Holding Firm When Facing Claims Of Fraud

IAG Coffee Franchise LLC v. Sanders

By Mulcahy LLP on January 08, 2013

In IAG Coffee Franchise LLC v. Sanders (AAA, Orange County, September 2008), It’s A Grind (“IAG”) coffeehouse franchisor terminated a franchisee’s franchise agreement for breaching the agreement. In response, the franchisee filed a lawsuit in Placer County Superior Court alleging fraud, violations of the California Franchise Investment Law, and price fixing in violation of the Cartwright Act.

The franchisee claimed damages in excess of $700,000 and attorneys fees. IAG retained Mulcahy LLP, who immediately initiated a binding arbitration with AAA seeking declaratory relief that the termination was valid, in addition to damages and attorneys’ fees. Mulcahy LLP then filed a motion to compel arbitration with the Court requesting that the case be arbitrated in compliance with the parties’ franchise agreement. The motion was granted and the franchisee asserted its court claims as counterclaims in the arbitration action. On September 19, 2008, following a nine-day trial, the arbitrator found in IAG’s favor, denying all counterclaims asserted by the franchisee and granting IAG’s request for damages and attorneys’ fees, totaling in excess of $390,000.

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