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Inc. v. Khan

United States District Court, D. Connecticut

January 19, 2016

7-ELEVEN, INC., Plaintiff,
NATASHA KHAN, et al., Defendants.



This is a lawsuit between plaintiff 7-Eleven, Inc. (“7-Eleven”), and three defendants: Natasha Khan, 32528 Unionville, Inc. (“Unionville”), and Warren Shuck. The central dispute is over who owns certain gasoline tanks and related equipment at a former 7-Eleven convenience store location in Unionville, Connecticut.

7-Eleven has sued the three defendants, principally seeking the right of access to and recovery of gasoline tanks and related equipment that are at the site of its former franchise location in Unionville. Defendants, however, contend that 7-Eleven has no right to the tanks and equipment because 7-Eleven allegedly sold Unionville all the tanks and equipment at the time of terminating its franchise agreement. Although I have concluded after an evidentiary hearing on 7-Eleven’s motion for a preliminary injunction that 7-Eleven is likely to prevail with respect to its claim to the gasoline equipment, I have denied 7-Eleven’s motion for preliminary injunctive relief for lack of a showing of irreparable harm. See Doc. #79. In view of the continuing environmental risks involved, the Court anticipates that this matter will proceed to trial at the first available jury selection date this Spring.

Despite having previously filed an answer to 7-Eleven’s complaint, two of the defendants-Khan and Unionville-have filed a “request” for leave to file several counterclaims against 7-Eleven. See Doc. #89. These counterclaims would vastly expand the facts subject to litigation in this case involving the parties’ dealings during the entire franchise agreement. For its part, 7-Eleven has opposed the filing of the proposed counterclaims on several grounds, including that the counterclaims are barred by the terms of a contractual release that Khan and Unionville entered into with 7-Eleven at the time of the termination of the franchise agreement. I agree. Because the parties’ release agreement plainly bars the counterclaims, I will deny leave for Khan and Unionville to amend the pleadings to assert their proposed counterclaims.


The Court assumes familiarity with the underlying facts of the case as related in the Court’s ruling denying 7-Eleven’s motion for a preliminary injunction. See Doc. #79. Since at least 2002, 7-Eleven leased property from defendant Shuck for a convenience store in Unionville, Connecticut. 7-Eleven had previously acquired and owned the gasoline equipment on the property before the events that gave rise to this lawsuit. For some years prior to 2013, the father of Natasha Khan operated the Unionville location as a 7-Eleven franchisee. Following his death, 7-Eleven employees operated the store for several months. 7-Eleven then entered into a franchise agreement with Unionville to operate the store and gasoline station in December 2013. The Franchise Agreement was Dated: behalf of Unionville by Khan as “President/Secretary/Treasurer.” See Pl. Exh. #6 (preliminary injunction hearing).

By late 2014, 7-Eleven had decided to terminate its lease with Shuck and its franchise agreement with Unionville. In January 2015, 7-Eleven informed Khan and her brother, Jahangir Khan (who managed the store on a day-to-day basis), that it would be terminating the agreement. 7-Eleven offered the Khans the opportunity to move to a different 7-Eleven location, but the Khans refused and stated their intention to operate an independent convenient store at the Unionville location. The Khans contend that 7-Eleven employees told them they could purchase the gasoline equipment from 7-Eleven, and thus continue to sell gas. 7-Eleven insists that they informed the Khans numerous times that it would not sell the gasoline equipment. Extensive evidence on all this was considered by the Court at the preliminary injunction hearing.

On June 10, 2015, 7-Eleven and Unionville (by means of the signature of Natasha Khan signing in her individual and corporate capacity) entered into a Termination and Settlement Agreement. See Pl. Exh. #9. The Termination and Settlement Agreement provided for the end of the franchise agreement in five days on June 15, 2015, and then the continued operation of an independent convenience store at the Unionville location. The Termination and Settlement Agreement provided in part for Unionville to give up its right under the Franchise Agreement to transfer to another 7-Eleven franchise location, all in return for a payment of $25, 000 from 7-Eleven and for “a release of all claims, if any, against 7-Eleven.” Id. at 1 (Preamble, ¶ E). Unionville further agreed that on June 15, 2015, it would execute a separately appended agreement-called “Release of Claims and Termination.” Id. at 2 (¶ 5(l)). Moreover, 7-Eleven agreed that it would waive the non-competition provisions of the Franchise Agreement against Unionville “[i]n exchange for your termination of the [Franchise] Agreement and release of all claims, if any against 7-Eleven.” Id. at 3 (¶ 11).

In addition, under the terms of the Termination and Settlement Agreement, Unionville agreed to purchase certain property from 7-Eleven for $20, 000. Id. at 2-3 (¶ 6). The parties, however, failed to specify in writing precisely what equipment was being sold, which ambiguity gave rise to this litigation.

As noted, the parties agreed to a formal turnover of the store on June 15, 2015, from 7-Eleven to Unionville. On that morning of June 15, 7-Eleven personnel attempted to remove the gasoline dispensers. Jahan Khan resisted, and 7-Eleven personnel left the dispensers, but padlocked the so-called “fill” cover for the gas tanks in hope that they could not be used until the tanks were later removed. At around 1:30 p.m. that day, Natasha Khan and 7-Eleven representative Ed Colgan signed the document titled, “Release of Claims and Termination” (the “Release”). This document provided in relevant part for the mutual release of legal claims by the parties against each other:

You and we hereby mutually agree that . . . all claims, demands, rights, duties, guarantees, obligations, debts, dues, sums of money, accounts, covenants, contracts, controversies, agreements, promises, torts, judgments, executions, liabilities, damages, injunctions, assignments, suits or causes of action . . . 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 Franchise Agreement, and any services provided to you under the Franchise Agreement or under any other agreement relating to the Store, existing or arising at any time before or at the time of the execution of this Agreement, are hereby mutually satisfied, acquitted, discharged and released by you and us on your and our behalf and on the behalf of any person claiming under or through you or us, it being the express intention of you and us that this release be as broad as permitted by law.

Pl. Exh. #10. The 7-Eleven personnel then left.

Further disputes over the ownership of the gasoline equipment ensued. Despite attempts by 7-Eleven contractors to remove the tanks, the Khans resisted these efforts, and the tanks remain today and in operation at the Unionville store

7-Eleven brought this lawsuit alleging that it is the true owner of the gasoline equipment and, among other claims, that defendants unlawfully converted the tanks for their own use. Following the filing by 7-Eleven of an amended complaint (Doc. #38), defendants Khan and Unionville filed an answer in which they set forth as a first and only ...

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