William O. Walker and Z of San Diego, Ltd., and Cross-Appellees v. Kfc Corporation and Heublein, Inc., and Cross-Appellants

KFC Corporation (“KFC”), a subsidiary of Heublein, Inc., is known principally for its franchised “Kentucky Fried Chicken” chain of fast-food restaurants. It also franchises Zantigo Mexican-American restaurants. In 1976, KFC entered into franchise agreements designating a limited partnership, Z of San Diego (“Z”), as Zantigo res taurant franchisee for the San Diego area. William 0. Walker is the principal shareholder of the corporation that acts as general partner of Z.

This litigation is the result of disputes relating to the franchise agreements. At trial, the jury awarded Z and Walker damages in the amount of $1,214,989 on theories of promissory estoppel and fraudulent concealment. The jury found in favor of KFC on its counterclaim against Walker and Z for trade debts in the amount of $117,778.19 incurred for franchise fees and restaurant equipment and supplies. Both sides appeal. We affirm the judgment against Walker and Z on KFC’s counterclaim for trade debts, but reverse the judgment awarding damages to Z on its promissory estoppel and fraud claims.

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KFC’s Counterclaim

Walker and Z, the plaintiffs below, appeal the judgment against them on KFC’s counterclaim for trade…