*Pursuant to 5TH CIR. R. 47.5, the court has determined that

this opinion should not be published and is not precedent except

under the limited circumstances set forth in 5TH CIR. R. 47.5.

UNITED STATES COURT OF APPEALS

for the Fifth Circuit

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No. 96-40735

_____________________________________

YANKEE ENTERPRISES, INC.,

Plaintiff-Appellant-Cross-Appellee,

VERSUS

DUNKIN' DONUTS, INC.,

Defendant-Appellee-Cross-Appellant.

_____________________________________________________

Appeal from the United States District Court

for the Eastern District of Texas

(1:95-CV-136)

______________________________________________________

July 8, 1997

Before KING, DAVIS and DeMOSS, Circuit Judges.

DAVIS, Circuit Judge:*

In this litigation between a franchisor and a franchisee,

which resulted in a verdict in favor of the franchisee, we consider

the propriety of the district court’s post verdict orders rejecting

the jury’s award under the Texas Deceptive Trade Practices Act

(“DTPA”) and entering judgment against the franchisor on

franchisee’s breach of contract claim. For the reasons that
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follow, we conclude that the evidence will not support any award in

franchisee’s favor.

I.

Dunkin’ Donuts Incorporated (“Dunkin’”) is a franchisor that

franchises donut shops nationwide. Yankee Enterprises (“Yankee”)

is a Dunkin’ franchisee that operates a Dunkin’ Donuts store in

Beaumont, Texas. Dunkin’ divides the nation into five zones:

Northeast, Midwest, Mid-Atlantic, Southeast, and West. Beaumont,

Texas, is located in Dunkin’s West zone. In 1986, Yankee, a

Dunkin’ franchisee since 1972, renewed its franchise for twenty

years. According to the franchise agreement, Dunkin’ promised to

“continue its efforts to maintain high and uniform standards of

quality, cleanliness, appearance and service at all Dunkin’ Donuts

shops.”

In 1994, Yankee brought suit against Dunkin’, asserting that

Dunkin’ had breached the franchise agreement and violated the DTPA.

Yankee contended that Dunkin’ had reduced personnel in the West

zone, failed to properly supervise franchises in the West zone, and

diverted resources and attention away from the West zone to the

Northeast zone. According to Yankee, these actions constituted a

breach of the franchise agreement -- in particular, Dunkin’s pledge

to “continue efforts” to maintain standards -- and a violation of

the DTPA.
3

A jury found that Dunkin’ had failed to comply with the

franchise agreement and had committed violations of the DTPA;

accordingly, the jury awarded Yankee damages. Yankee moved for

entry of judgment on the verdict, and Dunkin’ moved for judgment as

a matter of law. The court granted Dunkin’s motion on the DTPA

claim, but rejected Dunkin’s motion on the breach of contract claim

and entered judgment on the verdict on this claim. Both parties

appealed. We consider their arguments below.

II.

Yankee first argues that the district court erred in granting

Dunkin’s motion for a judgment as a matter of law on Yankee’s DTPA

claim. The jury found that Dunkin’ violated § 17.46 of the DTPA by

engaging in “[f]alse, misleading, or deceptive act or practices in

the conduct of any trade or commerce” and that Dunkin violated §

17.50 of the DTPA by engaging in “unconscionable” activities. 

Yankee argues that the record supports the verdict on its §

17.46 misrepresentation claim. According to Yankee, Dunkin’

violated its promise to maintain standards of cleanliness, quality,

and appearance in the West zone by drastically reducing personnel

in the West zone, cutting back supervision of the West zone, and

diverting its financial resources away from the West to the

Northeast zone. In essence, Yankee argues that Dunkin’s conduct

demonstrates that it misrepresented its intention to perform under

the contract. As the Supreme Court of Texas stated in Crawford v.
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Ace Sign, Inc., 917 S.W.2d 12, 14-5 (Tex. 1996), “[t]o accept this

reasoning, however, would convert every breach of contract into a

DTPA claim.” Crawford instructs that a claim only for breach of

contract is insufficient to violate § 17.46(a) of the DTPA.

Crawford, 917 S.W.2d at 14-5. We conclude that Yankee presented

nothing more than a claim for breach of contract in support of its

§ 17.46(a) misrepresentation action. Accordingly, we affirm the

district court’s order setting aside the jury’s verdict on the

misrepresentation prong of the DTPA claim.

Yankee also argues that the district court erred in setting

aside the jury’s finding that Dunkin’ engaged in unconscionable

activity that was the producing cause of Yankee’s damages in

violation of § 17.50 of the DTPA. The two means of engaging in

unconscionable conduct under the DTPA are: (1) taking advantage of

the lack of knowledge, ability, experience, or capacity of a person

to a grossly unfair degree; or, (2) taking action which results in

a gross disparity between the value received and consideration

paid, in a transaction involving transfer of consideration. See

Tex. Bus. & Com. Code Ann § 17.45.

Yankee asserts that a gross disparity exists between the

franchise it received and the consideration it paid because Dunkin’

did not maintain the standards of quality, cleanliness, and

appearance promised in the franchise agreement. We reject this

claim, without deciding whether Dunkin’ did indeed fail to maintain
 

1The district court’s money judgment in favor of Yankee included the sum

of $132,070 awarded by the jury as part of Yankee’s DTPA claim. This was

apparently an oversight by the district court because including this award is

inconsistent with its order setting aside the jury’s verdict on Yankee’s DTPA

claim.

 

2Dunkin also argues that there is insufficient evidence to support the

jury’s conclusion that it breached the franchise agreement. Because we conclude

that jury verdict must be reversed on other grounds, we do not address this

issue.

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the standards Yankee contracted for, because Yankee produced no

evidence of the value of franchise it received. With no evidence

of the value received, the jury could not determine that there was

a gross disparity between the consideration paid and the value

received. 

Yankee also contends that Dunkin used its superior bargaining

power to take advantage of Yankee to a grossly unfair degree.

Under the DTPA it is insufficient for Yankee to show that Dunkin’

treated Yankee unfairly; Yankee must show that the unfairness was

“glaringly noticeable, flagrant, complete, and unmitigated.”

Chastain v. Koonce, 700 S.W.2d 579, 583 (Tex. 1985). Our review of

the record convinces us that any unfairness suffered by Yankee did

not rise to the level of gross unfairness. Thus, we also affirm

the district court’s order setting aside the jury’s verdict for

Yankee on the unconscionability prong of the DTPA claim.1

III.

On cross-appeal, Dunkin’ contends that Yankee presented no

competent evidence to support the jury’s finding that Dunkin’s

breach of the franchise agreement caused Yankee to suffer damages.2
 

3Another Dunkin’ franchisee testified that a customer who had a bad

experience in another Dunkin’ shop in the West zone may not stop at a Dunkin shop

while driving through Beaumont. Other than this vague testimony we find no

support for Yankee’s theory that reduced standards in other shops in the West

caused a substantial sales reduction in Yankee’s shop. No proof was presented

to explain or substantiate the details of this theory.

6

Yankee argued at trial that Dunkin’ had breached its promise in the

franchise agreement to “continue efforts to maintain high and

uniform standards of quality, cleanliness, appearance and service

at all Dunkin’ Donut shops.” More particularly, Yankee argued that

Dunkin’ diverted its attention and resources to the Northeast and

failed to continue efforts in the West zone, where Yankee was

located, and this failure caused Yankee to lose sales.

Yankee began with a suspect causation theory: The reduced

standards of cleanliness in the other stores in the West zone

damaged Yankee’s sales even though Yankee’s store met or exceeded

the high standards in place prior to the alleged breach.3 In

support of this contention, Yankee produced the testimony of John

Croley, its expert witness on damages. Although Yankee contended

that Dunkin’s breach began in 1989 or 1990, Croley compared

Yankee’s average weekly sales for the years 1984 through 1996 to

the sales of the average store in the Northeast zone. Croley

testified that Yankee’s store was comparable to that of the average

store in the Northeast zone because in 1984 Yankee’s average weekly

sales were only $229 less than the average weekly sales of the

Dunkin franchises located in the Northeast zone. Croley testified

that the difference in sales between the “comparable” Northeastern
7

stores and Yankee’s store increased from 1984 through 1996. He

attributed this increased difference to Dunkin’s failure to

continue its efforts to maintain high standards in the West zone.

But Yankee’s expert did not fare well in cross examination.

First, the “gap” between the comparable Northeast store and

Yankee’s store existed at least four years before Dunkin’s breach,

which allegedly occurred in 1989 or 1990. It is obvious, and

Croley admitted, that the diminution in sales that occurred from

1984 through 1988 cannot be attributed to an event that took place

in 1989. The expert also admitted he did not consider a number of

factors (other than the difference in standards between Northeast

stores and West stores) that could account for the “gap.” These

factors include, but are not limited to, a difference in management

skill between the hypothetical Northeast store and Yankee’s store;

a difference in market penetration; and a difference in volume of

advertising.

In sum, Croley’s theory, that Dunkin’s breach caused the

“gap,” is nothing more than conjecture and surmise. Because we

conclude that Yankee has produced no credible evidence that the

damages claimed are causally related to Dunkin’s alleged breach of

contract, the judgment predicated on breach of the franchise

agreement cannot stand.

IV.

We conclude that the evidence is insufficient to support the
 

4It follows from the rejection of Yankee’s breach of contract claim that

the district court correctly denied Yankee’s claim for attorney’s fees.

8

jury’s finding that Dunkin’ engaged in conduct that violated the

DTPA. We therefore affirm the district court’s order setting aside

the jury verdict on those claims. We also conclude that there is

no credible evidence to support the jury’s finding that Dunkin’s

alleged breach of contract caused Yankee to suffer damages.4

Accordingly, we reverse the judgment entered on the breach of

contract claim and render a take nothing judgment in favor of

Dunkin’.

AFFIRMED in part, REVERSED and RENDERED in part.