ROBERT B. KUGLER, District Judge.
This matter comes before the Court on the motion of Mister Softee Sales and Manufacturing, LLC ("MSSM"), Mister Softee, Inc. ("MSI"), and Mister Softee Franchise LLC ("MSF") (collectively, "Defendants") to dismiss the complaint of Joseph McSweeney Enterprises, LLC ("Plaintiff"). Defendants contend that Plaintiff has failed to state a claim because Plaintiff relies on representations allegedly made during negotiations, which is squarely barred by the governing contracts' integration clauses. Defendants also argue that Plaintiff has failed to allege a breach of any term of the contract. Defendants alternatively move to strike Plaintiff's jury demand based on the express language of the contract. For the reasons expressed below, Defendants' motion to dismiss is
Plaintiff is a Texas limited liability company that contracted with Defendant Mister Softee Franchise LLC ("MSF") to purchase three Mister Softee Franchises in 2008, 2009, and 2010, respectively. Am. Compl. ¶9. Mister Softee Franchises are "mobile businesses which offer soft-serve ice cream and other frozen confections to the public."
According to Plaintiff, the purchased trucks were "designed and manufactured in a way that fails to compensate for the temperatures associated with warmer climates."
Due to these alleged failures, Plaintiff filed suit against Defendants in the United States District Court for the Northern District of Texas. Shortly thereafter, Defendants moved to dismiss, or in the alternative, to transfer venue to the District of New Jersey. On October 9, 2012, the district court granted Defendants' motion to transfer venue and the matter was transferred to this Court. (Doc. No. 22). On January 17, 2013, Plaintiff filed an Amended Complaint. In the Amended Complaint, Plaintiff asserts claims for breach of contract, fraud, violation of the New Jersey Consumer Fraud Act, and breach of warranty against all Defendants. Plaintiff also requests a jury trial.
Federal Rule of Civil Procedure 12(b)(6) allows a court to dismiss an action for failure to state a claim upon which relief can be granted. When evaluating a motion to dismiss, "courts accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief."
To make this determination, a court conducts a three-part analysis.
Defendants raise several arguments in support of their motion to dismiss. Defendants first argue that Plaintiff's CFA claim must be dismissed because the CFA is not applicable to the sale of a franchise under the Third Circuit's prediction of New Jersey law. Defendants further contend that even if the CFA were applicable, Plaintiff's CFA, fraud, and breach of warranty claims are barred by the integration clauses in both the Franchise and Sales Agreements.
Although Plaintiff urges the Court to apply an exception to the parol evidence rule, the Court finds that the integration clause bars further consideration of Plaintiff's allegations in the fraud, CFA, and breach of warranty counts. Plaintiff has also failed to articulate a breach of contract claim. Accordingly, the Court will grant Defendants' motion to dismiss in its entirety.
The Court will begin by addressing the integration clause in the Franchise and Sales Agreements, which Defendants maintain is a bar to Plaintiff's fraud, CFA, and breach of warranty claims. The Franchise Agreements each contain an integration clause which states: "This agreement reflects the entire agreement between the parties and may not be changed except by a written document signed by both parties." Defs.' Mot. Dismiss, Ex. A at 19. The Franchise Agreements also state: "You acknowledge that no representations, promises, inducements, guarantees or warranties of any kind were made by or on behalf of Mister Softee which have led you to enter this agreement. You understand that whether you succeed as a franchisee depends upon your efforts, business judgments, the performance of your employees, market conditions and variable factors beyond Mister Softee's control or influence."
Plaintiff insists that this language does not obstruct his ability to pursue the current claims. Instead, Plaintiff argues that the Court is "compelled, after the completion of all relevant discovery, to review that one contract term along with all other terms in the agreement to discern the parties' intent in entering into the contract." Pl.'s Opp'n at 11. Planitiff cites to New Jersey court decisions allowing parol evidence to clarify the parties' intentions, even where the contractual language is otherwise clear.
Plaintiff's argument conflates two distinct principles of contract law. Plaintiff endeavors to rely on the so-called "fraud exception" to the parol evidence rule to introduce extrinsic evidence of Defendants' alleged representations. While Plaintiff has correctly recited the law of New Jersey, he cannot find refuge under the decisions to which he cites. Unlike in those cases, Plaintiff is not attempting to clarify a provision in the contract, nor does Plaintiff assert that the parties intended some other agreement than the writing expresses. Plaintiff is instead attempting to alter the parties' obligations and responsibilities under the contract by voiding an agreed upon provision.
In the fraud count, Plaintiff alleges that "Defendants knowingly . . . made false representations as to material facts to Plaintiff during the negotiations of the Agreements. . . ." Compl. ¶22. Plaintiff relies on these same allegations in the CFA count, arguing that Defendants engaged in "unconscionable commercial practices, deception, fraud, false pretense, false promise, misrepresentations, and knowingly concealed, suppressed, or omitted material facts to Plaintiff . . . ."
The Court will similarly dismiss Plaintiff's breach of contract claim. In order to establish a breach of contract, Plaintiff must allege that the parties entered into a valid contract, that Defendants failed to perform their obligations under the contract, and that Plaintiff sustained damages as a result.
In the opposition brief, Plaintiff argues that "Plaintiff purchased three trucks that were designed and manufactured by Defendants and which Defendants represented would allow Plaintiff to operate the Franchised Businesses." Pl.'s Opp'n at 15. However, as explained with the respect to the first three claims, Plaintiff may not impose liability based on pre-contract representations because of the integration clause. Plaintiff also attempts to circumvent this pleading deficiency by asserting that Defendants provided trucks that could not function in warmer climates. Plaintiff argues that "[t]his failure prevents Plaintiff from being able to operate the Franchised Businesses as was promised by Defendants in Paragraph 1 entitled "Grant" of the Franchise Agreements and as it is described in the Background Section of the Franchise Agreements."
For the foregoing reasons, Defendants' motion to dismiss is GRANTED. An appropriate order shall issue today.
While the Court makes no ruling as to the CFA's applicability due to the integration clause, the Court must note that the majority of courts in this district have followed the Third Circuit's interpretation of the CFA.