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WON TEH HWANG v. DUNKIN' DONUTS INC.

January 7, 1994

WON TEH HWANG, Plaintiff,
v.
DUNKIN' DONUTS INCORPORATED, and SUPERMARKETS GENERAL CORPORATION, Defendants.



The opinion of the court was delivered by: THOMAS J. MCAVOY

 MEMORANDUM-DECISION & ORDER

 Background:

 The facts of the case indicate that in 1987 Hwang and Dunkin' Donuts entered into a franchise agreement in which Hwang would assume control of a Dunkin' Donuts shop located at 42-02 Northern Boulevard, Long Island City, New York (hereinafter "premises"). In preparing to operate this donut shop, Hwang signed an assignment and assumption of lease with SCG, the landlord of the premises. It should be noted here, that at no time was Dunkin' Donuts a party to the lease of the premises.

 The record indicates that, included within the prior owner's lease with SCG, was a lease option agreement which provides in part, that if the franchise agreement of the lessee of the premises was terminated, "the lessee at the option of Dunkin' Donuts will assign to Dunkin' Donuts all of its right, title and interest in said indenture of Lease." (Lease Agreement, Defendant's exhibit E).

 On or about April 17, 1989, an attorney for Dunkin' Donuts sent a letter to in-house counsel for SCG advising them that an order had been issued by a state court judge terminating Hwang's franchise agreement as of August 18, 1988. (Defendant's exhibit K). Additionally, the letter indicated that Dunkin' Donuts wished to exercise its rights under the lease option agreement dated April 7, 1978. Upon this communication and in accordance with the lease option agreement, SCG notified Hwang that his lease was automatically terminated and that his interest was to be conveyed to Dunkin' Donuts.

 On September 12, 1989 a Sheriff's sale was conducted on the premises, pursuant to a state court judgment obtained by Dunkin' Donuts against Hwang for breaching the franchise agreement and a prior promissory note. At this sale, Hwang voluntarily turned over his keys to the premises and never asked that they be returned despite the fact that no legal proceedings were ever commenced to evict Hwang.

 In his complaint, Hwang alleges four causes of action. The first cause of action stems from the alleged failure of Defendant Dunkin' Donuts to reveal the existence or proposed construction of 6 Dunkin Donut franchises within a one mile radius of the franchise Hwang was to purchase. Hwang alleges that such conduct violates New York State Franchise Law and the principles of honesty and fair play. Hwang's second and third causes of action allege that Dunkin' Donuts assumption of Hwang's lease in accordance with the lease assumption clause caused Hwang one million dollars of revenue damage and amounts to the wrongful confiscation of the plaintiffs property in violation of New York Penal Law § 155.05. Lastly, Hwang alleges that by virtue of Dunkin' Donuts' "malicious and larcenous conduct", he was forced to do extensive legal research in order to set forth this present complaint. Accordingly, he requests this court to reimburse him for the time and effort he has expended. The court will address the merits of these causes of actions seriatim.

 Analysis:

 As previously stated, both parties in this case have made motions under Rule 56 of the Federal Rules of Civil Procedure for summary judgment. Federal Rule of Civil Procedure 56 provides that summary judgment is appropriate only when "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Once the moving party has established that no genuine question of material fact exists and that it is entitled to judgment as a matter of law, the burden shifts to the non-movant to come forward with a similar response setting forth "specific facts showing that there is a genuine issue for trial," absent which summary judgment will be granted. The opposing party "may not rest upon the mere allegations or denials of [his] pleading" (Fed. R. Civ. P. 56(e)) but rather must present "sufficient evidence favoring the non-moving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Indeed, "conclusory allegations will not suffice to create a genuine issue. There must be more than a 'scintilla of evidence,' and more than 'some metaphysical doubt as to the material facts.'" Delaware & Hudson Railway Co. v. Consolidated Rail Corp., 902 F.2d 174, 178 (2d Cir. 1990) (quoting Anderson, 477 U.S. at 252 and Matsushita Electric Industrial Co. V. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986)). "The non-movant cannot escape summary judgment merely by vaguely asserting the existence of some unspecified disputed material fact, or defeat the motion through mere speculation of conjecture." Western World Insurance Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir. 1990).

 Of course, it is well established that in deciding a motion for summary judgment, the court must resolve all ambiguities and draw all inferences in favor of the non-moving party. See Cruden v. Bank of New York, 957 F.2d 961, 975 (2d Cir. 1992); Ramseur v. Chase Manhattan Bank, 865 F.2d 460, 465 (2d Cir. 1989). Further, it is equally well settled that "only when reasonable minds could not differ as to the import of the evidence is summary judgment proper." Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir.), cert. denied, 116 L. Ed. 2d 117, 112 S. Ct. 152 (1991). With this standard in mind, the court will address the defendants motion first and then proceed to address the plaintiff's motion for summary judgment.

 1. Hwang's Complaint:

 The plaintiff's complaint revolves around a lease option agreement signed by Hwang's predecessor and SCG, to which Hwang became bound when he assumed the lease of the premises. In his first cause of action Hwang seeks $ 343,389.00, for the value of the subject leasehold. The second cause of action demands $ 1,000,000.00 in "revenue damages" resulting from the appropriation of the Hwang's donut-shop leasehold and premise. In his third cause of action Hwang asks for the total damages sought in the first two cause of action, because the same conduct "constitutes deceitful and unlawful practice in violation of New York Penal Law 155.05. ...


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