Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—D.N.J.: Motel franchisor awarded damages from terminated franchisee, (May 1, 2015)
Law Firms Mentioned:Frank C. Fusco, Attorney at Law | LeClair Ryan LLP
Organizations Mentioned:Leclair Ryan, PC | Super 8 Worldwide, Inc.
By Michael Menzhuber, J.D., LL.M.
The federal district court in Newark, New Jersey granted a motel franchisor summary judgment on its breach of contract claim against a franchisee terminated for abandoning the franchise. The franchisor was entitled to liquidated damages and recurring fees (Super 8 Worldwide, Inc. v. Anu, Inc., April 29, 2015, Wigenton, S.).
Background. Super 8 Worldwide, Inc. (formerly “Super 8 Motels, Inc.”) entered into a franchise agreement that permitted Anu, Inc. to operate a Super 8 motel in Harrisburg, Pennsylvania. The agreement was supplemented by a personal guarantee, in the event a default, from Anu and its owners, Pravin M. Patel and Kailashben Zaver, to make payments and perform obligations under the agreement.
When Anu later stopped operating the motel, Super 8 sent an Acknowledgment of Termination letter and a demand for liquidated damages, recurring fees and attorney fees, pursuant to the agreement. Anu and its owners, did not comply with the demand and Super 8 filed a complaint against them that alleged several breach of contract claims. Super 8 subsequently filed a motion for default judgment against Anu, which was granted, and was awarded damages. Super 8 then filed a summary judgment motion on its breach of contract claims against Patel.
Breach of Contract. The court noted that, in order to prevail on a breach of contract claim, there must be: (1) evidence of a valid contract: (2) a breach of that contract; and (3) resulting damages. It determined that Super 8’s claim satisfied these requirements because: (1) Super 8 and Patel entered into a binding franchise agreement; (2) Patel breached the agreement when he ceased operating the motel; and (3) Patel provided a personal guarantee to Super 8 in the event of a default under the agreement.
The court determined that Super 8 was entitled to liquidated damages and recurring fees, pursuant to the agreement, and that these fees could be granted on summary judgment.
The case is No. 13-4852
Attorneys: Patrick Eugene During (LeClair Ryan LLP) for Super 8 Worldwide, Inc. Frank C. Fusco (Frank C. Fusco, Attorney at Law) for Pravin M. Patel.
Companies: Super 8 Worldwide, Inc.
Cases: FranchisingDistribution NewJerseyNews