FRANCHISE LAWSUITS: Noble Roman’s Granted Summary Judgment Against Franchisees

Noble Roman’s franchise lawsuit news.  Kari Heyser, Fred Eric Heyser and Meck Enterprises, LLC, et al v. Noble Roman’s, Inc. et al, lawsuit was filed in Superior Court in Hamilton County, Indiana on June 19, 2008.

The franchisee plaintiffs alleged that Noble Roman’s fraudulently induced them to purchase franchises for traditional locations through misrepresentations and omissions of material facts regarding the franchises.

[Also read:  NOBLE ROMAN’S PIZZA: Worst Franchises for SBA Loan Defaults]

Noble Roman’s filed counterclaims for damages for breach of contract against all of the Plaintiffs in the approximate amount of $3.6 million plus attorney’s fees, interest and other cost of collection, or a total of over $5 million.

As a result of the Order filed January 26, 2012, the company’s partial summary judgment motions were granted as to specific types of damages such as past fees, future fees, attorney’s fees and interest.

Here is Noble Roman’s press release on the granting of the summary judgement.

press release  Jan. 30, 2012, 5:00 p.m. EST

Noble Roman’s Granted Summary Judgment on Counterclaims Against Plaintiffs

INDIANAPOLIS, Jan 30, 2012 (GlobeNewswire via COMTEX) — Noble Roman’s, Inc. /quotes/zigman/235863 NROM -5.67% , the Indianapolis based, non-traditional franchisor and licensor of Noble Roman’s Pizza and Tuscano’s Italian Style Subs, today announced that in an Order by the Hamilton Superior Court I filed January 26, 2012 in the long-standing lawsuit by certain former franchisees, Noble Roman’s was granted partial summary judgment as to liability against the Plaintiffs/Counter-Defendants on the company’s counterclaims against them. As a result of this partial summary judgment, the Court determined that certain of the former franchisees of Noble Roman’s, Inc. were liable to the company for direct damages and consequential damages, including net loss future royalties, for breach of their franchise agreements. In addition, the Court determined that, as a matter of law, Noble Roman’s was entitled to recover attorneys fees associated with obtaining preliminary injunctions, fees resulting from the prosecution of Noble Roman’s counterclaims and fees for defending against fraud claims against the company and certain of its officers. The amount of the award is to be determined at trial.

The company was a Defendant in a lawsuit styled Kari Heyser, Fred Eric Heyser and Meck Enterprises, LLC, et al v. Noble Roman’s, Inc. et al, filed in Superior Court in Hamilton County, Indiana on June 19, 2008 (Cause No. 29D01 0806 PL 739). The Court issued an Order dated December 23, 2010 granting summary judgment in favor of the company against all of the Plaintiffs allegations of fraud. As a result, the Plaintiffs’ allegations of fraud against the company and certain of its officers were determined to be without merit. Plaintiffs previously filed numerous motions, including an appeal to the Indiana Court of Appeals, in an attempt to get the December 23, 2010 summary judgment order reversed. All of those attempts have failed, including the Indiana Court of Appeals which dismissed the appeal with prejudice. Plaintiffs’ last attempt to get the summary judgment award vacated was their attempt to vacate the Order on the grounds of misconduct of third parties. On December 1, 2011, the Judge issued an Order denying their request and specifically found "that there was absolutely no evidence of misconduct and the Court admonished Plaintiffs and Plaintiffs’ counsel for making such unfounded allegations." The fraud charges against the company and certain of its officers have been dismissed entirely, and Plaintiffs have no appeal rights remaining.

The Complaint was originally against the company and certain officers and institutional lenders. The Plaintiffs are former franchisees of the company’s traditional location venue. The Plaintiffs alleged that the Defendants fraudulently induced them to purchase franchises for traditional locations through misrepresentations and omissions of material facts regarding the franchises. In addition to the above claims, one franchisee/Plaintiff in the case asserted a separate claim under the Indiana Franchise Act as to which the Court’s Order denied the company’s motion for summary judgment, as the Court determined that there is a genuine issue of material fact, but did not render any opinion on the merits of the claim. The company denies liability on the Indiana Franchise Act claim and will continue to vigorously prosecute its defenses against the claim.

The company filed counterclaims for damages for breach of contract against all of the Plaintiffs in the approximate amount of $3.6 million plus attorney’s fees, interest and other cost of collection, or a total of over $5 million. As a result of the Order filed January 26, 2012, the company’s partial summary judgment motions were granted as to specific types of damages such as past fees, future fees, attorney’s fees and interest. The amount of the damages awarded to the company will be determined at trial.

SOURCE: Noble Roman’s, Inc.    CONTACT: Paul Mobley, Chairman & CEO  317/634-3377

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FRANCHISE LAWSUIT Alleges Matco Tools Scam, TD Bank Fraud

Matco Tools & TD Bank worked together to scam Matco franchise owners, the Small Business Administration (SBA) and American taxpayers, according to a class action franchise lawsuit filed by Marks & Klein, LLP of Red Bank, N.J. yesterday.

The press release issued by Marks & Klein, LLP is included below.

UnhappyFranchisee.com intends to follow this case and other allegations against Matco as they unfold.

If you are familiar with the Matco Tools franchise or distributorship programs, please share your insights or opinions with a comment below.

Representatives of Matco Tools, TD Bank or others are invited to submit clarification, opposing opinions or rebuttals for publication.  Contact the site ADMIN at UnhappyFranchisee[at]gmail.com.

Also read:  MATCO TOOLS Franchise Complaints.

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Marks & Klein franchise lawsuit press release:

Father & Son File Lawsuit Against Matco Tools and TD Bank

Class Action Lawsuit Claims the Tool Company and Bank Engaged in Widespread SBA Loan Fraud

TRENTON  – A father and son – David Villano, Jr. and David Villano III, through their attorneys, Marks & Klein, LLP of Red Bank, N.J., today filed a class action lawsuit against TD Bank and Matco Tools, Inc. alleging the tool company franchisor and the bank engaged in a loan fraud scheme to encourage unsophisticated borrowers to enter into risky business loans to buy Matco Tools franchises.

The scheme enabled Matco to sell more franchises and TD Bank to make risky loans without concern. The bank knew if the loans failed, the loans would ultimately be repaid by United States taxpayers through the SBA guaranteed loan program. Data from the SBA shows that from 2000 to 2010, Matco Tools’ SBA loans had a staggering 37.3 percent failure rate.

“It is most unfortunate that SBA loans, which are designed to assist aspiring entrepreneurs to finance a new business venture and benefit the economy could, as alleged in this case, be used for such deceitful purposes,” said Gerald A. (Jerry) Marks, Esq., lead plaintiff counsel.

“Many individuals like the Villanos have unknowingly been exploited,” Marks said. “We are seeking treble damages to discourage this sort of conduct from happening again in the future. United States taxpayers have unwittingly been `bailing out’ lenders like TD for years on defaulted loans that should never have been made in the first place.”

The lawsuit alleges that Matco and TD conspired to make loans using secret three-year income projections, in violation of FTC franchise disclosure regulations. Specifically, Matco would deliver the secret three-year income projections to TD Bank with a letter, instructing bank officials not to disclose the projections to loan applicants.

The bank would then use the income projections to qualify the loans for SBA financing. But Matco kept the projections secret because it knew of the high rate of failure among its franchisees and feared the lackluster projections would be used by failed franchisees filing suit.

The lawsuit further states that Matco, TD Bank and other unscrupulous SBA lenders preyed upon the Villanos and other unsophisticated borrowers because of their perception that the lender would not make the loan unless it believed the Matco franchise was an acceptable business opportunity.

According to the lawsuit, TD Bank profited through its collection of loan origination fees as well as interest on the loan principal, which it collected from borrowers while these improper loans were current. When the loans would ultimately fail, TD bank and other lenders would pass along the loss to the American taxpayer, as SBA loans are 90 percent guaranteed by taxpayers, according to the FDIC.

Matco, as the franchisor, would likewise profit from the sale of a new franchise and having its franchised distributors sell tool products for two to three years in a designated route, before ultimately failing and being replaced by a new franchisee.

“Matco and TD had the ability to perpetuate this scheme because of a self-serving lending culture that was more than happy to originate and collect fees and pass along the risk of loss to its customers and taxpayers, even if the law was being violated,” said Louis Tambaro, Esq., another member of Marks & Klein. “By bringing this lawsuit as a national class action, we look forward to exposing the dark underbelly of a destructive lending culture.”

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