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NATIONAL SCH. REPORTING SERVS. v. NATIONAL SCHS. O

June 27, 1997

NATIONAL SCHOOL REPORTING SERVICES, INC., Plaintiff, against NATIONAL SCHOOLS OF CALIFORNIA, LTD., (a/k/a National Schools of California, L.P.), JAN ANTON AND GREG LAWLOR, Defendants.


The opinion of the court was delivered by: BATTS

 DEBORAH A. BATTS, United States District Judge

 Plaintiff, National School Reporting Services, Inc. ("NSRS") compiles and sells information that can be used by potential home buyers to compare different school districts. Defendants Jan Anton ("Anton") and Greg Lawlor ("Lawlor"), are the general partners of Defendant National Schools of California, Ltd., ("NSC"), which contracted with the Plaintiff for the exclusive provision of the Plaintiff's services in California. Plaintiff brought this action for summary judgment to seek damages under a promissory note and two guarantees signed by the Defendants.

 I. BACKGROUND

 On March 15, 1994, Defendant NSC entered into an agreement with the Plaintiff entitled the "Exclusive Rights and License Agreement" ("License Agreement"). (Id. Ex. G.) Lawlor signed a Promissory Note ("Note") on behalf of NSC. (Id. Ex. E.) On September 15, 1994, Defendant defaulted on the Note. (Id. Ex. J P 17.) Defendant sent a letter dated September 15, 1994, to the Plaintiff's attorney, threatening suit, based on the Plaintiff's violation of California franchise laws, if the Plaintiff did not act in good faith in settling differences between the parties. (Id. Ex. Q.) On December 13, 1994, in exchange for more time to develop its marketing strategy and its product, NSC entered into a Forbearance Agreement with NSRS, (id. Ex. K), and on the following day, Anton and Lawlor signed personal guarantees ("Guarantees"). The Defendants failed to make any of the payments pursuant to the original Note or the subsequent Guarantees. (Defs.' 3(g) Stmt. P 1.)

 Sometime after August 8, 1995, NSC sued Plaintiff in the Superior Court of the State of California, County of San Diego, which case was removed to the Southern District of California, alleging that the Licensing Agreement was a franchise agreement. NSC moved for summary judgement, which motion was denied. *fn1"

 On October 27, 1995, Plaintiff sued Defendants in New York County Supreme Court seeking to collect on the Note and Guarantees. NSC removed to this Court and moved to dismiss, pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure, which was denied. The Plaintiff now moves for summary judgment seeking enforcement of the Note and Guarantees.

 II. DISCUSSION

 The principles applicable to summary judgment are familiar and well-settled. Summary judgment may be granted only when there is no genuine issue of material fact remaining for trial, and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986); Corselli v. Coughlin, 842 F.2d 23 (2d Cir. 1988). "The plain language of Rule 56(c) mandates the entry of summary judgment, . . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).

 As a general rule, all ambiguities and all inferences drawn from the underlying facts must be resolved in favor of the party contesting the motion, and all uncertainty as to the existence of a genuine issue for trial must be resolved against the moving party. LaFond v. General Physics Servs. Corp., 50 F.3d 165, 171 (2d Cir. 1995). As is often stated, "viewing the evidence produced in the light most favorable to the nonmovant, if a rational trier could not find for the nonmovant, then there is no genuine issue of material fact and entry of summary judgment is appropriate." Binder v. LILCO, 933 F.2d 187, 191 (2d Cir. 1991).

 Putting aside the determination of whether the agreement is a license or a franchise agreement, and assuming for the moment that the License Agreement is what it says it is -- a license agreement, the Defendants have raised no argument, nor any material fact, that would dispute the validity or enforceability of the Note or Guarantees. (Defs.' 3(g) Stmt. PP 2-3.) Accordingly, on this basis, the Court would have to render summary judgement in Plaintiff's favor.

 Assuming arguendo, that the Defendants are correct in their assertion that the License Agreement is a franchise agreement, the proposed link between the unenforceability of the underlying franchise agreement and the Note and Guarantees is a tenuous one. The Defendants argue, citing Village of Upper Nyack v. Christian and Missionary Alliance, 143 Misc. 2d 414, 540 N.Y.S.2d 125 (N.Y. Sup. Ct. 1988), aff'd, 155 A.D.2d 530, 547 N.Y.S.2d 388 (2d Cir. 1989), that any act, promise or agreement intended to accomplish the furtherance of an unlawful purpose is unlawful and thus unenforceable. From this, the Defendants reason that the Note and Guarantees are unlawful and unenforceable because the underlying agreement is unlawful. However, if the License Agreement were found to be a franchise agreement, it does not follow that it has an unlawful purpose -- in fact, contracting a franchise ...


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