Katie Mulvaney of the Providence Journal reports that Irwin Barkan claimed Dunkin’ Donuts set up his downtown Providence franchises to fail, an allegation dismissed by a federal court judge. The federal judge threw out a Vermont businessman’s suit accusing Dunkin’ Donuts of knowingly setting up his franchises to fail, finding there was no evidence the coffee shop chain contributed to his financial losses.
Senior U.S. District Judge Ronald Lagueux ruled Wednesday, midway through trial in U.S. District Court, that Irwin Barkan, of Waitsfield, Vt., had not proven that Dunkin’ Donuts engaged in fraud or breached its contract with him, according to transcripts of the proceedings.
It was Barkan’s second attempt to win more than $13 million in damages from the chain. Lagueux previously declared a mistrial in December after learning that jurors had discussed the case among themselves.
In 2002, Barkan bought the rights to run four poorly performing Dunkin’ Donuts shops in downtown Providence, court records show. The two sides argued for months over franchise fees, loan payments and rent. The Canton, Mass.-chain wanted nearly $2 million from Barkan and tried to revoke his operating permits.
The case landed in U.S. Bankruptcy Court, where three Rhode Islanders ended up with Barkan’s shops after a bitter process in which a judge rejected one sale amid alleged bid rigging.
Eventually, Barkan’s shops were auctioned off for $4.5 million and he has been trying to recoup money from Dunkin’ Donuts since. The two sides failed to reach an agreement and Barkan filed suit in U.S. District Court in 2005 alleging the chain had breached its agreement to ensure that he got refinancing to keep his franchises afloat.
Lagueux’s ruling came Wednesday, after Barkan presented his evidence to jurors nine days into the trial.
“There is absolutely no evidence of fraud,” Lagueux said. “That’s a red herring.”
The judge added that the only evidence Barkan presented as to why a lender wouldn’t restructure Barkan’s loan was that the Vermont businessman had no credit and no money left.
Dunkin’ Donuts praised the decision.
“From the beginning, we believed that Mr. Barkan’s lawsuit against Dunkin’ Brands was frivolous, and we are very pleased that Judge Lagueux agreed with our position,” said Karen Raskopf, senior vice president of communications for Dunkin’ Brands Inc. The judge, she said, confirmed the company’s position that it did not engage in fraud or breach its contract. It reaffirmed, she added, that the company had done its best to help Barkan restructure his debts, adding that his franchises are “flourishing under new franchisee management”.
Barkan, 58, expressed dismay.
“I’m very disappointed,” Barkan said Thursday as he and his wife headed back to Vermont. “I’d have a lot more confidence in a decision by a jury. That’s why we pursued this case.”
Barkan said he had lost “millions and millions of dollars” in business dealing with Dunkin’ Donuts and that the day he signed on with the company was the worst of his life. Both he and his lawyer, Elizabeth M. Noonan, of Adler Pollock & Sheehan, promised to appeal.