Red Roof Franchising LLC v. AA Hospitality Northshore, LLC

937 F.Supp.2d 537

RED ROOF FRANCHISING LLC, INC., Plaintiff,

v.AA HOSPITALITY NORTHSHORE, LLC et al., Defendants.

Civil Action Nos. 10–cv–4065, 10–cv–4120.

United States District Court, D. New Jersey.

March 28, 2013.

Peter J. Boyer, Esquire, Benjamin A. Levin, Esquire, Hyland Levin LLP, Marlton, NJ, for Plaintiff.

Frank C. Fusco, Esquire, Clifton, NJ, for Defendants.

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    ¦542    ¦
¦    ¦    ¦10–cv–4065                                                ¦       ¦
+----+----+----------------------------------------------------------+-------¦
¦    ¦B.  ¦Plaintiff's Motion For An Order Determining Amount Due and¦547    ¦
¦    ¦    ¦Entering Final Judgment in Civil Action 10–cv–4065        ¦       ¦
+----------------------------------------------------------------------------+

+----------------------------------------------------+
¦   ¦   ¦1.¦Damages for Unpaid Franchise Fees   ¦548 ¦
+----------------------------------------------------+

+----------------------------------------------------------------------------+
¦    ¦    ¦   ¦a. ¦Defendants' Claims that Plaintiff's Accounting of ¦548    ¦
¦    ¦    ¦   ¦   ¦Damages is Incomplete                             ¦       ¦
+----+----+---+---+--------------------------------------------------+-------¦
¦    ¦    ¦   ¦b. ¦Defendants' Claims that Plaintiff's Accounting of ¦549    ¦
¦    ¦    ¦   ¦   ¦Damages is Incorrect                              ¦       ¦
+----------------------------------------------------------------------------+

+----------------------------------------------------------------------------+
¦    ¦    ¦   ¦   ¦i.  ¦Defendants' Recorded Payments                ¦549    ¦
+----+----+---+---+----+---------------------------------------------+-------¦
¦    ¦    ¦   ¦   ¦ii. ¦Hardware Monitoring and Maintenance Fees     ¦551    ¦
+----+----+---+---+----+---------------------------------------------+-------¦
¦    ¦    ¦   ¦   ¦iii.¦Travel Agent and GDS Fees                    ¦553    ¦
+----+----+---+---+----+---------------------------------------------+-------¦
¦    ¦    ¦   ¦   ¦iv. ¦Signature Program Fees                       ¦553    ¦
+----+----+---+---+----+---------------------------------------------+-------¦
¦    ¦    ¦   ¦   ¦v.  ¦In–House Management Training Fee             ¦554    ¦
+----+----+---+---+----+---------------------------------------------+-------¦
¦    ¦    ¦   ¦   ¦vi. ¦Miscellaneous Other Expenses                 ¦555    ¦
+----------------------------------------------------------------------------+

+--------------------------------------------------------------------+
¦    ¦   ¦  ¦c. ¦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    ¦559    ¦
¦    ¦    ¦10–cv–4021                                                ¦       ¦
+----+----+----------------------------------------------------------+-------¦
¦    ¦D.  ¦Plaintiff's Motion For An Order Determining Amount Due and¦559    ¦
¦    ¦    ¦Entering Final Judgment in Docket No. 10–4120             ¦       ¦
+----------------------------------------------------------------------------+

+---------------------------------------------------------------------------+
¦    ¦    ¦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 10–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 10–cv–4021.¹ For the reasons that follow, Defendants' Motions for Reconsideration in both civil actions will be denied, and Plaintiff's 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 operation 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 10–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...