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Lawsuits
6 Months Ended
Jun. 30, 2011
Lawsuits

The Company is 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 on their fraud claims. As a result, the Plaintiffs’ allegations of fraud against the Company and certain of its officers were determined to be without merit. The Company’s counterclaims against the Plaintiffs for breach of contract and other related claims remain pending.

 

The Complaint was originally filed against the Company and certain of its officers and certain institutional lenders. The Plaintiffs are former franchisees of the Company’s traditional location venue. Initially there were approximately 14 groups of franchisee-Plaintiffs. Since the inception of the lawsuit, the Court has dismissed the claims against the institutional lenders. In addition, one group of franchisee-Plaintiffs voluntarily dismissed its claims against the Company and the Court held another group of franchisee-Plaintiffs in contempt and dismissed its claims with prejudice.

 

The Plaintiffs allege that the Defendants fraudulently induced them to purchase franchises for traditional locations through misrepresentations and omissions of material facts regarding the franchises. As relief, the Plaintiffs sought compensatory and punitive damages in addition to court costs and/or prejudgment interest. The Plaintiffs that remained in the case, following the voluntary and involuntary dismissals described above, claimed actual damages in the amount of $5.1 million, which has been discharged as a result of the summary judgment Order in favor of the Company issued December 23, 2010.

 

The Company filed counterclaims for damages for breach of contract against all of the Plaintiffs in the aggregate approximate amount of $3.6 million plus attorney’s fees, cost of collection and punitive damages in certain instances. The Company intends to prosecute the counterclaims and obtain and execute on any judgments against all counterclaim Defendants.

 

In addition to the above actual fraud claims, one group of franchisee-Plaintiffs asserted a separate claim under the Indiana Franchise Act. The Court’s December 23, 2010 Order denied the Company’s motion for summary judgment as to the Indiana Franchise Act claim finding the existence of a genuine issue of material fact and did not render any opinion on the merits of that claim. The Company denies liability on this claim and will continue to vigorously prosecute its defenses against this claim.

 

The Plaintiffs filed a motion with the Court asking it to correct errors and to reconsider the Order for summary judgment. The Company opposed that motion and a hearing on the motion was held on March 24, 2011. In accordance with trial rule 53.3, if the Judge does not rule on the motion to reconsider within 30 days, the motion is deemed denied. Therefore the motion was deemed denied on April 25, 2011. In accordance with the same trial rule, the 30 days within which a notice of appeal can be filed starts running the day it was deemed denied. Therefore, the deadline passed on May 25, 2011 for a notice of appeal to be filed and none was filed.

 

On June 28, 2011 Plaintiffs filed a motion with the Court asking the Judge to reconsider his Order of December 23, 2010 making it an “Interlocutory” order instead of a “Final” order. The Company filed its response opposing that motion. The Judge set a hearing on that motion for September 26, 2011. However, on June 8, 2011 Plaintiffs filed an appeal with the Indiana Court of Appeals. On July 6, 2011 the Clerk of the trial court issued a notice of completion of the Clerk’s record. On July 11, 2011 the Company filed a motion with the trial court to vacate the Order setting the hearing for September 26, 2011 on Plaintiff’s motion to reconsider the Order of December 23, 2010 on the grounds that the trial court no longer had jurisdiction over this issue since it completed the Clerk’s record to the Indiana Court of Appeals. On July 14, 2011 the Company filed a motion with the Indiana Court of Appeals to dismiss the appeal on the grounds that the appeal was filed after the deadline of May 25, 2011 for filing of an appeal. On July 25, 2011 the Court granted the Company’s motion to vacate the order setting the hearing for September 26, 2011. On July 29, 2011, Plaintiffs filed a motion with the Indiana Court of Appeals to voluntarily dismiss the appeal. Also, on July 29, 2011, Plaintiffs filed a motion with the trial court to reset the hearing on the motion to reconsider the Order of December 23, 2010. The Company intends to oppose the motion for voluntary withdrawal of appeal in the Indiana Court of Appeals asking the Court to rule on the Company’s motion to dismiss the appeal with prejudice. If the Indiana Court of Appeal grants the Company’s motion to dismiss the appeal with prejudice the motion to reset the hearing to reconsider the Order of December 23, 2010 will become moot.

 

On June 10, 2011 the Court granted permission for the Company to file summary judgment motions on the Company’s counterclaims against the Plaintiffs as opposed to jury trial. The Company will be filing summary judgment motions. The judge has set a hearing on the summary judgment motions for December 6, 2011.