Gordon Rees Scully Mansukhani Los Angeles Partner Calvin Davis and Senior Counsel Matthew Trejo 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, GRSM’s client, the franchisor, forced the sale of their ownership, as the part-owner’s conviction made them ineligible to be a franchisee under the terms of their franchise agreement.
When the plaintiffs later secured a civil judgment against the former part-owner, they claimed that GRSM’s client was somehow involved in a plot to have the guilty party sell their ownership for a below-market price, thus supposedly assisting in the fraudulent transfer of assets.
After significant written discovery and depositions of the parties, GRSM moved for summary judgment on all claims against the client. The motion was based on the fact that the client’s actions were based on a pre-existing clause in the applicable franchise agreement giving them the right to terminate a franchisee under these circumstances. In addition, there was no evidence that the client’s actions were in any way motivated by an effort to prevent the plaintiffs from collecting the debt owed by the former franchisee.
The court ruled in GRSM’s favor that there was no viable claim against the client based on either fraudulent transfer of assets or a violation of Business and Professions Code 17200. As a result, while the matter will continue against the other alleged tortfeasors, the claim against GRSM’s client was dismissed with prejudice after more than two years of litigation.
This was the second lawsuit against the client, and GRSM achieved another complete dismissal by prevailing on dispositive motions. The Los Angeles team would like to extend their gratitude to Legal Secretary Marisela Tesillo for her invaluable contributions in achieving this result.
This outcome showcases the depth and effectiveness of the firm’s Franchise practice in achieving successful results for GRSM’s clients.