November 05th, 2020

US Court of Appeals for the Fifth Circuit Opinions
Pizza Inn, Inc. v. Clairday

Docket: 19-11302
Opinion Date: November 4, 2020
Judge: Jerry Edwin Smith
Areas of Law: Contracts

This case stemmed from a contract dispute between Pizza Inn and defendant, a franchisee of Pizza Inn. Defendant held an option to renew but failed to timely notify Pizza Inn that he wished to do so; Pizza Inn did not honor the tardy notice of renewal and did not renew; and a jury subsequently awarded damages to defendant after finding that Pizza Inn breached the contract. The district court upheld the verdict and awarded defendant attorneys' fees. The Fifth Circuit reversed, holding that the district court incorrectly applied the equitable-intervention doctrine. The court held that, because strict compliance with the agreement does not result in unconscionable hardship, equitable intervention is inapplicable. The court rejected defendant's asserted hardships: forfeiture of a portion of his initial investment, forfeiture of future profits, and shuttering a Pizza Inn franchise store. The court also held that the district court erred in awarding attorneys' fees. The court rendered judgment in favor of Pizza Inn.

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