Zone Sports Center, Fresno Rock Taco (FRT) and developer Milton Barbis filed a $100 million federal complaint for breach of contract and emotional distress in connection with a licensing agreement for the Hagar restaurant franchise.
Hagar, Red Head Inc. (RHI), Marco Monroy and SKYY Spirits, a subsidiary of Gruppo Campari, were named as defendants.
Cabo Wabo is also the name of Hagar’s tequila brand.
“On December 7, 2006, RHI and FRT entered into a licensing agreement pursuant to which RHI granted a license to FRT to use certain intellectual property associated with Hagar and the ‘Cabo Wabo’ brand for FRT’s use at the ‘Cabo Wabo Cantina’ restaurant,” U.S. District Judge Jeffrey White wrote in dismissing the case.
In a prior 2008 complaint, Red Head dba Cabo Wabo Enterprises accused Fresno Rock Taco of breach of contract and trademark infringement in connection with the license.
After the parties settled, Barbis sued Hagar, in late 2010, this time alleging, among other things, that he signed the agreement “under duress.”
In his complaint, Barbis said that Hagar left him a voicemail stating: “I am going to fucking kill you.”
Judge White wrote: “Plaintiffs allege that Hagar threatened to kill Barbis and that an unnamed third party told Barbis that a ‘hitman’ was hired to kill Barbis if he did not settle the prior action.”
But White noted that Barbis did not state “who actually hired” the alleged hitman.
“From plaintiff’s complaint and Barbis’ declaration, it is clear that Hagar’s alleged threat to kill him was made in August 2008, four months before the prior action was even filed and seven months before the settlement agreement was signed,” White wrote.
The judge added: “Plaintiffs do not allege that this threat was made in connection with the settlement agreement or that the threat caused Barbis and FRT to sign the settlement agreement.”
White wrote that Barbis’ and FRT’s claim that they were “unduly influenced” by their attorney was insufficient. According to the plaintiffs, counsel threatened to resign unless they signed the settlement agreement.
“Plaintiffs have not alleged that defendants had any knowledge of plaintiffs’ attorney’s alleged threats or that defendants took advantage of these alleged facts. Accordingly, the court finds that plaintiffs have not alleged sufficient facts to state a claim for rescission based on the alleged undue influence by their counsel.”
But White did give Barbis a lifeline, granting him leave to amend his duress and undue influence claims: “Provided that plaintiffs can allege, in good faith, additional facts to state a claim for rescission.”
White threw out Barbis’ remaining claims, and graned Hagar’s motion to dismiss. That included an allegation that Hagar signed the settlement agreement to “defraud the United States and California of taxes owed by plaintiffs.”
White said the latter allegation failed because plaintiffs did not state a claim that was “plausible on its face.”
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