ILKB of CNY, LLC v. Franchoice, Inc.
- Michael Davis
- 0:19-cv-01064
- U.S. District Court · District of Minnesota
- 7
In ILKB of CNY v. Franchoice, Judge Davis partially dismissed the plaintiffs’ franchise-law claim, while allowing other portions to remain.
The plaintiffs, including ILKB of CNY, LLC and Teresa Ranieri, and the defendants, Franchoice, Inc. and Jeff Shafritz. The ruling dismissed only the portion of the New York Franchise Sales Act claim based on the November 2015 Agreement; the portion based on the April 20, 2016 Multi-Outlet Agreement and Ranieri’s common-law claims remained.
What happened
In ILKB of CNY, LLC v. Franchoice, Inc., the defendants asked the court to dismiss parts of the plaintiffs’ claims. The dispute included a claim under the New York Franchise Sales Act and common-law claims by Teresa Ranieri.
The court reviewed a magistrate judge’s report because no party objected. It changed one section concerning when the lawsuit began for statute-of-limitations purposes. The court decided that New York law applied and that the New York Franchise Sales Act claim began when the summons and complaint were filed on April 18, 2019.
Judge Michael J. Davis adopted the report in part and modified it in part. The court granted in part and denied in part the defendants’ dismissal motion: the New York Franchise Sales Act claim was dismissed with prejudice to the extent it was based on the November 2015 Agreement, but remained to the extent it was based on the April 20, 2016 Multi-Outlet Agreement; Ranieri’s common-law claims also remained.
The detailed version
- ILKB of CNY, LLC v. Franchoice, Inc. · No. 0:19-cv-01064
- Michael Davis
- Feb. 11, 2020
Background
The defendants moved for partial dismissal under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not adequately state a legal claim. The court considered a magistrate judge’s December 19, 2019 Report and Recommendation. Because no objections were filed, the court reviewed it for clear error.
The parties disagreed about when the plaintiffs’ action was commenced for statute-of-limitations purposes. The defendants argued that Minnesota law applied and that the action was commenced only after the April 20, 2019 deadline for claims related to the April 20, 2016 agreement. The plaintiffs argued that New York law applied and that the action was commenced on April 18, 2019, when they filed the summons and complaint.
Court’s Analysis
The court explained that, in a diversity case, state law governs when an action is commenced if that rule is part of the state’s statute-of-limitations policy. New York law provides that an action is commenced by filing a summons and complaint. Minnesota law provides that an action is commenced upon service of the summons and complaint.
The court concluded that New York substantive law and New York’s statute of limitations applied to the plaintiffs’ New York Franchise Sales Act claim. Under the Supreme Court’s reasoning in Walker v. Armco Steel Corp., the court determined that New York’s filing rule, rather than Minnesota’s service rule, governed when this lawsuit was commenced. Because the plaintiffs filed the summons and complaint on April 18, 2019, the amended complaint did not definitively establish that the New York Franchise Sales Act claim was time-barred.
Ruling
Judge Michael J. Davis adopted in part and modified in part the magistrate judge’s Report and Recommendation. The court granted in part and denied in part the defendants’ motion for partial dismissal. The plaintiffs’ New York Franchise Sales Act claim was dismissed with prejudice to the extent it was based on the November 2015 Agreement. The claim remained to the extent it was based on the April 20, 2016 Multi-Outlet Agreement. Teresa Ranieri’s common-law claims remained.
Read the full 7-page opinion on CourtListener, the free public archive maintained by the Free Law Project.