Preview
FILED
DALLAS COUNTY
12/26/2013 11:23:51 AM
GARY FITZSIMMONS
DISTRICT CLERK
CAUSE NO. DC-12-07867
RED MANGO FC, LLC, § IN THE DISTRICT COURT
§
Plaintiff-Counterdefendant, §
§
v. § 160TH JUDICIAL DISTRICT
§
HOWARD GROSSER and PHROZEN §
ASSETS LLC §
§
Defendant-Counterplaintiff § DALLAS COUNTY, TEXAS
and Third-Party Plaintiff §
DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER
AND ORIGINAL COUNTERCLAIMS
TO THE HONORABLE COURT:
Defendant-CounterPlaintiff Howard Grosser (“Defendant” or “Grosser”) and Phrozen
Assets LLC file this Third Amended Answer and Original Counterclaims, and respectfully
show as follows:
I. GENERAL DENIAL
1. Subject to such stipulations as it may enter into at time of trial, Defendant asserts
his general denial as authorized by Rule 92 of the Texas Rules of Civil Procedure, and upon trial
of this case will require that Plaintiff prove each and every allegation asserted against Defendant
by a preponderance of the evidence, as is required by the laws of this State of Texas the
Constitution of the United States.
II. AFFIRMATIVE DEFENSES
2. Pleading further, if same be necessary, pursuant to Texas Rule of Civil
Procedure 94, Grosser asserts that Plaintiff's recovery is barred by failure of consideration.
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3. Pleading further, if same be necessary, pursuant to Texas Rule of Civil
Procedure 94, Grosser asserts that Plaintiff's recovery is barred by fraud.
4. Pleading further, if same be necessary, pursuant to Texas Rule of Civil
Procedure 94, Grosser asserts that Plaintiff's recovery is barred by estoppel.
5. Pleading further, if same be necessary, pursuant to Texas Rule of Civil
Procedure 94, Grosser asserts that Plaintiff's recovery is barred by unclean hands.
6. Pleading further, if same be necessary, pursuant to Texas Rule of Civil
Procedure 94, Grosser asserts that Grosser is not subject to personal jurisdiction, in as much
as Grosser is a resident of Massachusetts, the business at issue is located in Florida, and any
alleged consent to jurisdiction is based upon an adhesion contract drafted by attorneys for
Plaintiff.
7. Pleading further, if same be necessary, pursuant to Texas Rule of Civil
Procedure 94, Grosser asserts that Plaintiff's recovery is barred by illegality.
8. Pleading further, if same be necessary, pursuant to Texas Rule of Civil
Procedure 94, Grosser asserts that Plaintiff's recovery is barred by Plaintiff's violation of
federal and state laws, including but not limited to Federal Trade Commission rules pertaining
to franchising, the Texas Deceptive Trade Practices Act, the Florida Deceptive and Unfair Trade
Practices Act, the Massachusetts Consumer Protection Act, and the Florida Franchises and
Distributorships law.
9. Pleading further, if same be necessary, pursuant to Texas Rule of Civil Procedure
94, Grosser asserts that Plaintiff’s recovery is barred by Plaintiff’s breach of the Franchise
Agreement at issue, and the covenant of good faith and fair dealing between Grosser and Plaintiff.
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10. Pleading further, if same be necessary, pursuant to Texas Rule of Civil Procedure
94, Grosser asserts that Plaintiff’s recovery is barred by Plaintiff’s charging of a usurious interest
rate.
III. ORIGINAL COUNTERCLAIMS
IV. PARTIES
1. Plaintiff-Counterdefendant Red Mango FC, LLC has already appeared in this case
and does not need to be served with process. Defendant-Counterplaintiff Grosser likewise is
already a party to this case.
2. Phrozen Assets LLC (“Phrozen Assets”) is a Florida Limited Liability Company
formed in connection with Grosser’s store.
V. VENUE AND JURISDICTION
3. Venue is proper for the counterclaims. The counterclaims seek amounts within
the jurisdictional power of this Court.
VI. FACTUAL BACKGROUND
4. Defendant-Counterplaintiff Howard Grosser (“Grosser”) is not a sophisticated or
experienced businessman in the area of franchising. Before purchasing a Red Mango franchise,
Grosser had never owned or been involved in the establishment, management and/or operation of
any kind of franchise, any kind of fast food business, or any kind of retail business located in a
strip mall.
5. On or about February 10, 2011, Grosser signed a Red Mango Franchise
Agreement. In doing so, Grosser relied on number of material factual representations that were
made to him by Red Mango’s authorized representatives. Grosser also understood that, by
signing the Franchise Agreement, he would be receiving Mango’s expertise, training,
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instructions and assistance regarding his newly-acquired franchise. Grosser has subsequently
learned that Mango provided him with materially false information.
A. Written Misrepresentations Before Grosser Signed Franchise Agreement
6. On or about December 23, 2010, Red Mango provided Grosser with a Franchise
Disclosure Document (“FDD”) purporting to “summarize[] certain provisions of the franchise
agreement, store development agreement, and other information in plain language.”
7. Grosser’s franchise was located inside the Galleria Mall in Fort Lauderdale,
Florida. The FDD describes three types of franchise opportunities: the Traditional Store, the
Non-Traditional Outlet, and the Self-Serve Store. The FDD defines a Self-Serve Store as one
which “occupies approximately 1,400 to 2,000 square feet … and is typically located on a major
thoroughfare, in or adjacent to a retail strip mall, or in an urban storefront.” This type of store is
inapplicable to Grosser’s franchise.
8. The FDD defines a Traditional Store as “a full service Store offering a variety of
flavors” and occupying “approximately 1,000 to 1,200 square feet of commercial space.”
Further, a Traditional Store is typically located on a major thoroughfare, in or adjacent to a retail
strip mall or shopping center, or in an urban storefront. This type of store is inapplicable to
Grosser’s franchise.
9. Under the FDD, a “Non-Traditional Store offers limited or no seating (for
example as in a shopping mall environment) and may offer limited product selections. It
typically occupies approximately 250 to 800 square feet of commercial space and typically is
located within an enclosed shopping mall, college campus or other closed market environment.”
Grosser’s store offers no seating, occupies 703 square feet and is within an enclosed shopping
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mall. This definition clearly and unambiguously applies to Grosser’s franchise located in the
Galleria Mall.
10. The Franchise Agreement discloses two alternative franchise fees: a $35,000.00
fee for a Traditional or Self-Serve Store, and a $17,500.00 fee for a Non-Traditional Store.
Despite the fact that the FDD clearly defines Grosser’s store as a Non-Traditional Store, Mango
charged him the higher $35,000.00 fee applicable to a Traditional or Self-Serve Store.
11. The amounts due to Grosser based upon his purchase of a “Non-Traditional
Outlet” after he paid for a “Traditional Store” are as follows: (a) $17,500.00 due based upon
payment of a $35,000.00 fee paid for a “Traditional Store” that exceeded the $17,500.00 that is
due for a “Non-Traditional Outlet,” (b) $9,600.00 Grosser paid for a Project Management Fee
which is due for a “Traditional Store” but for which there is no charge for a “Non-Traditional
Outlet” and (c) payment of $10,000.00 for the grand opening fee “Traditional Store” when the
grand opening fee for a “Non-Traditional Outlet” is $5,000.
12. The FDD also contains the following additional misrepresentations by Mango:
Mango represented that Grosser’s total investment would be in the range of
$180,000.00 to $354,500.00 when the total investment in fact was closer to
$600,000.
Mango represented that permits would cost between $1,500 to $5,000, when
Grosser in fact had to pay well over $5,000 for permits.
Mango represented that interior improvements and lighting would cost
$50,000 to $110,000, when these items actually cost over $194,900.
Mango represented that equipment furniture and smallwares would cost
$50,000 to $100,000 when these items actually cost over $128,000.
Mango represented that typical rent costs usually range from $2.00 to $8.00
per square foot, yet Grosser’s lease negotiated by Mango cost more than
$11.00 per square foot.
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Mango represented that 30-35% of Grosser’s total annual operating expenses
would be for goods or services subject to sourcing restrictions, but Grosser
actually had to spend more than 40% on such goods or services.
B. Oral Misrepresentations Before Grosser Signed Franchise Agreement.
13. Before Grosser signed the Franchise Agreement, Mango also made a number of
verbal misrepresentations that Grosser relied upon. First, Mango’s authorized representatives
provided Grosser with materially false information that was intended to induce Grosser to sign
the Franchise Agreement. For example, Mango provided Grosser with the following information
that Grosser believes is false:
Mango represented that no Mango store had ever been closed or abandoned.
Mango represented that many stores are company owned.
Mango represented, at the time of Grosser’s initial contact with Mango’s
broker, that the average Mango store does $520,000.00 in annual sales.
Mango represented, at the time that Grosser was induced to sign the
Franchise Agreement that the average Mango store’s annual sales had
increased to $550,000.
Mango represented that its consistent goal is to reduce the cost of entry for
new stores.
Mango represented that the average cost of operating a Mango store is 90%
of sales.
Mango represented that it was on track to have 200 stores open by the end of
2011.
Mango represented that there are dozens of above average locations in North
Broward County, and further represented that “We’ll find you one.”
Mango represented that a store’s costs of goods is 25-32% of sales.
14. Having made these critical factual representations, Mango made additional
misrepresentations to induce Grosser to sign the franchise agreement. Knowing that Grosser was
relying upon Mango’s franchising expertise, Mango represented that the Franchise Agreement
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was being offered on a take it or leave it basis, and that he should not bother retaining an attorney
to propose changes because all proposed changes would be rejected. Mango also told Grosser
that he had to check the boxes on the form stating that no representations had been made as a
technical requirement, and Mango had not been making “representations” but merely had shared
information that it knew. Mango never told Grosser that he would be waiving any legal rights by
signing the Franchise Agreement or the related checklist.
C. Mango Selects a Store Location Doomed to Failure.
15. After inducing and pressuring Grosser into signing the Franchise Agreement,
Mango promised to find an above average store location. This is exactly the sort of decision
where Grosser expected to benefit from the knowledge and experience of a supposedly growing
and successful franchisor (whose website promises “professional real estate selection”).
16. Through the broker Mango required Grosser to employ, Mango recommended
and approved a location in the Galleria Mall. Significantly, Starbuck’s had recently abandoned
the very same location, but Mango failed to disclose this critical fact about which it was well
aware.
17. The location is wholly unsuitable for Grosser’s store. Notwithstanding Grosser’s
best efforts, the location simply does not attract sufficient traffic to sustain a successful franchise
location. If Mango had disclosed that Starbuck’s, arguably the world’s most successful
franchise, had abandoned the very same location, Grosser never would have agreed to the
Galleria Mall location recommended by Mango.
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D. Mango Recommends a Grossly Incompetent Contractor for Grosser’s Store.
18. Following execution of the Franchise Agreement, Grosser also relied upon Mango
to choose a qualified furniture/fixture/equipment/millwork/casework contractor for the build out
of his store. Mango contracts with a company called Load King.
19. Mango agreed to hold Grosser’s check in escrow for Load King until the store
was completed and all punch listitems were resolved. Load King instead charged exorbitant
amounts and never completed the store, yet Mango released Grosser’s check from escrow to
Load King.
20. Mango also told Grosser that, in addition to being required to use Load King to
supply the furniture, fixtures and equipment, he was also required to use Load King for the
unloading, uncrating, and setting in place of the furniture, fixtures and equipment or he would be
voiding his warranty on all of the store’s furniture, fixtures and equipment. Grosser has since
learned that this representation was false.
21. Mango represented that it would reimburse Grosser for the cost of temporary
menu signs necessitated by the delays and incompetence of Mango’s required menu sign vendor,
Diesel Displays. No such reimbursement has been received.
22. Mango represented that Grosser’s store required water cooled frozen yogurt
dispensing machines, which required an additional $30,000 of equipment and installation as
compared with air cooled frozen yogurt machines. Water cooled machines were not necessary;
the air-cooled version was more suitable for Grosser’s location.
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E. Grosser Loses His Initial Investment and More Due to Mango’s Fraudulent
Misrepresentations.
23. Because of the combination of a terrible store location, Mango’s inflated and
wholly inaccurate financial projections, and Mango’s exorbitant charges for its contractor’s work
and its goods and services, Grosser’s store has been a financial disaster.
24. Grosser routinely lost in excess of an average of $12,900 per month during every
month of operation. Mango now has terminated his franchise, meaning that Grosser also has lost
his entire investment in the franchise itself as well as his entire investment in the store’s build-
out. Because Grosser is contractually barred from operating a frozen yogurt store by a non-
compete clause, Mango’s termination has also caused Grosser to default on his lease obligations
and he is now forced to liquidate his last remaining assets, the equipment, for a fraction of their
original cost.
VII. CAUSES OF ACTION
Count I – Breach of
Contract
25. Grosser incorporates all previous paragraphs as if set forth herein.
26. Mango violated the provisions of paragraphs 3.1 and 3.2 of the Franchise
Agreement by providing, recommending, and approving an improper location for Grosser’s
Store.
27. Mango violated the provisions of paragraph 3.4 of the Franchise Agreement by
requiring Grosser to use improper contractors and imposing other improper build-out
requirements.
28. Mango violated the provisions of paragraph 5.2 of the Franchise Agreement by
failing to provide the proper store opening assistance.
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29. Mango violated the provisions of paragraph 5.3 of the Franchise Agreement by
failing to provide the proper pre-opening consultation assistance.
30. Mango violated the provisions of paragraph 5.4 of the Franchise Agreement by
failing to provide the proper ongoing consultation assistance.
31. Mango violated the provisions of paragraph 9 of the Franchise Agreement by
failing to provide the proper advertising and marketing.
32. Mango has improperly charged Grosser a $35,000.00 franchise fee instead of the
$17,500 fee applicable to a Non-Traditional Store. Mango has improperly charged Grosser a
$10,000 grand opening advertising fee instead of the $5,000.00 fee applicable to his store type.
Mango has improperly charged Grosser a 3% brand development fund fee instead of the 0% fee
applicable to his store type. Mango has improperly charged Grosser a $9,600.00 project
management fee instead of the $0.00 fee applicable to his store type. Mango also improperly
charged Grosser a 9% royalty instead of the 8% royalty applicable to his store type.
33. As a direct result of Mango’s breaches of the Franchise Agreement, Grosser has
suffered extensive damages in an amount to be proven at trial.
Count II –
Unjust Enrichment
34. Grosser incorporates all previous paragraphs as if set forth herein.
35. Mango has improperly charged Grosser a $35,000.00 franchise fee instead of the
$17,500 fee applicable to a Non-Traditional Store. Under the circumstances, it would unjust for
Mango to retain the extra payment of $17,500. Mango has improperly charged Grosser a
$10,000.00 grand opening advertising fee instead of the $5,000.00 fee applicable to his store
type. Mango has improperly charged Grosser a 3% brand development fund fee instead of the
0% fee applicable to his store type. Mango has improperly charged Grosser a $9,600.00 project
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management fee instead of the $0.00 fee applicable to his store type. Mango also improperly
charged Grosser a 9% royalty instead of the 8% royalty applicable to his store type.
36. Grosser therefore seeks to recover these amounts from Mango on his unjust
enrichment claim.
Count III –
Fraudulent Inducement
37. Grosser and Phrozen Assets incorporate all previous paragraphs as if set forth
herein.
38. Mango made material factual representations to Grosser and Phrozen Assets with
the specific intent of inducing them to enter into the Franchise Agreement.
39. Mango’s factual representations were false.
40. Grosser reasonably relied on Mango’s misrepresentations. As a direct result of
such reliance, Grosser lost all of his investment in the franchise and Grosser and Phrozen Assets
incurred additional operating losses in an amount to be proven at trial.
41. Grosser is entitled to the complete rescission of the Franchise Agreement based
upon his reliance upon the fraudulent misrepresentations that induced him to enter into the
Franchise Agreement. Rescission entitles Grosser to be put back in the position he was in
before signed the Franchise Agreement. Grosser has not received or retained any benefits from
the signing of the Franchise Agreement, but is no longer operating a Mango franchise such that
any arguable rights or benefits have been returned to Mango. To the extent any alleged benefits
or rights are identified that Grosser allegedly has retained, Grosser tenders their return to Mango.
42. Grosser is pursuing rescission of the Franchise Agreement as the primary remedy
he seeks, and is pursuing breach of contract claims and other claims identified herein as
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alternative remedies. At the time of entry of a final judgment, Grosser will identify the claim
and elect the remedy upon which he ultimately decides to recover.
Count IV –
Fraud
43. Grosser and Phrozen Assets incorporate all previous paragraphs as if set forth
herein.
44. Mango made material factual representations to Grosser and Phrozen Assets with
the specific intent that they act upon such misrepresentations by moving forward with the build
out and operation of a Mango franchise.
45. Mango’s factual representations were false.
46. Grosser and Phrozen Assets reasonably relied on Mango’s misrepresentations. As
a direct result of such reliance, Grosser lost all of his investment in the franchise and Grosser and
Phrozen Assets incurred additional operating losses in an amount to be proven at trial.
Count V –
Promissory Fraud
47. Grosser and Phrozen Assets incorporate all previous paragraphs as if set forth
herein.
48. Mango made material promises to Grosser and Phrozen Assets with the specific
intent that they act upon such misrepresentations by signing the Franchise Agreement and
moving forward with the build out and operation of a Mango franchise.
49. Mango made such promises with no intention of honoring them.
50. Grosser and Phrozen Assets reasonably relied on Mango’s fraudulent promises.
As a direct result of such reliance, Grosser lost all of his investment in the franchise and Grosser
and Phrozen Assets incurred additional operating losses in an amount to be proven at trial.
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Grosser and Phrozen Assets also are entitled to the lost profits that the franchise would have
earned if Mango’s factual representations had been true.
Count VI –
Negligent Misrepresentation
51. Grosser and Phrozen Assets incorporate all previous paragraphs as if set forth
herein.
52. Mango made material factual representations to Grosser and Phrozen Assets with
the intent that they act upon such misrepresentations by moving forward with the build out and
operation of a Mango franchise.
53. Mango’s factual representations were false, and Mango acted negligently in
making such false representations.
54. Grosser and Phrozen Assets reasonably relied on Mango’s misrepresentations. As
a direct result of such reliance, Grosser lost all of his investment in the franchise and Grosser and
Phrozen Assets incurred additional operating losses in an amount to be proven at trial.
Count VII –
Breach of the Covenant of Good Faith and Fair Dealing
55. Grosser and Phrozen Assets hereby reallege and incorporate by reference all
previous paragraphs as if fully set forth herein.
56. A franchise agreement is more than the usual contract. It is a compact between a
franchisor (Mango) and a franchisee (Grosser) whereby the franchisee is paying a lump sum
payment up front and continuing royalties based upon the promises and representations of the
franchisor to provide all of the knowledge, expertise and assistance to the franchisee to make his
business successful.
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57. Mango lied to Grosser, failed to provide the support promised to Grosser, required
Grosser to utilize the services of incompetent contractors, required Grosser to expend
unnecessary funds and tool other actions which as deprived Grosser of the ability to make a
profit.
58. The actions of Mango constitute a breach of the covenant of good faith and fair
dealing based upon this franchise relationship.
59. As a result of Mango’s improper actions Grosser and Phrozen Assets were
financially harmed.
Count VIII –
Violation of the Texas Deceptive Trade Practices Act
60. Grosser and Phrozen Assets hereby reallege and incorporate by reference all
previous paragraphs as if fully set forth herein.
61. Mango is subject to the Texas Deceptive Trade Practices Act (Tex. Rev. Civ. Stat.
Title 2, Chapter 17, Subchapter A §17.01, et seq.) (“TDTPA”)
62. Mango violated §§17.12 & 17.46 of the TDTPA by the misrepresentations that it
made to Grosser as set forth above.
63. Grosser and Phrozen Assets are entitled to relief pursuant to §17.50 of the
TDTPA.
64. Grosser and Phrozen Assets demand all relief permitted pursuant to the TDTPA,
including but not limited to, mental anguish, monetary damages, treble damages, costs, expenses
and attorneys’ fees, which are hereby demanded.
65. As a result of Mango’s actions and/or inactions, Grosser and Phrozen Assets have
been suffered substantial injuries and are entitled to recover actual and treble damages under the
TDTPA.
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66. Grosser is entitled to the complete rescission of the Franchise Agreement based
upon his reliance upon the fraudulent misrepresentations that induced him to enter into the
Franchise Agreement. Rescission entitles Grosser to be put back in the position he was in
before signed the Franchise Agreement. Grosser has not received or retained any benefits from
the signing of the Franchise Agreement, but is no longer operating a Mango franchise such that
any arguable rights or benefits have been returned to Mango. To the extent any alleged benefits
or rights are identified that Grosser allegedly has retained, Grosser tenders their return to Mango.
67. Grosser is pursuing rescission of the Franchise Agreement as the primary remedy
he seeks, and is pursuing breach of contract claims and other claims identified herein as
alternative remedies. At the time of entry of a final judgment, Grosser will identify the claim
and elect the remedy upon which he ultimately decides to recover.
Count IX –
Violation of the Florida Deceptive and Unfair Trade Practices Act
68. Grosser and Phrozen Assets hereby reallege and incorporate by reference all
previous paragraphs as if fully set forth herein.
69. Mango is subject to the Florida Deceptive and Unfair Trade Practices Act, Florida
Statutes, title XXXIII, Chapter 501, §501.201, et seq. (“FDUTPA”).
70. Grosser and Phrozen Assets are entitled to the protection of FDUTPA for all pre-
contractual actions on the part of Mango based upon Florida’s right to protect businessmen who
engage in business in the State of Florida.
71. Grosser and Phrozen Assets are entitled to the protection of FDUTPA for all post-
contractual actions on the part of Mango based upon Florida’s right to protect businessmen who
engage in business in the State of Florida regardless of an contractual provision to the contrary.
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72. Mango violated FDUTPA §501.204(1) by engaging in unfair methods of
competition, performing unconscionable acts and practices and unfair and deceptive acts in a
trade or business.
73. Pursuant to FDUTPA §501.2075 Mango is subject to a civil penalty of $10,000
per violation and to pay attorneys’ fees.
74. Pursuant to FDUTPA §501.2105 Grosser and Phrozen Assets are entitled to
reasonable attorney’s fees and costs.
75. Pursuant to FDUTPA §501.211 Grosser and Phrozen Assets are entitled to actual
damages, attorneys’ fees and court costs, which are hereby demanded.
76. Pursuant to FDUTPA §501.213 Grosser’s and Phrozen Assets’ remedies pursuant
to Pursuant to FDUTPA are in addition to all other remedies.
77. As a result of Mango’s actions and/or inactions, Grosser and Phrozen Assets have
been injured in their business and property in an amount in excess of $75,000.00, exclusive of
interest and costs.
Count X –
Violation of the Massachusetts Consumer Protection Act
78. Grosser and Phrozen Assets hereby reallege and incorporate by reference all
previous paragraphs as if fully set forth herein.
79. Mango is subject to the Massachusetts Consumer and Business Protection Act,
Massachusetts General Laws, Part I, Title XV, Chapter 93A “(MCPA”).
80. Grosser and Phrozen Assets are entitled to the protection of MCPA for all pre-
contractual actions on the part of Mango based upon Massachusetts’ right to protect businessmen
who engage in business in the State of Florida.
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81. Grosser and Phrozen Assets are entitled to the protection of MCPA for all post-
contractual actions on the part of Mango based upon Massachusetts’ right to protect businessmen
who engage in business in the State of Florida regardless of an contractual provision to the
contrary.
82. Mango’s actions and inactions violated the MCPA and is subject to suit pursuant
to §9.
83. Pursuant to MCPA §9(3A) Grosser and Phrozen Assets are entitled to double or
treble damages, attorneys’ fees and costs, which are hereby demanded.
84. Grosser and Phrozen Assets are entitled to compensation due to their loss of
money or property, real or personal, as a result of the use or employment by Mango who
engaged in a trade or commerce of an unfair method of competition or an unfair or deceptive act
or practice pursuant to §11 of the MCPA.
85. Grosser and Phrozen Assets are entitled to and demands three times their damages
as provided by the MCPA.
86. Grosser and Phrozen Assets are entitled to and demands their reasonable
attorneys' fees and costs incurred in said action as provided by the MCPA.
Count XI –
Violation of the Florida Franchises and Distributorships Law
87. Grosser and Phrozen Assets hereby reallege and incorporate by reference all
previous paragraphs as if fully set forth herein.
88. Mango is subject to the Florida Franchises and Distributorships law, Florida
Statues, 1995, Chapter 817, Section 817.416, et seq. (“FFDL”).
89. Mango is subject to the Florida Deceptive and Unfair Trade Practices Act, Florida
Statutes, title XXXIII, Chapter 501, §501.201, et seq. (“FFDL”).
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90. Grosser and Phrozen Assets are entitled to the protection of FFDL for all pre-
contractual actions on the part of Mango based upon Florida’s right to protect businessmen who
engage in business in the State of Florida.
91. Mango violated FFDL §8.17.416(2)(a)(1) by intentionally misrepresenting the
known total investment of its franchise to Grosser.
92. Mango violated FFDL §8.17.416(2)(a)(2) by intentionally misrepresenting the
prospects or chances for success of its franchise to Grosser.
93. Pursuant to FFDL §8.17.416(3) Grosser and Phrozen Assets are entitled to
recover all moneys they invested in the franchise, reasonable attorneys’ fees and reasonable
costs.
94. Grosser and Phrozen Assets are entitled to recover all moneys they invested in the
franchise, reasonable attorneys’ fees and reasonable costs as provided by the FFDL.
Count XII –
Breach of Fiduciary Duty
95. Grosser and Phrozen Assets incorporate all previous paragraphs as if set forth
herein.
96. Mango agreed to act as the agent of Grosser and Phrozen Assets by agreeing to
hold $7500 in escrow unless and until Load King completed its construction punch list and
Grosser and Phrozen Assets consented to the release of such funds to Load King.
97. Within the course and scope of itsduties as escrow agent for the $7500, Mango
owed fiduciary duties to Grosser and Phrozen Assets.
98. Instead of complying with its fiduciary duties, Mango released the $7500 to Load
King, even though the punch lunch was not complete and Grosser and Phrozen Assets had not
consented. As a result of Mango’s conduct, Grosser and Phrozen Assets lost the $7500 (which
DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS Page 18
4841-2644-7638/02505.201
never should have been paid to Load King) and suffered additional damages from having to
spend the time and money necessary to complete the uncompleted punch list items.
Count XIII –
Exemplary Damages
99. Grosser and Phrozen Assets incorporate all previous paragraphs as if set forth
herein.
100. Grosser and Phrozen Assets are entitled to punitive or exemplary damages
because Mango intentionally committed fraud. In addition, Mango maliciously intended to harm
Grosser and Phrozen Assets financially or acted with gross negligence in regard to their best
interests.
Preview
FILED DALLAS COUNTY 12/26/2013 11:23:51 AM GARY FITZSIMMONS DISTRICT CLERK CAUSE NO. DC-12-07867 RED MANGO FC, LLC, § IN THE DISTRICT COURT § Plaintiff-Counterdefendant, § § v. § 160TH JUDICIAL DISTRICT § HOWARD GROSSER and PHROZEN § ASSETS LLC § § Defendant-Counterplaintiff § DALLAS COUNTY, TEXAS and Third-Party Plaintiff § DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS TO THE HONORABLE COURT: Defendant-CounterPlaintiff Howard Grosser (“Defendant” or “Grosser”) and Phrozen Assets LLC file this Third Amended Answer and Original Counterclaims, and respectfully show as follows: I. GENERAL DENIAL 1. Subject to such stipulations as it may enter into at time of trial, Defendant asserts his general denial as authorized by Rule 92 of the Texas Rules of Civil Procedure, and upon trial of this case will require that Plaintiff prove each and every allegation asserted against Defendant by a preponderance of the evidence, as is required by the laws of this State of Texas the Constitution of the United States. II. AFFIRMATIVE DEFENSES 2. Pleading further, if same be necessary, pursuant to Texas Rule of Civil Procedure 94, Grosser asserts that Plaintiff's recovery is barred by failure of consideration. DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS Page 1 4841-2644-7638/02505.201 3. Pleading further, if same be necessary, pursuant to Texas Rule of Civil Procedure 94, Grosser asserts that Plaintiff's recovery is barred by fraud. 4. Pleading further, if same be necessary, pursuant to Texas Rule of Civil Procedure 94, Grosser asserts that Plaintiff's recovery is barred by estoppel. 5. Pleading further, if same be necessary, pursuant to Texas Rule of Civil Procedure 94, Grosser asserts that Plaintiff's recovery is barred by unclean hands. 6. Pleading further, if same be necessary, pursuant to Texas Rule of Civil Procedure 94, Grosser asserts that Grosser is not subject to personal jurisdiction, in as much as Grosser is a resident of Massachusetts, the business at issue is located in Florida, and any alleged consent to jurisdiction is based upon an adhesion contract drafted by attorneys for Plaintiff. 7. Pleading further, if same be necessary, pursuant to Texas Rule of Civil Procedure 94, Grosser asserts that Plaintiff's recovery is barred by illegality. 8. Pleading further, if same be necessary, pursuant to Texas Rule of Civil Procedure 94, Grosser asserts that Plaintiff's recovery is barred by Plaintiff's violation of federal and state laws, including but not limited to Federal Trade Commission rules pertaining to franchising, the Texas Deceptive Trade Practices Act, the Florida Deceptive and Unfair Trade Practices Act, the Massachusetts Consumer Protection Act, and the Florida Franchises and Distributorships law. 9. Pleading further, if same be necessary, pursuant to Texas Rule of Civil Procedure 94, Grosser asserts that Plaintiff’s recovery is barred by Plaintiff’s breach of the Franchise Agreement at issue, and the covenant of good faith and fair dealing between Grosser and Plaintiff. DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS Page 2 4841-2644-7638/02505.201 10. Pleading further, if same be necessary, pursuant to Texas Rule of Civil Procedure 94, Grosser asserts that Plaintiff’s recovery is barred by Plaintiff’s charging of a usurious interest rate. III. ORIGINAL COUNTERCLAIMS IV. PARTIES 1. Plaintiff-Counterdefendant Red Mango FC, LLC has already appeared in this case and does not need to be served with process. Defendant-Counterplaintiff Grosser likewise is already a party to this case. 2. Phrozen Assets LLC (“Phrozen Assets”) is a Florida Limited Liability Company formed in connection with Grosser’s store. V. VENUE AND JURISDICTION 3. Venue is proper for the counterclaims. The counterclaims seek amounts within the jurisdictional power of this Court. VI. FACTUAL BACKGROUND 4. Defendant-Counterplaintiff Howard Grosser (“Grosser”) is not a sophisticated or experienced businessman in the area of franchising. Before purchasing a Red Mango franchise, Grosser had never owned or been involved in the establishment, management and/or operation of any kind of franchise, any kind of fast food business, or any kind of retail business located in a strip mall. 5. On or about February 10, 2011, Grosser signed a Red Mango Franchise Agreement. In doing so, Grosser relied on number of material factual representations that were made to him by Red Mango’s authorized representatives. Grosser also understood that, by signing the Franchise Agreement, he would be receiving Mango’s expertise, training, DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS Page 3 4841-2644-7638/02505.201 instructions and assistance regarding his newly-acquired franchise. Grosser has subsequently learned that Mango provided him with materially false information. A. Written Misrepresentations Before Grosser Signed Franchise Agreement 6. On or about December 23, 2010, Red Mango provided Grosser with a Franchise Disclosure Document (“FDD”) purporting to “summarize[] certain provisions of the franchise agreement, store development agreement, and other information in plain language.” 7. Grosser’s franchise was located inside the Galleria Mall in Fort Lauderdale, Florida. The FDD describes three types of franchise opportunities: the Traditional Store, the Non-Traditional Outlet, and the Self-Serve Store. The FDD defines a Self-Serve Store as one which “occupies approximately 1,400 to 2,000 square feet … and is typically located on a major thoroughfare, in or adjacent to a retail strip mall, or in an urban storefront.” This type of store is inapplicable to Grosser’s franchise. 8. The FDD defines a Traditional Store as “a full service Store offering a variety of flavors” and occupying “approximately 1,000 to 1,200 square feet of commercial space.” Further, a Traditional Store is typically located on a major thoroughfare, in or adjacent to a retail strip mall or shopping center, or in an urban storefront. This type of store is inapplicable to Grosser’s franchise. 9. Under the FDD, a “Non-Traditional Store offers limited or no seating (for example as in a shopping mall environment) and may offer limited product selections. It typically occupies approximately 250 to 800 square feet of commercial space and typically is located within an enclosed shopping mall, college campus or other closed market environment.” Grosser’s store offers no seating, occupies 703 square feet and is within an enclosed shopping DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS Page 4 4841-2644-7638/02505.201 mall. This definition clearly and unambiguously applies to Grosser’s franchise located in the Galleria Mall. 10. The Franchise Agreement discloses two alternative franchise fees: a $35,000.00 fee for a Traditional or Self-Serve Store, and a $17,500.00 fee for a Non-Traditional Store. Despite the fact that the FDD clearly defines Grosser’s store as a Non-Traditional Store, Mango charged him the higher $35,000.00 fee applicable to a Traditional or Self-Serve Store. 11. The amounts due to Grosser based upon his purchase of a “Non-Traditional Outlet” after he paid for a “Traditional Store” are as follows: (a) $17,500.00 due based upon payment of a $35,000.00 fee paid for a “Traditional Store” that exceeded the $17,500.00 that is due for a “Non-Traditional Outlet,” (b) $9,600.00 Grosser paid for a Project Management Fee which is due for a “Traditional Store” but for which there is no charge for a “Non-Traditional Outlet” and (c) payment of $10,000.00 for the grand opening fee “Traditional Store” when the grand opening fee for a “Non-Traditional Outlet” is $5,000. 12. The FDD also contains the following additional misrepresentations by Mango: Mango represented that Grosser’s total investment would be in the range of $180,000.00 to $354,500.00 when the total investment in fact was closer to $600,000. Mango represented that permits would cost between $1,500 to $5,000, when Grosser in fact had to pay well over $5,000 for permits. Mango represented that interior improvements and lighting would cost $50,000 to $110,000, when these items actually cost over $194,900. Mango represented that equipment furniture and smallwares would cost $50,000 to $100,000 when these items actually cost over $128,000. Mango represented that typical rent costs usually range from $2.00 to $8.00 per square foot, yet Grosser’s lease negotiated by Mango cost more than $11.00 per square foot. DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS Page 5 4841-2644-7638/02505.201 Mango represented that 30-35% of Grosser’s total annual operating expenses would be for goods or services subject to sourcing restrictions, but Grosser actually had to spend more than 40% on such goods or services. B. Oral Misrepresentations Before Grosser Signed Franchise Agreement. 13. Before Grosser signed the Franchise Agreement, Mango also made a number of verbal misrepresentations that Grosser relied upon. First, Mango’s authorized representatives provided Grosser with materially false information that was intended to induce Grosser to sign the Franchise Agreement. For example, Mango provided Grosser with the following information that Grosser believes is false: Mango represented that no Mango store had ever been closed or abandoned. Mango represented that many stores are company owned. Mango represented, at the time of Grosser’s initial contact with Mango’s broker, that the average Mango store does $520,000.00 in annual sales. Mango represented, at the time that Grosser was induced to sign the Franchise Agreement that the average Mango store’s annual sales had increased to $550,000. Mango represented that its consistent goal is to reduce the cost of entry for new stores. Mango represented that the average cost of operating a Mango store is 90% of sales. Mango represented that it was on track to have 200 stores open by the end of 2011. Mango represented that there are dozens of above average locations in North Broward County, and further represented that “We’ll find you one.” Mango represented that a store’s costs of goods is 25-32% of sales. 14. Having made these critical factual representations, Mango made additional misrepresentations to induce Grosser to sign the franchise agreement. Knowing that Grosser was relying upon Mango’s franchising expertise, Mango represented that the Franchise Agreement DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS Page 6 4841-2644-7638/02505.201 was being offered on a take it or leave it basis, and that he should not bother retaining an attorney to propose changes because all proposed changes would be rejected. Mango also told Grosser that he had to check the boxes on the form stating that no representations had been made as a technical requirement, and Mango had not been making “representations” but merely had shared information that it knew. Mango never told Grosser that he would be waiving any legal rights by signing the Franchise Agreement or the related checklist. C. Mango Selects a Store Location Doomed to Failure. 15. After inducing and pressuring Grosser into signing the Franchise Agreement, Mango promised to find an above average store location. This is exactly the sort of decision where Grosser expected to benefit from the knowledge and experience of a supposedly growing and successful franchisor (whose website promises “professional real estate selection”). 16. Through the broker Mango required Grosser to employ, Mango recommended and approved a location in the Galleria Mall. Significantly, Starbuck’s had recently abandoned the very same location, but Mango failed to disclose this critical fact about which it was well aware. 17. The location is wholly unsuitable for Grosser’s store. Notwithstanding Grosser’s best efforts, the location simply does not attract sufficient traffic to sustain a successful franchise location. If Mango had disclosed that Starbuck’s, arguably the world’s most successful franchise, had abandoned the very same location, Grosser never would have agreed to the Galleria Mall location recommended by Mango. DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS Page 7 4841-2644-7638/02505.201 D. Mango Recommends a Grossly Incompetent Contractor for Grosser’s Store. 18. Following execution of the Franchise Agreement, Grosser also relied upon Mango to choose a qualified furniture/fixture/equipment/millwork/casework contractor for the build out of his store. Mango contracts with a company called Load King. 19. Mango agreed to hold Grosser’s check in escrow for Load King until the store was completed and all punch listitems were resolved. Load King instead charged exorbitant amounts and never completed the store, yet Mango released Grosser’s check from escrow to Load King. 20. Mango also told Grosser that, in addition to being required to use Load King to supply the furniture, fixtures and equipment, he was also required to use Load King for the unloading, uncrating, and setting in place of the furniture, fixtures and equipment or he would be voiding his warranty on all of the store’s furniture, fixtures and equipment. Grosser has since learned that this representation was false. 21. Mango represented that it would reimburse Grosser for the cost of temporary menu signs necessitated by the delays and incompetence of Mango’s required menu sign vendor, Diesel Displays. No such reimbursement has been received. 22. Mango represented that Grosser’s store required water cooled frozen yogurt dispensing machines, which required an additional $30,000 of equipment and installation as compared with air cooled frozen yogurt machines. Water cooled machines were not necessary; the air-cooled version was more suitable for Grosser’s location. DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS Page 8 4841-2644-7638/02505.201 E. Grosser Loses His Initial Investment and More Due to Mango’s Fraudulent Misrepresentations. 23. Because of the combination of a terrible store location, Mango’s inflated and wholly inaccurate financial projections, and Mango’s exorbitant charges for its contractor’s work and its goods and services, Grosser’s store has been a financial disaster. 24. Grosser routinely lost in excess of an average of $12,900 per month during every month of operation. Mango now has terminated his franchise, meaning that Grosser also has lost his entire investment in the franchise itself as well as his entire investment in the store’s build- out. Because Grosser is contractually barred from operating a frozen yogurt store by a non- compete clause, Mango’s termination has also caused Grosser to default on his lease obligations and he is now forced to liquidate his last remaining assets, the equipment, for a fraction of their original cost. VII. CAUSES OF ACTION Count I – Breach of Contract 25. Grosser incorporates all previous paragraphs as if set forth herein. 26. Mango violated the provisions of paragraphs 3.1 and 3.2 of the Franchise Agreement by providing, recommending, and approving an improper location for Grosser’s Store. 27. Mango violated the provisions of paragraph 3.4 of the Franchise Agreement by requiring Grosser to use improper contractors and imposing other improper build-out requirements. 28. Mango violated the provisions of paragraph 5.2 of the Franchise Agreement by failing to provide the proper store opening assistance. DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS Page 9 4841-2644-7638/02505.201 29. Mango violated the provisions of paragraph 5.3 of the Franchise Agreement by failing to provide the proper pre-opening consultation assistance. 30. Mango violated the provisions of paragraph 5.4 of the Franchise Agreement by failing to provide the proper ongoing consultation assistance. 31. Mango violated the provisions of paragraph 9 of the Franchise Agreement by failing to provide the proper advertising and marketing. 32. Mango has improperly charged Grosser a $35,000.00 franchise fee instead of the $17,500 fee applicable to a Non-Traditional Store. Mango has improperly charged Grosser a $10,000 grand opening advertising fee instead of the $5,000.00 fee applicable to his store type. Mango has improperly charged Grosser a 3% brand development fund fee instead of the 0% fee applicable to his store type. Mango has improperly charged Grosser a $9,600.00 project management fee instead of the $0.00 fee applicable to his store type. Mango also improperly charged Grosser a 9% royalty instead of the 8% royalty applicable to his store type. 33. As a direct result of Mango’s breaches of the Franchise Agreement, Grosser has suffered extensive damages in an amount to be proven at trial. Count II – Unjust Enrichment 34. Grosser incorporates all previous paragraphs as if set forth herein. 35. Mango has improperly charged Grosser a $35,000.00 franchise fee instead of the $17,500 fee applicable to a Non-Traditional Store. Under the circumstances, it would unjust for Mango to retain the extra payment of $17,500. Mango has improperly charged Grosser a $10,000.00 grand opening advertising fee instead of the $5,000.00 fee applicable to his store type. Mango has improperly charged Grosser a 3% brand development fund fee instead of the 0% fee applicable to his store type. Mango has improperly charged Grosser a $9,600.00 project DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS Page 10 4841-2644-7638/02505.201 management fee instead of the $0.00 fee applicable to his store type. Mango also improperly charged Grosser a 9% royalty instead of the 8% royalty applicable to his store type. 36. Grosser therefore seeks to recover these amounts from Mango on his unjust enrichment claim. Count III – Fraudulent Inducement 37. Grosser and Phrozen Assets incorporate all previous paragraphs as if set forth herein. 38. Mango made material factual representations to Grosser and Phrozen Assets with the specific intent of inducing them to enter into the Franchise Agreement. 39. Mango’s factual representations were false. 40. Grosser reasonably relied on Mango’s misrepresentations. As a direct result of such reliance, Grosser lost all of his investment in the franchise and Grosser and Phrozen Assets incurred additional operating losses in an amount to be proven at trial. 41. Grosser is entitled to the complete rescission of the Franchise Agreement based upon his reliance upon the fraudulent misrepresentations that induced him to enter into the Franchise Agreement. Rescission entitles Grosser to be put back in the position he was in before signed the Franchise Agreement. Grosser has not received or retained any benefits from the signing of the Franchise Agreement, but is no longer operating a Mango franchise such that any arguable rights or benefits have been returned to Mango. To the extent any alleged benefits or rights are identified that Grosser allegedly has retained, Grosser tenders their return to Mango. 42. Grosser is pursuing rescission of the Franchise Agreement as the primary remedy he seeks, and is pursuing breach of contract claims and other claims identified herein as DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS Page 11 4841-2644-7638/02505.201 alternative remedies. At the time of entry of a final judgment, Grosser will identify the claim and elect the remedy upon which he ultimately decides to recover. Count IV – Fraud 43. Grosser and Phrozen Assets incorporate all previous paragraphs as if set forth herein. 44. Mango made material factual representations to Grosser and Phrozen Assets with the specific intent that they act upon such misrepresentations by moving forward with the build out and operation of a Mango franchise. 45. Mango’s factual representations were false. 46. Grosser and Phrozen Assets reasonably relied on Mango’s misrepresentations. As a direct result of such reliance, Grosser lost all of his investment in the franchise and Grosser and Phrozen Assets incurred additional operating losses in an amount to be proven at trial. Count V – Promissory Fraud 47. Grosser and Phrozen Assets incorporate all previous paragraphs as if set forth herein. 48. Mango made material promises to Grosser and Phrozen Assets with the specific intent that they act upon such misrepresentations by signing the Franchise Agreement and moving forward with the build out and operation of a Mango franchise. 49. Mango made such promises with no intention of honoring them. 50. Grosser and Phrozen Assets reasonably relied on Mango’s fraudulent promises. As a direct result of such reliance, Grosser lost all of his investment in the franchise and Grosser and Phrozen Assets incurred additional operating losses in an amount to be proven at trial. DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS Page 12 4841-2644-7638/02505.201 Grosser and Phrozen Assets also are entitled to the lost profits that the franchise would have earned if Mango’s factual representations had been true. Count VI – Negligent Misrepresentation 51. Grosser and Phrozen Assets incorporate all previous paragraphs as if set forth herein. 52. Mango made material factual representations to Grosser and Phrozen Assets with the intent that they act upon such misrepresentations by moving forward with the build out and operation of a Mango franchise. 53. Mango’s factual representations were false, and Mango acted negligently in making such false representations. 54. Grosser and Phrozen Assets reasonably relied on Mango’s misrepresentations. As a direct result of such reliance, Grosser lost all of his investment in the franchise and Grosser and Phrozen Assets incurred additional operating losses in an amount to be proven at trial. Count VII – Breach of the Covenant of Good Faith and Fair Dealing 55. Grosser and Phrozen Assets hereby reallege and incorporate by reference all previous paragraphs as if fully set forth herein. 56. A franchise agreement is more than the usual contract. It is a compact between a franchisor (Mango) and a franchisee (Grosser) whereby the franchisee is paying a lump sum payment up front and continuing royalties based upon the promises and representations of the franchisor to provide all of the knowledge, expertise and assistance to the franchisee to make his business successful. DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS Page 13 4841-2644-7638/02505.201 57. Mango lied to Grosser, failed to provide the support promised to Grosser, required Grosser to utilize the services of incompetent contractors, required Grosser to expend unnecessary funds and tool other actions which as deprived Grosser of the ability to make a profit. 58. The actions of Mango constitute a breach of the covenant of good faith and fair dealing based upon this franchise relationship. 59. As a result of Mango’s improper actions Grosser and Phrozen Assets were financially harmed. Count VIII – Violation of the Texas Deceptive Trade Practices Act 60. Grosser and Phrozen Assets hereby reallege and incorporate by reference all previous paragraphs as if fully set forth herein. 61. Mango is subject to the Texas Deceptive Trade Practices Act (Tex. Rev. Civ. Stat. Title 2, Chapter 17, Subchapter A §17.01, et seq.) (“TDTPA”) 62. Mango violated §§17.12 & 17.46 of the TDTPA by the misrepresentations that it made to Grosser as set forth above. 63. Grosser and Phrozen Assets are entitled to relief pursuant to §17.50 of the TDTPA. 64. Grosser and Phrozen Assets demand all relief permitted pursuant to the TDTPA, including but not limited to, mental anguish, monetary damages, treble damages, costs, expenses and attorneys’ fees, which are hereby demanded. 65. As a result of Mango’s actions and/or inactions, Grosser and Phrozen Assets have been suffered substantial injuries and are entitled to recover actual and treble damages under the TDTPA. DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS Page 14 4841-2644-7638/02505.201 66. Grosser is entitled to the complete rescission of the Franchise Agreement based upon his reliance upon the fraudulent misrepresentations that induced him to enter into the Franchise Agreement. Rescission entitles Grosser to be put back in the position he was in before signed the Franchise Agreement. Grosser has not received or retained any benefits from the signing of the Franchise Agreement, but is no longer operating a Mango franchise such that any arguable rights or benefits have been returned to Mango. To the extent any alleged benefits or rights are identified that Grosser allegedly has retained, Grosser tenders their return to Mango. 67. Grosser is pursuing rescission of the Franchise Agreement as the primary remedy he seeks, and is pursuing breach of contract claims and other claims identified herein as alternative remedies. At the time of entry of a final judgment, Grosser will identify the claim and elect the remedy upon which he ultimately decides to recover. Count IX – Violation of the Florida Deceptive and Unfair Trade Practices Act 68. Grosser and Phrozen Assets hereby reallege and incorporate by reference all previous paragraphs as if fully set forth herein. 69. Mango is subject to the Florida Deceptive and Unfair Trade Practices Act, Florida Statutes, title XXXIII, Chapter 501, §501.201, et seq. (“FDUTPA”). 70. Grosser and Phrozen Assets are entitled to the protection of FDUTPA for all pre- contractual actions on the part of Mango based upon Florida’s right to protect businessmen who engage in business in the State of Florida. 71. Grosser and Phrozen Assets are entitled to the protection of FDUTPA for all post- contractual actions on the part of Mango based upon Florida’s right to protect businessmen who engage in business in the State of Florida regardless of an contractual provision to the contrary. DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS Page 15 4841-2644-7638/02505.201 72. Mango violated FDUTPA §501.204(1) by engaging in unfair methods of competition, performing unconscionable acts and practices and unfair and deceptive acts in a trade or business. 73. Pursuant to FDUTPA §501.2075 Mango is subject to a civil penalty of $10,000 per violation and to pay attorneys’ fees. 74. Pursuant to FDUTPA §501.2105 Grosser and Phrozen Assets are entitled to reasonable attorney’s fees and costs. 75. Pursuant to FDUTPA §501.211 Grosser and Phrozen Assets are entitled to actual damages, attorneys’ fees and court costs, which are hereby demanded. 76. Pursuant to FDUTPA §501.213 Grosser’s and Phrozen Assets’ remedies pursuant to Pursuant to FDUTPA are in addition to all other remedies. 77. As a result of Mango’s actions and/or inactions, Grosser and Phrozen Assets have been injured in their business and property in an amount in excess of $75,000.00, exclusive of interest and costs. Count X – Violation of the Massachusetts Consumer Protection Act 78. Grosser and Phrozen Assets hereby reallege and incorporate by reference all previous paragraphs as if fully set forth herein. 79. Mango is subject to the Massachusetts Consumer and Business Protection Act, Massachusetts General Laws, Part I, Title XV, Chapter 93A “(MCPA”). 80. Grosser and Phrozen Assets are entitled to the protection of MCPA for all pre- contractual actions on the part of Mango based upon Massachusetts’ right to protect businessmen who engage in business in the State of Florida. DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS Page 16 4841-2644-7638/02505.201 81. Grosser and Phrozen Assets are entitled to the protection of MCPA for all post- contractual actions on the part of Mango based upon Massachusetts’ right to protect businessmen who engage in business in the State of Florida regardless of an contractual provision to the contrary. 82. Mango’s actions and inactions violated the MCPA and is subject to suit pursuant to §9. 83. Pursuant to MCPA §9(3A) Grosser and Phrozen Assets are entitled to double or treble damages, attorneys’ fees and costs, which are hereby demanded. 84. Grosser and Phrozen Assets are entitled to compensation due to their loss of money or property, real or personal, as a result of the use or employment by Mango who engaged in a trade or commerce of an unfair method of competition or an unfair or deceptive act or practice pursuant to §11 of the MCPA. 85. Grosser and Phrozen Assets are entitled to and demands three times their damages as provided by the MCPA. 86. Grosser and Phrozen Assets are entitled to and demands their reasonable attorneys' fees and costs incurred in said action as provided by the MCPA. Count XI – Violation of the Florida Franchises and Distributorships Law 87. Grosser and Phrozen Assets hereby reallege and incorporate by reference all previous paragraphs as if fully set forth herein. 88. Mango is subject to the Florida Franchises and Distributorships law, Florida Statues, 1995, Chapter 817, Section 817.416, et seq. (“FFDL”). 89. Mango is subject to the Florida Deceptive and Unfair Trade Practices Act, Florida Statutes, title XXXIII, Chapter 501, §501.201, et seq. (“FFDL”). DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS Page 17 4841-2644-7638/02505.201 90. Grosser and Phrozen Assets are entitled to the protection of FFDL for all pre- contractual actions on the part of Mango based upon Florida’s right to protect businessmen who engage in business in the State of Florida. 91. Mango violated FFDL §8.17.416(2)(a)(1) by intentionally misrepresenting the known total investment of its franchise to Grosser. 92. Mango violated FFDL §8.17.416(2)(a)(2) by intentionally misrepresenting the prospects or chances for success of its franchise to Grosser. 93. Pursuant to FFDL §8.17.416(3) Grosser and Phrozen Assets are entitled to recover all moneys they invested in the franchise, reasonable attorneys’ fees and reasonable costs. 94. Grosser and Phrozen Assets are entitled to recover all moneys they invested in the franchise, reasonable attorneys’ fees and reasonable costs as provided by the FFDL. Count XII – Breach of Fiduciary Duty 95. Grosser and Phrozen Assets incorporate all previous paragraphs as if set forth herein. 96. Mango agreed to act as the agent of Grosser and Phrozen Assets by agreeing to hold $7500 in escrow unless and until Load King completed its construction punch list and Grosser and Phrozen Assets consented to the release of such funds to Load King. 97. Within the course and scope of itsduties as escrow agent for the $7500, Mango owed fiduciary duties to Grosser and Phrozen Assets. 98. Instead of complying with its fiduciary duties, Mango released the $7500 to Load King, even though the punch lunch was not complete and Grosser and Phrozen Assets had not consented. As a result of Mango’s conduct, Grosser and Phrozen Assets lost the $7500 (which DEFENDANT-COUNTERPLAINTIFF’S THIRD AMENDED ANSWER AND ORIGINAL COUNTERCLAIMS Page 18 4841-2644-7638/02505.201 never should have been paid to Load King) and suffered additional damages from having to spend the time and money necessary to complete the uncompleted punch list items. Count XIII – Exemplary Damages 99. Grosser and Phrozen Assets incorporate all previous paragraphs as if set forth herein. 100. Grosser and Phrozen Assets are entitled to punitive or exemplary damages because Mango intentionally committed fraud. In addition, Mango maliciously intended to harm Grosser and Phrozen Assets financially or acted with gross negligence in regard to their best interests.