United States District Court, D. Connecticut
RULING ON PETITION TO COMPEL ARBITRATION (DOC.,
C. HALL UNITED STATES DISTRICT JUDGE.
plaintiff, Doctor's Associates, Inc. (“DAI”
or “Subway”), the franchiser of Subway sandwich
shops in the United States, filed a Petition to Compel
Arbitration (Doc. No. 1) against the defendant, Kamaljit
Nijjar, (“Ms. Nijjar”). Ms. Nijjar had assumed
the obligations and liabilities for two Subway Franchise
Agreements. See Assumption of Agreement No. 24099
(on page 17 of Doc. No. 1-1); Assumption of Agreement No.
12414 (on page 17 of Doc. No. 1-2). The Franchise Agreements
each include an arbitration provision. See Franchise
Agreement No. 24099 (in pages 2-16 of Doc. No. 1-1) at 11-12
¶ 10; Franchise Agreement No. 12414 (in pages 2-16 of
Doc. No. 1-2) at 11-12 ¶ 10. DAI now seeks to compel
arbitration in connection with a lawsuit that Ms. Nijjar
filed against DAI in Virginia state court, and that has since
been removed to a court in the Easter District of Virginia
(“the Virginia Lawsuit”). See Pet.
¶¶ 13, 18; Original Virginia Compl. (Doc. No. 1-4);
Virginia Am. Compl. (E.D. Va. Case No. 16-cv-1457, Doc. No.
7). DAI seeks an order “directing Ms. Nijjar to
arbitrate her claims in the manner provided by the Franchise
Agreements.” Pet. ¶ 18. For the reasons stated
below, DAI's Petition to Compel Arbitration is denied.
Franchise Agreements were formed in 2007, between Rambir
Nijjar (“Mr. Nijjar”) and DAI. See
Franchise Agreement No. 24099 at 2; Franchise Agreement No.
12414 at 2. Each Franchise Agreement contains an arbitration
provision, stating that “[a]ny dispute, controversy or
claim arising out of or relating to this Agreement or the
breach thereof shall be settled by arbitration.”
Franchise Agreement No. 24099 at 11 ¶ 10(a); Franchise
Agreement No. 12414 at 11 ¶ 10(a).
Nijjar is currently Ms. Nijjar's ex-husband. See
Divorce Order (Doc. No. 14-1) at 1. The couples' divorce
became final on August 14, 2015. See Divorce Order
at 1 (discussing final divorce decree). Mr. Nijjar
transferred the Franchise Agreements to Ms. Nijjar on August
20, 2015, in connection with this divorce. See Pet.
¶¶ 6-7; Response (Doc. No. 14) ¶ 2; Divorce
Order at 1 (quoting settlement agreement, incorporated into
couples' divorce decree, in which Ms. Nijjar released Mr.
Nijjar from certain claims, in exchange for him transferring
the franchises to her).
dispute arose between DAI and Ms. Nijjar regarding the
operation of the restaurants involved in the Franchise
Agreements. In June 2016, the parties signed, and an
arbitrator approved, a Stipulated Arbitration Award (Doc. No.
1-3), in connection with that dispute.
Stipulated Arbitration Award states, inter alia,
that (1) Ms. Nijjar “will transfer the Restaurants in
accordance with the standard transfer procedures, as required
by subparagraph 9(a) of the Franchise Agreement[s] and
Chapter 21 [(excerpted in Doc. No. 14-2)] of the SUBWAY®
Operations Manual, ” (2) “[t]he transfer must be
at arms-length to a buyer approved by [DAI], ” and (3)
“a closing must take place within one hundred and fifty
(150) days.” Stipulated Arbitration Award ¶
5(a)(ii). The Stipulated Arbitration Award provides that, if
Ms. Nijjar “fails to transfer the Restaurants by the
date set forth above, the Franchise Agreements will be
terminated on the one hundred and fifty first (151st) day
from execution of [the] Award.” Id. ¶ 8.
The Stipulated Arbitration Award states that the Award
“does not affect any continuing obligations of the
parties under [the] Franchise Agreements between them.”
Id. ¶ 12. The Stipulated Arbitration Award
states that the Award “can be confirmed in any court
having jurisdiction.” Id. ¶ 17.
Subparagraph 9(a) of the Franchise Agreements, which is
referenced in the Stipulated Arbitration Award, contains the
You may transfer the Restaurant and this Agreement . . .
provided[, inter alia]: (i) you first offer, in
writing, to sell the Restaurant to us on the same terms and
conditions offered by a bona fide third party purchaser, we
fail to accept the offer . . ., and we approve your contract
with the purchaser; (ii) each purchaser has a satisfactory
credit rating, and is of good moral character; [and] (iii)
each purchaser received a passing score on our standardized
Franchise Agreement No. 24099 at 10 ¶ 9(a); Franchise
Agreement No. 12414 at 10 ¶ 9(a).
21 of the SUBWAY® Operations Manual, also referenced in
the Stipulated Arbitration Award, states, inter
alia, that “DAI considers any change in the
ownership interest of a franchise due to a divorce decree
(or, a court approved settlement or Separation Agreement) to
be a transfer in accordance with paragraph 9(a) of your
Franchise Agreement.” Chapter 21.
September 26, 2016, a Virginia state court ordered Ms. Nijjar
to “transfer back to” Mr. Nijjar “all of
her right, title and ownership interest in the [ ] Subway
franchised stores.” Divorce Order at 1. Ms. Nijjar then
attempted to transfer the franchises back to Mr. Nijjar.
See Response ¶ 10; Reply (Doc. No. 16) at 6.
However, DAI refused to allow Ms. Nijjar to transfer the
franchises back to Mr. Nijjar. See Response ¶
10; Reply at 6.
October 28, 2016, Ms. Nijjar filed a lawsuit against DAI in
Virginia state court. See Original Virginia Compl.
Ms. Nijjar alleged that, by preventing her from transferring
the franchises back to Mr. Nijjar, DAI acted in bad faith,
made it impossible for Ms. Nijjar to find a buyer within the
150-day window set out by the Stipulated Arbitration Award,
prevented her from complying with the Divorce Order, and
violated both the Stipulated Arbitration Award and the
Franchise Agreements. See Original Virginia Compl.
¶¶ 23- 27. Despite mentioning the Franchise
Agreements, the Original Virginia Complaint contained only a
single cause of action: a breach of contract claim for
violation of ...