In Re Vylene Enterprises, Inc., Debtor. Vylene Enterprises, Inc. v. Naugles, Inc.

OVERVIEW

Chapter 7 debtor Vylene Enterprise, Inc., the operator of a restaurant under a franchise granted by defendant Naugles, Inc., appeals the district court’s order declining to adopt the bankruptcy court’s proposed findings of fact and conclusions of law.

We have jurisdiction under 28 U.S.C. § 1291 . For the reasons stated herein, we vacate the district court’s order and reinstate the bankruptcy court’s findings of fact, conclusions of law, and judgment.

FACTS AND PROCEDURAL HISTORY

In 1975, Vylene, the franchisee, and Nau-gles, the franchisor, entered into a ten-year franchise agreement which authorized Vylene to take over the operation of an existing Naugles restaurant located in Long Beach, California. Under the terms of the franchise agreement, Vylene was granted the option to extend the franchise upon the expiration of the initial ten-year term, for an additional eight years, “on terms and conditions to be negotiated.”

In 1983, Vylene became increasingly delinquent in paying its franchise fees and rent. Shortly thereafter, Vylene filed a voluntary Chapter 11 proceeding in bankruptcy court. In July 1985, the bankruptcy court approved a stipulation which, among other…