Holiday Hospitality Franchising, LLC v. Oakbrook Realty and Investments, LLC

• Court: Court of Appeals for the Eleventh Circuit
• Decided: May 29, 2020
• Docket: 19-15063
• Status: Unpublished

Opinion

Case: 19-15063 Date Filed: 05/29/2020 Page: 1 of 15

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 19-15063 Non-Argument Calendar ________________________

D.C. Docket No. 1:16-cv-03817-MLB

HOLIDAY HOSPITALITY FRANCHISING, LLC,

Plaintiff – Appellee,

versus

OAKBROOK REALTY AND INVESTMENTS, LLC, DONNA KRILICH,

Defendants – Appellants.

________________________

Appeal from the United States District Court for the Northern District of Georgia ________________________

(May 29, 2020)

Before WILSON, JORDAN, and ANDERSON, Circuit Judges. Case: 19-15063 Date Filed: 05/29/2020 Page: 2 of 15

PER CURIAM:

Oakbrook Realty and Investments, LLC and Donna Krilich appeal the grant

of summary judgment in favor of Holiday Hospitality Franchising, LLC, in a suit

arising out of a hotel construction/operation transaction gone awry. Holiday

Hospitality obtained summary judgment on its claims for repayment of a Promissory

Note and for breach of the License between the parties. Oakbrook and Ms. Krilich

contend on appeal that the claim on the promissory note was time barred. They also

argue that there are material issues of fact concerning the alleged breach of the

License and that the liquidated damages claim was not sufficiently supported by

evidence. Upon review of the applicable law and the record, we affirm in part and

reverse in part.

I

Holiday Hospitality, successor in interest to Holiday Hospitality Franchising,

Inc., develops and operates a system of hotel management and operation services

under certain well-known brands, including the Crowne Plaza Hotel brand. Holiday

Hospitality licenses the system and associated trademarks with licensees in exchange

for the payment of royalties and other fees.

In 2009, Oakbrook approached Holiday Hospitality about a licensing

opportunity for a new hotel that it was planning to build in Oakbrook, Illinois. On

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September 30, 2009, the parties entered into a written license agreement to use the

system for the new hotel, which would be operated under the Crowne Plaza brand.

The License authorized Oakbrook to use Holiday Hospitality’s system and

associated trademarks for 20 years from the date of the hotel’s opening. It required

Oakbrook to obtain any permits and approvals required for construction of the hotel

and established a timeline for construction under which Oakbrook would (1) submit

preliminary plans to Holiday Hospitality by February 1, 2011, (2) submit final plans

to Holiday Hospitality by May 1, 2011, (3) begin construction by September 1, 2011,

and (4) complete construction by March 1, 2013. Holiday Hospitality could

terminate the License before the 20-year period if Oakbrook defaulted on any of its

contractual obligations.

In the event that Holiday Hospitality terminated the License for such a breach,

the License provided that Oakbrook would owe Holiday Hospitality liquidated

damages calculated using a formula based on gross room revenue and royalties that

Holiday Hospitality would have expected to receive under the License. The parties

“acknowledge[d] and agree[d] that it would be difficult to determine the injury

caused to [Holiday Hospitality] by termination of this License” and so they

“intend[ed] the . . . liquidated damages calculation to be a reasonable pre-estimate

of [Holiday Hospitality’s] probable loss and not as a penalty or in lieu of any other

payment.” D.E. 24-1 at 25 (License § 14I).

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The same day they signed the License, Oakbrook borrowed $25,000 from

Holiday Hospitality, memorialized by a Promissory Note with a maturity date of

March 1, 2010. Oakbrook’s president, Donna Krilich, executed the Note both on

behalf of Oakbrook as Maker and in her own personal capacity as Co-Maker.

Oakbrook and Ms. Krilich failed to pay by the Note by the maturity date.

Oakbrook also failed to submit the preliminary and final plans for the hotel’s

construction by the dates specified in the License. Shortly after the May 1, 2011

deadline for submitting final plans, Holiday Hospitality sent an email to Oakbrook

to “get an update on the status of the project” and figure out “if there is any chance

that [the] project is not moving forward” in light of a new business opportunity that

had emerged for Holiday Hospitality. D.E. 33-1 at 12 (Declaration of Kim M.

Plencner, Ex. A). Oakbrook claims that it subsequently obtained extensions on the

License deadlines, but does not cite any record evidence to support that claim. So,

after sending multiple letters notifying Oakbrook of the default, Holiday Hospitality

terminated the License on February 13, 2012. Holiday Hospitality demanded

payment of the Note and $961,706.48 in liquidated damages. But Oakbrook and

Ms. Krilich did not pay.

Holiday Hospitality filed an action against Oakbrook and Ms. Krilich in state

court for breach of the License and default on the Note, among other claims. After

the case was removed to federal court, Holiday Hospitality filed its motion for

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summary judgment, which the district court granted. The district court ruled that

Holiday Hospitality was entitled to payment and interest on the Note because the

Note was valid and enforceable and, as an instrument under seal, it had a 20-year

statute of limitations within which Holiday Hospitality could sue. The district court

also concluded that Oakbrook had breached the License and was entitled to its

requested liquidated damages. Finally, the district court held that Ms. Krilich was

liable to Holiday Hospitality for all the amounts Oakbrook owed and that Holiday

Hospitality was entitled to attorney’s fees.

II

We review a grant of summary judgment de novo, viewing all the facts and

making all reasonable inferences in the light most favorable to the nonmoving party.

See Jurich v. Compass Marine, Inc., 764 F.3d 1302, 1304 (11th Cir. 2014) (citation

omitted). Summary judgment is appropriate if there is “no genuine dispute as to any

material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ.

P. 56(a). In evaluating a motion for summary judgment, a court considers all record

evidence, “including depositions, documents, electronically stored information,

affidavits or declarations, . . . or other materials[.]” Fed. R. Civ. P. 56(c)(1)(A).

III

Oakbrook and Ms. Krilich argue that Holiday Hospitality’s claim under the

Note is barred as untimely and contend that there are issues of material fact regarding

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Holiday Hospitality’s claim for liquidated damages which preclude summary

judgment. For the reasons that follow, we conclude that the Note is time barred as

to Oakbrook but not as to Ms. Krilich. On Holiday Hospitality’s liquidated damages

claim, we agree with the district court that there are no issues of fact and therefore

affirm the grant of summary judgment.

A

Georgia provides a six-year statute of limitation for breach of contract claims.

See O.C.G.A. § 9-3-24. Claims upon contracts under seal, however, are governed

by a 20-year statute of limitations. See O.C.G.A. § 9-3-23. “[T]o constitute a sealed

instrument, there must be both a recital in the body of the instrument of an intention

to use a seal and the affixing of the seal or scroll after the signature.” Perkins v. M

& M Office Holdings, LLC, 695 S.E.2d 82, 84 (Ga. Ct. App. 2010) (citation and

emphasis omitted). The word “seal” printed under the parties’ signatures suffices in

lieu of an affixed seal or scroll. See id. (noting that five amendments to an agreement

constituted contracts under seal because they contained the requisite recitals and

“SEAL” was printed by the parties’ signatures) (citation omitted). Similarly, the

words “Legal Signature” or the shorthand notation of “L.S.” can qualify as a seal or

scroll. See Brown v. Cooper, 514 S.E.2d 857, 861 (Ga. Ct. App. 1999) (“The

[Georgia] Supreme Court has held that the combination of the words ‘Witness my

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hand and seal’ in the body of the note and the letters ‘L.S.’ following the maker’s

signature renders the note a sealed instrument.”) (citation omitted).

The Note came due on and was not paid by March 1, 2010, and Holiday

Hospitality filed its complaint on September 15, 2016. Because Holiday Hospitality

took more than six years to file its complaint, its claim is time barred if the Note is

a simple contract and not an instrument under seal.

The Note contains the requisite recital of the intent to use a seal, stating before

the signature lines that “IN WITNESS HEREOF, Maker has executed this Note

under Seal as of the date first above written.” D.E. 24-2 at 3 (Promissory Note).

Immediately below this language, under the word “MAKER,” Ms. Krilich signed on

behalf of Oakbrook. See id. To the left of her signature on behalf of Oakbrook

is a signature on a line titled “Corporate Secretary or Notary with Seal.” Id.

Below her signature for Oakbrook as “MAKER,” Ms. Krilich also signed in

her own capacity as “CO-MAKER.” Id. Her name and the words “Legal

Signature” are printed immediately under this signature. Id.

The defendants acknowledge that the Note contains a recital as to

Oakbrook, but dispute that the “Corporate Secretary or Notary with Seal”

language constitutes the seal or scroll required by Georgia law. As to Ms.

Krilich, the defendants argue that the words “Legal Signature” under her

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signature as Co-Maker do not render the Note under seal as to her because the

Note only contains a recital as to the “Maker.”

Georgia law provides that when a promissory note states that it is given under

seal and the word “seal” appears after the signature of a debtor, the note is a contract

under seal. See Bryant v. Optima Int’l, Inc., 792 S.E.2d 489, 494 (Ga. Ct. App. 2016)

(citation omitted). The Note states that the Maker intends to execute it under seal,

but here, the word “seal” does not appear immediately under or after Ms. Krilich’s

signature as Oakbrook’s representative; rather it appears by the signature of the

corporate secretary or notary attesting to her signature on behalf of Oakbrook.

Georgia courts have declined to attribute to a maker the word “seal,” “sealed” or

similar language “where it was intended to be the expression of whatever witnesses

might attest the paper.” Echols v. Phillips, 37 S.E. 977, 977 (Ga. 1901) (determining

that the words “signed, sealed, and delivered in the presence of,” written above the

portion of the note where witnesses ordinarily attest, absent any language showing

the maker intended to use the words as his own, did not render the note a sealed

instrument); Johnson v. Int’l Agr. Corp., 154 S.E. 465, 465 (Ga. Ct. App. 1930)

(distinguishing notes that contain the phrase “signed, sealed, and delivered in the

presence of,” located above the space for witnessing, and concluding that a note was

a sealed instrument because the maker’s signature was immediately preceded by the

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words, “Given under the hand and seal of each party,” and was immediately followed

by the word “Seal”).

While there is a recital in the body of the Note demonstrating an intention to

use a seal, because there is no affixed seal or use of the word “seal” after Ms.

Krilich’s signature for Oakbrook, the Note is missing one of the two necessary

elements to make it an instrument under seal as to Oakbrook. See Perkins, 695

S.E.2d at 84. Holiday Hospitality’s claim as to Oakbrook is therefore time barred.

Contracts may be under seal as to one party and not the other, however, see

McCalla v. Stuckey, 504 S.E.2d 269, 270 (Ga. Ct. App. 1998), and that is the

situation before us here. Although we determine that the Note is not under seal as

to Oakbrook, we conclude that it is under seal as to Ms. Krilich as Co-Maker.

The words “Legal Signature” appear immediately under Ms. Krilich’s Co-

Maker signature. The defendants point out that recitation of the parties’ intent to

execute the instrument under seal refers only to the “Maker.” Where a recitation in

the body of a contract indicates that the intent to file under seal applies to only one

party, a court will not ignore express contract language to find that the instrument is

under seal as to both parties. See Marshall v. Walker, 178 S.E. 760, 760 (Ga. Ct.

App. 1935) (holding that an instrument that contained recitation that it was under

seal only as to the “party of the first part” was an instrument under seal as to that

party but was a simple contract as to “the party of the second part”). Here the express

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contract language indicates that the word “Maker” can refer to both Oakbrook and

Ms. Krilich.

The Note states that if “more than one person, firm[,] or entity is a Maker

hereunder, then all references to ‘Maker’ shall be deemed to refer equally to each of

said persons, firms, entities, all of whom shall be jointly and severally liable for all

of the obligations of Maker hereunder.” D.E. 24-2 at 3. Despite the fact that the

Note defines Oakbrook as “Maker” and Ms. Krilich as “Co-Maker,” its language

supports the reading that both are makers and both are jointly and severally liable

under the Note. For instance, although the Note refers throughout to the Maker’s

actions, from the opening line both Oakbrook and Ms. Krilich “promise to pay”

Holiday Hospitality the principal sum of $25,000. Because the reference to “Maker”

in the recitation applies to Ms. Krilich, and her signature is closely followed by the

words “Legal Signature,” we conclude that the Note is under seal as to her, and that

Holiday Hospitality’s claim under the Note is not time barred as to her.

B

The defendants next argue that there are genuine issues of material fact about

whether the parties mutually departed from the terms of the License such that

Oakbrook was not in breach. Oakbrook contends that, even if liquidated damages

are proper, Holiday Hospitality failed to adequately support its liquidated damages

amount.

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Oakbrook conceded that it did not submit the necessary plans or complete

construction of the hotel as contemplated in the License. It nevertheless argued that

a series of emails and letters between the parties established their mutual agreement

to depart from the License. See D.E. 33-1 (exhibits containing May 3, 2011 Holiday

Hospitality email, October 20, 2011 Oakbrook letter, and July 5, 2012 Oakbrook

letter). Upon review of the License and the referenced correspondence, we agree

with the district court that there is no conflicting evidence and no fact issue as to

Oakbrook’s breach or the liquidated damages calculation.

First, the License specifically requires that any modification must be in

writing and signed by the parties. See D.E. 24-11 at 23 (§ 14.D) (“No change in this

License will be valid unless in writing signed by both parties.”). That requirement

is enforceable under Georgia law, see Gerdes v. Russell Rowe Communications, Inc.,

502 S.E.2d 352, 354 (Ga. Ct. App. 1996) (citation omitted), and Oakbrook points to

no executed writing that complies with the License requirement and purports to

memorialize any new agreement to modify the License terms.

Second, although waiver of a contract’s written modification requirement can

be established through the parties’ course of conduct, see id. (citation omitted), the

defendants have not submitted evidence that creates a fact question as to this issue.

The correspondence that they present as evidence of mutual departure does not

demonstrate the parties’ mutual intent to change the License terms. The May 3,

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2011, Holiday Hospitality email merely asked for a status update on the project.

Oakbrook’s October 20, 2011, letter stated that Oakbrook “could proceed

expediently” if Holiday Hospitality could give it “some assistance in equity, a joint

venture partner or . . . client who could work with us on a creative deal.” D.E. 33-1

at 5. That same letter stated Oakbrook would appreciate “any consideration you

could give us as to an extension so [as] not to cancel our licensing.” Id. at 6. Finally,

Oakbrook’s July 5, 2012, letter, a response to Holiday Hospitality’s final demand

letter, merely disputed Holiday Hospitality’s right to liquidated damages and

claimed that, through prior meetings and discussions, Holiday Hospitality knew

Oakbrook was not going to build the hotel as contemplated by the License.

Even construing these messages in the light most favorable to Oakbrook and

Ms. Krilich, they do not permit a reasonable jury to conclude that the parties intended

to depart from the License terms. At best they show that Oakbrook desired a

modification of the License, and a one-sided intent to change contract terms is not

enough to show mutual intent to depart from a contract. See Chastain v. Spectrum

Stores, Inc., 418 S.E.2d 420, 422 (Ga. Ct. App. 1992) (“The mere fact that one party

so intended [to waive a distinct stipulation in a contract] would not bring about this

result. It must appear that it was the mutual intention[.]”) (citation omitted). The

district court was therefore correct to enter summary judgment in favor of Holiday

Hospitality.

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The district court was also right to hold that Holiday Hospitality had

adequately supported its claim for liquidated damages. A contract’s liquidated

damages provision is enforceable under Georgia law if “(1) the injury caused by the

breach is difficult or impossible to estimate accurately; (2) the parties intended to

provide for damages rather than a penalty; and (3) the sum stipulated is a reasonable

pre-estimate of the probable loss.” Mariner Health Care Mgt. v. Sovereign, 703

S.E.2d 687, 689 (Ga. Ct. App. 2010) (citation omitted).

Oakbrook and Ms. Krilich do not dispute the first two factors or the propriety

of the liquidated damages formula in the License. Rather, they argue that there was

insufficient evidentiary basis for the $65.42 amount of “average daily revenue per

available room”—one of the variables that must be plugged into the License’s

formula to yield the liquidated damages figure.

Oakbrook and Ms. Krilich do not appear to have disputed this number when

Holiday Hospitality initially provided it in its August 7, 2013, letter attempting to

collect the outstanding amounts purportedly due under the License. They

nevertheless fault Holiday Hospitality for failing to append to its summary judgment

motion a spreadsheet of data collected from its system showing how it arrived at the

$65.42 figure.

While a spreadsheet or similar documentation would have been thorough, it

was not required to show the reasonableness of the liquidated damages calculation

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on summary judgment. Holiday Hospitality submitted letters in support of its

motion for summary judgment that identified the $65.42 figure as the “average daily

revenue per available room.” It also submitted a declaration in support of summary

judgment in which its Vice President of Franchise Licensing and Compliance

explained how the $65.42 figure was calculated and stated that she had personal

knowledge of the facts in her declaration. See D.E. 24-10 at ¶¶ 2, 62–63.

Specifically, she explained that where, as here, there was no available data for a

hotel, Holiday Hospitality and its licensees use a formula that yields a liquidated

damages figure “based on the average daily revenue per available room for all hotels

in the System for the previous (12) months.” Id. at ¶¶ 62–63. An affidavit that is

made on personal knowledge, sets out facts that would be admissible in evidence,

and shows that the declarant is competent to testify on the topic need not attach

documentary support to serve as acceptable evidence on summary judgment. See

Fed. R. Civ. P. 56(c)(4) (setting out requirements for affidavits or declarations). Cf.

United States v. Stein, 881 F.3d 853, 854 (11th Cir. 2018) (en banc) (“[A]n affidavit

which satisfies Rule 56 of the Federal Rules of Civil Procedure may create an issue

of material fact and preclude summary judgment even if it is self-serving and

uncorroborated.”).

Given Holiday Hospitality’s declaration, its letters supplying the formula

variables, and the lack of contrary evidence from Oakbrook and Ms. Krilich, we

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conclude that the district court’s award of liquidated damages was proper and is due

to be affirmed.

IV

The district court held that the Promissory Note between Holiday Hospitality

on one side and Oakbrook and Ms. Krilich on the other was an instrument under seal

as to both Oakbrook and Ms. Krilich. We must reverse this ruling in part because

the two requirements to convert a simple contract to an instrument under seal in

Georgia—a recital of an intent to use a seal in the body of the instrument and the

affixing of the seal after the signature—were met only with respect to Ms. Krilich

and not with respect to Oakbrook. We affirm the district court’s ruling on the breach

of contract claim seeking liquidated damages. The case is remanded for the district

court to enter an amended judgment.

AFFIRMED IN PART AND REVERSED IN PART.