NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-3631-22
DAYS INNS WORLDWIDE, INC., a Delaware Corporation,
Plaintiff-Respondent,
v.
BASCO TRUST, a California Trust, and STEVEN BEIN, an individual,
Defendants-Appellants. ______________________________
BASCO TRUST, a California Trust, and STEVEN BEIN, an individual,
Third-Party Plaintiffs- Appellants,
DAVID PATEL and DRP MANAGEMENT, LLC,
Third-Party Defendants. ______________________________
Submitted January 28, 2025 – Decided April 7, 2025 Before Judges Gilson, Firko, and Bishop-Thompson.
On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. L-0874-19.
Guarino & Co. Law Firm, LLC, attorneys for appellants (Philip L. Guarino, on the briefs).
Connell Foley, LLP, attorneys for respondent Days Inns Worldwide, Inc. (Patrick E. During, of counsel; Bryan P. Couch, of counsel and on the brief).
PER CURIAM
Plaintiff Days Inns Worldwide, Inc. (plaintiff or Days Inns) had a
licensing agreement (the License Agreement) with defendant Basco Trust
(Basco), under which Basco operated a hotel as a Days Inn. Defendant Steve
Bein (Bein) is the sole trustee of Basco, and he signed a guaranty (the Guaranty),
agreeing to pay or perform all Basco's obligations under the License Agreement.
Days Inns sued defendants, alleging that they breached the License
Agreement and Guaranty. Days Inns sought payment of outstanding fees owed
under the License Agreement, liquidated damages, interest, attorneys' fees, and
costs. Following a bench trial, the trial court found that defendants had breached
the License Agreement by failing to make payments of fees and by terminating
the License Agreement prematurely. The trial court also rejected all of
defendants' alleged defenses. Consequently, on July 11, 2022, the trial court
A-3631-22 2 entered a judgment awarding Days Inns $134,444.94 in fees owed and
$312,691.95 in liquidated damages. On June 29, 2023, the trial court entered a
second judgment awarding Days Inns $57,208.41 in attorneys' fees and
$2,569.91 in costs.
Defendants now appeal from both judgments. Essentially, defendants
dispute the factual findings made by the trial court and argue that the trial court
should have found that Days Inns had breached the License Agreement and Bein
should not have been liable under the Guaranty. Because the trial court's
findings of facts are supported by substantial credible evidence, and because the
judgments are consistent with well-established law, we reject all of defendants'
arguments and affirm both judgments.
I.
On November 17, 2004, Days Inns and Basco entered into the License
Agreement, which permitted Basco to use the Days Inn brand for a hotel it
owned in Rawlins, Wyoming. Bein signed the License Agreement on behalf of
Basco. The hotel originally had 118 rooms and later it was expanded to 120
rooms.
The License Agreement was for fifteen years, running from November
2004 through December 2019. Under the License Agreement, Days Inns agreed
A-3631-22 3 to provide certain services to Basco and Basco agreed to pay monthly fees for
those services and for the use of the Days Inn brand.
In terms of its obligations, Days Inns, under Section four of the License
Agreement, agreed to provide Basco with training, a computerized reservation
system, marketing, and other services. In September 2015, Basco and Days Inns
signed an additional agreement, giving Basco use and access to certain computer
programs and systems (the SynXis Agreement). Under Section five of the
SynXis Agreement, Basco was to pay certain fees to use the computer programs
and systems. If Basco failed to make those payments, Basco's use of the systems
could be "suspend[ed] . . . until such amounts [were] paid in full."
Under Section seven of the License Agreement, Basco agreed to pay taxes
and "[r]ecurring [f]ees," including a monthly royalty fee, system assessment
fees, and a "Basic Service Charge." Basco also agreed to pay interest on overdue
fees and taxes calculated at 1.5 percent per month or the maximum rate
permitted by the law. Section eighteen of the License Agreement also discussed
how and at what rate Basco would pay certain recurring fees.
The License Agreement set forth the rights and remedies of the parties.
Section 11.1 stated that Basco would be in default if it failed to make payments
A-3631-22 4 when due, failed to perform its obligations, or if it "otherwise breach [ed] [the
License] Agreement."
Section 11.2 allowed Days Inns to terminate the License Agreement for
various breaches, including if Basco (1) did not cure a default; (2) discontinued
operating the hotel as a "Days Inn" hotel; or (3) lost possession of or the right
to possess the hotel. Section 11.4 also stated that Days Inns could suspend the
hotel from its reservation system for any default or failure to pay or perform
under the License Agreement.
In Section 12.1 of the License Agreement, Basco agreed to pay liquidated
damages if the License Agreement was terminated under Section 11.2 or if
Basco terminated the License Agreement prematurely. In that regard, Section
12.1 stated, in relevant part:
If [Days Inns] terminate[s] the License under Section 11.2, or [Basco] terminate[s] this Agreement (except under Section 11.3 or as a result of our default which we do not cure within a reasonable time after written notice), [Basco] will pay [Days Inns] within [thirty] days following the date of termination, as Liquidated Damages, an amount equal to the sum of accrued Royalties and Basic Service Charges during the immediately preceding [twenty-four] full calendar months (or the number of months remaining in the unexpired Term (the "Ending Period") at the date of termination, whichever is less.)
A-3631-22 5 The License Agreement also stated that if there was a dispute between the
parties, the "non-prevailing party will pay all costs and expenses, including
reasonable attorneys' fees, incurred by the prevailing party to enforce [the
License] Agreement or collect amounts owed under [the License] Agreement ."
Additionally, the License Agreement had several provisions governing
how and where a legal action could be brought. In that regard, the License
Agreement stated that it would be "governed by and construed under the laws of
the State of New Jersey, except for its conflict[] of law principles." Basco also
consented to jurisdiction in New Jersey and venue "in the New Jersey state
courts situated in Morris County." Moreover, both parties waived their right to
a jury trial.
Shortly after Bein signed the License Agreement on behalf of Basco, he
signed the Guaranty. In the Guaranty, Bein agreed that if Basco defaulted under
the License Agreement, he would "immediately make each payment and perform
or cause [Basco] to perform, each unpaid or unperformed obligation of [Basco]
under the [License] Agreement."
The parties operated under the License Agreement from 2004 to 2017. In
2017, Basco fell behind in making certain recurring fee payments. As a result,
in late 2017, Days Inns twice suspended the reservation system for the hotel.
A-3631-22 6 Bein claims that he negotiated an oral agreement with Days Inns under which
he or Basco would pay $10,000 per month towards the unpaid fees and Days
Inns would restore the reservation system. Bein paid $10,000 in early December
2017. Bein also asserts that Days Inns thereafter reneged on the oral agreement
by demanding $18,000 or $19,000 per month towards the arrears.
On January 23, 2018, Basco, in a letter signed by Bein, informed Days
Inns that effective February 5, 2018, the hotel would cease to operate as a Days
Inn and instead would be operated as a Magnuson Hotel. In a letter dated
February 28, 2018, Days Inns acknowledged Basco's termination of the License
Agreement and advised Basco that it was required to pay Days Inns liquidated
damages for the premature termination and all outstanding recurring fees
through the date of the termination. In that regard, Days Inns demanded
$178,319.63 in liquidated damages and $87,926.59 in fees and charges. Neither
Basco nor Bein made any payments towards the outstanding recurring fees or
the liquidated damage claim.
Basco ceased operating the hotel as a Days Inn effective February 5, 2018.
Apparently, the agreement with Magnuson Hotels did not work out and Bein
testified that the hotel was lost in a foreclosure proceeding.
A-3631-22 7 In April 2019, Days Inns sued defendants in the Law Division in Morris
County. Days Inns asserted claims against defendants for breach of the License
Agreement and the Guaranty and sought payments of the outstanding recurring
fees, liquidated damages, interest, attorneys' fees, and costs.
Defendants filed an answer to the complaint and asserted various
defenses. Defendants did not, however, file any counterclaim against Days
Inns.1
After various pretrial proceedings, a two-day bench trial was conducted
in May 2022. The trial court heard testimony from three witnesses: two
executives of Days Inns or its parent company, and Bein. The Days Inns
executives explained the relationship between Days Inns and Basco, and how
Days Inns calculated its alleged damages. Bein testified about his
communications with various representatives of Days Inns, particularly the
communications he had in December of 2017. The parties also submitted into
evidence various exhibits and documents to support their positions.
1 Defendants did file a third-party complaint against David Patel and DRP Management, LLC, who they alleged agreed to operate the hotel as a Magnuson Hotel. The record does not reflect what happened with those third-party claims, but they are not at issue on this appeal. A-3631-22 8 On July 11, 2022, the trial court entered a judgment in favor of Days Inns
awarding it $134,444.94 for unpaid recurring fees, and $312,691.95 in
liquidated damages. Both those amounts included pre-judgment interest. The
trial court also ruled that Days Inns was entitled to attorneys' fees and costs
In support of the judgment, the trial court issued a written statement
setting forth its findings of facts and conclusions of law. The trial court found
that Basco had breached the License Agreement by terminating the Agreement
prematurely. The court also found that Basco had fallen behind in paying the
monthly recurring fees. Relying on exbibits submitted by Days Inns, the trial
court found that Basco owed Days Inns $134,444.94 in fees for services
provided between June 2017 to February 2018.
Addressing the liquidated damages, the trial court determined that the
provision was reasonable and enforceable under the law. The court then found
that defendants had terminated the License Agreement prematurely by ending it
on February 5, 2018, twenty-two months before its expiration date. The trial
court also accepted Days Inns' proofs that it was entitled to $312,691.95 in
liquidated damages.
A-3631-22 9 In reaching its conclusions, the trial court considered, but rejected,
defendants' defenses. The court found that Days Inns had provided the training
it agreed to under the License Agreement. The trial court also found that Days
Inns had not breached the License Agreement by suspending the reservation
system for the hotel from November 19, 2017 to November 30, 2017, and again
on December 18, 2017. Concerning the suspensions, the trial court found that
at those times, Basco was in financial arrears and Days Inns had the right to
suspend the reservation system under Section 11.4 of the License Agreement.
The trial court expressly rejected Bein's claim that Days Inns had agreed
to a new oral agreement to accept $10,000 per month towards the outstanding
fees to restore the reservation system. The trial court also rejected defendants'
claim that Days Inns breached the License Agreement concerning the marketing
services provided. Instead, the court found that Days Inns had provided the
marketing services as required by the License Agreement.
The trial court also found that Bein had signed and agreed to the Guaranty.
In that regard, the court noted that the parties had submitted different copies of
the Guaranty and defendants had argued that the copy they submitted was
illegible and unclear. Focusing on the legible copy of the Guaranty, the trial
A-3631-22 10 court held that the Guaranty had been signed by Bein, and its terms and
conditions were clear.
The trial court then directed Days Inns to submit certifications to support
its claims for attorneys' fees and costs. After receiving Days Inns' submissions,
and reviewing defendants' opposition, on June 29, 2023, the trial court issued a
second judgment awarding Days Inns $57,208.41 in attorneys' fees and
$2,569.91 in costs. The trial court supported that second judgment with an
additional statement of reasons.
In its statement of reasons, the trial court analyzed Days Inns' claims for
attorneys' fees and costs. It noted that Days Inns was seeking $87,351.17 in
counsel fees. The court found that $14,900 of those fees were not properly
supported. The trial court also found that 40.9 hours of the claimed services
were excessive and, therefore, it further reduced the fees claim by $13,998.50.
Concerning the costs, the trial court noted that Days Inns had ordered
expedited transcripts, which the court found were not necessary. Accordingly,
the court reduced the costs by $1,244.26. Days Inns had sought costs of
$3,814.27 and, therefore, the trial court reduced that amount to $2,569.91.
Defendants now appeal from both judgments.
A-3631-22 11 II.
On appeal, defendants make four arguments. They contend that the trial
court erred in (1) finding that defendants breached the License Agreement and
not finding that Days Inns had breached the Agreement; (2) not finding that
Days Inns breached the implied covenant of good faith and fair dealing; (3)
holding Bein liable under the Guaranty; and (4) awarding Days Inns attorneys'
fees and costs. Neither the facts nor the law support defendants' arguments.2
We review a "trial court's determinations, premised on the testimony of
witnesses and written evidence at a bench trial," under a deferential standard.
Nelson v. Elizabeth Bd. of Educ., 466 N.J. Super. 325, 336 (App. Div. 2021)
(quoting D'Agostino v. Maldonado, 216 N.J. 168, 182 (2013)). We accept the
trial court's factual findings unless "they are so manifestly unsupported by or
inconsistent with the competent, relevant and reasonably credible evidence as to
offend the interests of justice[.]" D'Agostino, 216 N.J. at 182 (alteration in
original) (quoting Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169
(2011)). A trial court's legal conclusions and the legal consequences that flow
from established facts are reviewed de novo. Motorworld, Inc. v. Benkendorf,
2 Defendants do not challenge the liquidated damages or how the damages awards, including the interest imposed, were calculated. Accordingly, we do not address those issues. A-3631-22 12 228 N.J. 311, 329 (2017); Manalapan Realty, L.P. v. Twp. Comm. of Manalapan,
140 N.J. 366, 378 (1995).
A. The Breach of the License Agreement.
After hearing all the testimony and considering the exhibits admitted into
evidence, the trial court found that in 2017 Basco had failed to pay several
months of recurring fees when they were due. The trial court also found that
Basco prematurely terminated the License Agreement twenty-two months early
by ceasing to operate the hotel as a Days Inn on February 5, 2018. Those
findings are amply supported by the credible evidence at trial. Those facts also
establish breaches under Section 11.2 of the License Agreement. In addition,
the premature termination of the License Agreement triggered the liquidated
damages provision in Section 12.1.
The trial court also considered but rejected each of defendants' contentions
that Days Inns had breached the License Agreement thereby justifying Basco's
termination. Defendants had argued that Days Inns had breached the License
Agreement by (1) not providing appropriate training; (2) not providing
appropriate marketing; and (3) improperly suspending the hotel's reservation
system. The trial court found that Days Inns had provided the training called
for under the License Agreement. The court also found that Days Inns had
A-3631-22 13 marketed the hotel as required by the License Agreement. In that regard, the
trial court pointed out that the License Agreement was clear in explaining that
Days Inns would provide general marketing on behalf of the Days Inn trade
name and would not necessarily market specific hotels.
Finally, the trial court found that Days Inns acted within its contractual
rights to suspend the reservation system at Basco's hotel in November and
December 2017, because Basco had fallen behind in making its recurring
monthly fee payments. To support that finding, the court pointed to Section
11.4 of the License Agreement, which expressly stated that Days Inns had the
right to suspend the reservation system if Basco, after notice, "default[ed] or
fail[ed] to pay or perform."
Defendants simply disagree with the trial court's factual findings. Our
scope of review on an appeal is not to reweigh or reevaluate the disputed facts;
rather we consider if the facts found by the trial court are supported by credible
evidence. D'Agostino, 216 N.J. at 182. As we have already summarized, in this
matter the factual findings are supported by substantial credible evidence.
B. The Alleged Breach of the Implied Covenant of Good Faith and Fair Dealing.
An implied covenant of good faith and fair dealing exists in every contract
in New Jersey. Wood v. N.J. Mfrs. Ins. Co., 206 N.J. 562, 577 (2011); Sons of
A-3631-22 14 Thunder, Inc. v. Borden, Inc., 148 N.J. 396, 420 (1997). "[A] party claiming a
breach of the covenant of good faith and fair dealing 'must provide evidence
sufficient to support a conclusion that the party alleged to have acted in bad faith
has engaged in some conduct that denied the benefit of the bargain originally
intended by the parties.'" Brunswick Hills Racquet Club, Inc. v. Route 18
Shopping Ctr. Assocs., 182 N.J. 210, 225 (2005) (quoting 23 Williston on
Contracts § 63:22, at 513-14 (Lord Ed. 2002)).
The implied covenant of good faith and fair dealing, however, "cannot
override an express term in a contract." Wilson v. Amerada Hess Corp., 168
N.J. 236, 244 (2001); see also Barila v. Bd. of Educ. of Cliffside Park, 241 N.J.
595, 616 (2020) (holding that courts must enforce a contract as written, when
the language is clear and unambiguous). In that regard, "when the intent of the
parties is plain and the language is clear and unambiguous, a court must enforce
the agreement as written, unless doing so would lead to an absurd result." Barila,
241 N.J. at 616 (quoting Quinn v. Quinn, 225 N.J. 34, 45 (2016)). So, when a
contract contains a clear and unambiguous integration clause, the parol evidence
rule "prohibits the introduction of [oral and documentary] evidence that tends to
alter [the] integrated written document." Conway v. 287 Corp. Ctr. Assocs., 187
A-3631-22 15 N.J. 259, 268 (2006) (citing Restatement (Second) of Conts § 213 (Am. L. Inst.
1981)).
Defendants argue that Bein negotiated an oral agreement with Days Inns,
under which Basco would pay $10,000 per month towards the unpaid fees and
Days Inns would restore the reservation system. Defendants then argue that
Days Inns reneged on that agreement thereby breaching an implied covenant of
good faith and fair dealing. We reject that argument for two reasons.
First, the trial court, after hearing testimony and considering the exhibits,
expressly rejected Bein's claim that Days Inns had agreed orally to accept
$10,000 per month towards the outstanding fees to restore the reservation
system. The trial court found that Days Inns had not confirmed they agreed to
accept the $10,000 to restore the reservation system. The trial court also found
that Bein's claim was inconsistent with Section 11.4 of the License Agreement,
which allowed Days Inns to suspend the reservation system when Basco was
behind on its monthly payments.
Second, the License Agreement had an integration clause which stated:
"All modifications, waivers, approvals and consents of or under this Agreement
by [Days Inns] must be in writing and signed by [a Days Inns] authorized
representative to be effective." Defendants' reliance on the alleged oral
A-3631-22 16 agreement is inconsistent with the integration clause and, therefore, is not
enforceable. See Walid v. Yolanda for Irene Couture, Inc., 425 N.J. Super. 171,
185 (App. Div. 2012) (stating that "the parol evidence rule operates to prohibit
the introduction of oral promises to alter or vary an integrated written
instrument" (quoting Ocean Cape Hotel Corp. v. Masefield Corp., 63 N.J. Super.
369, 378 (App. Div. 1960))).
C. The Guaranty.
Bein argues that he should not have been found liable under the Guaranty
because its terms were unclear. To support that position, Bein points to an
exhibit defendants submitted, which is a blurred copy of the Guarant y. He then
argues that the Guaranty is "virtually incomprehensible." Days Inns, however,
produced a legible copy of the Guaranty.
The trial court considered these same arguments by defendants but
rejected them. The trial court found that Bein had signed the Guaranty and
rejected his argument that he did not understand it. Instead, the trial court found
that the Guaranty was "sufficiently" clear in explaining that Bein was personally
guaranteeing the payments and performance of Basco under the License
Agreement.
A-3631-22 17 The trial court's findings concerning the Guaranty are supported by the
substantial credible evidence presented at trial. There is no dispute that Bein
signed the Guaranty. The terms of the Guaranty are clear in stating that "[u]pon
default by [Basco] and notice" Bein would "immediately make each payment
and perform or cause [Basco] to perform, each unpaid or unperformed obligation
of [Basco] under the [License] Agreement."
D. The Attorneys' Fees and Costs Award.
"A prevailing party can recover counsel fees if expressly allowed by
statute, court rule, or contract." Empower Our Neighborhoods v. Guadagno, 453
N.J. Super. 565, 579 (App. Div. 2018). Generally, the party who prevails on a
breach of contract claim satisfies the contractual right for an award of fees.
Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 385-86 (2009).
We review an award of attorneys' fees for an abuse of discretion.
Empower Our Neighborhoods, 453 N.J. Super. at 579; Shore Orthopaedic Grp.,
LLC v. Equitable Life Assurance Soc'y of the U.S., 397 N.J. Super. 614, 623
(App. Div. 2008). "[F]ee determinations by trial courts will be disturbed only
on the rarest of occasions, and then only because of a clear abuse of discretion."
Empower Our Neighborhoods, 453 N.J. Super. at 579 (alteration in original)
(quoting Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 444 (2001)).
A-3631-22 18 In this matter, Days Inns was entitled to reasonable attorneys' fees and
costs under Section 17.4 of the License Agreement. That provision, which
described remedies, states: "The non-prevailing party will pay all costs and
expenses, including reasonable attorneys' fees, incurred by the prevailing party
to enforce this Agreement or collect [monies] owed under this Agreement." The
trial court found that Days Inns was the prevailing party in the litigation.
The trial court then reviewed and evaluated Days Inns' submissions
concerning its attorneys' fees and costs. The trial court also reviewed
defendants' opposition to those fees and costs. Days Inns had sought $87,351.17
in attorneys' fees. The court reduced that claim by $28,898.50, finding that
$14,900.00 was not supported by the proofs and $13,998.50 was not reasonable,
because the nature of the services rendered was not explained. The trial court
also reduced the request for costs by $1,244.26, because Days Inns had chosen
to order expedited transcripts, which the court found were unnecessary. While
the trial court's analysis could have been more detailed, we discern no abuse of
discretion and no reversible error in the court's award of attorneys' fees and
costs.
The New Jersey Supreme Court has repeatedly stated that trial courts
should evaluate the reasonableness of a fee request by comparing the amounts
A-3631-22 19 requested to the amount of damages recovered. See Packard-Bamberger & Co.,
167 N.J. at 445-46; Litton Indus., Inc., 200 N.J. at 386-87. The litigation here
involved claims for unpaid recurring fees and liquidated damages. Days Inns
recovered a judgment of $447,136.89 (consisting of $134,444.94 for recurring
fees and $312,691.95 for liquidated damages). An award of $57,208.41 in
attorneys' fees is reasonable in comparison to the amount of damages actually
recovered.
Affirmed.
A-3631-22 20