Jackson Hewitt, Inc. v. Kaman
2011 Fla. App. LEXIS 14237
| Fla. Dist. Ct. App. | 2011Background
- Jackson Hewitt is a national franchisor with franchisees operating offices, including SFS in Sarasota, where JHIS operated as an independent entity; JHIS and Prewett promoted real estate investments to customers.
- Kamans, investors, participated in real estate joint ventures with JHIS beginning in 2004, investing about $575,000; Jackson Hewitt’s name did not appear in joint venture documents or payment instruments.
- Prewett, who controlled daily operations at the Sarasota location, later was revealed to be involved in fraud; Jackson Hewitt had no knowledge of Prewett’s investment activities until after the Kamans’ investments.
- Valmont contacted Jackson Hewitt in 2002 about JHIS-like investment programs; Jackson Hewitt informed her it did not offer such investments and pressed for change of JHIS branding.
- Despite early notices to Scott and others, Jackson Hewitt did not terminate the independent operations or prevent JHIS’s activities; Prewett was arrested in 2006 for money laundering and drug trafficking related to the scheme.
- A jury awarded the Kamans damages tied to the fraud, but Jackson Hewitt sought directed verdicts on negligence and apparent agency; the trial court denied, and the appellate court granted relief on the negligence/apparent agency claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty owed by franchisor to prevent fraud by a franchisee | Kamans contend Jackson Hewitt created a foreseeability-based duty. | Hewitt argues no duty to third parties; no control or special relationship with Kamans exists. | Duty not owed; directed verdict proper. |
| Apparent agency against franchisor by conduct | Kamans allege apparent authority due to franchisee use of Jackson Hewitt branding and knowledge of the venture. | Hewitt asserts no representation, no reliance, and no apparent authority by the franchisor. | Apparent agency claim insufficient; directed verdict appropriate. |
Key Cases Cited
- Curd v. Mosaic Fertilizer, LLC, 39 So.3d 1216 (Fla. 2010) (duty arises from foreseeability; four sources of duty)
- McCain v. Fla. Power Corp., 593 So.2d 500 (Fla. 1992) (duty as threshold legal question; foreseeability framework)
- Bransford v. Bransford, 648 So.2d 120 (Fla. 1994) (logos usage alone not sufficient for apparent agency)
- Vermeulen v. Worldwide Holidays, Inc., 922 So.2d 271 (Fla. 3d DCA 2006) (apparent authority elements and reliance requirements)
- Cullen v. BMW of North America, Inc., 691 F.2d 1097 (2d Cir. 1982) (franchisor not liable for dealer’s fraud; absence of duty to police fraud)