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Sandhu v. 7-Eleven, Inc.

United States District Court, D. Delaware

June 2, 2014

ROSIE SANDHU, YST INC., et al., Plaintiffs,
v.
7-ELEVEN, INC., Defendant

For Sakattar Singh Sandhu, Plaintiff: John G. Harris, LEAD ATTORNEY, David B. Anthony, Berger Harris, LLP, Wilmington, DE; Evan M. Goldman, Gerald A. Marks, PRO HAC VICE.

For Paramjit Kaur Sandhu, Rosie Sandhu, YST Inc., Plaintiffs: John G. Harris, LEAD ATTORNEY, David B. Anthony, Berger Harris, LLP, Wilmington, DE.

For 7-Eleven Inc., Defendant: Richard L. Renck, LEAD ATTORNEY, Duane Morris LLP, Wilmington, DE.

Page 427

MEMORANDUM

SUE L. ROBINSON, United States District Judge.

At Wilmington this 2nd day of June 2014, having reviewed the papers submitted in connection with plaintiffs' motion for preliminary injunction, and having heard oral argument on the same, the court issues its decision based on the reasoning that follows:

1. Background. Plaintiff Rosie Sandhu, through her corporation YST, Inc. (collectively, " plaintiffs" ),[1] is franchised by 7-Eleven, Inc. (" 7-Eleven" ) to operate a 7-Eleven® convenience store located in Bear, Delaware (" the Store" ). According to the " 7-Eleven, Inc. Individual Store Franchise Agreement" (" the Agreement" ) executed by plaintiffs on or about June 3, 2013, in exchange for establishing and maintaining financing [2] for a franchisee, 7-Eleven

Page 428

conducts quarterly audits, preserving the right to enter a store and conduct an audit

at any time and without notice ... if Net Worth is less than the Minimum Net Worth required under Paragraph 13(d); or (d) if the last Audit we conducted reflects an Inventory Overage or Inventory Shortage of more than one percent (1%) of the Retail Book Inventory.

( D.I. 3, ex. A, ¶ 14) The Agreement also provides in this regard that 7-Eleven agrees to

finance any unpaid balance in the Open Account as a loan to you, provided that (1) you are not in Material Breach of this Agreement .... If at any time there has been a Material Breach by you or we believe that any of the conditions set forth above are not met or if we reasonably believe that our security interest is threatened, we may discontinue the financing described above. If we do so, you agree to immediately pay us the unpaid balance in the Open Account.

( Id. at ¶ 13(b))

2. The Store commenced operation in August 2013. On March 31, 2014, 7-Eleven conducted an unannounced audit at the Store. An inventory shortage (i.e., difference between the book and actual inventory) of more than $30,000 at cost was recorded.[3] According to 7-Eleven, such shortage resulted in plaintiffs' " equity investment in the Store ...


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