Carrick v. Franchise Associates, Inc.

CARRICK_V_FRANCHISE_ASSOCIATES.94-637; 164 Vt 418; 671 A.2d 1243

[Opinion Filed 27-Oct-1995]

[Motion for Reargument Denied 11-Dec-1995]


  NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                 No. 94-637


Sandra M. Carrick                            Supreme Court

                                             On Appeal from
     v.                                      Rutland Superior Court


Franchise Associates, Inc.,                  September Term, 1995
Howard Johnson Company, and
Prime Hospitality Corporation


Silvio T. Valente, J.

       Richard S. Bloomer of Lorentz, Bloomer & Harnett, P.C., Rutland, for
  plaintiff-appellant

       Douglas D. Le Brun of Dinse, Erdmann & Clapp, Burlington, for
  defendants-appellees


PRESENT:  Gibson, Dooley, Morse and Johnson, JJ., and Maloney, Supr J., 
          Specially Assigned


       GIBSON, J.   Plaintiff Sandra Carrick appeals from an order of the
  Rutland Superior Court granting summary judgment to defendants on
  plaintiff's claims of franchisor liability under the Dram Shop Act, 7
  V.S.A. §§ 501-507.  We affirm.

       The facts are not in dispute.  On the evening of January 16, 1991,
  Shawn C. Forrest was a customer at the Plug & Feather Lounge in Rutland. 
  Over the course of approximately four hours, employees of the Plug &
  Feather served Mr. Forrest eight mixed drinks, which he consumed.  Mr.
  Forrest then left the Plug & Feather and, while driving south on Route 7 at
  a high rate of speed, ran a red light and collided with a vehicle driven by
  plaintiff's decedent, Michael Carrick.  Mr. Carrick died of the injuries he
  received in the crash.

       The Plug & Feather is located within the Howard Johnson Restaurant in
  Rutland.  The building housing the restaurant and lounge bears the
  orange-tile roof and other trademarks and trade dress of defendant Howard
  Johnson Company (HJC) and is located next door to a Howard

 

  Johnson Motor Lodge.  The Motor Lodge operates under a license from
  defendant Prime Hospitality Corporation (Prime).  The property on which the
  restaurant and lounge are located is leased to Brown & Currier, Inc., which
  operates the restaurant and lounge under a franchise agreement with
  defendant Franchise Associates, Inc. (FAI).  A separate trademark agreement
  between FAI and HJC allows FAI to license the use of the Howard Johnson
  name and trademarks.

       Plaintiff brought suit in Rutland Superior Court against HJC, FAI and
  Prime, alleging that each had violated Vermont's Dram Shop Act by failing
  to take reasonable steps to prevent Brown & Currier, as operators of the
  Plug & Feather, from overserving alcohol to Mr. Forrest.(FN1)  Defendants
  moved for summary judgment on the ground that plaintiff had failed to show
  that defendants, as franchisors, had sold or furnished alcoholic beverages
  to Mr. Forrest, as required by 7 V.S.A. § 501(a).  The court granted
  summary judgment in defendants' favor, and the present appeal followed.

       A motion for summary judgment should be granted only "if the
  pleadings, depositions, answers to interrogatories, and admissions on file,
  together with the affidavits, if any, show that there is no genuine issue
  as to any material fact and that any party is entitled to a judgment as a
  matter of law."  V.R.C.P. 56(c); Ross v. Times Mirror, Inc., No. 94-224,
  slip op. at 2-3 (Vt., July 7, 1995).  The sole issue on appeal is whether
  defendants, as franchisors of the "Howard Johnson" name and trademarks, can
  be held liable under the "furnishing" provision of the Dram Shop Act, which
  states:

      A spouse, child, guardian, employer or other person who is injured in
     person, property or means of support by an intoxicated person, or in
     consequence of the intoxication of any person, shall have a right of action in
     his or her own name, jointly or severally, against any person or persons who
     have caused in whole or in part such intoxication by selling or furnishing
     intoxicating liquor . . . .

7 V.S.A. § 501(a) (emphasis added).

  

       Our previous decisions have defined "furnishing" to include
  "supplying" in a manner other than by selling.  State v. McDermott, 108 Vt.
  58, 60, 182 A. 191, 192 (1936); see also Estate of Kelley v. Moguls, Inc.,
  160 Vt. 531, 535, 632 A.2d 360, 363 (1993) (using terms "furnishing
  alcohol" and "supplying alcohol" interchangeably).  Defendants argue that a
  person "furnishing" alcohol must actually possess and directly provide an
  alcoholic beverage to a consumer.  We agree that the word "furnishing," as
  used in our Dram Shop Act, connotes possession or control of the alcoholic
  beverage by the furnisher.  See Bennett v. Letterly, 141 Cal. Rptr. 682,
  684 (Cal. Ct. App. 1977) ("[t]he word `furnish' implies some type of
  affirmative action on the part of the furnisher"); see also Lather v. Berg,
  519 N.E.2d 755, 761 (Ind. Ct. App. 1988) (under Indiana's Dram Shop Act,
  liability for "furnishing" alcoholic beverages is limited to "supplier
  [who] was `the active means by and through which the liquor [was] placed in
  the custody and control of persons whom the statute was enacted to
  protect'") (quoting Banks v. State, 123 N.E. 691, 693 (Ind. 1919)).  In the
  instant case, there is no allegation that defendants ever had possession of
  the alcoholic beverages that were served to Mr. Forrest by the Plug &
  Feather. To avoid summary judgment, therefore, the record must show that
  defendants had control over the service of alcoholic beverages at the Plug
  & Feather.

       Although discovery had been substantially completed at the time the
  superior court entered summary judgment, the only evidence of defendants'
  control of the Plug & Feather's operation was the franchise agreement
  between FAI and Brown & Currier.  That agreement gave Brown & Currier a
  license to use the name "Howard Johnson" for the "maintenance, conduct and
  operation . . . of a restaurant including serving of alcoholic beverages." 
  FAI, as licensor, had the power to "determine, prescribe and approve
  standards of restaurant services and of the quality for all food, food
  products, beverages and other commodities bought, used, sold, served or
  dispensed on or from the restaurant, [and] standards of service in
  connection with their sale or service"; Brown & Currier, as licensee, was
  required to "conform to said standards, including but not limited to
  compliance with the standards as outlined in the Manuals," and FAI and HJC

 

  could "inspect the conduct and operation of the Licensee's business." 
  (Emphasis added.) Failure to maintain the standards imposed under the
  franchise agreement could have placed Brown & Currier in default of the
  franchise agreement and resulted in termination of the agreement.  The
  franchise agreement further required Brown & Currier to pay FAI a "royalty
  fee" equal to 1.5% of the gross sales of the business, including the sales
  of alcoholic beverages.

       According to plaintiff, the foregoing provisions of the franchise
  agreement demonstrate that defendants exercised such control over the
  operation of the Howard Johnson Restaurant and Lounge that liability for
  overserving Mr. Forrest can be laid directly at their doors.(FN2)  We
  disagree.  The agreement merely provided that FAI, as franchisor, had the
  right to prescribe and approve standards of service.  As the trial court
  concluded, plaintiff offered no evidence that defendants had actually
  prescribed such standards, or if they had, that those standards included
  training bartenders in the proper exercise of discretion in serving
  alcoholic beverages.  The franchise agreement contains a reference to
  "standards as outlined in the Manuals," but as plaintiff conceded at oral
  argument, the Manuals were not presented below and are not part of the
  record on appeal.

       Defendants urge us to hold that franchisors are immune from liability
  under the Dram Shop Act, on the ground that they do not directly furnish
  alcohol to consumers.  We need not reach this question on the record
  presented.  We decide today only that plaintiff failed to present
  sufficient evidence of defendants' control to sustain her claims under the
  Dram Shop Act.

       Affirmed.

                                        FOR THE COURT:


                                        _________________________________
                                        Associate Justice



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                                  Footnotes



FN1.  Plaintiff also brought suit against Shawn Forrest and Brown &
  Currier, Inc.  These claims were disposed of by settlement and are no
  longer before the court.


FN2.  Plaintiff has not attempted to distinguish among the defendants
  by the degree of control they may have exercised.  For example, there is no
  evidence that Prime, as franchisor of the neighboring Howard Johnson Motor
  Lodge, had any role in the franchising or operating of the Howard Johnson
  Restaurant or the Plug & Feather lounge.  We decide today that there was
  insufficient evidence to sustain a claim against any of the three
  defendants.