The plaintiff wanted to open a Victoria’s Secret franchise in Puerto Rico. Defen

Question

The plaintiff wanted to open a Victoria’s Secret franchise in Puerto Rico. Defendant Domingo, a business broker, told the plaintiff that the franchise was a “done deal” if the plaintiff hired the defendant’s firm and also hired former United States Senator Birch Bayh’s firm to assist. In reliance on the defendant’s representations, the plaintiff entered into retainer agreements with the two firms, paying them $225,000 and $400,000, respectively. Several months later, someone from Bayh’s firm emailed the plaintiff that he could not get the franchise because Victoria’s Secret did not use a franchise system, and instead owned and operated its own stores. The plaintiff sued Domingo, Bayh, and their firms. Bayh and his law firm settled for an undisclosed amount, and a jury awarded damages of $625,000 against Domingo and his firm. On appeal, the judgment was affirmed. What do you believe was the legal basis for the lawsuit? Why do you agree or disagree with the outcome of this case? [Portugues-Santana v. Rekomdiv International, Inc., 725 F.3d 17, 2013 U.S. App. Lexis 15331 (2013).]

Explanation / Answer

The legal basis of lawsuit was the breach of contract and dolo ( Bad faith), i.e. knowingly and intentionally, through deceitful means, avoids complying with its contractual obligation. The defandants knew that Victoria's Secret operats through its own stores only and does not give frachise, despite of knowing, they fraudulantly conned the plaintiff into entering a contract, which amounted to voluntary and conscious breach of duty.

The Puerto Rico law affirmed the case by not reducing the damage reward of plaintiff to the settlement made by the parties, because the jury was directed only at the defendants' conduct and not with the other parties involved to settle the matter. The suit filed against the legal counsel by the parties ( plaintiff and defendant) for legal malpractice was also dismissed as the parties could not establish any causation element necessary for the claim.

The opinon of the court is appropriate because it can't opine on the conduct of other parties that are not the part of the case.

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