Crush City Contruction, LLC v. Englert, Inc.
- John Tunheim
- 0:24-cv-01014
- U.S. District Court · District of Minnesota
- 11
In Crush City Construction, LLC v. Englert, Inc., Judge Tunheim denied Englert's motion to compel arbitration without prejudice because the court cannot yet determine which contract — if any — governs the parties' relationship, and therefore cannot decide whether a valid arbitration agreement applies.
Franchise distributors and companies operating under franchise or dealership agreements, particularly where the controlling agreement is disputed or where business transitions may have created ambiguity about which contract governs. Also relevant to parties seeking to enforce or avoid arbitration clauses in franchise contexts.
What happened
In Crush City Construction, LLC v. Englert, Inc., Crush City Construction, LLC sued Englert, Inc., a LeafGuard gutter franchise company, claiming Englert violated the terms of their distributor agreements by, among other things, threatening to terminate agreements after refusing to allow Crush City to sell its business to a third party. Crush City brought seven claims including breach of contract, violations of Minnesota and Wisconsin franchise and dealership laws, and requests for declaratory and injunctive relief. Englert responded by asking the court to compel arbitration, arguing that the parties' 2003 distributor agreements — which included arbitration clauses — governed the dispute.
The core problem is that multiple contracts might govern the parties' relationship, and the parties disagree about which one applies. The 2003 Rochester Agreement and 2003 Midwest Agreement both contained arbitration clauses. However, in 2017, new agreements covering the same Midwest territories were signed, and those 2017 agreements do not contain arbitration clauses. It is also unclear whether the 2003 Rochester Agreement was ever formally transferred to Crush City, or whether an implied agreement arose from how the parties actually conducted business after that transfer. Each of these possibilities would produce a different legal outcome on the arbitration question.
Judge Tunheim denied Englert's motion to compel arbitration without prejudice — meaning Englert may raise the issue again later — because determining whether a valid arbitration agreement exists is a question for the court, not an arbitrator, and that question cannot be resolved on the current record. The court found that discovery is needed to determine which agreement, if any, governs the Rochester territory relationship between the parties before it can rule on arbitration. The court noted that if discovery establishes that the 2003 Rochester Agreement governs, a renewed motion to compel arbitration may be appropriate at that time.
The detailed version
- Crush City Construction, LLC v. Englert, Inc., Civil No. 24-1014 (JRT/DTS), United States District Court, District of Minnesota
- John R. Tunheim, United States District Judge
- July 24, 2025
Background and Facts
In 1995, Lindus Construction began operating a LeafGuard gutter franchise under Englert, Inc. in Minnesota and Wisconsin. By 2003, Lindus Construction and Englert had entered into at least two relevant distributor agreements: (1) the 2003 Rochester Agreement, covering southern Minnesota and southwestern Wisconsin counties, and (2) the 2003 Midwest Agreement, covering central Minnesota and northwestern Wisconsin counties. Both agreements contained identical arbitration clauses requiring arbitration of 'any issue arising out of or relating to this Agreement' in New Brunswick, New Jersey, and both specified New Jersey law and courts for any disputes.
In 2015, Lindus Construction consolidated its Rochester and Midwest territory operations into one office in Baldwin, Wisconsin, and Englert began treating them as a single operation for invoicing and sales quota purposes.
In 2017, Kevin and Emily Lindus transitioned the business to their children (Adam, Andrew, and Alex) and their company, Crush City Construction, LLC. A Termination Agreement formally assigned rights under the 2003 Midwest Agreement (and a Cincinnati Agreement) to Crush City. Englert acknowledged in a letter that Crush City would 'own and operate LeafGuard of Cincinnati and Midwest LeafGuard.' However, the Termination Agreement did not appear to formally assign the 2003 Rochester Agreement to Crush City. Crush City contends that both parties nevertheless operated as though the Rochester Agreement had been assigned, with Englert forwarding Rochester-territory leads to Crush City and Crush City paying royalties for that territory bundled with Midwest royalties.
Also in June 2017, Crush City and Englert signed two new franchise agreements — the 2017 Minnesota Agreement and 2017 Wisconsin Agreement — covering the same geographic territory as the 2003 Midwest Agreement. Critically, neither 2017 agreement contained an arbitration clause, and neither expressly covered the Rochester territory counties.
After Englert was acquired by a private equity firm in 2019, Englert began moving to terminate LeafGuard franchise agreements across the country. In 2023, when Crush City attempted to sell its business to a third party, Englert refused to consent and then claimed, for the first time, that the original 2017 transfer from Lindus Construction to Crush City violated the 2003 Cincinnati and Rochester Agreements. Englert notified Crush City it would terminate those agreements.
Claims
Crush City filed suit asserting seven causes of action: (1) Breach of the 2003 Midwest Agreement; (2) Breach of the 2003 Rochester Agreement; (3) Breach of the Minnesota Franchise Act; (4) Breach of the Wisconsin Fair Dealership Law; (5) Estoppel and Breach of Implied Contract; (6) Declaratory Judgment; and (7) Injunctive relief for unfair trade practices.
Englert's Motion to Compel Arbitration
Englert moved to compel arbitration under the Federal Arbitration Act (FAA), 9 U.S.C. § 3, arguing that the 2003 agreements — which contain broad arbitration clauses — govern the dispute. On a motion to compel arbitration, a court does not evaluate the merits of the underlying dispute; it only determines (1) whether a valid agreement to arbitrate exists, and (2) whether the dispute falls within the scope of that agreement. See Pro Tech Indus. Inc. v. URS Corp., 377 F.3d 868, 871 (8th Cir. 2004). The existence of a valid arbitration agreement is assessed under ordinary state-law contract principles. Arbitration clauses are generally construed broadly, with doubts resolved in favor of arbitration.
Court's Analysis
Judge Tunheim identified the fundamental problem: the parties dispute which contract, if any, governs their current relationship, and only some possibilities would trigger an arbitration obligation.
The court outlined four possible scenarios:
1. 2003 Rochester Agreement governs: If this agreement was effectively transferred to Crush City (through the 2017 transition or by the parties' course of conduct), it would require arbitration. But the court has not seen the Termination Agreement, and whether the Rochester Agreement was validly transferred is an unresolved factual question.
2. 2017 Minnesota and Wisconsin Agreements govern: These agreements contain no arbitration clauses and do not on their face cover the Rochester territory counties. If they govern, there is no mandatory arbitration. However, this determination could change after discovery.
3. An implied franchise/dealership agreement governs: Both the Minnesota Franchise Act (Minn. Stat. § 80C.01, subd. 4(a)) and the Wisconsin Fair Dealership Act (Wis. Stat. § 135.02(3)(a)) allow franchise/dealership agreements to be express or implied, oral or written. An implied agreement based on the parties' course of conduct could borrow the terms of the 2003 Rochester Agreement (including its arbitration clause), borrow the 2017 agreement terms (no arbitration clause), or be something else entirely. This too is an open factual question.
4. No agreement at all: If no agreement covers the Rochester territory relationship with Crush City, Crush City may have no cause of action. This is effectively the inverse of the above possibilities and also remains unresolved.
The court noted that determining whether a valid arbitration agreement exists at all is a question for the court — not an arbitrator — to resolve. See Express Scripts, Inc. v. Aegon Direct Mktg. Servs., Inc., 516 F.3d 695, 700 (8th Cir. 2008). Because that question cannot be answered on the current record, the motion was premature.
Ruling
Judge Tunheim denied Englert's Motion to Compel Arbitration without prejudice (meaning Englert may renew the motion later). The case will proceed to discovery. The court noted that if discovery establishes that the 2003 Rochester Agreement governs the parties' relationship, a renewed motion to compel arbitration after the close of discovery may be appropriate.
Reviewer note from the AI+
Read the full 11-page opinion on CourtListener, the free public archive maintained by the Free Law Project.