Equinox F&B, Inc. v. Roots Pressed Juices LLC

Background

Equinox F&B, Inc. sued Roots Pressed Juices LLC for breach of contract. Roots counterclaimed for breach of contract, conversion, and negligence. The court held a bench trial, meaning the judge—not a jury—decided the facts and the law.

The parties’ Master Operating Agreement required Roots to operate cafés at three Equinox clubs and pay the greater of a percentage fee or a minimum monthly fee. Later modification letters extended the arrangement to two additional clubs. The agreement provided that Roots’ material breaches generally required written notice and an opportunity to cure before Equinox could terminate the agreement. It also addressed what would happen to Roots’ equipment if Roots became insolvent, defaulted, or voluntarily left the cafés.

September 2021 events

On September 2, 2021, Roots owner Brent Rodgers sent messages stating that Roots would vacate the Texas locations in 30 days. Rodgers believed the agreement allowed that notice, although the court found that it did not. Equinox responded by directing its employees to close the cafés, lock Roots out, and prevent removal of equipment. Roots employees then removed or attempted to remove some items, including perishables and café equipment. The next day, Roots notified Equinox that Equinox had breached the agreement by locking out Roots without notice or an opportunity to cure, and said Roots intended to continue operating if allowed access.

The court found that Roots had not already abandoned or physically vacated the cafés when Equinox shut them down. It credited evidence that Equinox began closing the cafés before Roots employees tried to remove equipment. The court also found that Roots’ September 3 letter retracted any attempted repudiation—that is, any advance statement that it would not perform the agreement—before Equinox materially changed its position in reliance on that statement.

Equinox’s claims

The court rejected Equinox’s argument that Rodgers’ messages immediately ended Roots’ right to notice and an opportunity to cure. Although the messages expressed an intent to breach because the agreement did not permit Roots to leave on 30 days’ notice, they also contemplated continued performance during that period. The messages therefore were not an unequivocal repudiation that made notice futile.

The agreement also specifically treated refusal to operate as a default subject to the agreement’s notice-and-cure provisions. Because Equinox did not provide the required written notice and opportunity to cure before closing the cafés and attempting to terminate the agreement for breach, its breach-of-contract claim failed.

The court separately held that Equinox properly terminated the agreement on September 15 under a provision allowing termination when Equinox determined that continuing the relationship created legal risks or liabilities. Once that termination occurred, the contract’s term ended, and Equinox was not entitled to monthly fees for later periods. The court also found insufficient evidence that the parties had agreed that the fee abatement would end in September or that Equinox was entitled to a partial September fee.

Roots’ counterclaims

The court found Equinox liable for breach of contract because it improperly retained Roots’ equipment. The agreement’s automatic-transfer provision applied when Roots became insolvent, defaulted as defined by the agreement, or voluntarily vacated or abandoned the cafés. Roots had not defaulted under the agreement’s definition because Equinox had not provided notice and an opportunity to cure, and Roots had not voluntarily abandoned the cafés before Equinox excluded it. The agreement did not give Equinox ownership of the equipment merely because Equinox itself removed Roots from the cafés.

The court also found that Roots gave Equinox notice and an opportunity to cure the equipment-related breach. Equinox did not return or pay for the equipment after receiving Roots’ September 3 letter. Using the estimated equipment values supported by Rodgers’ testimony and applying contractual percentages that the court found provided a reasonable damages estimate, the court awarded Roots $19,440 plus prejudgment interest.

Roots did not establish its claim concerning the perishable goods. Although Equinox acknowledged that it had no contractual right to retain those goods, Roots did not adequately prove that Equinox prevented their recovery or establish their value. The court therefore found insufficient proof of both liability and damages on that part of the contract claim.

The court also found Equinox not liable for conversion and negligence because Roots introduced no trial evidence on those claims and appeared to have abandoned them.

Disposition

The court denied Equinox’s request for recovery and granted in part Roots’ request for recovery. It directed the Clerk to enter judgment for Roots on Equinox’s claims, for Equinox on Roots’ conversion and negligence claims, and for Roots on its breach-of-contract claim in the amount of $19,440 plus prejudgment interest under New York Civil Practice Law and Rules § 5004. The court directed the Clerk to close the case.