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BL Restaurant Franchises LLC v. 510 Park Inc.

United States District Court, N.D. Texas, Dallas Division

May 24, 2018




         Before the Court is Plaintiff BL Restaurant Franchises LLC's (Bar Louie) Amended Motion for Temporary Restraining Order and Preliminary Injunction. Doc. 14. For the reasons that follow, the Court DENIES the motion.

         I. BACKGROUND[1]

         Bar Louie, franchisor of the Bar Louie restaurant system, filed suit against Defendants, three franchisees and the entities they control, who operate or have operated three Bar Louie restaurants, alleging that they breached various provisions in their Unit Franchise Agreements (UFA). Doc. 1, Compl., ¶ 1. Two days after filing suit, Bar Louie filed a motion for a temporary restraining order (TRO) and preliminary injunction seeking to enforce certain terms of the UFAs for the defendants' Ridgedale and Uptown Locations. Doc. 6, Mot. for TRO. The parties resolved the claims against the Ridgedale Location out of court, so Bar Louie filed the amended motion presently before the Court. Doc. 14, Am. Mot. for TRO. In Bar Louie's amended motion, it seeks an injunction only against the Uptown Location to require the defendants to comply with the pre-termination procedures in the restaurant's UFA before closing the restaurant. Doc. 14, Am. Mot. for TRO, 2.

         On May 15, 2018, before Bar Louie's motion was ripe, the Uptown Location closed. Doc. 22, Pl.'s App., 1. Bar Louie contends that the closure does not moot its motion because “‘where a defendant with notice in an injunction proceeding completes the acts sought to be enjoined the court may by mandatory injunction restore the status quo.'” Id. (quoting Porter v. Lee, 328 U.S. 246, 251 (1946); see also Boerschig v. Trans-Pecos Pipeline, 872 F.3d 701, 704 (5th Cir. 2017)). The Court agrees. And after the Uptown Location closed the defendants filed a response brief, Bar Louie replied, and the Court held a hearing on Bar Louie's motion. Thus, Bar Louie's motion is ripe for review.


         “Injunctive relief is an extraordinary and drastic remedy, and should only be granted when the movant has clearly carried the burden of persuasion.” Anderson v. Jackson, 556 F.3d 351, 360 (5th Cir. 2009). To obtain a preliminary injunction, a plaintiff must show “(1) a substantial likelihood of success on the merits; (2) a substantial threat that it will suffer irreparable injury absent the injunction; (3) that the threatened injury outweighs any harm the injunction might cause the defendants; and (4) that the injunction will not impair the public interest.” Enrique Bernat F., S.A. v. Guadalajara, Inc., 210 F.3d 439, 442 (5th Cir. 2000). “A temporary restraining order . . . is simply a highly accelerated and temporary form of preliminary injunctive relief, which requires that party seeking such relief to establish the same four elements for obtaining a preliminary injunction.” BNSF Ry. Co. v. Panhandle N. R.R. LLC, 4:16-CV-1061-O, 2016 WL 10827703, at *1 (N.D. Tex. Dec. 30, 2016) (internal quotations omitted).

         III. ANALYSIS

         Bar Louie and the defendants executed the Uptown Location UFA on October 21, 2011. Doc. 7, Br. in Supp. of Mot. for TRO, 7. The term expires on October 21, 2021. Id. But the Uptown Location informed Bar Louie on March 26, 2018 that it intended to close the restaurant. Id. Section 19.3 of the UFA provides that “[f]ranchisee may not terminate the Agreement prior to the expiration of its term, except through arbitration as set forth herein, based upon a material breach of the Agreement by the Franchisor.” Id. at 4. The franchisee must provide the franchisor with written notice of its claim within one year of when it believed the franchisor materially breached the UFA and it must allow the franchisor sixty days to cure. Id. Bar Louie claims the Uptown Location did not follow this procedure before closing its restaurant and that it is entitled to injunctive relief requiring the Uptown Location to reopen and comply with § 19.3. Id. at 8; Doc. 22, Pl.'s App., 1.

         A. Section 22.1 of the UFA

         The parties agreed in the UFA that Bar Louie has a right to an injunction in particular circumstances regardless of whether Bar Louie has shown the four elements required to establish a right to injunctive relief. Section 22.1 of the UFA provides that:

Franchisee recognizes the unique value and secondary meaning attached to the System, the Proprietary Marks, standards of operation and Confidential Information (collectively, “Proprietary Property”), and Franchisee agrees that any non-compliance with the terms of this Agreement or any unauthorized or improper use of the Proprietary Property will cause irreparable damage to Franchisor and its franchisees. Franchisee therefore agrees that if it should engage in any such unauthorized or improper use of the Proprietary Property, either during or after the Term, Franchisor shall be entitled to permanent and temporary injunctive relief, without bond, from any court of competent jurisdiction, in addition to any other remedies to which Franchisor may be entitled by law or at equity.

Doc. 1-4, Ex. 3, § 22.1. Bar Louie believes this provision applies to its claims against the Uptown Location. See Doc. 7, Br. in Supp. of Mot. for TRO, 21 (using the provision to argue the Court should not require it to post a bond). But the Court disagrees. Section 22.1 provides that Bar Louie is entitled to an injunction if a franchisee engages in “unauthorized or improper use of the Proprietary Property.” Doc. 1-4, Ex. 3, § 22.1. “Proprietary Property” is defined as “the System, the Proprietary Marks, standards of operation and confidential information.” Id. “The System” is defined as Bar Louie trade dress, trademarks, service marks, copyrights, “confidential information, confidential materials, operating systems and methods for merchandising food and beverage products and for operating the Bar Louie Restaurant.” Id. § 1.1.2. Bar Louie's claims against the Uptown Location do not relate to Bar Louie's Proprietary Property; Bar Louie requests an injunction only to require the Uptown Location to give notice of Bar Louie's alleged material breach of the UFA and an opportunity to cure if the Uptown Location seeks early termination of the UFA. Thus, because Bar Louie's claims do not fall under § 22.1, the UFA does not entitle Bar Louie to an injunction.

         Bar Louie also claims it is entitled to an injunction because it has shown it is likely to succeed on the merits, irreparable harm, that its injury outweighs the harm to the defendants, and that an injunction is in the public interest. Doc. 7, Br. in Supp. of Mot. ...

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