LA QUINTA FRANCHISING LLC v. SHIN HOSPITALITY, INC.

CourtDistrict Court, D. New Jersey
DecidedSeptember 29, 2025
Docket2:22-cv-05183
StatusUnknown

This text of LA QUINTA FRANCHISING LLC v. SHIN HOSPITALITY, INC. (LA QUINTA FRANCHISING LLC v. SHIN HOSPITALITY, INC.) is published on Counsel Stack Legal Research, covering District Court, D. New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
LA QUINTA FRANCHISING LLC v. SHIN HOSPITALITY, INC., (D.N.J. 2025).

Opinion

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

LA QUINTA FRANCHISING LLC, Civil Action No. 22-5183 Plaintiff,

v. OPINION

SHIN HOSPITALITY, INC., PERCY September 29, 2025 POONIWALA, and DINAZ SURTEE

Defendants/Counter Claimants/Third-Party Claimants

v.

LQ MANAGEMENT LLC and TRAVEL & LEISURE LLC

Third-Party Defendants.

SEMPER, District Judge. The current matter comes before the Court on Plaintiff La Quinta Franchising LLC’s (“LQF”), third-party Defendant LQ Management LLC’s (“LQM”), and Defendants Shin Hospitality (“Shin”), Percy Pooniwala (“Pooniwala”), and Dinaz Surtee’s (“Surtee”) (collectively “Defendants”) cross Motions for Summary Judgment. (ECF 71, “Defendants’ Motion” or “DMSJ”; ECF 72, “Plaintiff’s Motion” or “PMSJ”; collectively “Motions.”) The parties opposed the Motions. (ECF 75, “Plaintiff’s Opposition” or “Pl. Opp.”; ECF 76, “Defendants’ Opposition” or “Def. Opp.”) The parties filed replies. (ECF 77, “Defendants’ Reply” or “Def. Reply”; ECF 78, “Plaintiff’s Reply” or “Pl. Reply.”) The Court has decided these motions upon the submissions of the parties, without oral argument, pursuant to Federal Rule of Civil Procedure 78 and Local Rule 78.1. For the reasons stated below, Plaintiff’s Motion is GRANTED and Defendants’ Motion is DENIED. I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY1 This dispute concerns a Franchise Agreement between Plaintiff and Defendants in which

the parties contracted for Defendants to operate a hotel facility in Merrillville, Indiana (“the Merrillville Facility”) under the La Quinta brand in exchange for paying certain fees to Plaintiff. Plaintiff asserts (in part) that Defendants have failed to comply with the terms of the Franchise Agreement and thus are liable to Plaintiff for the contractual fees and liquidated damages. Defendants assert (in part) that Plaintiff breached the Franchise Agreement by failing to provide certain disclosures as required by FTC regulations, relieving Defendants of their contractual obligations. Plaintiff La Quinta Franchising LLC is a Nevada limited liability company with its principal place of business in New Jersey. (ECF 1, “Compl.” ¶ 1.) Defendant Shin Hospitality, Inc. is a Minnesota corporation with a principal place of business in Minnesota, and Defendants

Percy Pooniwala and Dinaz Surtee are natural persons residing in Minnesota. (Id. ¶¶ 2-4.) Third- party Defendant LQ Management LLC is a Delaware limited liability company with its principal place of business in New Jersey. (ECF 72-2, “Plaintiff’s Statement of Undisputed Material Facts” or “PSUMF,” ¶ 2.) In 2020, Pooniwala contracted to purchase the Merrillville Facility from CPLG Properties LLC; the parties made the conveyance of property effective on February 9, 2021. (PSUMF ¶ 26; ECF 72-15, “Special Warranty Deed.”) On August 24, 2020, before the effective date of the

1 The facts and procedural history are drawn from the Complaint (ECF 1, “Compl.”), the Motions, and the exhibits attached thereto. See In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997). conveyance, Pooniwala applied to LQF for Shin Hospitality to franchise the facility as a La Quinta. (PSUMF ¶ 27; ECF 72-16, “La Quinta Franchise Application.”) LQF provided Shin and Pooniwala with a Franchise Disclosure Document (“FDD”) dated March 31, 2020 (and amended on October 9, 2020), which Defendants reviewed and signed on December 23, 2020. (ECF 72-7,

ECF 72-8.) On February 10, 2021, the parties entered into the Franchise Agreement (ECF 72-6), and effective as of that date, Pooniwala and Surtee executed a guaranty agreement (the “Guaranty”) in which they assumed liability for Shin’s obligations under the Franchise Agreement. (ECF 72-9.) After completing the conveyance of the property and executing the Franchise Agreement and Guaranty, Shin began operating the Merrillville Facility as a La Quinta hotel. (PUSMF ¶ 10.) On June 19, 2022, Shin’s representative Andy Rathod sent a letter to Joe Maida, the Director of Contract Compliance at Wyndham Hotel Group, demanding that “the Franchisor and Franchisee relations between the two parties terminate immediately, so as the hotel has some chance of surviving by opening its reservation system independently.” (ECF 72-10 at DEF_00654.) On

June 29, 2022, Shin’s counsel Jaren L. Johnson sent a letter to LQF provide notice of Shin’s claims against LQF, propose a resolution to those claims, and request that LQF terminate the Franchise Agreement. (ECF 72-11.) On August 23, 2022, LQF and Wyndham sent a letter to Shin’s counsel acknowledging termination of the Franchise Agreement, denying Shin’s allegations of misconduct against them, and demanding that Shin fulfill certain post-termination obligations. (ECF 72-12.) That same day, August 23, 2022, LQF filed the Complaint in the instant action, invoking diversity jurisdiction, requesting that this Court enforce the Franchise Agreement by: (1) enjoining Defendants to account for all revenue they derived under the Franchise Agreement; (2) finding Defendants liable for liquidated damages of $801,021.41; (3) awarding actual damages of an as- yet-undetermined amount; (4) awarding Recurring Fees totaling $124,016.50; and (5) allowing Plaintiff to collect prejudgment interest, fees and costs of suit. (Compl. ¶¶ 25-48.) On October 19, 2022, Defendants filed an Answer to the Complaint, which included third-party complaints and counterclaims against Wyndham Hotel Group LLC, Wyndham Worldwide Corporation

(collectively “Wyndham”), and LQF. (ECF 10.) Defendants amended their Answer on July 12, 2023, and again on August 10, 2023, adding third-party claims against Travel & Leisure LLC and LQM. (ECF 33, 37.) LQF and LQM filed Answers to Defendants’ counterclaims and third-party complaint on October 3, 2023. (ECF 42.) The parties engaged in discovery and twice attempted to resolve the dispute in mediation, but they did not successfully reach a resolution. (ECF 68.) As described supra, the parties filed cross motions for summary judgment, responses, and replies. II. LEGAL STANDARD Federal Rule of Civil Procedure 56(a) provides that summary judgment should be granted if the movant shows that “there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.” Kreschollek v. S. Stevedoring Co., 223 F.3d 202, 204 (3d

Cir. 2000); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In deciding a motion for summary judgment, a court must construe all facts and inferences in the light most favorable to the nonmoving party. See Boyle v. Cnty. of Allegheny Pa., 139 F.3d 386, 393 (3d Cir. 1998) (citing Peters v. Del. River Port Auth. of Pa. & N.J., 16 F.3d 1346, 1349 (3d Cir. 1994)). The moving party bears the burden of establishing that no genuine issue of material fact remains. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). “[W]ith respect to an issue on which the nonmoving party bears the burden of proof . . .

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LA QUINTA FRANCHISING LLC v. SHIN HOSPITALITY, INC., Counsel Stack Legal Research, https://law.counselstack.com/opinion/la-quinta-franchising-llc-v-shin-hospitality-inc-njd-2025.