Red Lion Hotels Franchising, Inc. v. MAK, LLC, et al., No. 10-35465 (9th Cir. 2011)
Annotate this CaseThis litigation arose out of a franchise agreement between West Coast Hotels and Mahmoud Karimi. The successor in interest to West Coast Hotels was Red Lion, both were incorporated in Washington state. Karimi and his hotel management company (collectively, Karimi) operated a Red Lion franchise in Modesto, California. Red Lion subsequently terminated the franchise and sued Karimi for breach of contract and Karimi counterclaimed, asserting state-law claims, including a claim based on the "franchise bill of rights" of the Washington Franchise Investment Protection Act (FIPA), Wash. Rev. Code 19.100.180, 19.86.020. At issue on appeal was whether a non-Washington franchisee could assert a claim against a Washington franchisor under FIPA's bill of rights. The court concluded that an out-of-state franchisee could assert such a claim. Because FIPA's bill of rights applied to the franchise agreement at issue, the court remanded to the district court for further proceedings. The court agreed with the district court's conclusion that Red Lion was not equitably estopped from terminating the franchise agreement. The court remanded for consideration by the district court of the entry of judgment against Karimi's wife.
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