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Maids International, Inc. v. Ward (in re Ward)

194 B.R. 703 (1996)

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Maids International, Inc. v. Ward (in re Ward)

United States Bankruptcy Court for the District of Massachusetts
194 B.R. 703 (1996)

Facts

Michael E. Ward and Angela L. Ward (the debtors) entered into a franchise agreement with Maids International, Inc. (Maids). After the agreement expired, the Wards began a cleaning service of their own, separate from Maids and within the franchise area. By operating a new business in the same area, the Wards breached a noncompete agreement with Maids. Maids initiated arbitration against the Wards with the American Arbitration Association, which awarded Maids damages of $29,232 and issued a cease-and-desist order against the Wards. The Wards filed for Chapter 7 bankruptcy. Maids then filed a complaint in the bankruptcy court requesting an injunction forbidding the Wards from operating their business within 50 miles of the franchised territory. The bankruptcy court dismissed Maids’ complaint and asked Maids to file a proof of claim. Maids timely filed a proof of claim. The bankruptcy court subsequently issued a written opinion explaining its decision to dismiss the complaint and require the proof of claim instead.

Rule of Law

Issue

Holding and Reasoning (Queenan, J.)

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