Estate of Anderson v. Denny's Inc.

987 F.Supp.2d 1113

In the Matter of the ESTATE OF Stephanie ANDERSON, deceased, Plaintiff,

v.DENNY'S INC., Barreras Enterprises, Inc., Frank H. Barreras, June R. Barreras, Judith A. Barreras, Jose Humberto Melgar–Cabrera, Marvin Antonio Aguilar–Lopez and Pablo De Leon Oritz, Defendants,andDenny's Management Inc., Cross Claimant,

v.Frank H. Barreras, Judith A. Barreras, June R. Barreras, and Barreras Enterprises, Inc., Cross Defendants.

No. CIV 12–0605 JB/GBW.

United States District Court, D. New Mexico.

Nov. 13, 2013.

Shannon Robinson, Albuquerque, NM, for the Plaintiff.

Scott P. Hatcher, Hatcher & Tebo, P.A., Santa Fe, NM, for the Defendant and Cross Claimant Denny's, Inc.

Paul Maestas, Maestas & Suggett, P.C., Albuquerque, NM, for the Defendants and Cross Defendants Barreras Enterprises, Inc., Frank H. Barreras, June R. Barreras, and Judith A. Barreras.

MEMORANDUM OPINION¹

JAMES O. BROWNING, District Judge.

THIS MATTER comes before the Court on: (i) the Motion for Summary Judgment of Denny's, Inc., filed October 26, 2012 (Doc. 40)(“MSJ”); and (ii) the Motion to Continue Defendant Denny's Inc. Summary Judgement [sic] Hearing, filed January 29, 2013 (Doc. 60)(“Motion to Continue”). The primary issues are: (i) whether Plaintiff Estate of Stephanie Anderson (“Anderson Estate”) properly requested the Court to continue the MSJ hearing; and (ii) whether Defendant Denny's, Inc.² as the franchisor is vicariously liable for the failure of Defendant Barreras Enterprises, Inc., the franchisee, to provide a safe working environment. The Court held hearings on February 8, 2013, and November 5, 2013. The Court will deny the Motion to Continue and will deny the MSJ. Counsel for the Anderson Estate did not follow proper procedure in requesting the Court to continue the hearing; however, the Court allowed the Anderson Estate to supplement with discovery on the MSJ. The Court will deny the MSJ, because the facts do not establish as a matter of law that Denny's, Inc. is not involved in the day-to-day operations of the franchisee restaurant.

FACTUAL BACKGROUND

On June 20, 2009, Stephanie Anderson was working at a Denny's restaurant located at 1602 Coors Boulevard, N.W. in Albuquerque, New Mexico. See MSJ 11, at 2 (setting forth this fact); Response to Defendant Denny's Inc. Motion for Summary Judgment ¶ 1, at 1, filed January 10, 2013 (Doc. 55)(“Response”) (stipulating to this fact); Response of Plaintiff Estate of StephanieAnderson to Defendant Denny's Inc. Motion for Summary Judgment ¶ 1, at 3 (Doc. 75)(“Second Response”)(stipulating to this fact).³ Three El Salvadoran nationals, Defendants Jose Humberto Melgar–Cabrera, Marvin Antonio Aguilar–Lopez, and Pablo De Leon Ortiz, shot and killed Anderson during an armed robbery at the restaurant. See MSJ ¶¶ 1, 4, at 2, 3 (setting forth this fact); Response ¶¶ 1, 4, at 1, 2 (stipulating to this fact); Second Response ¶¶ 1, 4, at 3, 4 (stipulating to this fact). Anderson was acting in the scope and course of her employment as an employee of Barreras Enterprises, a Denny's, Inc. franchisee, at the time of her death; she was not a Denny's, Inc. employee. See MSJ ¶ 22, at 6 (setting forth this fact); Response ¶ 22, at 4 (stipulating to this fact); Second Response ¶ 22, at 6 (stipulating to this fact).

1. Defining the Franchisor and Franchisee Relationship.

On July 13, 1989, Denny's, Inc., or its predecessor in interest, entered into a Franchise Agreement with Frank H. and June R. Barreras, the Barreras Enterprises' predecessor in interest, to operate the Denny's Restaurant at 1602 Coors Boulevard in Albuquerque. See Franchise Agreement Greenfield [sic] at 5, filed October 26, 2012 (Doc. 40–1 at 5)(“Franchise Agreement”); MSJ ¶ 2, at 3 (setting forth this fact); Response ¶ 2, at 2 (stipulating to this fact); Second Response 12, at 3 (stipulating to this fact).⁴ On October 23, 1998, Denny's, Inc. or its predecessor in interest entered into a “Consent to Assignment of Franchise Agreement,” which assigned all rights and obligations under the 1989 Agreement from Defendants Frank H. Barreras and June R. Barreras to Barreras Enterprises. See Franchise Agreement at 38; MSJ ¶ 3, at 3 (setting forth this fact); Response ¶ 3, at 2 (not controverting this fact); Second Response ¶ 3, at 3 (not controverting this fact).⁵ The Franchise Agreement was in full force and effect on June 20, 2009, when Anderson was shot and killed. See Affidavit of Arthur “Arp Boudaki.a. [sic] ¶ 6, at 2, filed October 26, 2012 (Doc. 40–1 at 1)(“Boudakian Aff.”); ⁶ MSJ ¶ 4, at 3 (setting forth this fact); Response ¶ 4, at 2 (stipulating to this fact); Second Response ¶ 4, at 3 (stipulating to this fact).

Under the Franchise Agreement, the parties agreed:

It is expressly understood and agreed by the parties that Franchisee is [n]ot for any purpose an employee or agent of [Denny's], is not for any purpose an employee or agent of [Denny's], and that all of the personnel employed by Franchisee at the Restaurant will be empl[o]yees or agents of the Franchisee as an independent contractor and will not be employees or agents of [Denny's]. Franchisee understands and agrees that, as an independent contractor, [i]t does not have the authority to do anything for or on behalf of the Company, including, but not limited to, holding itself [o]ut as the Company, signing contracts, notes or other [i]nstruments, acquiring or disposing of any property, or making purchases or [i]ncurring any other obligation or liability.

Franchise Agreement § 1.3, at 6; MSJ ¶ 7, at 3–4 (setting forth this fact); Response ¶ 7, at 2 (stipulating to this fact).⁷ Denny's, Inc. and Barreras Enterprises are “completely separate companies.” Boudakian Aff. ¶ 8, at 2; MSJ ¶ 17, at 5 (setting forth this fact); Response ¶ 17, at 4 (stipulating to this fact). The Franchise Agreement states:

Franchisee agrees that in all public records, [i]n its relationship with other personsor companies, and [i]n any offering circu[l]ar, prospectus or similar document, Franchisee [s]hall indicate clearly the independent ownership of the Franchisee's business and that the operations of said business are separate and distinct from the operation of [Denny's] business.

Franchise Agreement § 2.4, at 7; MSJ ¶ 8, at 4 (setting forth this fact); Response ¶ 8, at 3 (stipulating to this fact). Denny's, Inc. does not own the building, real property, or the restaurant located at 1602 Coors Boulevard in Albuquerque. See Boudakian Aff. ¶ 5, at 2; MSJ ¶ 9, at 4 (setting forth this fact); Response ¶ 9, at 3 (stipulating to this fact).

In exchange for allowing Barreras Enterprises the right to operate a restaurant using the Denny's, Inc.'s Marks, Barreras Enterprises must pay a franchise fee and other consideration, see Franchise Agreement § 6, at 11–12; MSJ ¶ 12, at 5 (setting forth this fact); Response ¶ 12, at 3 (stipulating to this fact), including four percent of weekly gross sales in exchange for using Denny's, Inc.'s Marks and other company-provided supervision and training, and two percent of weekly gross sales for institutional advertising, public relations, and promotion, see Franchise Agreement §§ 6.1.b. and 6.1.C, at 11. The Franchise Agreement requires Barreras Enterprises to send Denny's, Inc. a cumulative cash register tape to show the weekly sales. See Franchise Agreement § 7.3, at 12; Response ¶ 16, at 3–4 (setting forth this fact); Reply at 3 (not disputing this fact). For purposes of the Barreras Enterprises' obligations of royalty payments under the Franchise Agreement, Denny's, Inc. tracks sales, but does not control Barreras Enterprises' net cash deposits. See Boudakian Depo. at 28–29; Second Reply ¶ 26, at 9 (setting forth this fact).⁸ Denny's, Inc. assists Barreras Enterprises market its restaurant, in part because of its financial interest in Barreras Enterprises' success, through royalties based on sales. Boudakian Depo. at 149–50; Second Reply ¶ 38, at 12 (setting forth this fact).

2. The “Denny's System” and “Denny's Marks”.

The Franchise Agreement states Denny's, Inc. has a unique and particular plan for the operation of family style restaurants. See Franchise Agreement at § 1.4, at 5; MSJ ¶ 5, at 3 (setting forth this fact); Response ¶ 5, at 2 (stipulating to this fact).⁹ The Franchise Agreement describes the “Denny's Marks” and the “Denny's System”:

The Company owns the trademark, service mark and trade name “Denny' s” [sic] and other related trademarks, service marks, trade names, copyrights, labels, designs, symbols, and distinctive logotypes (the “Denny's Marks”) and the Company has a unique [a]nd particular plan for the operation of family style restaurants, including, but not limited to the Denny's Marks, the Operations Manual, policies, standards, procedures, em[p]loyee uniforms, signs, menus, and related [i]tems, and the reputation and goodwill of the company'[s] chain of restaurants (the “Denny's System”). The Company desires to have the Restaurant operated as a Denny's restaurant utilizing the Denny's System and the Denny's Marks. Franchisee understands and agrees that strict adherence to these standards, policies, procedures and requirements is essential to the value of the Denny's Sy[s]tem and the Denny's Marks[.]

Franchise Agreement § 1.4, at 5.¹⁰ Barreras Enterprises must strictly adhere to all standards, policies, procedures, and requirements for the operation, maintenance or improvement of Denny's, Inc.'s restaurants using the Denny's System and the Denny's Marks. See Franchise Agreement § 6, at 3; MSJ ¶ 6, at 3 (setting forth this fact); Response ¶ 6, at 2 (stipulating to this fact).¹¹

To protect its brand and marks, Denny's, Inc. controls various aspects restaurant site development, including construction and remodeling, which must be done at Barreras Enterprises' sole expense. See Franchise Agreement § 5, at 8–11; MSJ ¶ 10, at 4 (setting forth this fact); Response ¶ 10, at 3 (not disputing this fact). Denny's, Inc. has the right to “enter the...