POPEYES LOUISIANA KITCHEN INC v. FLORIDA POP LLC LLC LLC LLC (2024)

ORDER

THIS CAUSE came before the Court upon Plaintiff/Counter-Defendant Popeyes Louisiana Kitchen, Inc.’s (“Plaintiff” or “Popeyes”) Motion to Dismiss Counterclaim. (“Motion” or “Mot.”) (ECF No. 50). Defendants/Counter-Plaintiffs Florida Pop, LLC (“Florida Pop”), Pop Restaurant Holdings, LLC (“Pop Restaurant”), Pop Investments, LLC (“Pop Investments”), Pronto Consolidated, LLC (“Pronto Consolidated”), and Guillermo Perales (collectively, “Defendants”) filed a response. (“Resp.”) (ECF No. 53). Plaintiff filed a reply. (“Reply”) (ECF No. 54). The Motion is now ripe for review.

I. FACTUAL BACKGROUND 1

This dispute arises from a contractual relationship between Popeyes and some of its franchisees. See generally (“Compl.”) (ECF No. 1). Popeyes is a well-known national restaurant brand. As part of its business strategy, Popeyes permits individuals or entities to operate franchises of the restaurant so long as they adhere to various operating standards focused on quality, service, and cleanliness requirements. See id. ¶¶ 22–23. In turn, franchisees may use and display certain Popeyes trademarks in the design and décor of the restaurants, as well as on signs, menu boards, posters, uniforms, packaging, and advertising products. See id. ¶¶ 15–16. Though this business relationship is common, problems arise when, as alleged here, a franchisee continues to operate the restaurants after the agreement between both parties has terminated. Id. ¶ 1.

Defendant Perales is the CEO and President of Sun Holdings, Inc. an affiliate of Defendants Florida Pop, Pop Restaurant, Pop Investments, and Pronto Consolidated. See (“Counterclaim”) (ECF No. 44 ¶ 11). In early 2023, Defendants Florida Pop and Pop Investments owned fifty-two franchised Popeyes Restaurants. Compl. ¶ 27. Popeyes, however, informed these Defendants that their franchise agreements were terminated as a result of Defendants’ default.² Id. ¶ 28. Florida Pop and Pop Investments allegedly failed to comply with its obligations following the termination of the franchise agreements, thus prompting Popeyes to file a lawsuit. Id. ¶¶ 31–32 (citing Popeyes Louisiana Kitchen, Inc. v. Florida Pop, LLC et al., 1:23-cv-21008 (S.D. Fla. 2023)). To resolve the lawsuit, Popeyes and Defendants entered a Limited License Agreement (“LLA” or “the Contract”) on April 3, 2023. Id. ¶ 33. The result of the LLA was that Defendants were permitted to operate specific franchised restaurants until September 30, 2023 (“Sale Date”) to allow Defendants the opportunity to sell the restaurants to a suitable buyer. Id. ¶ 34; Counterclaim ¶ 28. According to Defendants, the Parties verbally agreed that Plaintiff would provide extensions to the Sale Date so long as Defendants were working towards a sale and had an active, potential buyer. Counterclaim ¶ 31. Once this agreement terminated, upon the Sale Date or otherwise, Defendants would no longer be permitted to use Popeyes trademarks, promotional materials, or to hold themselves out as a current or former Popeyes franchisee. See Compl. ¶ 36.

Defendants were unable to complete a sale. On or about August 16, 2023, Defendants entered into a purchase and sale agreement with Serazen LLC for the purchase of the restaurants (“Serazen BFA”), but ultimately, the purchaser was unable to obtain financing. See Counterclaim ¶¶ 37–41. Once the agreement with Serazen LLC fell through, Defendants executed a purchase and sale agreement with First Lexington LLC (“First Lexington BFA”) on September 29, 2023. Id. ¶¶ 42–43. Defendants submitted the purchase agreement to Plaintiff for approval. Id. ¶ 43. Plaintiff never approved or disapproved the purchase agreement. Id. ¶¶ 48 n.7, 60.

Shortly thereafter, Plaintiff sent Defendants a letter on October 11, 2023 confirming that the Sale Date had passed and thus, the LLA was terminated. Compl. ¶ 38. Nevertheless, Defendants continued to operate the restaurants as if they were still Popeyes franchises to this day, long after Plaintiff sent the termination letter and the termination specified in the LLA had expired. Id. ¶¶ 39–40.

Accordingly, Plaintiff brought this Action alleging five counts: (1) trademark infringement in violation of Section 32 of the Lanham Act, 15 U.S.C. § 1114; (2) false designations of origin in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (3) common law trademark infringement; (4) common law unfair competition; and (5) breach of contract as to the LLA. See generally Compl. In response, Defendants filed a Counterclaim alleging four counts: (1) breach of contract; (2) breach of the duty of good faith and fair dealing; (3) tortious interference with contractual relations; and (4) violation of Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”). See generally Counterclaim. The instant Motion challenges the sufficiency of the Counterclaim's allegations, and the Court's inquiry is focused accordingly.

II. LEGAL STANDARD

“A motion to dismiss a counterclaim under Federal Rule of Civil Procedure 12(b)(6) is evaluated in the same manner as a motion to dismiss a complaint.” Buccellati Holding Italia SPA v. Laura Buccellati, LLC, No. 13-CV-21297, 2014 WL 11880856, at *2 (S.D. Fla. Jan. 3, 2014). Federal Rule of Civil Procedure 12(b)(6) provides that a court may dismiss a complaint for failing to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citation and internal quotation marks omitted). This requirement “give[s] the defendant fair notice of what the claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal citation and alterations omitted). The court takes the plaintiff's factual allegations as true and construes them in the light most favorable to the plaintiff. Pielage v. McConnell, 516 F.3d 1282, 1284 (11th Cir. 2008).

A complaint must contain enough facts to plausibly allege the required elements. Watts v. Fla. Int'l Univ., 495 F.3d 1289, 1295–96 (11th Cir. 2007). A pleading that offers “a formulaic recitation of the elements of a cause of action will not do.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955). “[C]onclusory allegations, unwarranted deductions of facts or legal conclusions masquerading as facts will not prevent dismissal.” Oxford Asset Mgmt., Ltd. v. Jaharis, 297 F.3d 1182, 1188 (11th Cir. 2002).

III. DISCUSSION

Plaintiff alleges that each count of the Counterclaim must be dismissed. See generally Mot. As to Count I, Plaintiff contends that Defendants’ breach of contract claim fails because: (1) Defendants’ submission of the First Lexington BFA did not extend the Sale Date; (2) the First Lexington BFA was not a bona fide purchase and sale agreement as defined and required by the LLA; and (3) Defendants failed to identify which provisions of the LLA Plaintiff allegedly breached. See id. at 7–12. Regarding Count II, Plaintiff argues that Defendants’ breach of duty of good faith must be dismissed as duplicative of Count I. See id. at 12–14. Moreover, Plaintiff argues that the tortious interference with contract claim in Count III fails because Defendants failed to allege that a contract was breached, and in any event, the claim is barred by the independent tort doctrine. See id. at 14–18. Last, Plaintiff avers that Count IV must be dismissed because Defendants’ FDUTPA claim fails to allege that Defendants suffered actual damages. See id. at 18–20. Defendants dispute each contention. See generally Resp. The Court addresses the arguments in turn.

A. Breach of Contract

i. Premature and Wrongful Termination of the LLA

The relevant portions of the LLA explain the obligations of each Party regarding when and how Defendants were required to sell their franchises. As mentioned above, the LLA permitted Defendants to operate the franchisees until September 30, 2023. (“LLA”) (ECF No. 44-1 ¶¶ 2.1, 4.1). Defendants were also permitted to operate the franchises after the Sale Date, but only if they could present Plaintiff with one or multiple “Bona Fide Asset Purchase and Sale Agreements” by August 14, 2023. See id. ¶¶ 2.2; (“Second Amendment to LLA”) (ECF No. 44-3). Section 4.2 provided the requirements for what constitutes a “Bona Fide Purchase and Sale Agreement” (“APA”) and Section 5.1.2 explained that Defendants’ failure to enter such an agreement by the Sale Date would result in default without the opportunity to cure. See LLA ¶¶ 4.2, 5.1.2, 5.2.

Defendants assert that Plaintiff breached Section 2.2 of the LLA when Plaintiff wrongfully and prematurely attempted to terminate the agreement. See Counterclaim ¶ 68. In Defendants’ view, they properly submitted the First Lexington BFA to Plaintiff on September 29, 2023, and thus, Plaintiff was required to extend the Sale Date until such time as Plaintiff either approves or disapproves the transaction. Id. ¶ 69. Plaintiff did not consider the First Lexington BFA and terminated the LLA on October 11, 2023, which, to Defendants, amounts to a material breach.³ See id. ¶ 70.

In the instant Motion, Plaintiff offers a straightforward rebuke of Defendants’ allegations. As a threshold matter, Plaintiff alleges that the First Lexington BFA did not meet the requirements of a bona fide asset purchase and sale agreement set forth in Section 4.2 of the LLA. See Mot. at 9–11. Even if it were, Plaintiff emphasizes that the Second Amendment to the LLA provides that Defendants were required to submit any such agreement to Plaintiff by August 14, 2023. See id. at 7 (citing Second Amendment to LLA ¶ 4.1). It is this date, and not the Sale Date, that controls. By Defendants’ own admission, they submitted the First Lexington BFA to Plaintiff on September 29, 2023, weeks after the August 14, 2023 deadline. See id. at 7–8. According to Plaintiff, Defendants’ failure to timely submit an APA would result in their default under the LLA. See id. at 8 (citing LLA ¶ 5.1.2). Defendants’ default results in Plaintiff's right to terminate the LLA without providing for a chance to cure. See id. (citing LLA ¶ 5.2). Plaintiff therefore asserts that it did not breach the contract; on the contrary, Plaintiff was entitled to terminate the LLA upon Plaintiff's alleged default. See id.

Perhaps understanding the implications of missing the August 14th deadline, Defendants present two arguments in response: (1) the Counterclaim's allegations state the Sale Date would be extended if Defendants submitted an agreement to Plaintiff by September 30, 2023 and Plaintiff had not yet approved or disapproved of the transaction; and (2) Plaintiff's subsequent course of dealings resulted in a waiver of the August 14, 2023 deadline. See id. at 3–8. The first argument is nonsensical, but the second is a closer question.

Defendants’ first argument, to the extent one is able to discern it, posits that the Court may not engage in contract interpretation at this stage of the litigation, and thus, the Court is beholden to the allegations of the Counterclaim rather than the conflicting contractual language in the LLA. See id. at 3–4 (citing Geter v. Galardi S. Enterprises, Inc., 43 F. Supp. 3d 1322, 1328 (S.D. Fla. 2014)). Without citing to any LLA provision, Defendants aver that the allegations in the Counterclaim show the Sale Date was tolled when they submitted the First Lexington BFA to Plaintiff for review, and because the APA is still pending approval, the Sale Date was indefinitely extended. See id. at 4. In other words, Defendants say that the Court may not review the LLA's terms, but rather, must accept as true their allegations which would compel the conclusion that the Sale Date was extended, Defendants did not default, and Plaintiff's termination of the LLA was wrongful and premature.

But that is not how the Court's analysis works when, as here, the Parties’ contract is attached to the complaint (or counterclaim). On a motion to dismiss, while “all the facts set forth in a complaint are to be accepted as true, when the attached exhibits to a pleading contradict those allegations, the exhibits govern.” Weiner v. Fed. Ins. Co., No. 11-81168-CIV-MARRA, 2011 WL 13229316, at *3 (S.D. Fla. Dec. 16, 2011) (citing Grossman v. Nationsbank, N.A., 225 F.3d 1228, 1231 (11th Cir. 2000)). Defendants attach the LLA as an exhibit to their Counterclaim. Conspicuously absent from the LLA is any provision supporting the allegations in the Complaint that an APA submitted after the August 14th deadline tolls the Sale Date while Plaintiff considers the transaction. See generally LLA. Defendants cite to no LLA provision in support of this proposition. See Resp. at 4. That is because none exists. The Court will not turn a blind eye to the LLA's terms, particularly when they contradict Defendants’ unsupported allegations. Nothing in the LLA supports Defendants’ theory that the Sale Date was tolled by their untimely submission of the First Lexington BFA.

Defendants’ next argument, that Plaintiff waived the August 14th deadline through its subsequent course of dealings with Defendants, fares no better. Defendants are correct that, under Florida law, the Parties’ subsequent dealings can function as a waiver of a contractual provision. See Resp. at 5 (collecting cases). Moreover, Defendants assert that “[w]here a party's conduct is inconsistent with the assertion of the right to performance, or the party engages in conduct that indicates that strict compliance with the contract will not be required, an implied wavier of nonperformance is established.” See id. at 5–6 (citing 13 Williston on Contracts § 39:30 (4th ed.)). From there, Defendants identify multiple allegations in the Counterclaim where they allege Plaintiff took various actions indicating that Plaintiff's waived the August 14th deadline, including: (1) assuring Defendants that the deadline would be extended if they were engaged with a potential buyer; (2) failing to object to the untimely submitted Serazen BFA on August 16th; and (3) continuing to discuss with Defendants their potential agreement with First Lexington. See id. at 6–7 (citing Counterclaim ¶¶ 31, 41, 47). In the aggregate Defendants argue that Plaintiff's actions functioned as an implied waiver of the contractual provision requiring Defendants to submit a bona fide asset purchase and sale agreement by August 14th.

Where Defendants’ argument falls short, however, is that it omits reference to the anti-waiver clause in the LLA. See LLA ¶ 5.5. Under Florida law, “[n]on-waiver provisions are valid and enforceable and they preclude waiver and estoppel clauses as a matter of law.” Tim Hortons USA, Inc. v. Singh, No. 16-23041-CIV-GOODMAN, 2017 WL 4837552, at *11 (S.D. Fla. Oct. 25, 2017); see also MCA Television Ltd. v. Pub. Interest Corp., 171 F.3d 1265, 1270–71 (11th Cir. 1999) (rejecting waiver argument based on plaintiff's acceptance of late payments over two-year period where the contract contained an anti-waiver provision); Burger King Corp v. Lee, 766 F. Supp. 1149, 1156 (S.D. Fla. 1991) (enforcing anti-waiver provision). The Court must therefore give effect to the anti-waiver provision.

The anti-waiver clause here unambiguously defeats Defendants’ argument. It states: “[Plaintiff's] failure to terminate the [LLA] granted herein ․ upon any occurrence of a Default ․ will not constitute a waiver or otherwise affect the right of [Plaintiff] to terminate the Limited License.” LLA ¶ 5.5. The Parties’ bargained-for language dictates that Plaintiff does not waive the right to terminate the LLA upon Defendants’ default, namely, their failure to submit an agreement to Plaintiff by the August 14th deadline, even if Plaintiff did not terminate the LLA immediately thereafter. Defendants’ waiver argument fails as a matter of law. Plaintiff never terminated its right to terminate the LLA upon Defendants’ default.

For this reason, the Court finds that Plaintiff has not stated a claim for breach of contract in Count I as to Plaintiff's alleged wrongful and premature termination of the LLA. Accordingly, the Court need not and does not reach the Plaintiff's argument about whether the First Lexington BFA was a bona fide asset sale and purchase agreement as defined in the LLA.

ii. Other Claims of Breach

Aside from claiming that Plaintiff breached Section 2.2 of the LLA, Defendants also allege that Plaintiff breached the contract by (1) failing to timely consider the sale of Defendants’ franchises; (2) failing to consent to the sale of Defendants franchises; and (3) placing commercially unreasonable and unfair conditions upon the sale of Defendants’ franchises. See Counterclaim ¶ 71. Plaintiff responds that Defendants may not assert these grounds for breach of contract absent an identification of what specific contractual provisions Plaintiff purportedly violated. See Mot. at 11–12; Reply at 3–4. Defendants retort that, when considered as a whole, the Counterclaim alleges that Plaintiff violated Section 2.2 of the LLA and the actions described in Paragraph 71 of the Counterclaim further demonstrate why Plaintiff's termination of the contract was wrongful. See Resp. at 8. Defendants’ argument fails for two reasons.

First and most importantly, Defendants do not argue that Plaintiff's alleged failure to timely consider and consent to the sale of their franchises, or that Plaintiff placed unreasonable conditions upon a potential sale, were part of Plaintiff's wrongful termination of the contract in violation of Section 2.2 of the LLA. Indeed, Defendants state that “Popeyes also materially breached the [LLA]” by engaging in those actions, thus implying that Defendants view these actions as independent grounds for breach of contract. Compl. 71. Moreover, Section 2.2 is silent as to the time in which Plaintiff must consider an APA, under what conditions Plaintiff must consent to an APA, and what conditions could be placed on the sale. See LLA. ¶ 2.2. It cannot be said that these actions—which allegedly constitute a material breach—can plausibly be brought under Section 2.2 of the LLA. These actions are better understood as independent bases for a purported breach of contract.

This conclusion leads to the second point. This Court has been clear that where a breach of contract claim does not identify the contractual provision a party allegedly breached, dismissal is appropriate. Ricardo v. Wells Fargo Bank, N.A., No. 1:21-23278-KMM, 2022 WL 6745507, at *6 (S.D. Fla. Jan. 28, 2022). And that is precisely the case here. Defendants did not identify which portion of the LLA that Plaintiff allegedly breached by engaging in the above actions. Without such identification and understanding that these claims of breach cannot arise under Section 2.2 of the LLA as Defendants suggest, the Court is compelled to dismiss these claims as well.

B. Implied Covenant of Good Faith and Fair Dealing

Plaintiff also argues that the Court must also dismiss Defendants’ claim for breach of the implied covenant of good faith and fair dealing in Count II of the Counterclaim. See Mot. at 12–14. Specifically, Plaintiff argues that Count II must be dismissed because it is entirely duplicative of Defendants’ breach of contract claim, and like in Count I, Defendants do not identify a provision of the contract which has been breached. See id. Defendants do not meaningfully rebut either of Plaintiff's contentions. See Resp. at 9–10. First, Defendants suggest that dismissal of a breach of implied covenant of good faith and fair dealing is premature at this stage. See id. at 9. Second, Defendants argue that Count II is not duplicative of Count I because “the allegations in Paragraph 71 center around the breach of the implied covenant of good faith claim, as opposed to a breach of contract.” See id. at 9 n.3. Neither response adequately responds to Plaintiff's arguments.

The Court first addresses the argument that Count II is duplicative of Count I. “A claim for breach of the implied duty of good faith and fair dealing ‘may be dismissed as redundant where the conduct allegedly violating the implied covenant is duplicative of the companion cause of action alleging breach of contract.’ ” RRC Aruba, Ltd. v. Lionstone Grp., Inc., No. 05-23060-CIV-UNGARO-BENAGES, 2006 WL 8433464, at *3 (S.D. Fla. Nov. 15, 2006) (quoting Shibata v. Lim, 133 F. Supp. 2d 1311, 1319 (M.D. Fla. 2000)). Here, the claims in Count I and Count II are nearly identical. Count II alleges that Plaintiff breached the implied covenant of good faith and fair dealing by “unreasonably refusing to make a decision as to the approval of the First Lexington APA and by placing conditions on the sale not authorized by agreements or applicable law.” Counterclaim ¶ 76. As discussed above, the breach of contract claim in Count I proffered the nearly identical argument that Plaintiff breached the LLA by “failing to timely consider the sale of [Defendants’] franchises” and “placing commercially unreasonable and unfair conditions upon the sale of [Defendants’] franchises.” Id. ¶ 71. Thus, “there is no question that [Defendants’] claim for breach of the implied covenant of good faith and fair dealing presents the exact allegations as those in [Defendants’] breach of contract claims.” Z Indus. USA, LLC v. Circuitronix, LLC, et al., No. 17-cv-60727-UU, 2017 WL 11718026, at *5 (S.D. Fla. Oct. 5, 2017).

Defendants respond briefly in a footnote, but only to state that Count II is not duplicative of Count I because the allegations in Paragraph 71 “center around the breach of the implied covenant of good faith claim, as opposed to a breach of contract.” Resp. at 9 n.3. Not only is this response confusing, but it is insignificant. As discussed above, Paragraph 71 appears in Count I and alleges multiple separate instances in which Plaintiff allegedly breached the contract, contrary to Defendants’ assertion. See Counterclaim ¶ 71. And as the Court has already described, Paragraph 76, contained in Count II, discusses how nearly identical allegations to those raised in Count I result in an alleged breach of good faith and fair dealing. See id. ¶ 76. Defendants’ Response, therefore, ignores the manner in which they styled their own Counterclaim. In any event, the Response provides no rebuttal to Plaintiff's arguments that Count II is duplicative of Count I and must be dismissed.

Accordingly, the Court finds that Count II is duplicative of Count I. The Court therefore dismisses Count II. Because the Court makes this finding, it need not address Plaintiff's argument that Count II does not specify a contractual provision that Plaintiff allegedly violated.

C. Tortious Interference With Contract

Plaintiff also argues that the Court should dismiss Defendants’ Count III, which alleges tortious interference with contractual relations, for three separate reasons. See Mot. at 14–18. First, Plaintiff argues that Count III must be dismissed because Defendants failed to allege that any contract between itself and a third-party was breached. See id. at 14–15. Next, Plaintiff argues that Defendants’ tortious interference claim is barred by the independent tort doctrine. See id. at 16–17. And last, Plaintiff argues that because it was not a stranger to the contract between First Lexington and Defendants, Defendants may not sustain a tortious interference with contract claim. See id. at 17–18. Defendants respond to each, see Resp. at 10–15, but the Court need not address each argument. Indeed, that Defendants failed to identify a breach of contract between itself and a third-party dooms their claim.

Under Florida law, “the elements of a cause of action for tortious interference with a contractual relationship are: (1) the existence of a contract, (2) the defendant's knowledge of the contract, (3) the defendant's intentional procurement of the contract's breach, (4) absence of any justification or privilege, [and] (5) damages resulting from the breach.” Johnson Enter. of Jacksonville, Inc. v. FPL Grp., Inc., 162 F.3d 1290, 1321 (11th Cir. 1998) (citing Florida Tel. Corp. v. Essig, 468 So.2d 543, 544 (Fla. 5th Dist. Ct. App. 1985)) (alteration in original). Applied here, Defendants must allege that there was a contract between themselves and First Lexington, Plaintiff knew of the contract and intentionally caused it to be breached without privilege to do so, and Defendants suffered damages as a result. In Count III, Defendants satisfy the first two elements. See Counterclaim ¶¶ 80–81 (describing the contract between Defendants and First Lexington, and Plaintiff's knowledge of same). Defendants then allege that Plaintiff “refused to provide its approval or disapproval ․ of the First Lexington APA.” Id. ¶ 83. This allegation, however, falls short of alleging that Plaintiff intentionally caused a breach of the First Lexington BFA. Indeed, Defendants never allege that the First Lexington BFA was breached. See id. ¶¶ 78–91. Without such allegation, Count III must be dismissed.

Defendants’ arguments to the contrary demonstrate a misunderstanding of their own claim—they allege tortious interference with contract, not tortious interference with a business relationship. The following passage of their Response, which quotes the Florida Supreme Court highlights their misunderstanding of this distinction: “Contrary to [Plaintiff's] assertion, however, ‘in light of the language used by the Florida Supreme Court in describing the elements of a claim for tortious interference with a business relationship, the Court will not require Plaintiffs to allege a breach of the underlying [ ] agreement.’ ” Resp. at 10 (quoting Novell v. Bank of Am. Corp., No. 14-CV-80672-RLR, 2014 WL 7564678, at *5 (S.D. Fla. Dec. 3, 2014)) (alteration in original) (emphasis added). From there, Defendants purport to convert their claim into one asserting an “unjustified interference in the relationship between [Defendants] and First Lexington,” and cite various case law in support of the proposition that a breach of contract is not required for the tort of interfering with a business relationship. See Resp. at 11. But whether a breach of contract is required for that tort, is irrelevant. Regardless of how Defendants attempt to contort their claim now, Defendants pled tortious interference with contract in Count III. Their attempt to alter the reality of their pleadings does not save Count III from dismissal when, as here, Defendants failed to allege that Plaintiff breached the First Lexington BFA.

Because Defendants will not be able to amend their complaint to demonstrate that Plaintiff caused the breach of a contract between First Lexington and Defendants, the Court finds that amendment would be futile. Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962) (holding that a district court may properly deny leave to amend when such amendment would be futile). Accordingly, Count III is dismissed with prejudice.

D. FDUTPA

In Count IV, Defendants allege that Plaintiff violated the FDUTPA when it engaged in the following unfair and deceptive business practices: interfering with the sale of Popeyes franchises, reducing the franchise's sale price to an amount below market value, and improperly limiting the pool of potential buyers. See Counterclaim ¶¶ 95–97, 100. “To state a claim under FDUTPA, a party must allege (1) a deceptive act or unfair practice; (2) causation; and (3) actual damages.” Guerrero v. Target Corp., 889 F. Supp. 2d 1348, 1355 (S.D. Fla. 2012). Plaintiff does not contest that Defendants have pled factual allegations sufficient to satisfy the first two elements. See Mot. at 18–20. Therefore, the Court does not address them and analyzes only actual damages.

The FDUTPA provides that “[i]n any action brought by a person who has suffered a loss as a violation of this part, such consumer may recover actual damages.” Fla. Stat. § 501.211(2) (emphasis added). “Generally, the standard measurement for actual damages ‘is the difference in the market value of the product or service in the condition in which it was delivered and its market value in the condition in which it should have been delivered according to the contract of the parties.’ ” BPI Sports, LLC v. Labdoor, Inc., No. 15-62212-CIV-BLOOM, 2016 WL 739652, at *6 (S.D. Fla. Feb. 25, 2016) (quoting Rollins, Inc. v. Heller, 454 So.2d 580, 585 (Fla. 3d DCA 1984)); Rife v. Newell Brands, Inc., 632 F. Supp. 3d 1276, 1315 (S.D. Fla. 2022) (“And, as we just explained, there are only two possible ways to measure actual damages in a FDUTPA claim: (1) the value between what was promised and what was delivered; or (2) the total price paid for a valueless good or service.”). The statute limits recovery to actual damages—not “nominal damages, speculative losses, or compensation for subjective feelings of disappointment.” City First Mortg. Corp. v. Barton, 988 So. 2d 82, 86 (Fla. Dist. Ct. App. 2008).

Defendants’ claims seem ill-suited to the requirements of the FDUTPA. As an initial matter, this case does not involve a product or service, much less the delivery of that product or service in a manner that was not contemplated under a contract. See generally Counterclaim. Defendants also do not allege that they ever paid for a good or service. See generally id. To the contrary, the allegations in the Counterclaim argue something entirely different, namely, that Defendants were unable to sell their franchises based on Plaintiff's alleged wrongdoing. See generally id. In other words, there is no product or service in this case to scrutinize, nor is there a payment from which a court could divine what damages Defendants are owed.

Nevertheless, Defendants urge this Court not to dismiss their claim because, in their view, the actual damages also cover “a diminished value of an aggrieved party's business.” See Resp. at 15 (citing Marco Island Cable v. Comcast Cablevision of the S., Inc., 312 F. App'x 211, 214 (11th Cir. 2009); Delta Airlines, Inc. v. Network Consulting Assoc., Inc., No. 8:14-cv-948-T-24-TGW, 2014 WL 4347839, at *9 (M.D. Fla. Sept. 2, 2014)). Because the Counterclaim alleges that Defendants own fifty successful restaurants and employ over 2000 people, the market value of their business exceeds thirty-six million dollars as evidenced by the First Lexington BFA, and Plaintiff's goal was to ensure Defendants’ restaurants were sold at a substantially reduced price, Defendants believe they satisfy their “diminution of a business's value” theory of actual damages. See id.

The authority that Defendants cite do not support their theory that a party may demonstrate that it suffered actual damages through a diminution of the business's value. Marco, the first case Defendants cite ⁴ —holds that a business's diminished value can constitute actual damages, but in a context inapplicable to this Action. See Marco, 312 F. App'x at 213–14. There, the plaintiff brought a claim as a corporate competitor to Comcast Cablevision. See id. at *2 (finding that plaintiff would have expected to receive multiple contractual bids but for defendant's actions). And “in a claim brought by a corporate competitor, there is no bargain giving rise to the expectancy measure of damages employed in traditional consumer cases.” Tymar Dist. LLC v. Mitchell Grp. USA, LLC, 558 F. Supp. 3d 1275, 1285 (S.D. Fla. 2021). Therefore, in the context of a corporate competitor proceeding under the FDUTPA, “[i]t makes considerable sense to permit [the plaintiff] to seek lost profits damages when there is no transaction giving rise to the oft-used expectancy measure of damages.” See id. at 1286. Defendants, however, bring their FDUTPA claim as a typical consumer and not as a corporate competitor. See Counterclaim ¶ 93 (“At all relevant times, [Defendants] were consumers”) (quotation omitted). The Counterclaim alleges that as a consumer, Defendants’ businesses lost value when Popeyes wrongfully interfered with the sale of their franchises. Accordingly, Defendants’ theory of damages—“that they are entitled to the lost value of [their] business—is not cognizable under FDUTPA.” SMS Audio LLC v. Belson, No. 9:16-cv-81308-MIDDLEBROOKS, 2017 WL 11631378, at *4 (S.D. Fla. Apr. 25, 2017).

Even if Defendants’ theory of actual damages was sufficient, it nevertheless fails because the Counterclaim does not actually allege that they suffered harm. By Defendants’ own words, they argue they suffered “substantial damages”⁵ to the value of their businesses because Plaintiff's “goal [was] to have [Defendants’] restaurants sold at a substantially reduced price.” Resp. at 15 (citing Counterclaim ¶¶ 53, 63, 95–99). As Plaintiff rightly identifies, even assuming the truth of those allegations, all Defendants have alleged is that Plaintiff had the “goal” of interfering with the sale of Defendants’ restaurants. See Reply at 10. And in any event, Defendants’ restaurants have not been sold. See generally Counterclaim. Defendants’ argument that they suffered substantial damages based on Plaintiff's alleged goal to prevent the sale of their restaurants, thus causing a diminution of value in Defendants’ businesses even when the restaurants have not been sold, cannot be the basis for actual damages under FDUTPA.

IV. CONCLUSION

UPON CONSIDERATION of the Motion, the pertinent portions of the record, and being otherwise fully advised in the premises, it is hereby ORDERED AND ADJUDGED that Plaintiff's Motion to Dismiss (ECF No. 50) is GRANTED. Counts I, II, and IV of Defendants’ Counterclaim (ECF No. 44) are DISMISSED WITHOUT PREJUDICE. Count III is DISMISSED WITH PREJUDICE.

DONE AND ORDERED in Chambers at Miami, Florida, this 18th day of March, 2024.

FOOTNOTES

2.   It is not clear from either the Complaint or the Counterclaim why Defendants were in default. The Counterclaim alleges that Popeyes wrongfully targeted Defendants stores by conducting frequent audits and re-inspections without providing the stores time to cure violations of Plaintiff's policy. Counterclaim ¶¶ 22–25. The Counterclaim does not, however, identify what violations ultimately led to Defendants’ default. See id. Nor does the Complaint. See Compl. ¶¶ 28–30.

3.   Defendants also argues that Plaintiff materially breached the contract by (1) failing to timely consider the sale of Defendants’ franchises, (2) failing to consent to the sale of Defendants’ franchises, and (3) placing commercially unreasonable and unfair conditions upon the sale of the franchises. Compl. ¶ 71. The Court finds that these allegations must be dismissed for the reasons discussed below. See infra Part III.A.ii.

4.   Defendants also cite Delta Airlines for the proposition that damage to goodwill can constitute actual damages. See Resp. at 15. That case, which is neither from the Southern District of Florida nor binding on this Court, expanded what qualified as actual damages under the FDUTPA in the context of unauthorized use of trademarks. See Delta Airlines, 2014 WL 4347839, at *9. Though that court held that damages to goodwill associated with a trademark could constitute actual damages under the FDUTPA, this Court need not analyze the propriety of that decision. See id. The holding in Delta Airlines is limited to loss of goodwill in the context of trademarks. It has no bearing on the outcome of this Action.

5.   Counterclaim ¶ 101.

K. MICHAEL MOORE, UNITED STATES DISTRICT JUDGE