the franchisee. The appeal is funded by the Franchise Council of Australia representing franchisors. In this case the franchisee argued that the franchisor failed to disclose and he therefore never signed to accept any such documents. The franchisor argues that the franchisee was given disclosure documents and the failure to gain a signature was simply an error.
But the law states the franchisee’s signature of acceptance must be gained. The argument as to disclosure almost appears to be forgotten where parties agree to disagree and where the focus of the court battle is largely on the signature. So do we go to intent or do we go to the application of a clear legal requirement.
He with most money usually wins but in Coffee Beanery we see a Court making decisions on a clear legal requirement. Hopefully we will see same in Ketchell. The law we have is weak so it would really be rubbing our noses in it if Courts allowed what we do have to be manipulated by an onslaught of greater funding on those rare occasions where a franchisor doesn’t like the outcome.
The Coffee Beanery decision is wonderful news for everyone on the franchisee side of the fence. It did make my day even in Australia. But for me the words of Williams and Welshans are at the centre of what opportunism is all about. It is often a relegated issue somewhere out past the legal and political implications and arguments but the social issue for those that have been hit by the franchisor truck is what drives us to reject and to challenge the status quo.
Williams said, "We've lost over a million dollars, we've lost our home and our credit standing. We have lived without medical insurance for five years. We can't get back those five years." She said they have gone through mental anguish and torture every day knowing that there was a predator franchisor out there that not only ruined their lives, but also the lives of 99 other franchisees of Coffee Beanery.
Rifkin said, "Nothing will fully restore the victims of Coffee Beanery, Joanne Shaw, Kevin Shaw and the others to the positions they were in beforehand." But he added, "We hope this will prevent them from victimizing more people in the future and help the people who are already involved in The Coffee Beanery to get justice."
Grand Larceny
FYI - from the arbitration transcript, the grand larceny was when he was in college and he and a friend stole a bunch of orange construction cones, and were caught by a cop with all of them in the backseat of the car.
So, now you'll have to convince a jury that your decision would've been different had you known this information.
As for you attorney fee's I believe that those were included in the losses and then you were asking for them as well, so 'double dipping'. I could be wrong, but I still stand by my opinion that the Yao & Yao expert did a better job than your witness. They admit you lost money, but they actually used a better valuation method. I don't do this type of work, but there are even things in there that weren't mentioned that I would've been looking at. Oh, i believe that your witness admitted that they didn't even look at the balance sheet, which should at least be considered.
About them cones...
Just wondering how many cones there were. In my state, you'd have to have a thousand dollars worth just to get a Grand Larceny 4th degree charge.
Is this like those Pentagon $600 toilet seats?
And while I'm rambling... what is with these coffee franchises?
Right now, we have Coffee Beanery, Cuppy's, and Peaberry.
Has the IFA "educational foundation" commissioned empirical research to ascertain the causal relationship between caffeine and franchisor malfeasance?
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Look at that event from another perspective
If it was so obvious that the facts would not, if disclosed, have changed the investment decision, then why violate the statute by concealing them? Obviously the franchisor believed that those facts had potentiality to be investment decision determinative, That makes the concealment a substantial concealment, because it is inherent that the intent to conceal directly links to a desire to influence the investment decision. In other words - - if the truth won't hurt, why lie?
But, as we all know, theer are people like the Coffee Beanery crowd who will lie when the truth would do.
Actually, you are right. It was a nothing crime. Fully disclosed, there would now be no case. Is that poetic justice?--
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
You make the Industry; The industry makes You
I have no reason to believe that the individuals at the CB system are any different than any other franchisor or business group. As people, I think they love their kids, care about their neighbours, are perfectly charming, etc. I have never met any with horns.
What Richard hints at is a deeper insight, perhaps:
People tend to underestimate the power of the 1. situation, 2. authority, 3. material success, and 4. the need to belong to the group on influencing behavior.
As rookie practioners, there always is some personal discomfort with the logical affects of your actions on investors. But as the socialization process continues, there are often many psychological defenses and material rewards available to ease their existential pain.
Pretty soon, however, you couldn't tell the truth while at work even if you wanted to. Let alone view franchisees as anything other than the defective, weaker "other".
A Philosophy on Wealth
It is unwise to believe your own personal value system is shared by others. And that is a valuable lesson to learn, if you do not know that by now.
This is how a thief maybe your family's best teacher, if you choose to view them that way.
Les Stewart MBA
Understanding Franchising
JD
You don't have the transcripts from Mike Yurik's arbitration. Kevin Shaw's story is even more skewed in that hearing. Under oath he testified that his record had been exspunged. In reading the transcripts from our hearing you will notice that the arbitrator asked Kevin if his record had been exspunged, his answer, NO. How would she have known to ask such a question? Why did she even get involved?
So if you believe he was in College at the age of 27 working on an AA Degree, then you would be correct.
As for the arbitrators accountant, 4 years of sweat equity gets you what? What is your definition of equity?
After 4 years of constant sweat and no money and I mean no MONEY, what we got was a bucket of water.
In reading those transcripts JD how many past and current cafe owners testified that they ever made money. Over 98 of the cafe owners have the identical story. Maybe if it was just us you could beleive your own rhetoric. Everyone, however, can't be wrong.
Even CB could not identify one cafe that ever made money, including the company owned locations.
No one said
it was a viable concept. The funny thing is you trotted out all of those franchisees to the arbitration and I don't even think anyone was arguing that.
As for the larceny charge, I don't care if it was mentioned in the Yurik testimony. Why wasn't it in your UFOC expert witness's testimony. Instead your attorney decided to ask him about the gift card program, Pepsi contract, and music contract. Don't you think it would have been wise to pull out the Maryland Franchise Act and the grand larceny charge then? What about when Harry was cross-examining their expert witness? That was a serious flaw in the line of questioning by your attorney (in my opinion).
JD
We don't have to convince a jury our decision to buy a CB Franchise would have been different had Kevin's Felony been disclosed.CB is going to convince a Jury that all the laws they broke did not hurt us or the other 99 cafe owners. The Judages have decided that fraud was commited and the FA no longer exist. The cones are no longer an issue.
The Attorneys fee's you are refering to was for arbitration only, as requested by the arbitrator. The loser is required to pay all fee's involved for the arbitration including the winning sides attorny's fees.
NO Double Dipping.
Through the past 4 years we have never waivered in what we knew all along to br true. DD played a hugh part in our understanding of MD Law and how that would impact the sale of our Franchise, should anything go wrong. And it all went wrong.
We have been right on every single point, and yet there are those who still, without knowing JACK about MD Law, post things that make me laugh.
I would think that by now you would know better.
Okay, you're right
The $100k+ of attorneys' fees that were included in the store operations loss for 2006. I'm sure most people would find that reasonable when doing an analysis of store operations.
So, when your accountant stated how much you lost, was that $100k included in that number? If so, I assume that you weren't asking for them separately too.
Also, why didn't your attorney question your UFOC or their UFOC expert on why the grand larceny conviction wasn't included in the UFOC? Seems to me that it should have been asked.
JD
We did question it in arbitration and in the Appeal. Karl Fink, attorney for CB, is also the author of the CB UFOC.
His answer in arbitration as in the Appeal Process was, yes it should have been disclosed, but the arbitrator said it did not cause damage. Just from reading the decision you can see the 3 Judge panel was not happy with that answer.
To argue not disclosing it was an oversight, was a lie as well. This Grand Larceny Conviction was brought up in Mike Yurik's arbitration. That was a year and a half prior to the registration of our UFOC.
This was no mistake on CB's part.
No we were not asking for attorneys fee's seperate from that.
Say what you want,
but when valuing a business, extra-ordinary items (like $108k) in legal fees is not a normal operating expense, and should not be considered. That's one reason why the Yao & Yao accountant was more credible.
Actually keep the accountant you have, and let a jury decide who they believe more. If you have a least one person on the jury that knows accounting or how to run a business, they will side with valuation by Yao & Yao.
Being Right
guest writes: "We have been right on every single point, and yet there are those who still, without knowing JACK about MD Law, post things that make me laugh."
First, I have read all the transcripts also.
Second, you have not been right on every single point, as many of those points will now be contested before a judge or jury. Good for Harry to get it to that point.
Third, you might want to use the BMM community as your informal jury testing - some people have made some pretty cogent arguments about what they see as the merits to your case.
Good luck.
Michael Webster PhD LLB
Franchise News
How naive you are JD
Of course that is relevant - obviously you were never a franchisee of a coffee franchise. I remember when I, uh, requisitioned some luggage push carts at a train station in Europe, placed them onboard a train and then unloaded them at the next town some 60 kilometers away. Sure I was quite inebriated, but look at the havoc that one person wrought: One town with absolutely no luggage push carts - another town, with an overabundance of pushcarts.
Similarly, consider the orange construction cones in the backseat of one vehicle, perhaps enroute to another construction zone which would not have needed all of those extra orange construction cones. Understanding the psyche of this type of criminal mastermind is every bit relevant in making the determination as to whether or not one should move forward with a coffee franchise.
That being said, I am glad R&D stuck it to them - I abhor the idea of mandatory arbitration, feel like the concept has been grossly perverted from its original intent, and wish them luck with respect to the civil litigation.
Reliance
jd writes: "So, now you'll have to convince a jury that your decision would've been different had you known this information. "
Actually, the whole ball of wax is now open for Harry to litigate on - in front of a jury and judge.
The arbitration award was tossed because the arbitrator basically refused to allow the individuals to sue in Maryland - a very curious decision given the state law and ufoc at the time.
The 6th Circuit simply found the easiest way to let the plaintiffs try their luck under the Maryland statute - no doubt the Court was heavily impressed by the results of Dale Cantone's investigation and conclusion and was likely troubled by the out right dismissal of the exact same claims.
Michael Webster PhD LLB
Franchise News
JD
You did read the arbitration transcripts. I wanted to thank you for that as you were the only one posting on BMM who did.
My statement was, to read the 11 page 6th Circuit decision.
That decision will more clearly help you understand our Expert Accountant. Maryland Law is very clear about inducing the sale of a franchise by means of Fraud. These 3 Judges upheld that Law. We were not Double Dipping our lose's when we included our attorney cost. If not for the fraud we would not have suffered the legal expense. In Maryland we are entitled to get that back.
On page 11 of the 6th Circuit Decision it read and I quote " Finally, the purpose of this provision of the Franchise Act is to allow parties to make informed decisions regarding whether to enter into a franchise agreement and with whom they do business. Because WW was deprived of a mandatory, statutorily required notice, prior to entering into the franchise agreement, and did not have an opportunity to avoid being subjected to the consequences of having entered into the contract(including the requirement to arbitrate such claims), WW should not be bound by the arbitration provisions to the which it was fraudulently induced into signing in violation of the Franchise Act."
I also wanted to add that our accountant did have our Balance Sheets, our Tax Returns and every other Financial Document we have.
Those are all attachments that, of course, are not included in the Transcripts. If you want copies, I can send them.
By the way, are you available?
Richard
Harry is on vacation. Stop already with the feeling bad. There are only a handful of arbitration awards that have ever been vacated. Who Knew?
From the legal history you were right in assuming we sould not win. From our stand point, what did we have to lose?
The Trial Lawyers for Public Justice educated us as to how an arbitrtion clause had to be understood. It is a Contract. The Supreme Court rules in favor of arbitration only to keep arbitration on an equal footing as any other contract, But not more so.