McDonald's written submissions in reply — part 1

fax received from : B1_ 15 14 6?_13 1-BB:12 ..Pg: 1 - at the beginning of 1997, when he had already had, in accordance with his request, the lease-management (*location-gérance*) of Antibes Nord, he "returns to the charge" (see opposing submissions, p 6) to obtain Antibes Ouest, - whereas Mr Collorafi, in SEBOL, in 1996, had already received remuneration of plus that of his wife: that is: he still draws dividends: 625,000 F.F 193,400 FF -_ 818,400 F.F 1,000,000 F.F that is: 1,818,400 F.F he claims not to have the means to finance the "straight license" agreement of Antibes Ouest. MeDONALD's agrees, out of benevolence, to convert the agreement into a BFL agreement of 3 years • MCDONALD's also agrees to an adjustment of the financial terms of the Antibes Nord fee, on 10 June 1997 (- 26.3%), - on 15 June, the Antibes Ouest agreement is signed. • on 26 June, the writ of summons is served on McDONALD's. Whatever the (undoubted) talent of his lawyer and the diligence (to be proved) of the bailiff, it is clear that the writ of summons was ready on 18 June. He therefore signed the Antibes Ouest agreement knowing that he was going to issue proceedings. Mr Collorafi is therefore of established bad faith: having decided to leave the MCDONALD's network, for reasons which are personal to him, he manoeuvred to have the lease-management (*location-gérance*) of Antibes Ouest allocated to him without investing much (318,000 Frs, whereas McDONALD's invests 11,825,000 Frs, see Husson-Dumoutier report) and dares to come and claim 13,244,734 F.F. on behalf of the SARL LES PINS 21. Concerning the turnover hypotheses in which he would like to find commitments by MCDONALD'S, Mr Collorafi is in bad faith, whereas he signed in each agreement a clause by which he acknowledges "that the grantor makes no representation, promise or guarantee as to the future profitability of the restaurant". This clause is perfectly valid. 22. He is again in bad faith when he claims to shelter behind the plea of non-performance to justify the non-payment of the fees due to McDONALD's and which were the subject of the formal notices of 27 November 1997, the effect of which was to terminate the agreement. This invocation of the plea 11/83/98 B6:12 . Ps: 2 of non-performance appears after receipt of the formal notices, whereas throughout the whole of 1997, he sheltered behind an alleged impossibility to pay. He is indeed unable to say what the obligations of MCDONALD's would be that were not performed and would justify his own non-performance If he had had a good reason to put forward, he would have invoked it. He remained passive throughout the month that the agreement gave him to pay and did not even request time or offer any part payments. Thus far from proving in any way the alleged bad faith of MCDONALD's, Mr Collorafi is himself convicted of bad faith by the matters just reported. Sco bigreendue exelgitation abugive d'un bert de dépendance 23. We are here again in full incoherence - Mr Collorafi invokes Article 8 of the Ordinance of 1 December 1986, - but he forgets that the implementation of Article 8 presupposes that the conditions of Article 7 are met (preventing, restricting or distorting competition by limiting access to the market or the free play of competition, or by obstructing the setting of prices by the free play of the market, or by limiting or controlling production, outlets or investments or technical progress, or again by sharing out markets) Mr Collorafi does not even attempt to provide the slightest proof of this. • Moreover, Article 8 leads to Article 9 which sanctions the violation of Article 8 by the nullity of the agreements constituting an infringement of that text. Now Mr Collorafi does not request the nullity of the agreements. 24. Thus no fault can be attributed to MCDONALD's. Mr Colorati never cites any clause of the agreements that would have been violated by MCDONALD's, and the supports for his action, which he would like to find in good faith or in Article 8 of the Ordinance of 1986, do not exist. 25. The Court will moreover observe: - that the imprecise grievances which fill the opposing submissions did not appear in the writ of summons where Mr Coliorati sought to show that McDONALD's had wronged him by granting the lease-management (*location-gérance*) of the Vallauris restaurant to Mr Gilarsky, which was the absolute right of MCDONALD'S. fax r41: 34 13 11/03/98 88:12 .. Ps: 3 paul anders - that the notion of "bearable fee" appears in the submissions and did not appear in the writ of summons. That shows how artificial it is. It cannot be accepted: • since this notion leads, following the study by Mr Musson-Dumoutier, to figures, for 1997. • higher than those paid by SEBOL (+ 111,000) - higher than those paid by B & O (+ 129,000) • virtually identical to those paid by LES PINS (- 4,000) (see Husson-Dumoutier report). • since this inquiry is purely theoretical, SEBOL having paid the contractual fee without disputing it for 10 years, • since the judge can never modify the agreement which is the law of the parties (Art. 1134 Civil Code). 26. In the absence of any fault by MCDONALD's, it is obviously only to complete the picture that the other elements indispensable to generate an obligation to make reparation will be mentioned. 27. No harm is capable of being validly invoked by Mr Collorafi or his companies. After very profitable years, the modification of the access to the Carrefour store and the arrival of the Quick Restaurant changed the market conditions. That is a risk mande presentét by M. Colloran. But it must have been overcome in 1998 , thanks to the effort of MDONALI which financed: quelque infartilisme dans la de observe that the situation would of investment by MDONALI Antibles Ni Antibes Ou ard to the extent of 82.00% is to the extent of 96.90% an absent harm and a non-existent fault has not and moreover: external events which changed the situation that modification of access to Carrefour and siting of the decided to complain of the impact of the restaurants and since he signed the agreements concerning them the time, of Mr Collorafi and of his companies • abusive nature must be sanctioned by 100,000 Frs. 28. Finally, the causal link between does not need to be examined, knowing - that these are events SEBOL knew (modifica Quick), - that Mr Coltorafi is not fo Antibes Nord and Antibes Oues and rien demande pas la nullité 28. The claims, variable in must therefore be rejected and their damages up to fax 11/83/28- 08:12 McDONALD's CLAIMS 30. Mr Collorafi and his companies have obstinately maintained claims forgetting the legal and factual situation in which the adversaries have found themselves since 2 January: the agreements are terminated by operation of law, McDONAL D's is a creditor for substantial sums. the three companies of Mr Collorafi remain on the premises and A - Termination by operation of law is established. As acknowledged by the opposing submissions, the lessee Companies stopped paying the fees regularly in Account statements were sent regularly to Sebol (see our documents 5 to 8) as to B & O (documents 9 to 12), then a registered letter of 22 September concerning Sebol and B & O (document 13) and yet another on 22 October concerning the three Companies (document 14) A financial audit, planned for October, was postponed, at the request of Mr Collorafi, to 17 November. It notably revealed that Mr Collorati had repaid himself his current account in Sebol (350,000 F) and had Sebol take out a loan of the same amount. The sums due amounting on 30 November to 1,62B,100 F incl. VAT for Sebol (document 15), 1,409,184 F incl. VAT for B & 0 (document 15), 319,937 F incl. VAT for Les Pins (document 17). Three formal notices complying with the terms of the agreements (art 11.2.5 for Sebol . • art XI.2.2. for B & 0 and Les ¿addressed to each of the companies on 27 November No useful reaction from Mr Collorati and his companies occurred during the month following the formal notice. Consequently the termination took place by operation of law, in accordance with the text of the agreements recalled below • 4on .Py: For Sebol: "art 116: At the initiative of the Lessor Company and without any judicial formality one month after a simple formal notice to pay any sum or to perform any obligation that has remained without effect and indicating the Lessor Company's intention to invoke the benefit of this clause in the event of non-compliance by the Lessee-Manager with any stipulation whatsoever of this agreement and, in particular failure to pay the fees on the agreed due dates." For B & 0 and Les Pins "art XI 22: Non-compliance with the contractual provisions / Events affecting the operation of the business that is the subject hereof: Notification by the Lessor Company, addressed to the Lessee-Manager by registered letter with acknowledgement of receipt, made one month after a formal notice that remained unsuccessful and indicating the intention of the Lessor Company to avail itself of this clause, shall suffice to put an end to the "Agreement", by operation of law and without any judicial formality, in any of the following cases (8) Non-compliance by the Lessee-Manager with any of the contractual provisions, in particular: - non-payment of the fees to the Lessor Company or of any sum due, in connection with this "Agreement" as well as to a natural person or legal entity whom the Lessor Company has substituted for itself; - non-compliance with any of the obligations arising from the Licence annexed hereto (Annex A), in particular any acts or omissions of the Lessee-Manager by virtue of which the Lessor Company McDonald's Corporation would be entitled to terminate the Licence Consequently, by a clear and precise provision of the agreements, the application of which is not contested by the adversaries, and which is binding on the parties as on the judge, these agreements came to an end on 2 January 1998 The opposing submissions, p. 26, admit it in a "very alternatively" (which moreover defies logic since, acknowledging that the termination is established, he asks the Court to pronounce it at the fault and expense of MeDONALD's). It therefore suffices for the Court to record the termination by application of the termination clause contained in the agreements. ..Pg: b fax received : 81.25.41 61_13 B. The expulsion of Mr Collorati and his Companies. 34. But after notification of the termination to each Company on 2 January (documents 43, 44, 45), Mr Collorafi refused to return the keys and to give back to McDONALD's the free disposal of the three restaurants over which he no longer has any right He thereby commits an act of trespass (*voie de fait*), by occupying and operating, under a sign which does not belong to him, and of which he has lost all right of use, businesses which do not belong to him. The decision of the President in summary proceedings, under appeal, refusing to rule on our request for expulsion on the pretext of a serious difficulty, has, by definition, no res judicata authority, and does not constitute a title for the opposing Companies to commit a serious infringement of McDONALD's property. 35. The expulsion of Mr Collorafi and of the three Companies should be ordered in the terms of the operative part below and under the penalty payment requested (1/365 per day of the turnover of last year) 36. As regards the staff, Article L. 122-12 settles the question But the pecuniary consequences of the default of the opposing Companies must be settled C - The pecuniary sentences 37. The debts of the three Companies are not contested Besides the fact that the one-month period following the formal notice was not put to use by the debtors to put forward any objection whatsoever against the sums then due (30 November), the sums have increased by the fees of December and are, at the end of December, SEBOL: B&0 LES PINS: 1,867,247.84 F 1,533,548.87 F 504,474.02 F (see documents 49 to 59). (see documents 60 to 67). (see documents 68 to 77) that is: 3,905,271.13 F These sums are not contested. Mr Collorafi having even written on 5 January (document 75) "The sums which the Commercial Court will not fail to award me can only be infinitely greater than the fees you are claiming" and the opposing submissions making a judicial admission of the debt (p. 13), which fully justifies, if need be, the termination of the agreement by operation of law fax received from 11/83/98_98:12 38. But, since 1 January, the Companies occupying without right or title owe an occupation indemnity. It is with this indemnity in mind that the adversaries introduced into their submissions the singular concept of "bearable fee", because they know very well that the judge, who has no power to modify the terms of an agreement, can freely fix the amount of an occupation indemnity. But it is out of the question to treat an occupant without right or title, guilty of an act of trespass and infringing the property of others, better than a lessee-manager. That is why it is appropriate to fix it at: - 15,000 F per day for Sebol, • 14,000 F per day for B & O, - 16,000 F per day for Les Pins. the amount of the daily occupation indemnity, that is to say double the contractual fee, calculated on the turnover of 1997 which has the merit of being known, whereas the results obtained this year through its unlawful operation might not be exactly known. 39. McDONALD's must be reserved the possibility of asserting all rights to indemnity against the opposing Companies by reason of the damage and harm of every kind that may be recorded upon the return to McDONALD's of its businesses. 40. The riders transferring the lease-management agreements (*location-gérance*) specify that Mr Collorafi remains jointly and severally liable with the lessee-manager and guarantees the performance by the latter of all of the clauses and conditions of the agreement. He will therefore be ordered jointly and severally with each of his Companies. Provisional enforcement is necessary. 42. The irrecoverable costs which the opposing Companies and Mr Collorafi will be ordered to reimburse to McDONALD's cannot be less than 300,000 F. 137 67_13 11/83/9898:12 Py: FOR THESE REASONS Order the joinder of the proceedings registered under numbers RG 97.062466 and 98.010823. 2) Record the termination by operation of law on 2 January 1998 of the lease-management (*location-gérance*) and licence agreements concluded between, on the one hand, McDONALD's France and, on the other: - SA Sebol and Mr Collorafi, on 31 August 1987, - SARL B & O and Mr Collorafi, on 9 October 1996, • SARL Les Pins and Mr Collorafi, on 18 June 1997, by the effect of the termination clause inserted in each of these agreements. 3) Order the expulsion of the companies Sebol, B & O, Les Pins and of Mr Collorafi, as well as of all occupants through them, from the fast-food businesses, located respectively at: - Galerie Marchande of the Carrefour store, Chemin de St Claude, 06600 Antibes, • 1190 route de Grasse, 06600 Antibes, • 32 rue de Cannes, 06160 Antibes-Juan-Les-Pins and enjoin each of these Companies and Mr Collorafi to hand over to the owner of the business, McDONALD's France SA: - the keys of the restaurants, elatits to each of the employees in order to allow the normal continuation of the employment contracts, - the accounts of the operation until the day of the abandonment of this operation by the SARL Les Pins, State that: • vo Pg: Fax received from : 91 45.27.67 13 The Company Saboi and Mr Collorafi, for the Antibes 1 restaurant, shall carry out all of the provisions above on pain of a joint and several penalty payment between them of 32,000 F per day, from The Company B & O and Mr Collorafi for the Antibes 2 restaurant, shall carry out all of the provisions above on pain of a joint and several penalty payment between them of 37,000 F per day, from service of the decision to be given, The Company Les Pins and Mr Colorati, for the Antibes Ouest restaurant, shall carry out all of the provisions above on pain of a joint and several penalty payment between them of 26,350 F per day from service of the decision to be given. 4) Appoint Maître Zonio, bailiff (*huissier de justice*), as the officer recording the facts (*constatant*), in order to draw up, in the presence of both parties, in each restaurant, the inventory of the stock of goods and consumables, operating items, furniture and equipment of the business, and the statement of cash in hand. 5) Order jointly and severally: a) SA Sebol and Mr Collorafi to pay McDONALD's France the sums of: -1. F F by way of unpaid fees, with interest as of right: • from 1 August 1997 (LRAR of 22.07) on: 1,266,300.00 F • from 1 December 1997 (LRAR of 27.11) ON: 361,800.00 F • from 1 January 1998 (art. 11.4. on) 239,147.84 F - 16,000 F by way of occupation indemnity, per day from 2 January 1998, until the day of the report by the bailiff whose appointment is requested above, with interest as of right: The SARL B & O and Mr Collorafi to pay McDONALD's France the sum of: - 1,533,548.87 F by way of unpaid fees, with default interest at the base bank rate increased by 3 points on each instalment from the date on which it should have been paid (art. XII. 2.3. of the agreement)., - 24,000 F by way of occupation indemnity per day, from January 1995, until the day of the report by the bailiff whose appointment is requested above, with interest as of right: harm that may appear. : 01 45 27 67 13 B8:12 Order jointly and severally the Companies Sebol, B & O, Les Pins and Mr Collorati to pay 100,000 F damages to McDONALD's France for abuse of process. 8) Dismiss the Companies Sebal, B & O, Les Pins and Mr Collorafi of all their claims, 9) Order provisional enforcement of the decision to be given, notwithstanding any appeal and without security, 10) Order jointly and severally the Companies Sebol, B & O, Les Pins and Mr Collorafi to pay McDONALD's France the sum of 300,000 F under Article 700 of the N.C.P.C State that the indemnity under this head shall be increased by the amount of the proportional fee of bailiffs provided for by Article 10 of the tariff of these ministerial officers, if the decision to be given is not the subject of spontaneous enforcement, thus necessitating recourse to a bailiff for the recovery of the sums due 11) Order the Companies Sebol, B & O, Les Pins and Mr Collorafi to pay all costs. Py : 9 ALL RIGHTS RESERVED