The Colorado Court of Appeals affirmed the Rule 12(b)(5) dismissal of premises liability and negligence claims, and an award of attorney fees and costs, in favor of a franchisor in a case defended by Shareholder Ashley Larson.
Plaintiff alleged she tripped and fell on a poorly maintained sidewalk adjacent to a franchised restaurant. Plaintiff attached the applicable lease agreement and franchise agreement to her Amended Complaint that asserted claims against the Franchisor. The district court dismissed the Amended Complaint in its totality holding the Franchisor was not a landowner under the PLA, did not owe any duty to Plaintiff, and was not liable in respondeat superior. Plaintiff appealed. After briefing and oral argument, the Colorado Court of Appeals affirmed the trial court’s order and judgment and awarded the Franchisor its attorney fees and costs.
On appeal Plaintiff argued (1) the trial court erred when it concluded the Franchisor wasn’t a “landowner” of the franchise real property under the PLA; (2) the franchisee was an authorized agent of the Franchisor; and (3) the franchisor owed a duty to Plaintiff. The Court of Appeals disagreed as to each argument.
As to the PLA claim, Plaintiff argued that the Franchisor was a landowner because (1) under the franchise agreement, the franchise used the franchisor’s “system” to manage and operate the restaurant and premises; (2) under the franchise agreement, the franchisor was required to provide counseling and advisory services to the franchise; and (3) the franchisor had the power to terminate the franchise agreement if the franchisee failed to perform any of the terms and conditions contained in the franchise agreement. However, the Court of Appeals agreed with the Franchisor that (1) the Franchisor was not in possession of the subject property; (2) the franchisee was not an authorized agent of the Franchisor but simply an independent contractor; and (3) the Franchisor was not legally responsible for the condition of the property or the activities conducted on the land. The Court of Appeals relied upon the appliable lease agreement and franchise agreement provisions to find that Plaintiff had failed to allege facts that, if true, would establish the Franchisor was legally responsible for the where Plaintiff alleged to have fallen.
As to Plaintiff’s respondeat superior claim, the Court found the franchisee was an independent contractor and the Franchisor did not have the right to control the details of the franchisee’s restaurant operations. Without a right to control, the respondeat superior claim failed as a matter of law. Plaintiff’s negligent entrustment claim failed, as well, because the Franchisor was not in control or in possession of the restaurant.
Ultimately, the appellate court affirmed the award of attorney fees at the trial court level and remanded the matter to determine and award the Franchisor its reasonable attorney fees and costs incurred on the appeal.