Nashville at law: 2 September 2008

O'Charley's brings Boston Market into franchisee dispute, prominent locals sue trucking company, and more in our weekly roundup of Nashville-area civil litigation

Email | Print By Walker Duncan

Nashville-based restaurant chain O’Charley’s Inc. has sued Boston Market Corp. in Davidson County Chancery Court, landing the latest jab in an ongoing legal tussle between the company and a pair of former franchisees.

O’Charley’s fired the original volley last November when it sued Wi-Tenn, a franchise formed by Richard Arras and Stephen Pahl along with some other investors. Arras and Pahl soon after countersued for fraud.

Wi-Tenn was formed a few years ago to open and operate O’Charley’s stores in Wisconsin and Minnesota, where the company, at the time, had no presence. The stores, according to the lawsuit, failed to perform at the level expected. Despite language in the development agreement that O’Charley’s claims required Arras and Pahl to “devote their full time and best efforts to the supervision and conduct,” of the store, the duo began to explore other business ventures.

In August of 2007, less than a year after the first Wisconsin store opened, Sun Capital – which had recently bought a large stake in Boston Market from McDonald’s Corp. – issued a press release announcing that Arras had been tapped to serve as the new CEO of Boston Market.

O’Charley’s claims in its latest lawsuit, which also names Sun Capital as a defendant, that by attempting to woo Arras, both Boston Market and Sun “induced” the breach of contract that led to its November 2007 suit.

Arras’ talks with Sun about the Boston Market job were “in direct violation of obligations” spelled out in the development and operating agreements, the local company claims.

The lawsuit also claims that the language of the press release, which identified Arras as a former partner in Wi-Tenn, indicates that that both Sun Capital and Boston Market were aware of the relationship between Arras and O’Charley’s and thus culpable.

The counts listed in the lawsuit include tortious interference with contract, statutory inducement of breach of contract and other similar charges. The filing did not specify damages.

Filing the suit on behalf of O’Charley’s are Bass Berry & Sims attorneys Matt Curley and Daniel Hull.

Other cases of note, Aug. 20-26:

Davidson County Chancery Court

• Prominent Nashville couple Clay and Cathy Jackson have filed a lawsuit against locally based trucking outfit Western Express Inc. claiming they are still owed $132,000 as part of a consulting agreement with the company.

According to the suit, both Jacksons entered into a consulting arrangement with Western Express that would yield compensation “equal to $1 million of which $500,000 was payable to Plaintiffs.” Those payments were being made until 2004 when they suddenly stopped.

The complaint asks for the remaining cash allegedly still owed along with pre-judgment interest of 10 percent per year. Filing the case on behalf of the Jacksons are Daniel Paulus and Michael Dolan of the law firm Paulus & Dolan.

Davidson County Circuit Court

• A group called Church Financial Planners is being sued by two local women for fraud. According to the complaint, the defendants represent themselves as consultants and trustees to churches issuing mortgage bonds allowing denominations to finance new buildings. The plaintiffs claim to have purchased first-mortgage bonds of the Harvey Church of Christ in Harvey, Ill. Between the two, they invested $56,000 in 2004.

But after a time, the interest payments on the notes became sporadic and then ceased altogether. When the women inquired with the church, the complaint claims that they were told the no bond had ever been issued in their names and that all of the bonds issued in 2004 had been redeemed by April of 2005. The lawsuit seeks $150,000 in compensatory damages and $1.5 million in punitive damages.

• And finally, we have two interesting items involving a local security company. Chancellor Russell Perkins last week filed a temporary restraining order against Securitywise Inc., telling the company it cannot conduct its business until it shows proof of worker’s compensation insurance.

The complaint stems from an on-the-job injury suffered by one the company’s employees working at Fisk University in January of this year. In July, an insurance company sued Securitywise, accusing it of workers’ compensation fraud, among other things.

The Tennessee Department of Labor & Workforce Development then followed up, saying the company has since May of last year repeatedly failed to provide proof that its employees are covered. The company is now enjoined from doing business until it produces the necessary paperwork.

Meanwhile, in Circuit Court, Securitywise – along with one of its guards – is the target of a suit filed by the estate of Adam Villegas.

Villegas was shot and killed in May during an altercation with Securitywise guard Jeremy Holmes in the parking lot of a Nippers Corner bar. The plaintiffs are suing Holmes for his conduct, along with his employer and the owner of the property where Villegas was killed.