Red Roof Franchising LLC v. AA Hospitality Northshore, LLC

937 F. Supp. 2d 537, 2013 WL 1314326, 2013 U.S. Dist. LEXIS 44046
CourtDistrict Court, D. New Jersey
DecidedMarch 28, 2013
DocketCivil Action Nos. 10-cv-4065, 10-cv-4120
StatusPublished
Cited by19 cases

This text of 937 F. Supp. 2d 537 (Red Roof Franchising LLC v. AA Hospitality Northshore, LLC) 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
Red Roof Franchising LLC v. AA Hospitality Northshore, LLC, 937 F. Supp. 2d 537, 2013 WL 1314326, 2013 U.S. Dist. LEXIS 44046 (D.N.J. 2013).

Opinion

HILLMAN, District Judge.

TABLE OF CONTENTS

I. FACTUAL AND PROCEDURAL BACKGROUND............. 540

A. Factual Background Related to Civil Action 10-cv-4065 ...................541

B. Factual Background Related to Civil Action 10-cv-4120 ..................542

II. DISCUSSION...........................................................542

A. Defendants’ Motion for Reconsideration in Civil Action 10-ev-4065 .........542

B. Plaintiffs Motion For An Order Determining Amount Due and Entering Final Judgment in Civil Action 10-cv-4065............:.......547

1. Damages for Unpaid Franchise Fees................................548

a. Defendants’ Claims that Plaintiffs Accounting of Damages is Incomplete ................................................548

b. Defendants’ Claims that Plaintiffs Accounting of Damages is Incorrect.............................. 549

i. Defendants’ Recorded Payments .........................549

ii. Hardware Monitoring and Maintenance Fees ..............551

[540]*540iii. Travel Agent and GDS Fees................. 553

iv. Signature Program Fees................................553

v. In-House Management Training Fee .....................554

vi. Miscellaneous Other Expenses...........................555

e.. Accrued Interest on the Unpaid Franchise Fees..................555

2. Liquidated Damages..............................................556

3. Attorneys’ Fees..................................................558

4. Summary........................................................558

C. Defendants’ Motion for Reconsideration in Civil Action lO-cv-4021 .........559

D. Plaintiffs Motion For An Order Determining Amount Due and Entering Final Judgment in Docket No. 10-4120 .......................559

1. Signature Program Fees..........................................560

2. Defendants’ Recorded Payments ...................................561

3. Interest Accrued on Defendants’ Unpaid Franchise Fees..............562

4. Liquidated Damages.............................. 562

5. Lost Profits......................................................562

6. Attorneys’ Fees.....................'.............................562

7. Summary........................................................564

III. CONCLUSION.....................................................564

In this Memorandum Opinion, the Court addresses several motions filed in two separate but related civil actions, docketed at lO-cv-4065 and 10-cv-4021. Currently pending before the Court are four motions: (1) the Motion for Reconsideration by Defendants AA Hospitality Northshore, LLC (“AAHN”) and Alpesh and Aruna Patel in Civil Action 10-cv-4065; (2) Plaintiff Red Roof Franchising LLC, Inc.’s (“RRF”) Motion For An Order Determining Amount Due and Entering Final Judgment in Civil Action 10-cv-4065; (3) the Motion for Reconsideration by Defendants AAHN and Asvin and Aruna Patel in Civil Action 10-cv-4021; and (4) RRF’s Motion For An Order Determining Amount Due and Entering Final Judgment in Civil Action lO-ev-4021.1 For the reasons that follow, Defendants’ Motions for Reconsideration in both civil actions will be denied, and Plaintiffs Motions For An Order Determining Amount Due and Entering Final Judgment will be granted in part and denied in part in both civil actions.

I. FACTUAL AND PROCEDURAL BACKGROUND

The full factual background of this case is familiar to all relevant parties and the Court, and is detailed in the Court’s prior Opinions. The Court therefore only briefly discusses the facts and procedural history relevant to the instant motions.

This matter involves an alleged breach of two separate Red Roof Inn franchise agreements entered into between RRF and various members of the Patel family. The first franchise agreement was entered into between RRF and Asvin and Aruna Patel related to the operation of a RRF hotel in Bellmawr, New Jersey. The legal action stemming from the alleged breach of this franchise agreement is docketed at 10-cv-4065. The second franchise agreement was entered into between RRF and Alpesh and Aruna Patel related to the [541]*541operation of a RRF hotel in Duluth, Minnesota. It appears from the record that Asvin Patel is Alpesh Patel’s father.2 The legal action related to the alleged breach of the Minnesota franchise agreement is docketed at 10-cv-4021. Both cases involve largely similar factual scenarios and the complaints in both legal actions contain nearly identical claims and counterclaims.3 Furthermore, since the filing of the initial complaints, both legal actions have reflected essentially mirrored dockets, complete with the filing of virtually identical motions and briefing, and representation by the same counsel.

A. Factual Background Related to Civil Action lO-cv-4065

On August 23, 2002, Asvin and Aruna Patel entered into a written franchise agreement with RRF’s predecessor, Red Roof Inns, Inc., to operate a hotel in Bellmawr, New Jersey. On March 1, 2005, Red Roof Inns assigned its rights and obligations under the franchise agreement to Accor Franchising North America, LLC (“Accor”). On June 20, 2007, Accor assigned its rights and obligations under the franchise agreement to Plaintiff RRF.

On June 13, 2006, the Patels assigned their interest in the franchise agreement to Defendant AAHN through a written transfer assignment and consent; The Patels also executed a guarantee, indemnification, and acknowledgment at this time, according to which they guaranteed the performance of AAHN’s obligations. Subsequently, AAHN fell behind in payments it owed to RRF and defaulted under the terms of the franchise agreement. On January 19, 2010, RRF sent a notice of default to Defendants, indicating that they were in default and had the opportunity to cure by March 26, 2010. Defendants failed to do so, and RRF therefore sent them a notice of termination on April 10, 2010.

On August 9, 2010, Plaintiff RRF filed a Complaint in this Court, asserting three counts against Defendants: - (1) breach of contract based on the franchise agreement; (2) breach of contract based on the guarantee agreement; and (3) specific performance related to the removal of Red Roof Inn signs and marks and continued use of its proprietary and confidential information. On October 17, 2011, Plaintiff moved for partial summary judgment on the breach of contract claims, which the Court granted on June 28, 2012. In granting summary judgment on the breach of the franchise agreement claim, the Court specifically stated as follows:

Defendants argue that the calculation of damages does not take into consideration the payments made by them, and does not indicate the type of fee. Defendants’ dispute over the amount of damages,. however, does not challenge the fact that RRF incurred damages as a result of the breach.

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937 F. Supp. 2d 537, 2013 WL 1314326, 2013 U.S. Dist. LEXIS 44046, Counsel Stack Legal Research, https://law.counselstack.com/opinion/red-roof-franchising-llc-v-aa-hospitality-northshore-llc-njd-2013.