Crush City Contruction, LLC v. Englert, Inc.
- John Tunheim
- 0:24-cv-01014
- U.S. District Court · District of Minnesota
- 11
In Crush City Construction v. Englert, Judge Tunheim denied Englert's motion to compel arbitration without prejudice because it is unclear which contract governs the parties' relationship.
Franchisees and dealers who operate under franchise or dealership agreements with multiple overlapping contracts — particularly where a business has been transferred or transitioned and the applicable governing agreement is disputed. This ruling may also be relevant to parties seeking to enforce or avoid arbitration clauses when the controlling contract has not been conclusively established.
What happened
Crush City Construction, LLC sued Englert, Inc., a LeafGuard franchise company, alleging Englert violated the terms of their distributor agreements covering territories in Minnesota and Wisconsin. The case centers on a complicated history of contracts: 2003 agreements (which contained arbitration clauses) between Englert and Lindus Construction, followed by a 2017 business transition to Crush City, and 2017 agreements between Englert and Crush City (which had no arbitration clauses). Englert moved to force the dispute into arbitration, arguing that the older 2003 agreements — which required arbitration in New Jersey — govern the parties' relationship.
The core legal problem is that no one can say with certainty which contract actually governs. There are at least four possibilities: the original 2003 Rochester Agreement (if it was properly transferred to Crush City), the 2017 Minnesota and Wisconsin Agreements (which lack arbitration clauses), an implied agreement based on how the parties actually behaved toward each other, or no enforceable agreement at all. The court noted that it has not seen the Termination Agreement that was supposed to transfer rights from the Lindus family to Crush City, and the record is too thin to resolve these competing possibilities at this stage.
Judge Tunheim denied Englert's motion to compel arbitration without prejudice, meaning Englert may renew the motion later. The court reasoned that under federal law, the question of whether a valid arbitration agreement exists is for the court — not an arbitrator — to decide, and that question cannot be answered without more information gathered through the discovery process. The court left open the possibility that if discovery shows the 2003 Rochester Agreement governs, Englert could file a new motion to compel arbitration at that point.
The detailed version
- Crush City Contruction, LLC v. Englert, Inc. · No. 0:24-cv-01014
- John Tunheim
- July 24, 2025
Background
Plaintiff Crush City Construction, LLC brought seven causes of action against Defendant Englert, Inc. arising from their LeafGuard franchise relationship. The claims include: (1) Breach of the 2003 Midwest Agreement, (2) Breach of the 2003 Rochester Agreement, (3) Breach of the Minnesota Franchise Act, (4) Breach of the Wisconsin Fair Dealership Law, (5) Estoppel and Breach of Implied Contract, (6) Declaratory Judgment, and (7) injunctive relief for unfair trade practices.
The factual history spans decades. In 1995, Lindus Construction began operating a LeafGuard franchise under Englert. In January 2003, Lindus Construction and Englert signed two distributor agreements: the 2003 Rochester Agreement (covering counties in southern Minnesota and southwestern Wisconsin) and the 2003 Midwest Agreement (covering counties in central Minnesota and northwestern Wisconsin). Both agreements contained identical arbitration clauses requiring arbitration of "any issue arising out of or relating to this Agreement" in New Brunswick, New Jersey, and designated New Jersey law and courts for dispute resolution.
In 2015, Lindus Construction consolidated its operations, running both territories from a single Wisconsin office. In 2017, Kevin and Emily Lindus transitioned the business to their children (Adam, Andrew, and Alex) and their company, Crush City Construction. A Termination Agreement assigned rights under the 2003 Midwest Agreement (and a Cincinnati Agreement) to Crush City, and Englert acknowledged the transition in writing. However, the Termination Agreement did not explicitly assign rights under the 2003 Rochester Agreement to Crush City. Despite this, both Englert and Crush City allegedly operated as though the Rochester Agreement had been assigned — Englert forwarded Rochester-territory leads to Crush City, and Crush City serviced that area and paid royalties bundled with Midwest territory payments.
In June 2017, Crush City and Englert also signed two new franchise agreements — the 2017 Minnesota Agreement and the 2017 Wisconsin Agreement — covering the same counties as the old Midwest Agreement. Critically, neither 2017 agreement contained an arbitration clause.
After Englert was purchased by private equity firm Audax in 2019, Englert allegedly began aggressively terminating franchise agreements to return them to corporate ownership. When Crush City attempted to sell its business to a third party in 2023, Englert refused to consent and then notified Crush City it would terminate the Cincinnati and Rochester Agreements, claiming for the first time that the original transfer from Lindus Construction to Crush City had been improper.
Legal Standard
Under the Federal Arbitration Act (FAA), 9 U.S.C. § 3, a party may move to compel arbitration when it believes a dispute falls within a valid arbitration agreement. On such a motion, a court does not decide the merits of the underlying dispute but instead determines: (1) whether a valid agreement to arbitrate exists between the parties, and (2) whether the specific dispute falls within the scope of that agreement. The existence of an arbitration agreement is evaluated under ordinary state-law contract principles. Arbitration clauses are to be construed liberally, with doubts resolved in favor of arbitration. The party seeking to avoid arbitration bears the burden of showing the claims are not suitable for arbitration. However, the question of whether any valid arbitration agreement exists at all is for the court — not an arbitrator — to decide.
Analysis
The court identified the fundamental problem: the parties do not agree on which contract, if any, governs their relationship, and the answer determines whether arbitration applies.
Possible Governing Agreements
The 2003 Rochester Agreement
If this agreement was validly transferred to Crush City through the 2017 business transition, it would bind the parties to arbitration. But the court has not seen the Termination Agreement and has only fragments of Englert's acknowledgment of the transfer. Whether the Rochester Agreement was effectively assigned is an unresolved question of fact.
The 2017 Minnesota and Wisconsin Agreements
These agreements, signed directly between Crush City and Englert, contain no arbitration clause. Their territorial exhibits do not include the Rochester counties. The court found that, at least on the current record, these agreements do not appear to govern the Rochester territory dispute — though discovery could change that conclusion.
An Implied Agreement
Under both the Minnesota Franchise Act (Minn. Stat. § 80C.01, subd. 4(a)) and the Wisconsin Fair Dealership Law (Wis. Stat. § 135.02(3)(a)), franchise and dealership agreements can be implied from the parties' course of conduct rather than reduced to writing. If an implied agreement exists covering the Rochester territory, it is unclear whether it would incorporate the arbitration clause from the 2003 Rochester Agreement, the no-arbitration framework of the 2017 agreements, or some other terms. This too is an open question of fact.
No Agreement
It is also possible that no enforceable agreement covers the Rochester territory at all, which would likely mean Crush City has no viable cause of action as to those claims.
Ruling
The parties agree that if the 2003 Rochester Agreement governs, arbitration is required. They also appear to agree that if the 2017 agreements govern, there is no mandatory arbitration. Because the threshold question — which agreement governs — cannot be resolved on the current record, the court held it would be premature to compel arbitration. The court emphasized that the existence of a valid arbitration agreement is a question for the court, not an arbitrator, and that question requires further factual development through discovery.
Disposition
The court denied Englert's Motion to Compel Arbitration without prejudice. The court noted that if discovery clarifies that the 2003 Rochester Agreement governs, Englert may renew the motion to compel arbitration at the close of discovery.
Read the full 11-page opinion on CourtListener, the free public archive maintained by the Free Law Project.