Red Lion Hotels Franchising, Inc. v. MAK, LLC

concurring in part and dissenting in part:

I concur in the majority’s conclusion that the franchisee may not rely upon the doctrine of equitable estoppel to avoid termination of the franchise agreement. However, I do not join the decision to “leave it [to] the district court on remand to determine if there is any reason judgment should be entered against [the franchisee’s spouse] ...” Because this issue was not raised in the district court, it was not properly considered on appeal. See State of Ariz. v. Components, Inc., 66 F.3d 213, 217 (9th Cir.1995) (explaining that we do not reach issues not raised in the district court). Because the issue was not raised in district court, we should not address it at all. See id.

I also dissent from the majority’s holding that Washington’s Franchise Investment Protection Act may be applied to the California franchise at issue in this case.

I start my analysis with the general understanding that a state legislature does not act with intent to affect matters outside the borders of its state. See Grennan v. Crowley Marine Svcs., Inc., 128 Wash. App. 517 , 116 P.3d 1024, 1029 (2005) (discussing the presumption against extraterritoriality). A…

This litigation arises out of a franchise agreement between West Coast Hotels, Inc., and Mahmoud (“Mike”) Karimi. The successor in interest to West Coast Hotels is Red Lion Hotels Franchising, Inc. (“Red Lion”). West Coast Hotels was, and Red *1083 Lion is, incorporated in Washington State with their headquarters in Spokane. Kari-mi and his hotel management company MAK, LLC (collectively, “Karimi”) operated a Red Lion franchise in Modesto, California. Red Lion terminated the franchise and sued Karimi for breach of contract. Karimi counterclaimed, asserting state-law claims, including a claim based on the “franchisee bill of rights” of the Washington Franchise Investment Protection Act (“FIPA”).

The district court granted summary judgment to Red Lion on Karimi’s counterclaim under FIPA’s bill of rights on the ground that FIPA does not apply extraterritorially. After a bench trial, the court held for Red Lion on its contract claim.

The primary question before us is whether a non-Washington franchisee may assert a claim against a Washington franchisor under FIPA’s bill of rights. For the reasons explained in this opinion, we conclude that an out-of-state franchisee may…

Douglas Clayton Berry, Graham & Dunn, PC, Seattle, WA, for the appellee.

Michael Karimi; Law Office of Michael Karimi, Modesto, CA, Michael A. Maurer, Lukins & Annis, P.S., Spokane, WA, for the appellants.

Before: STEPHEN REINHARDT, WILLIAM A. FLETCHER, and JOHNNIE B. RAWLINSON, Circuit Judges.

Opinion by Judge WILLIAM A. FLETCHER; Partial Concurrence and Partial Dissent by Judge RAWLINSON.

W. FLETCHER, Circuit Judge:

This litigation arises out of a franchise agreement between West Coast Hotels, Inc., and Mahmoud ("Mike") Karimi. The successor in interest to West Coast Hotels is Red Lion Hotels Franchising, Inc. ("Red Lion"). West Coast Hotels was, and Red Lion is, incorporated in Washington State with their headquarters in Spokane. Karimi and his hotel management company MAK, LLC (collectively, "Karimi") operated a Red Lion franchise in Modesto, California. Red Lion terminated the franchise and sued Karimi for breach of contract. Karimi counterclaimed, asserting state-law claims, including a claim based on the "franchisee bill of rights" of the Washington Franchise Investment Protection Act ("FIPA").

The district court granted summary judgment to Red Lion on Karimi's…