Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_04-cv-06151/USCOURTS-caed-1_04-cv-06151-2/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1442 Petition for Removal- Breach of Contract

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

GURSEWAK SINGH AULAKH,

 Plaintiff,

 v. 

7-ELEVEN, INC., and DOES 1

through 30, inclusive

 Defendants.

01:04-CV-06151 OWW LJO

ORDER GRANTING IN PART AND

DENYING IN PART

DEFENDANT/COUNTERCLAIMANT’S

MOTION FOR SUMMARY JUDGMENT

(DOC. 19)

I. INTRODUCTION

This is a contract dispute between 7-Eleven, Inc. (“7-

Eleven” or Defendant) and Gursewak Singh Aulakh (Plaintiff or

“Aulakh”), a former 7-Eleven franchisee. In 1999, Plaintiff

entered into a Franchise Agreement with 7-Eleven to operate a 7-

Eleven franchise in Lamont, California. In December 2003,

Plaintiff and 7-Eleven began to discuss the possible termination

of the Franchise Agreement. In February 2004, Plaintiff and his

business partner entered into a Sales Contract for the purchase

of the Lamont property. At the closing on this Sales Contract,

Plaintiff signed a Rider, which purports to terminate all of

Plaintiff’s rights under the Franchise Agreement. Plaintiff also

signed a mutual Release which releases both the parties from all

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claims and liabilities existing as of that date, with some

limited exceptions, including a provision concerning the

reconciliation of the financial records at the store. 

Plaintiff filed suit against 7-Eleven in the Superior Court

for the County of Kern on July 15, 2004, setting forth various

claims for breach of contract and rescission. (Doc. 1, Notice of

Removal, Ex. 1, filed Aug. 27, 2004.) The first cause of action

alleges that 7-Eleven breached the terms of the Franchise

Agreement by terminating Aulakh as a franchisee without

satisfying the conditions of the Franchise Agreement. (Id. at

¶¶5-14.) The second cause of action alleges that 7-Eleven

breached the Franchise Agreement by refusing to refund any

portion of the franchise fee paid by Plaintiff and by refusing to

allow Plaintiff to transfer to another 7-Eleven store. (Id. at

¶¶15-20.) The third claim alleges that Plaintiff breached the

Sales Contract by removing the existing gasoline canopy from the

Premises. (Id. at ¶¶21-23.) The fourth cause of action is for

rescission of the Rider and Release on the grounds that

Plaintiff’s consent was obtained through duress. (Id. at 28-33.)

Defendant removed on the basis of diversity (Doc. 1), and

filed two counterclaims. (Doc. 8, filed Dec. 2, 2004.) The

first counterclaim is for setoff in the amount of $6,922.35, the

amount 7-Eleven claims Aulakh was indebted to 7-Eleven based on

the final financial reconciliation of the store. The second

counterclaim alleges that Aulahk breached the franchise agreement

by failing to pay 7-Eleven the $6,922.35 net worth deficiency

from the store. 

7-Eleven now moves for summary judgment on all claims,

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arguing (1) that the Rider and Release entitles 7-Eleven to

judgment on Plaintiff’s breach of contract and rescission claims

and (2) that there is no dispute that Plaintiff owes 7-Eleven

$6,922.35. Plaintiff, who filed papers related to the present

motion pro se, opposes summary judgment, asserting that he signed

the Rider and Release under duress and that there are disputed

facts regarding the accounting that forms the basis for 7-

Eleven’s counterclaims. Oral argument was heard on November 7,

2005. 

In his opposition and at oral argument, Plaintiff requested

additional time to have his accountant and a lawyer analyze his

financial records so that he could more effectively contest 7-

Eleven’s demand for $6,922.35. The court ordered Plaintiff to

have his attorney enter an appearance within 24 hours of the

hearing. (See Doc. 30.) Indira Lahiri, Esq. timely entered his

appearance for Plaintiff. A telephonic status conference was

held on December 1, 2005, at which time Plaintiff was granted

until December 15, 2005 to file any supplemental opposition to

the motion for summary judgment. (Doc. 36.) Plaintiff failed to

file any supplement. 

II. FACTUAL BACKGROUND

On March 16, 1999, Plaintiff entered into a Franchise

Agreement with 7-Eleven to operate a 7-Eleven store in Lamont,

California. (UMF No. 1.) During the course of Plaintiff’s

tenure as a franchisee, Plaintiff was consistently one of the

lowest performers in his sales district. (Austin Decl. ¶3.) In

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December 2003, Michael Austin, 7-Eleven’s Market Manager, and

David Lisuk, a Field Consultant, met with Plaintiff to discuss

the several possible options to terminate the Franchise

Agreement. (Id. at ¶4.) At this meeting, Austin apparently

informed Plaintiff that, before 7-Eleven would agree to any

resolution, Plaintiff would have to sign a mutual release. (Id.) 

Ultimately, Plaintiff offered to purchase the store property

so that he could run the business as an independent franchise. 

(Id. at ¶5.) Mr. Austin negotiated this transaction on behalf of

7-Eleven. The parties eventually signed three documents: (1) a

Sales Contract transferring the real property to Mr. Aulakh (2) a

Rider to the Sales Contract (“Rider”), and (3) a Mutual

Termination and Release (“Release”).

Among other terms, the Rider provides:

Pursuant to the termination of the Franchise Agreement,

Aulakh acknowledges that, except as provided herein,

all of Aulakh’s rights under the Franchise Agreement

are terminated, including, but not limited to, any

rights to renewal of transfer of the franchise, refund

of all or any portion of the franchise fee paid by

Aulakh, any rights granted under the Long-Term Tenure

Rebate Program or any other program offered by 7-

Eleven. Aulakh will no longer be a 7-Eleven franchisee

at any location following the Termination Date and will

receive no compensation other than what is described in

this Agreement. 

(Id. at Ex. E ¶6.)

The Release provides in pertinent part:

1. 7-Eleven, Inc. (“7-Eleven”) and the undersigned

individual(s) (the “Franchisee”) hereby mutually

agree that, under that certain 7-Eleven Store

Franchise Agreement between the undersigned

parties, dated march 16, 1999, as amended (the

“Agreement”) and terminated effective 6:45 a.m. on

April 15, 2004, and which covered 7-Eleven Store

no. 25955C (the “Store”), except as specifically

provided in Paragraphs 8 and 9 hereof, ALL claims,

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demands, rights, duties, guarantees, obligations,

debts, dues, sums of money, accounts, covenants,

contracts, controversies, assignments, suits or

causes of action (collectively, the “claims”) of

every kind and nature, however, or wherever

arising, whether known or unknown, foreseen or

unforeseen, direct, indirect, contingent or

actual, liquidated or unliquidated, which have

arisen or which might or could arise under

Federal, state, or local law from any

relationship, incident, or transaction arising or

occurring under the Agreement or under any

agreement in connection therewith, or from the

execution, operation under or termination of the

Agreement, and any services to the franchisee

thereunder or under any prior agreement relating

to the Store, existing or arising at any time

prior to or at the time of the execution hereof,

are hereby mutually satisfied, acquitted,

discharged and released by Franchisee and 7-

Eleven, it being the express intention of

Franchisee and 7-Eleven that this release be as

broad as permitted by law. 

2. Franchisee intends this release to acquit and

forever fully discharge 7-Eleven and any parent

and direct or indirect subsidiary thereof, any

division, affiliate, and its and their respective

officers, directors, shareholders, partners,

agents, employees, heirs, legal representatives,

successors and assigns. 

3. Franchisee and 7-Eleven represent and warrant that

execution hereof is free and voluntary and that no

inducements, threats, representations, or

influences of any kind were made or exerted by or

on behalf of either party.

***

8. NOTWITHSTANDING ANY OF THE FOREGOING, THIS RELEASE

DOES NOT INCLUDE: 

***

(b) any amounts to either party (the “Final

Settlement”) as reflected on the final

Financial Statements prepared by 7-Eleven.

(Id. at Ex. F. (emphasis added).)

Among other provisions, the Sales Contract contained terms

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concerning the removal of gasoline equipment:

14. Removal of Motor Fuels Equipment and Testing

Seller has commenced work to remove the Motor

Fuels Equipment located on, about or under the

Property. Seller agrees that the gasoline canopy

will remain in place at the Property provided that

it does not interfere with the removal of the

Motor Fuels Equipment. Seller estimates that the

removal, testing and procuring of test results

should be completed on or before April 30, 2004. 

In connection with the removal of the Motor Fuels

Equipment, Seller will perform such soil and/or

groundwater tests as Seller deems appropriate, and

upon request from Buyer will provide Buyer with

the results thereof. If the results of such tests

and/or assessments reveal that there is no

contamination, then the parties shall proceed with

the Closing. If, however, such tests reveal

contamination, Seller shall initiate and complete,

at its cost and expense, certain remedial measures

as required by the appropriate authorities. In

this instance, the parties may proceed to Closing

provided that a mutually-acceptable Access

Agreement is executed at the Closing. 

(Sales Contract at ¶14.) Prior to closing, Plaintiff was aware

that 7-Eleven had already removed its gas canopy at the store. 

Plaintiff also acknowledged that he knew prior to the closing

that 7-Eleven intended to terminate the Franchise Agreement and

did not intend to permit Aulakh to transfer to another 7-Eleven

store. (Aulakh Depo. at 110, 139.)

After the closing, 7-Eleven reconciled the financial records

of the Lamont Store. As a result, 7-Eleven asserts Plaintiff

owes 7-Eleven $6,922.35. (Austin Decl., ¶12, Ex. G.) 

Mr. Austin maintains that it is his practice to provide

copies of all documents in advance to any franchisee with whom he

is negotiating a deal. Mr. Austin recalls having provided Mr.

Aulakh copies of a draft of the Sales Contract, the Release, and

the Rider, prior to closing. Mr. Aulakh maintains that he was

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first informed that 7-Eleven would require a Release at the

Closing. According to Mr. Aulakh, Mr. Austen stated that “they

would not close escrow unless I signed a release document, and

that if I did not sign the release document they would sell the

property to somebody else who they had available, and thereby

they put great pressure and duress upon me to sign the settlement

agreement.” (Aulakh Decl. at ¶6.) Mr. Aulakh “had no lawyer or

financial adviser representing [him] or helping [him] negotiate

this transaction with 7-Eleven.” (Id. at ¶9.) 

III. STANDARD OF REVIEW

Summary judgment is warranted only “if the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact.” Fed. R. Civ. P. 56(c);

California v. Campbell, 138 F.3d 772, 780 (9th Cir. 1998). 

Therefore, to defeat a motion for summary judgment, the nonmoving party must show (1) that a genuine factual issue exists

and (2) that this factual issue is material. Id. A genuine

issue of fact exists when the non-moving party produces evidence

on which a reasonable trier of fact could find in its favor

viewing the record as a whole in light of the evidentiary burden

the law places on that party. See Triton Energy Corp. v. Square

D Co., 68 F.3d 1216, 1221 (9th Cir. 1995); see also Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 252-56 (1986). The evidence

must be viewed in a light most favorable to the nonmoving party.

Indiana Lumbermens Mut. Ins. Co. v. West Oregon Wood Products,

Inc., 268 F.3d 639, 644 (9th Cir. 2001), amended by 2001 WL

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1490998 (9th Cir. 2001). Facts are “material” if they “might

affect the outcome of the suit under the governing law.” 

Campbell, 138 F.3d at 782 (quoting Liberty Lobby, Inc., 477 U.S.

at 248). 

The moving party bears the initial burden of demonstrating

the absence of a genuine issue of fact. Devereaux v. Abbey, 263

F.3d 1070, 1076 (9th Cir. 2001). If the moving party fails to

meet this burden, “the nonmoving party has no obligation to

produce anything, even if the nonmoving party would have the

ultimate burden of persuasion at trial.” Nissan Fire & Marine

Ins. Co., Ltd. v. Fritz Cos., Inc., 210 F.3d 1099, 1102-03 (9th

Cir. 2000). However, if the nonmoving party has the burden of

proof at trial, the moving party must only show “that there is an

absence of evidence to support the nonmoving party’s case.”

Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once the

moving party has met its burden of proof, the non-moving party

must produce evidence on which a reasonable trier of fact could

find in its favor viewing the record as a whole in light of the

evidentiary burden the law places on that party. Triton Energy

Corp., 68 F.3d at 1221. The nonmoving party cannot simply rest

on its allegations without any significant probative evidence

tending to support the complaint. Devereaux, 263 F.3d at 1076.

[T]he plain language of Rule 56(c) mandates the

entry of summary judgment, after adequate time

for discovery and upon motion, against a party

who fails to make a showing sufficient to

establish the existence of an element essential

to the party's case, and on which that party

will bear the burden of proof at trial. In such

a situation, there can be “no genuine issue as

to any material fact,” since a complete failure

of proof concerning an essential element of the

nonmoving party’s case necessarily renders all

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other facts immaterial.

Celotex Corp., 477 U.S. at 322-23.

“In order to show that a genuine issue of material fact

exists, the nonmoving party must introduce some ‘significant

probative evidence tending to support the complaint.’” Rivera v.

AMTRAK, 331 F.3d 1074, 1078 (9th Cir. 2003) (quoting Liberty

Lobby, Inc., 477 U.S. at 249). If the moving party can meet his

burden of production, the non-moving party “must produce evidence

in response....[H]e cannot defeat summary judgment with

allegations in the complaint, or with unsupported conjecture or

conclusory statements.” Hernandez v. Spacelabs Med., Inc., 343

F.3d 1107, 1112 (9th Cir. 2003). “Conclusory allegations

unsupported by factual data cannot defeat summary judgment.” 

Rivera, 331 F.3d at 1078 (citing Arpin v. Santa Clara Valley

Transp. Agency, 261 F.3d 912, 922 (9th Cir. 2001)).

The more implausible the claim or defense asserted by the

nonmoving party, the more persuasive its evidence must be to

avoid summary judgment. See United States ex rel. Anderson v. N.

Telecom, Inc., 52 F.3d 810, 815 (9th Cir. 1996). Nevertheless,

“[t]he evidence of the non-movant is to be believed, and all

justifiable inferences are to be drawn in its favor.” Liberty

Lobby, Inc., 477 U.S. at 255. A court’s role on summary judgment

is not to weigh evidence or resolve issues; rather, it is to find

genuine factual issues. See Abdul-Jabbar v. G.M. Corp., 85 F.3d

407, 410 (9th Cir. 1996).

IV. ANALYSIS

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A. Are Aulakh’s Breach of Contract Claims Barred by the

Rider and Release?

7-Eleven argues that all of Aulakh’s claims, based upon the

Franchise Agreement, are barred by the Rider and Release. Aulakh

does not challenge the potential effect of the language in the

Rider and Release. Rather, Aulakh maintains that he signed the

Rider and Release under duress and should therefore be relieved

from their operation and effect 

It not disputed that on April 15, 2004, Plaintiff signed the

Release and Rider, the terms of which are also undisputed. 

There is also no dispute that, absent any reason to invalidate

the release agreement, written releases are enforceable under

California law. See Cal. Civ. Code § 1541 (“An obligation is

extinguished by a release therefrom given to the debtor by the

creditor, upon a new consideration, or in writing, with or

without new consideration.”). 

B. Facts Applicable to Mr. Aulakh’s Claim of Duress.

Mr. Aulakh maintains that he signed the contracts under

duress and presents his own deposition and declaration in support

of this contention. First, Mr. Aulakh asserts that he was not

provided copies of the Rider and Release prior to the closing

date. (Aulakh Decl. at ¶6.) Mr. Austen disputes this assertion

and recalls that he did indeed deliver drafts of these documents

to Mr. Aulakh. (Austin Decl. at ¶10.) 7-Eleven provides no

documentary evidence to support this contention, however. 

Whether Mr. Aulakh possessed the documents in advance of the

closing is in dispute. Accordingly, the inference must be drawn

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in favor of Mr. Aulakh’s on this subject. 

It is undisputed that Mr. Aulakh “had no lawyer or financial

adviser representing [him] or helping [him] negotiate this

transaction with 7-Eleven.” (Aulakh Decl. at ¶9.) Mr. Austen

maintains, however, that “at no point during the sales process

did Mr. Aulakh ask for more time to read the Sales Contract, the

Rider to the Sales Contract, or the Release, or to have an

attorney (or other advisor) review the documents on his behalf.” 

(Austin Decl. at ¶11.)

Mr. Aulakh also asserts that the circumstances of the

closing and Mr. Austen’s conduct placed him under financial

duress. According to Mr. Aulakh, Mr. Austen stated that 7-Eleven

“would not close escrow unless [Aulakh] signed a release

document, and that if [he] did not sign the release document they

would sell the property to somebody else who they had available,

and thereby they put great pressure and duress upon me to sign

the settlement agreement.” (Aulakh Decl. at ¶6.) Mr. Aulakh

further asserts that

The duress and corrosion [sic] were increased by the

fact that I had already paid them between $30,000.00

and $35,000.00 for the closing of the store, and a

transfer to 7-Eleven of the lottery equipment, food

stamps, and credit cards, and had purchased the ATM

machines which were all in the store at the time. I

therefore financially committed to buying the store and

running the business and therefore I had no alternative

but to sign the release document, which I did under

protest and under threat and with out [sic] my consent,

in order that I could continue with my lively hood

[sic] by running a store at that location to provide

for myself and my family. 

(Aulakh Decl. at ¶6.). 7-Eleven does not deny that Mr. Aulakh

might have felt financial pressure to sign the Release and rider. 

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Mr. Austin does deny ever using any force “either physically or

otherwise” to convince Mr. Aulakh to sign the contracts. (Austin

Decl. at ¶ 11). Therefore, Mr. Aulakh’s contention that he was

under financial pressure to sign the documents is undisputed for

the purposes of this motion. The question remains, however,

whether such financial pressure constitutes “duress” under

California law.

C. The Record Does Not Support a Finding of Economic

Duress.

California recognizes two forms of duress that, under

certain circumstances, may justify the invalidation of an

otherwise valid agreement. First, a court may invalidate an

agreement where one party was subject to physical coercion. See

Cal. Civ. Code § 1569 (defining duress as unlawful or fraudulent

confinement of the person or unlawful detention of property). No

physical coercion is alleged in this case. Second, an agreement

may be invalid if it is the result of economic coercion. 

Economic duress “may arise from an act that is so coercive as to

cause a reasonably prudent person, faced with no reasonable

alternative, to agree to an unfavorable contract.” Tarpy v.

County of San Diego, 110 Cal. App. 4th 267, 277 (2003) (internal

quotations and citations omitted); see also CrossTalk Prod., Inc.

v. Jacobson, 65 Cal. App. 4th 631, 644 (1998)(“When a party

pleads economic duress, that party must have had no reasonable

alternative to the action it now seeks to avoid (generally,

agreeing to a contract). If a reasonable alternative was

available, and there hence was no compelling necessity to submit

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to the coercive demands, economic duress cannot be

established.”). To set aside a contract because of economic

duress, a court must determine (1) that a coercive act took

place; and (2) that the act left the party pleading duress with

no “reasonable alternative” to the agreement. 

A court may find a coercive act took place if the allegedly

coercive party asserted “a claim known to be false” or made “a

bad faith threat to breach a contract or to withhold a payment,” 

See Rich & Whillock, Inc., Ashton Develop., Inc., 157 Cal. App.

3d 1154, 1158-59 (1984)(citing other cases). “Whether the party

asserting economic duress had a reasonable alternative is

determined by examining whether a reasonably prudent person would

follow the alternative course, or whether a reasonably prudent

person might submit.” CrossTalk, 65 Cal. App. 4th at 644. For

example, “a reasonably prudent person...may have no reasonable

alternative but to succumb when the only other alternative is

bankruptcy or financial ruin.” Rich & Whillock, 157 Cal. App. at

1159. 

Here, there is no evidence that 7-Eleven engaged in any

conduct that constitutes a coercive act. It did not make a false

claim or a bad faith threat. Moreover, even if 7-Eleven had

engaged in a coercive act, Plaintiff has failed to present any

evidence that suggests he had no “reasonable alternative” to the

agreement. Mr. Aulakh asserts that he “already paid [7-Eleven]

between $30,000.00 and $35,000.00 for the closing of the store,

and a transfer to 7-Eleven of the lottery equipment, food stamps

and credit cards, and had purchased the ATM machines which were

all in the store at the time. I therefore financially committed

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to buying the store and running the business....” (Aulakh Decl.

at ¶ 6). 

The possible loss of such sunk costs cannot, on its own,

justify a finding that Mr. Aulakh had no “reasonable alternative

to the agreement.” For example, in River Bank America v. Diller,

38 Cal. App. 4th 1400 (1995), developers claimed to have reached

a tentative joint venture agreement with a bank and complained

that they had incurred development expenses and other obligations

as a result. The bank then changed the terms of the joint

venture agreement. Defendants claimed they executed the revised

agreements under economic duress, because they had difficulty

finding alternative financing. The court found those facts could

not establish a defense based on economic duress. Id. at 1425. 

Relying on London Homes, Inc. v. Korn, 234 Cal. App. 2d 233

(1965), the River Bank court concluded that a claim of economic

duress requires more than mere proof that the opposing party

takes a different view of its contract rights than the party

claiming duress:

[In Korn] the court held there was no “duress” or

“business compulsion” as a matter of law, where a

plaintiff voluntarily agreed to pay more for land than

it had originally agreed. At the time the sellers

demanded more money per acre than had originally been

agreed in the deposit receipt, the buyer/plaintiff

could have brought suit against them for damages, but

for what seemed good business reasons, elected not to

do so. Instead, the buyer/plaintiff paid the higher

price, even though it was not required to do so. It is

not duress to take a different view of contract rights,

even though mistaken, from that of the other

contracting party, and it is not duress to refuse, in

good faith, to proceed with a contract, even though

such refusal might later be found to be wrong. A mere

threat to withhold a legal right for the enforcement of

which a person has an adequate [legal] remedy is not

duress.

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River Bank, 38 Cal. App. 4th at 1425 (emphasis added)(internal

citations and quotations omitted). The River Bank court then

concluded:

This case falls squarely within the holding of Korn.

Consequently, there was no “economic duress” upon which

an estoppel can be based. If defendants believed they

had in fact reached a “joint venture” agreement with

River Bank, they could have immediately sued to enforce

that agreement once River Bank reneged.

Id.

Mr. Aulakh’s claim of duress, even viewing the disputed

facts in a light most favorable to him, similarly fails to

establish that he had “no reasonable alternative.” Rather than

signing the agreement, Mr. Aulakh could have immediately sued to

enforce the Franchise Agreement. Nor was he forced to by the

fixtures. it was his choice to seek to continue in the

convenience store business. He does not suggest that 7-Eleven

requires he do so. There is nothing in the record that suggests

this alternative was not available or would somehow be

inadequate. Mr. Aulakh has not provided evidence that he was on

the brink of bankruptcy.

D. The Record Does Not Support a Finding of

Unconscionability.

As an alternative ground for invalidation of the agreements,

Mr. Aulakh appears to suggest in his opposition brief that the

terms of the Release are unconscionable. (See Doc. 26 at 2:5;

5:10-19.) There is no basis for a finding of unconscionability

on the facts of this case. 

The doctrine of unconscionability is codified in California

Civil Code § 1670.5. California jurisprudence recognizes that

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1 California law recognizes that franchise agreements

themselves “can have some characteristics of contracts of

adhesion.” Mailbox Ctr. Owners, 34 Cal. Rptr. 3d at 668. 

However, Mr. Aulakh claims that the terms of the Release and

Rider, not the Franchise Agreement, are unconscionable. 

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the term “unconscionable” has “both a procedural and a

substantive element, both of which must be present to render a

contract unenforceable.” Indep. Ass'n of Mailbox Ctr. Owners,

Inc. v. Superior Court (Mail Boxes, etc., USA, Inc.), 34 Cal.

Rptr. 3d 659, 667-68 (2005)(emphasis added).

The procedural element focuses on the unequal

bargaining positions and hidden terms common in the

context of adhesion contracts. While courts have

defined the substantive element in various ways, it

traditionally involves contract terms that are so

one-sided as to “shock the conscience,” or that impose

harsh or oppressive terms.

Id. “[T]he more substantively oppressive the contract term, the

less evidence of procedural unconscionability is required to come

to the conclusion that the term is unenforceable, and vice

versa.” Armendariz v. Found. Health Psychcare Servs., Inc., 24

Cal. 4th 83, 114 (2000).1

As to the procedural component of unconscionability, the

parties in this case arguably have unequal bargaining power. 

However, there is no evidence that the simple forms contained any

“hidden terms.” The waivers contained in the Rider and Release

are obvious and straightforward.

Even if procedural unconscionability existed, there is

absolutely no indication that any of the provisions of the

contracts are substantively unconscionable. One example of a

substantively unconscionable provision is a mandatory arbitration

clause that gives an advantage to one party by virtue of the

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place or manner in which the arbitration is to occur. See Bolter

v. Superior Court (Harris Research, Inc.), 87 Cal. App. 4th 900,

904 (2001). The Release and Rider in this case operate as a

mutual release from liability, shielding both Mr. Aulakh and 7-

Eleven from liability. There is nothing about these terms that

“shocks the conscience,” nor are they “harsh or oppressive.”

E. The Legal Effect of a Valid Release and Rider.

The inquiry then turns to the effect of the Release and

Rider on Plaintiffs’ claims. Having determined that Plaintiff’s

consent to the Release and Rider is not tainted by economic

duress or unconscionability, 7-Eleven is entitled to summary

judgment on Plaintiff’s fourth cause of action for rescission of

the mutual release based on duress and unconscionability. For

the remaining claims, the critical question is whether the

waivers contained within the agreements encompass any or all of

Plaintiff’s complaints.

The first cause of action alleges that 7-Eleven breached the

terms of the Franchise Agreement by terminating Aulakh as a

franchisee without satisfying the conditions of the Franchise

Agreement. (Id. at ¶¶5-14.) The second cause of action alleges

that 7-Eleven breached the Franchise Agreement by refusing to

refund any portion of the franchise fee paid by Plaintiff and by

refusing to allow Plaintiff to transfer to another 7-Eleven

store. (Id. at ¶¶15-20.)

Plaintiff is barred from pursuing either of these claims

because the Release terminates Plaintiff’s rights under the

Franchise Agreement by providing in pertinent part:

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1. 7-Eleven, Inc. (“7-Eleven”) and the undersigned

individual(s) (the “Franchisee”) hereby mutually

agree that, under that certain 7-Eleven Store

Franchise Agreement between the undersigned

parties, dated march 16, 1999, as amended (the

“Agreement”) and terminated effective 6:45 a.m. on

April 15, 2004, and which covered 7-Eleven Store

No. 25955C (the “Store”), except as specifically

provided in Paragraphs 8 and 9 hereof, ALL claims,

demands, rights, duties, guarantees, obligations,

debts, dues, sums of money, accounts, covenants,

contracts, controversies, assignments, suits or

causes of action (collectively, the “claims”) of

every kind and nature, however, or wherever

arising, whether known or unknown, foreseen or

unforeseen, direct, indirect, contingent or

actual, liquidated or unliquidated, which have

arisen or which might or could arise under

Federal, state, or local law from any

relationship, incident, or transaction arising or

occurring under the Agreement or under any

agreement in connection therewith, or from the

execution, operation under or termination of the

Agreement, and any services to the franchisee

thereunder or under any prior agreement relating

to the Store, existing or arising at any time

prior to or at the time of the execution hereof,

are hereby mutually satisfied, acquitted,

discharged and released by Franchisee and 7-

Eleven, it being the express intention of

Franchisee and 7-Eleven that this release be as

broad as permitted by law. 

(Austin Decl. at Ex. F.)(emphasis added). It is undisputed that,

at the time Plaintiff signed the Release and Rider, he was aware

that 7-Eleven intended to terminate his franchise without

permitting him to transfer to another 7-Eleven store. (Aulakh

Depo. at 110.) Although Plaintiff could have attempted to

enforce the terms of the Franchise Agreement against 7-Eleven, he

instead chose to sign the Release in return for the right to

purchase the real property. 7-Eleven is entitled to summary

judgment on Plaintiff’s first two causes of action. 

The third cause of action, which alleges that 7-Eleven

breached the Sales Contract by removing the existing gasoline

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canopy from the Premises, presents a slightly different question.

The Sales Contract contains the following provision concerning

the gasoline equipment:

14. Removal of Motor Fuels Equipment and Testing

Seller has commenced work to remove the Motor

Fuels Equipment located on, about or under the

Property. Seller agrees that the gasoline canopy

will remain in place at the Property provided that

it does not interfere with the removal of the

Motor Fuels Equipment. Seller estimates that the

removal, testing and procuring of test results

should be completed on or before April 30, 2004. 

In connection with the removal of the Motor Fuels

Equipment, Seller will perform such soil and/or

groundwater tests as Seller deems appropriate, and

upon request from Buyer will provide Buyer with

the results thereof. If the results of such tests

and/or assessments reveal that there is no

contamination, then the parties shall proceed with

the Closing. If, however, such tests reveal

contamination, Seller shall initiate and complete,

at its cost and expense, certain remedial measures

as required by the appropriate authorities. In

this instance, the parties may proceed to Closing

provided that a mutually-acceptable Access

Agreement is executed at the Closing. 

(Austin Decl., Ex. D at ¶ 14.) It is undisputed that the

gasoline canopies were removed prior to the April 15, 2004

closing date, the date on which Plaintiff signed the Sales

Contract, the Rider, and the Release. (UMF: Third Count, No. 1.) 

The Release appears to bar this claim as well because it

applies to all claims, “arising or occurring under the Agreement

or under any agreement in connection therewith, or from the

execution, operation under or termination of the Agreement, and

any services to the franchisee thereunder or under any prior

agreement relating to the Store, existing or arising at any time

prior to or at the time of the execution hereof....” The Sales

Contract is an agreement relating to the Store that was excecuted

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prior to the signing of the Release. The canopy removal is

expressly provided for and Plaintiff signed the contract with

full knowledge of the canopy removal. Although Plaintiff could

have sued to enforce the Sales Contract at any time before

singing the Release, he chose to go forward with the sale. 7-

Eleven is entitled to summary judgment on Plaintiff’s third cause

of action. 

Accordingly, 7-Eleven’s motion for summary judgment is

GRANTED as to all of Plaintiff’s claims. 

F. 7-Eleven’s Counterclaim

7-Eleven also maintains that it is entitled to summary

judgment on its counterclaim for setoff because “no genuine

issues of fact exist.” (Doc. 19 at 8.) 7-Eleven oversimplifies

its legal burden on a motion for summary judgment. Because 7-

Eleven bears the ultimate burden of proof on this claim at trial,

to prevail on summary judgment it must produce evidence

demonstrating that it is entitled to judgment as a matter of law.

Houghton v. South, 965 F.2d 1532, 1536 (9th Cir. 1992) (Where

“the moving party bears the burden of proof at trial, it must

come forward with evidence which would entitle it to a directed

verdict if the evidence went uncontroverted at trial.”); cf.

Anderson, 477 U.S. at 252 (“The judge's inquiry, therefore,

unavoidably asks ... whether there is evidence upon which a jury

can properly proceed to find a verdict for the party producing

it, upon whom the onus of proof is imposed.”).

7-Eleven points to two pieces of evidence to support its

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2 For his part, Mr. Aulakh contests 7-Eleven’s

accounting, “since [he] has not had the chance to have [his]

accountant analyze it.” Aulakh Decl. ¶ 13. Were it not for 7-

Eleven’s own oversight of proof, Mr. Aulakh’s response would be

insufficient to defeat 7-Eleven’s motion. 

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motion on this claim. First, the Release explicitly does not

apply to “any amounts owning to either party (the ‘Final

settlement’) as reflected on the final Financial Summaries

prepared by 7-Eleven.” (Release at ¶8.) 7-Eleven also points to

Exhibit G to the Declaration of Michael Austin, a one-page

spreadsheet purporting to establish that Mr. Aulakh owes 7-Eleven

$6,922.35. But 7-Eleven provides no documents, declarations, or

testimony explaining what the figures on this informal

spreadsheet mean, how they were calculated, and why Mr. Aulakh

should be held financially responsible for the listed sum.2 7-

Eleven has not met its burden on summary judgment. Mr. Aulakh’s

denial is sufficient to make a disputed fact any amount owed by

him to 7-Eleven.

V. CONCLUSION

For the reasons set forth above, 7-Eleven’s motion for

summary judgment is GRANTED as to all of Plaintiff’s claims. 

7-Eleven’s motion for summary judgment on its counterclaim is

DENIED.

SO ORDERED

Dated: January 26, 2006

/s/ OLIVER W. WANGER

____________________________

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OLIVER W. WANGER

United States District Judge

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