Jth Tax, Incorporated v. Frashier

624 F.3d 635 (4th Cir. 2010)

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Nature of the Case

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Facts

In 2006, D signed a franchise agreement with P granting him the right to operate Liberty Tax Service franchises in a designated area of West Virginia. In return, D agreed to several post-termination provisions, including a covenant not to compete and a requirement that he return all customer lists and equipment to Liberty. D operated without incident until 2008. D offered to sell P a right of first refusal for the purchase of D's franchise territory for $80,000. The parties failed to agree on the terms of a sale, and D closed his franchise, which prompted P to terminate its agreement with D. P filed a complaint seeking $80,000 in damages and a permanent injunction. P claimed that D breached his post-termination duties by using his former office to support a competing tax enterprise and by failing to return the requisite materials to P. In its subsequent motion for summary judgment, P refined its damages calculation, seeking $60,456.25 in money damages and injunctive relief. The district court sua sponte dismissed P's complaint for failure to meet the $75,000 amount in controversy requirement for diversity jurisdiction. The court denied P’s 59(e) motion. P appealed.