Choice Hotels International, Inc. v. SM Property Management, LLC.

519 F.3d 200, 2008 U.S. App. LEXIS 4292
CourtCourt of Appeals for the Fourth Circuit
DecidedFebruary 28, 2008
Docket05-1979, 06-1698, 06-1812
StatusPublished
Cited by58 cases

This text of 519 F.3d 200 (Choice Hotels International, Inc. v. SM Property Management, LLC.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Choice Hotels International, Inc. v. SM Property Management, LLC., 519 F.3d 200, 2008 U.S. App. LEXIS 4292 (4th Cir. 2008).

Opinions

Affirmed by published opinion. Senior Judge HAMILTON wrote the opinion, in which Judge NIEMEYER joined. Judge TRAXLER wrote a separate opinion concurring in part and dissenting in part.

OPINION

HAMILTON, Senior Circuit Judge:

Below, Franchisor Choice Hotels International (Franchisor) sought to confirm a $264,305.02 arbitration award (the Arbitration Award) obtained by default against S.M. Property Management, L.L.C., SayHai Cun, and his wife May Duong Cun (collectively Franchisees). In response, Franchisees moved to vacate the arbitration award for lack of notice. The district court declined to confirm the arbitration award and granted Franchisees’ motion to vacate. Franchisor appealed. We affirm.

Franchisees moved to recover attorney’s fees and costs as prevailing parties under terms of the franchise agreement with Franchisor. The district court denied the motion, and Franchisees noted a cross-appeal of such denial. We affirm on this issue also.

I.

On February 18, 2000, the parties executed a franchise agreement (the Franchise Agreement) whereby the Franchisees had the right to operate a hotel located at 450 Memorial Drive, Chicopee, Massachusetts (the Hotel) as a Comfort Inn. Under the Franchise Agreement, the Hotel was subject to periodic inspections in order to ensure compliance with Franchisor’s mandatory quality assurance standards. According to an affidavit in the record by May Duong Cun, she and her husband moved from Kentucky to Massachusetts in February 2000 to run the Hotel.

Of relevance to the present appeal, the definitional section of the Franchise Agreement provided that the term “ ‘Designated Representative’ means your representative for matters about this Agreement.” (J.A. 7). Also of relevance to the present appeal, Section 15 of the Franchise Agreement required that “[a]ll notices required or permitted under this Agreement must be in writing, must be ... mailed by registered or certified mail, return receipt requested ... to you at the Designated Representative’s address.” (J.A. 15). The same section provided that Franchisees “may change the Designated Representative by written notice to” Franchisor. Id.

At the time the parties executed the Franchise Agreement on February 18, 2000, it listed Daniel T. Li (Li) as the Franchisees’ Designated Representative with an address in Ocean Township, New Jersey. Li brokered the deal between the parties culminating in the Franchise Agreement. In a letter dated February 20, 2000 and addressed to Franchisor, Li requested Franchisor to “please direct all future correspondences, bills, circular notices and all matters to the current owner Mr. Say Hai Cun or May Cun at the Comfort Inn, 450 Memorial Drive, Chicopee, Massachusetts 01020. My position of contact representative ends here.” (J.A. 457).

Approximately a year and a half later, Elaine Bracci, General Manager of the Hotel, sent a letter to Lisa Collins, Senior Paralegal of Franchisor, requesting on behalf of the Franchisees that Franchisor “remove the name of Daniel T. Li as licensee rep for MA 405 and substitute the [203]*203names of May D. Cun and Say Hai Cun.” (J.A. 459). Approximately two weeks later, Collins sent a responsive letter addressed to Franchisees at the Hotel address, acknowledging their intentions to change the Designated Representative under the Franchise Agreement, but instructing that they do so by completing the enclosed “Change of Designated Representative Form,” and that “[o]nly the signatures of SM Property Management, L.L.C., Say-Hai Cun and May Duong Cun will make this change effective.” 1 (J.A. 460).

Franchisor received the completed form, dated July 21, 2001, listing Elaine Bracci as the new Designated Representative and the Hotel address as the new address for such representative. Elaine Bracci had signed the form on behalf of S.M. Property Management, L.L.C., in her capacity as General Manager, while Say-Hai Cun and May Duong Cun had signed in their individual capacities. We will refer to this form as the July 21, 2001 Designated Representative Form.

On July 25, 2001, Collins responded by letter again to the Hotel address.2 She expressly acknowledged receipt of the July 21, 2001 Designated Representative Form, but informed the Franchisees that she could not accept the signature of Elaine Bracci, as General Manager on behalf of S.M. Property Management, L.L.C. and that “[a]n authorized officer must sign on behalf of SM.” (J.A. 463). Collins enclosed another blank Change of Designated Representative Form. Franchisees returned such form completed per Collins’ instructions regarding an authorized signature on behalf of S.M. Property Management, L.L.C. (May Duong Cun signed in this regard), except that, although the form listed “Elaine Bracci, G.M.,” as the new Designated Representative, the “New Address for New Designated Representative” section was inadvertently left blank.3 (J.A. 464). Each signature was dated August 2, 2001. We will refer to this form as the August 2, 2001 Designated Representative Form. Franchisor has never seriously disputed during this litigation that the series of letters and forms beginning with Elaine Bracci’s July 2, 2001 letter and ending with the August 2, 2001 Designated Representative Form effectively changed the Franchisees’ Designated Representative under the Franchise Agreement.

After Franchisees began operating the Hotel as a Comfort Inn, Franchisor concluded that Franchisees failed to meet its minimum quality assurance standards and had violated other terms of the Franchise Agreement. Franchisor formally notified Franchisees in writing of the violations by letter dated October 15, 2001, addressed to Daniel Li at his New Jersey address. Thereafter, on January 11, 2002, Franchisor notified Franchisees by letter addressed to Elaine Bracci at the Hotel address that it was terminating Franchisees’ rights to operate the Hotel under the Comfort Inn franchise due to Franchisees’ failure to cure the perceived violations (the Notice of Termination). The Notice of Termination also demanded that Franchisees pay Franchisor $18,812.03, which Franchisor claimed Franchisees owed it under the terms of the Franchise Agreement. The Notice of Termination was [204]*204signed by Kevin M. Rooney, Associate General Counsel for Franchisor.

On August 28, 2003 and September 8, 2003, James G. Healy, Assistant General Counsel for Franchisor, sent the Franchisees letters to the attention of Elaine Bracci at the Hotel address regarding Franchisor’s claims against Franchisees for liquidated damages under the Franchise Agreement. The September 8, 2003 letter stated that Franchisees owed Franchisor $255,196.81 in liquidated damages arising from termination of the Franchise Agreement.

On June 9, 2004, Franchisor filed this diversity action in the district court against Franchisees seeking, inter alia, the same $255,196.81 in liquidated damages. The details of the service of process with respect to this action are relevant to the issues on appeal.

A deputy sheriff for Hampden County, Massachusetts attempted to serve the summons and complaint on May Duong Cun at 384 Stony Hill Road, Wilbraham, Massachusetts.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Lotz v. Vietor
Court of Appeals of Iowa, 2024
Unifirst Corp. v. Indus. Fabrication & Repair, Inc.
Court of Appeals of Tennessee, 2024
Seldin v. Estate of Silverman
305 Neb. 185 (Nebraska Supreme Court, 2020)
Ebbe v. Concorde Inv. Servs., LLC
392 F. Supp. 3d 228 (District of Columbia, 2019)
Grp. III Mgmt., Inc. v. Suncrete of Carolina, Inc.
819 S.E.2d 781 (Court of Appeals of South Carolina, 2018)
Bayer Cropscience Ag v. Dow Agrosciences LLC
680 F. App'x 985 (Federal Circuit, 2017)
Frye v. Wild Bird Centers of America, Inc.
237 F. Supp. 3d 302 (D. Maryland, 2017)

Cite This Page — Counsel Stack

Bluebook (online)
519 F.3d 200, 2008 U.S. App. LEXIS 4292, Counsel Stack Legal Research, https://law.counselstack.com/opinion/choice-hotels-international-inc-v-sm-property-management-llc-ca4-2008.