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Jack In Box Inc. v. Mehta

United States District Court, N.D. California, San Jose Division

April 9, 2014

JACK IN THE BOX INC., Plaintiff(s),
v.
DEEPAK MEHTA, et. al., Defendant(s).

ORDER GRANTING REQUEST FOR RULING; DENYING MOTION TO INTERVENE; DENYING MOTION TO AMEND OR ENFORCE TURNOVER ORDER [DOCKET ITEM NO(S). 50, 52, 92]

EDWARD J. DAVILA, District Judge.

Plaintiff Jack in the Box Inc. ("JIB") filed a Complaint on September 25, 2013, asserting causes of action for breach of contract, claim and delivery, violations of the Lanham Act, and violation of California's Unfair Competition Law against Defendants Deepak Mehta, Kiran Mehta, Mehta Enterprises, Inc. and Deepak Enterprises, Inc. (collectively, "Defendants"). See Docket Item No. 1. In that Complaint, JIB alleges that Defendants, who are former operators of certain Jack in the Box restaurants in Northern California, [1] breached written franchise and lease agreements by failing to make timely payments.

Presently before the court are two motions and one request filed by third-party McClane Foodservice, Inc. ("McLane"). See Docket Item No. 50. For the reasons explained below, McLane's request for ruling will be granted, but its motion to intervene and motion to amend or enforce a court order will be denied.

I. FACTUAL AND PROCEDURAL BACKGROUND

According to its motion, McLane is a "multibillion-dollar supply chain services leader providing foodservice supply chain solutions for chain restaurants throughout the United States." In 2010 and 2011, McLane entered into two agreements to provide food and other supplies to Defendant's Jack in the Box restaurants, for which Defendants agreed to pay McLane.

McLane delivered food and supplies pursuant to its agreements with Defendants through on or about October 10, 2013. However, unbeknownst to McLane and before it was paid for all of its deliveries, JIB terminated its franchise agreements with Defendants, initiated the instant lawsuit, and took over operations of the restaurants pursuant to a court order entered in lieu of a receivership.[2] Since McLane did not have an agreement for payment from JIB and since Defendants were no longer operating the restaurants, it was left with outstanding invoices totaling $508, 296.51 for one agreement and $36, 301.41 for the other.

Pursuant to the Turnover Order, JIB voluntarily paid McLane $127, 000.00 for the inventory in the restaurants as of its takeover on October 12, 2013. Accordingly, the total principal amount due and owing to McLane is $409, 895.13, plus interest and late charges. McLane now seeks to intervene in this action to recover the remaining amount from JIB.

II. LEGAL STANDARD

A third party may intervene in a case either as a matter of right under Federal Rule of Civil Procedure 24(a) or with the court's permission pursuant to Federal Rule of Civil Procedure 24(b). To establish the right to intervene under Rule 24(a)(2), a third party applicant must establish four elements:

(1) its motion must be timely;
(2) the applicant must claim a "significantly protectable" interest relating to the property or transaction which is the subject of the action;
(3) the applicant must be so situated that the disposition of the action may as a practical matter impair or impede its ability to protect that interest; and
(4) the applicant's interest must be inadequately represented by the parties to the action. Sierra Club v. U.S. Envtl. Prot. Agency , 995 F.2d 1478, 1481 (9th Cir. 1993).

"While an applicant seeking to intervene has the burden to show that these four elements are met, the requirements are broadly interpreted in favor of intervention." Citizens for Balanced Use v. Montana ...


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