ST. LOUIS (CN) – A federal judge awarded Dunkin Donuts more than $757,000 in attorneys fees for the doughnut giant’s lawsuit against a franchisee group.
Dunkin Donuts Franchising sued SAI Food Hospitality, Jayant Patel, Ulka Patel and Kamleesh Patel in 2011.
Dunkin Donuts sought declaratory relief that it had the right to terminate the franchise agreement. Dunkin Donuts claimed it terminated the agreement for fraud because the defendants falsely represented the true ownership of SAI Food.
The defendants filed a counterclaim, arguing that Dunkin Donuts wrongfully terminated the agreement.
The court found in favor of Dunkin Donuts after a five-day bench trial in August 2013.
In post-trial motions for damages, Dunkin Donuts sought $757,573.96 for attorney fees. That included $636,373.50 for a firm in Washington, D.C., $103,685.50 for local counsel and $11,514.96 in travel expenses for witnesses. Dunkin Donuts claimed these rates were at the low end of the reasonable range.
The defendants claimed Dunkin Donuts was not entitled to attorneys fees because it did not prove its fees at trial as an element of contract claims, that it was trying to terminate an agreement instead of enforcing it, and that it cannot seek to invalidate a franchise agreement and yet enforce the fees provisions in the agreement.
U.S. District Judge Audrey G. Fleissig ruled in favor of Dunkin Donuts and awarded it the full amount requested.
“Here, the court has carefully reviewed plaintiffs’ submissions, and concludes that the hours and rates claimed are reasonable for this case,” Fleissig wrote. “Defendants were aware from the filing of the complaint that plaintiffs would be seeking fees, costs, and expenses under the terms of the franchise agreements if plaintiffs prevailed in the action, and could have obtained discovery on the matter. While the amounts sought by plaintiffs are considerable, the court sees no basis for reducing them.”
Fleissig also found that the defendants drove up the attorneys fee by filing a counterclaim.
“Moreover, defendants chose, as was their right, to expand the lawsuit by taking positions and filing pleadings which served to increase the fees, expenses and costs incurred by plaintiffs,” Fleissig wrote. “For example, in their counterclaim, defendants asserted numerous grounds, including claims for violation for the Sherman and Clayton Acts, which counts were dismissed on plaintiffs’ motion. Further, defendants sought a jury trial, lost profits, punitive damages and other relief, which plaintiffs moved to strike and the court found were precluded by the terms of the parties’ agreements. Defendants also amended their counterclaims at least three times, each time after plaintiffs had filed motions to dismiss, and defendants expanded their pleadings to include as parties other parent companies, which parties the court ultimately dismissed, again on motion of the plaintiffs. The proper measure of defendants’ claimed damages also posed difficult issues, and potentially differed based upon the store or agreement involved. Defendants’ expert’s calculations ultimately were not consistent with the proffered damage theory, prompting the court to grant plaintiffs’ motion to strike a significant portion of the expert’s report.
“The court further notes that the amount and importance of the matters involved were significant. As plaintiffs note, they were seeking to protect the integrity of their brand, and at issue in the litigation was not only defendants’ ability to operate the Washington and Florissant stores, but also defendants’ ability to continue under the Store Development Agreement between the parties to develop other stores in the designated geographic area. Defendants’ counterclaims for damages for wrongful termination were correspondingly significant, claiming as much as $11 million in damages at times. Thus, although the fee amount is admittedly quite substantial, so were the matters at stake in the litigation.”
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