Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca6-08-06368/USCOURTS-ca6-08-06368-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

File Name: 10a0120p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT _________________

LA QUINTA CORPORATION; BAYMONT

FRANCHISING LLC,

Plaintiffs-Appellees,

v.

HEARTLAND PROPERTIES LLC; DAVID W.

ADAMS; BETTY L. ADAMS,

Defendants-Appellants.

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No. 08-6368

Appeal from the United States District Court

for the Western District of Kentucky at Louisville.

No. 05-00328—Charles R. Simpson, District Judge.

Argued: August 3, 2009

Decided and Filed: April 28, 2010 

Before: SILER, GIBBONS, and GRIFFIN, Circuit Judges.

_________________

COUNSEL

ARGUED: George R. Carter, GEORGE R. CARTER, ATTORNEY AT LAW, Louisville,

Kentucky, for Appellants. Joel D. Siegel, SONNENSCHEIN NATH & ROSENTHAL LLP,

Los Angeles, California, for Appellees. ON BRIEF: George R. Carter, GEORGE R.

CARTER, ATTORNEY AT LAW, Louisville, Kentucky, for Appellants. Joel D. Siegel,

SONNENSCHEIN NATH & ROSENTHAL LLP, Los Angeles, California, David R.

Simonton, SONNENSCHEIN NATH & ROSENTHAL LLP, San Francisco, California,

Theresa A. Canaday, J. Kendrick Wells, IV, FROST BROWN TODD LLC, Louisville,

Kentucky, for Appellees. 

_________________

OPINION

_________________

GRIFFIN, Circuit Judge. In this action alleging breach of a hotel franchise

agreement and federal trademark infringement, defendants Heartland Properties LLC, David

W. Adams, and Betty L. Adams appeal the district court’s denial of discovery-related

1

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1

Budgetel Franchises International, Inc. was a wholly-owned subsidiary of Budgetel Inns, Inc.,

which in turn was a subsidiary of The Marcus Corporation. Budgetel subsequently changed its name to

Baymont Franchises International, Inc., and thus, when the parties executed amendments to the License

Agreement in October 2001 and September 2003, Baymont was the named licensor. In September 2004,

La Quinta Corporation acquired the assets of the limited service lodging division of The Marcus

Corporation, including the Baymont hotel franchise; however, La Quinta did not merge with Baymont, and

Baymont did not assign its rights under the License Agreement to La Quinta. 

motions, grant of summary judgment in favor of plaintiffs La Quinta Corporation and

Baymont Franchising LLC, and the award of liquidated and treble damages to Baymont. We

affirm. 

I.

In 1994, Heartland Properties LLC and its guarantors, David and Betty Adams

(collectively referred to as “Heartland”), entered into a franchise agreement with Budgetel

Franchises International, Inc., the corporate predecessor to Baymont Franchising LLC

(“Baymont”), to operate a Budgetel Inn in Shepherdsville, Kentucky. Baymont is a whollyowned subsidiary of La Quinta Corporation (“La Quinta”).1

 

The License Agreement granted Heartland a license to operate the Shepherdsville

Inn using Baymont’s unique internal operating “System” which included, inter alia,

Baymont’s federally-registered trademarks, logos, reservation system, and other

intellectual property. The Agreement required Heartland to maintain certain “System

Standards” for its facilities, technology, and service, and gave Baymont the right to

“amend, modify, delete or enhance any portion of the System.” Heartland agreed to

carry the costs for compliance with these standards, including any updates in computer

hardware and software. 

Specifically, the License Agreement provided that Baymont would maintain a

reservation system that “in its sole discretion, [it] determines will best serve the System”;

conversely, Heartland “agree[d] to participate in the Reservation System” and to “bear

. . . telephone line connection charges, supply costs and other such expenses of meeting

System Standards and participating in the Reservation System.” In addition, Heartland

was obligated to pay monthly “Recurring Fees” to Baymont. These fees included a

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royalty of five percent of Heartland’s gross room revenues, as well as marketing and

reservations assessments. 

Pursuant to Section 13.b of the License Agreement, Baymont could terminate the

franchise arrangement “at any time . . . if: (i) “Licensee fails fully to remedy specified

Agreement breaches within 30 days of [Baymont’s] written notice[;] . . . (vi) Licensee

fails to pay its debts as they fall due; . . . or (xi) with good cause, for any other reason.”

In the event of Heartland’s failure to “operate[] under the System for any reason []

including, but not limited to, Section 13.b termination for Licensee’s uncured default,”

Heartland agreed to pay liquidated damages to Baymont in “an amount equal to 100%

of the aggregate Recurring Fees which accrued with respect to Inn operations during the

immediately preceding 36 full calendar months[.]” Heartland’s right to use the System

and all trademarks, signage, logos, and equipment ended immediately when the license

term expired or was terminated earlier for any reason. Additionally, upon termination

of the franchise, Heartland “shall promptly pay all sums then owed to [Baymont].”

Heartland possessed the right to terminate the Agreement “by giving at least 12

months prior written notice to [Baymont], but only effective on . . . the tenth anniversary

of the Opening Date [September 26, 2006] . . . .” 

In the fall of 2004, Baymont adopted a new System Standard for computerized

reservations known as the L.I.S.A. System, which necessitated the installation of updated

computer hardware and software at its franchise hotels. The L.I.S.A. System was

designed to improve the centralized reservation system and ensure the integration of all

of Baymont’s franchisees into the shared reservation system used by Baymont’s

affiliates, La Quinta Inn & Suites and La Quinta Inn. As part of the upgrade, Baymont

required its franchisees to sign a software license agreement – the “L.I.S.A. Agreement”

– pursuant to which franchisees’ payments for the acquisition, installation, and initial

training on the system were amortized over a period of 120 months, commencing upon

installation of the new computer system. Under the terms of the L.I.S.A. Agreement,

Heartland was to pay a total of $35,000 over the ten-year period for L.I.S.A.-associated

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costs. However, if the License Agreement expired or was terminated for any reason,

Heartland would be obligated to pay in full the remaining balance owed for the L.I.S.A.

System. 

In October 2004, the Baymont Inns Franchise Advisory Council, consisting of

representative Baymont franchisees, approved the adoption of the L.I.S.A. System. In

late 2004, Baymont shipped the components for the L.I.S.A. System to Heartland, along

with a copy of the L.I.S.A. Agreement. In January 2005, Baymont conducted a series

of conference calls and training sessions with its franchisees to ease the transition to the

new computer program. The parties disagree about the extent of Heartland’s

participation in these events. In February 2005, Baymont attempted to work with

Heartland to bring it into conformance with the L.I.S.A. System, but installation was

never completed because Heartland allegedly refused to provide Baymont with access

to its facilities. It is undisputed that Heartland neither signed the L.I.S.A. Agreement nor

made the L.I.S.A. System operational at its hotel. 

Consequently, on February 24, 2005, Baymont sent a letter notifying Heartland

that it was in default under Sections 5 and 7 of the License Agreement due to its failure

to execute the L.I.S.A. Agreement and install the L.I.S.A. System. Baymont ordered

Heartland to cure the default within thirty days, but Heartland failed to do so. 

Heartland attributes its refusal to sign the L.I.S.A. Agreement to Baymont’s

failure to address its concerns, purportedly shared by other franchisees, about conflicts

between the terms of the original License Agreement and the L.I.S.A. Agreement –

precisely, the L.I.S.A. Agreement’s effect on Heartland’s non-renewal option at the tenyear anniversary date under Section 13.a of the License Agreement. Heartland also cites

sloppy and disruptive installation of the computer infrastructure and related technical

problems as factors in its decision not to sign the L.I.S.A. Agreement or participate in

the L.I.S.A. System. Heartland claims that Baymont terminated the License Agreement

before arrangements could be made for Heartland’s representatives to attend any training

seminars and before rescheduled work could be completed on the L.I.S.A. System.

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2

Following consolidation, the district court realigned the parties and denominated La Quinta and

Baymont as plaintiffs and Heartland and the Adams as defendants. Heartland’s action against La Quinta

became a counterclaim and, following the realignment, Heartland added a counterclaim against Baymont.

On March 25, 2005, after unsuccessful attempts to resolve these controverted

issues, Baymont notified Heartland by letter that its rights under the License Agreement

would be terminated effective April 30, 2005. 

On May 17, 2005, Heartland filed suit against La Quinta in the Kentucky state

circuit court, alleging breach of the License Agreement and the implied covenant of

good faith and fair dealing, and seeking injunctive relief. La Quinta removed the action

to federal court, where it was ultimately consolidated with Baymont’s separate action

against Heartland.2 Baymont’s seven-count complaint averred federal trademark

infringement and false designation of sponsorship under the Lanham Act, 15 U.S.C.

§§ 1114(1) and 1125(a), misappropriation of trade secrets, and breach of contract;

Baymont also sought declaratory relief to prevent Heartland’s continued use of

Baymont’s trademarks and intellectual property. 

In February 2006, with the stipulation of the parties, the district court entered a

preliminary injunction against Heartland, precluding further use of Baymont’s name,

trademarks, and System Standards. Discovery concluded on November 17, 2006, after

an extension of the original discovery deadlines. An extended deadline for the filing of

dispositive motions expired on January 5, 2007. On that date, the parties filed cross

motions for summary judgment. In addition, Heartland filed three discovery-related

motions – a motion to produce, a motion to compel, and a motion to reopen discovery.

Heartland maintained that the failure of Baymont and La Quinta to cooperate with

discovery and to identify all of their employees with knowledge of the dispute justified

reopening discovery. 

In an order entered on March 20, 2007, the magistrate judge declined to reopen

discovery and denied Heartland’s three discovery-related motions, citing Heartland’s

“entirely unacceptable” delays in the context of the current posture of the proceedings.

Over Heartland’s objections, the district court affirmed the magistrate’s decision, and

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thereafter granted summary judgment on all claims in favor of La Quinta and Baymont,

and denied Heartland’s cross motion for summary judgment. 

The district court dismissed La Quinta from the action, finding that “[a]s the

claims devolve solely into an analysis of the rights and liabilities under the license

agreement, La Quinta [was] not a proper party to the action” because it was not shown

to be a party to the License Agreement. With regard to Baymont’s liability for breach

of contract, the district court categorized the parties’ dispute over the status of

negotiations and the completeness of hardware and software installation as “immaterial”

in light of the undisputed fact that Heartland failed to cure its default within the requisite

thirty-day period under the License Agreement. The court explained: 

Heartland contends that Baymont breached the license agreement

because its requirement that Heartland participate in and pay for the

L.I.S.A. System hardware and software constituted an impermissible

unilateral modification of the termination clause in the agreement. It

argues that requiring it to sign the L.I.S.A. System License Agreement

with the ten-year amortization provision essentially locked franchisees

into their franchise agreement until the L.I.S.A. System was paid off.

Heartland urges that this modified the termination clause because it

would be required to pay any remaining balance for the unamortized

portion of the L.I.S.A. System if it chose not to renew its franchise

relationship with Baymont at the end of the contract period. 

Section 13.a providing for termination by Heartland on the tenth

anniversary of the opening of its hotel remained unaltered by the

adoption of the L.I.S.A. System and its attendant financial requirements.

In accordance with its duties at and after termination, pursuant to Section

15.f, Heartland agreed in its license agreement to “promptly pay all sums

then owed to [Baymont].” The unamortized portion of the L.I.S.A.

System cost simply became one of the sums owed. Heartland’s

contention is merely that, because it was approaching its ten-year

anniversary in 2006, it would constitute an expensive buy-out if it chose

to terminate its franchise relationship, and thus it was unfair. However,

it cannot and does not argue that the adoption of the L.I.S.A. System with

its attendant costs was not anticipated and permitted by its agreement.

Similarly, Heartland’s contention that Baymont should have agreed to

waive the unamortized portion of the cost is an argument without teeth

inasmuch as Baymont did precisely what it was permitted to do under the

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3

The matter of attorney’s fees was referred to the magistrate judge. After Heartland filed its

notice of appeal in this court, the district court adopted the magistrate judge’s report and recommendation

in its entirety and awarded Baymont $246,048.20 in attorney’s fees and $8,835.74 in costs. The court

denied Heartland’s ensuant motion to alter, amend, or vacate the damages and attorney’s fee awards. 

agreement, and was entitled to payment of all sums then owed upon

termination of the agreement. 

In sum, Heartland’s sole defense to the claim for breach of the license

agreement rests upon the assertion that Baymont defaulted on the

contract and caused Heartland’s non-compliance. As we reject the

contention that Baymont committed any breach of the agreement, we will

grant summary judgment in favor of Baymont on its claim of liability.

(Footnote omitted.) The court also granted summary judgment in favor of Baymont on

its remaining claims against Heartland and the Adams. 

In a separate order, the district court granted Baymont’s motions for damages and

attorney’s fees and awarded the following sums: (1) $19,852.52 in unpaid “Recurring

Fees” and accounts receivable that Heartland owed to Baymont under the License

Agreement at the time of termination, plus prejudgment interest at the rate of eight

percent per annum; (2) $111,325.37 in liquidated damages for early termination, as

provided in Section 14.a of the License Agreement, plus prejudgment interest;

(3) $117,866.16 in treble damages for willful, unauthorized use of Baymont’s

intellectual property in violation of the Lanham Act; and (4) attorney’s fees pursuant to

15 U.S.C. § 1117(a) in an amount to be established by further order of the court.3

Heartland now appeals.

II.

Heartland first argues that the district court improperly denied the three

discovery-related motions that it filed simultaneously with its summary judgment

motion, nearly two months after the close of discovery. We disagree. 

While “[i]t is well-established that the plaintiff must receive a full opportunity

to conduct discovery to be able to successfully defeat a motion for summary judgment,”

a district court’s decision denying further discovery is “generally unreviewable unless

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the appellant has filed a Rule 56(f) affidavit or a motion that gives the district court a

chance to rule on the need for additional discovery.” Ball v. Union Carbide Corp., 385

F.3d 713, 719-20 (6th Cir. 2004) (citations and internal quotation marks omitted). 

We review the district court’s decision precluding additional time for discovery

for an abuse of discretion. Audi AG v. D’Amato, 469 F.3d 534, 541 (6th Cir. 2006)

(citing Plott v. Gen. Motors Corp., 71 F.3d 1190, 1196-97 (6th Cir. 1995)). “Factors that

should be considered include when the moving party learned of the issue that is the

subject of discovery, how the discovery would affect the ruling below, the length of the

discovery period, whether the moving party was dilatory, and whether the adverse party

was responsive to prior discovery requests.” Audi AG, 469 F.3d at 541. “It is not an

abuse of discretion for the district court to deny the discovery request when the party

makes only general and conclusory statements [] regarding the need for more discovery

and does not show how an extension of time would have allowed information related to

the truth or falsity of the [document] to be discovered.” Ball, 385 F.3d at 720 (citation

and internal quotation marks omitted). 

The multiple reasons provided by the magistrate judge and district court for the

denial of Heartland’s motions are well founded and need no further reiteration.

Heartland not only failed to comply with the requirements of Federal Rule of Civil

Procedure 56(f), see generally Singleton v. United States, 277 F.3d 864, 872 (6th Cir.

2002), Cacevic v. City of Hazel Park, 226 F.3d 483, 488 (6th Cir. 2000), but also failed

to adequately explain to the court its inability to obtain discovery in a timely fashion or

the need to depose more individuals and obtain certain documents, including Baymont’s

privilege log and information concerning how other franchisees were treated, six weeks

after the close of an already-extended discovery period. Heartland was not, as it claims,

prematurely foreclosed from conducting discovery; it was simply dilatory in its

discovery requests. 

As the magistrate judge aptly observed, Heartland’s own discovery conduct

“[was] not unblemished,” and “the relief requested by the discovery motions [was not

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reconcilable] with Heartland’s position on summary judgment – that no genuine issues

of material fact preclude entry of a judgment in its favor on all claims.” Thus, we find

no abuse of discretion in the district court’s decision denying Heartland’s belated

discovery motions. 

III.

Heartland next argues that the district court’s grant of summary judgment in

favor of Baymont on its breach of contract counterclaim should be reversed. We

conduct de novo review of a district court’s summary judgment determination. Med.

Mut. of Ohio v. K. Amalia Enter. Inc., 548 F.3d 383, 389 (6th Cir. 2008). Summary

judgment is appropriate if, taking the evidence in the light most favorable to the

nonmoving party, “the pleadings, the discovery and disclosure materials on file, and any

affidavits show that there is no genuine issue as to any material fact and that the movant

is entitled to judgment as a matter of law.” FED. R. CIV. P. 56 (c)(2). “A genuine issue

of material fact exists when there is sufficient evidence for a trier of fact to find for the

non-moving party.” Ciminillo v. Streicher, 434 F.3d 461, 464 (6th Cir. 2006). A “mere

scintilla” of evidence, however, is not enough for the non-moving party to withstand

summary judgment. Id. We review cross motions for summary judgment under this

standard as well, evaluating each motion on its own merits. Beck v. City of Cleveland,

390 F.3d 912, 917 (6th Cir. 2004). 

Heartland contends that the L.I.S.A. Agreement effected “significant changes”

and imposed additional demands on franchisees such as itself, beyond those contained

in the License Agreement. Because these material changes were imposed without its

written consent, Heartland asserts that Baymont anticipatorily breached the License

Agreement, thereby excusing further performance on Heartland’s part. Heartland

focuses on several discrete provisions in the L.I.S.A. Agreement: the ten-year

amortization period, the forum selection clause, a disclaimer of warranties and limitation

of liability pertaining to the software, and Baymont’s right to disable the software should

the franchisee be in default. 

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4

Section 17.e of the License Agreement provides that “[t]his Agreement shall be construed in

accordance with Wisconsin substantive law[.]” See generally Savedoff v. Access Group, Inc., 524 F.3d

754, 762 (6th Cir. 2008) (“When interpreting contracts in a diversity action, we [] generally enforce the

parties’ contractual choice of governing law.”). 

To establish a cognizable breach of contract claim under Wisconsin law,4 a

plaintiff must prove “the existence, applicability and breach of a contract right.” Sch.

Dist. of Slinger v. Wis. Interscholastic Athletic Ass’n, 563 N.W.2d 585, 590 (Wis. Ct.

App. 1997) (citation omitted). “[A] material breach by one party may excuse subsequent

performance by the other.” Mgmt. Computer Servs., Inc. v. Hawkins, Ash, Baptie & Co.,

557 N.W.2d 67, 77 (Wis. 1996). “However, a party is not automatically excused from

future performance of contract obligations every time the other party breaches . . . .

[T]here must be so serious a breach of the contract . . . as to destroy the essential objects

of the contract.” Id. at 77-78 (citations and internal quotation marks omitted). 

“‘[T]he cornerstone of contract construction is to ascertain the true intentions of

the parties as expressed by the contractual language.’” Town Bank v. City Real Estate

Dev., LLC, 777 N.W.2d 98, 103 (Wis. Ct. App. 2009) (quoting State ex rel.

Journal/Sentinel, Inc. v. Pleva, 456 N.W.2d 359, 362 (Wis. 1990)). To ascertain the

parties’ intent, “a court must adhere to the plain meaning of the contract” if it is

unambiguous. Town Bank, 777 N.W.2d at 104. “Words or phrases within a contract are

only ambiguous when they are reasonably or fairly susceptible to more than one

construction.” Heritage Mut. Ins. Co. v. Truck Ins. Exch., 516 N.W.2d 8, 10 (Wis. Ct.

App. 1994) (citation and internal quotation marks omitted); see also Town of Neenah

Sanitary Dist. No. 2 v. City of Neenah, 647 N.W.2d 913, 916 (Wis. Ct. App. 2002). 

Heartland renews its primary argument, made to the district court, that the

L.I.S.A. Agreement imposed a penalty on its right to terminate the franchise under

Section 13.a of the License Agreement, because if it opted not to renew its contract on

the tenth anniversary of its opening date, but before the L.I.S.A. amortization period

ended, it would have to pay the remainder of the balance it owed for the L.I.S.A. System

and thus would be charged for a reservation system that it was no longer using. 

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We agree with the district court, however, that Baymont’s implementation of the

L.I.S.A. System with its attendant costs was fully contemplated and permitted under the

unambiguous terms of the License Agreement. Sections 5.a and 7.d of the License

Agreement expressly gave Baymont the right to add, amend, and/or delete System

Standards, including the reservation system, and required Heartland to participate in and

bear such costs: 

5. STANDARDS: Standards of quality and service associated with the

System (collectively, “System Standards”) shall at all times be subject to

[Baymont’s] supervision and control . . . . Licensee agrees, at its sole

expense to comply with all such System Standards, and System Manuals

and Policy Statements. Without limiting the foregoing: 

a. Changes. [Baymont] shall have the right, from time to time to

add, amend and/or delete System Standards, including without

limitation for: . . . (iv) Inn technology (including for computer

hardware and software for various applications, such as rooms

management, records maintenance, accounting, and budgeting);

and (v) Reservation System participation (including for the

purchase or lease and maintenance of terminal and telephone

equipment and service, and related computer hardware and

software). [Baymont] may, in its sole discretion, permit

deviations from System Standards, based on local conditions

and/or [Baymont’s] assessment of special circumstances. 

* * *

[7].d. Reservation System. [Baymont] shall . . . maintain a “Reservation

System” with a distinctive national toll-free telephone access number for

making reservations at System Inns, and/or such technological

substitute(s) and/or supplements as [Baymont], in its sole discretion,

determines will best serve the System. Licensee agrees to participate in

the Reservation System . . . [and] shall bear . . . supply costs and other

such expenses of meeting System Standards and participating in the

Reservation System. 

(Emphasis added.) Section 3.a of the License Agreement allowed Baymont to, 

by adoption or amendment of its “Systems Manuals” and/or “Policy

Statements,” amend, modify, delete or enhance any portion of the

System, including any of the Marks, System Standards and the Prototype

Package, as may be desirable, in the sole judgment of [Baymont], to

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maintain or enhance the reputation of the System or improve System

license marketability.”

Consistent with these provisions, Baymont had the right to institute changes to

its reservation system and require Heartland to conform to this new System Standard “at

its sole expense.” Indeed, David Adams admitted so during his deposition, conceding

that under the terms of the License Agreement, Baymont had the right to charge

Heartland for upgrades to the reservation system. 

Moreover, the License Agreement stated that if it was “terminated for any

reason,” e.g., termination by Heartland under Section 13.a, Heartland was required to

“promptly pay all sums then owed to [Baymont].” There is no inherent inconsistency,

then, between the two agreements; rather, as the district court correctly determined, in

the event the License Agreement was terminated, “[t]he unamortized portion of the

L.I.S.A. System cost simply became one of the sums owed.” Heartland’s argument that

the payment provisions of the L.I.S.A. Agreement materially altered the License

Agreement so as to penalize Heartland’s termination rights does not withstand scrutiny.

Other courts, in similar circumstances, have upheld the right of franchisors to

make changes to their systems, sometimes at the expense of the franchisee, if authorized

under the franchise agreement. For instance, in Trail Burger King, Inc. v. Burger King

of Miami, Inc., 187 So. 2d 55 (Fla. Dist. Ct. App. 1966), the Florida Third District Court

of Appeal held, in the context of a declaratory judgment action, that a chain restaurant

corporation could change certain standards, including an increase in the quantity of meat

used to make hamburgers: 

The plaintiff argues that any changes in standards and specifications in

the operation of its restaurant from those in existence at the time of the

execution of the agreement would be a modification or amendment

thereto. It is also argued that since the agreement provides for

modification and amendment only by the written consent of both parties,

the chancellor erred in allowing the defendant to make reasonable

changes from time to time as circumstances may dictate. 

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We have found that the chancellor was correct in determining that such

changes are not modifications or amendments to the agreement, but were

provided for in the agreement. It is clear from the language of the

instrument that one of the objects is to provide uniformity among all

franchised ‘Burger-King’ restaurants. A review of the clauses of the

agreement summarized above reveals that this uniformity is

accomplished by providing that the defendant set and maintain standards

and specifications which the plaintiff must follow or suffer termination

of the agreement. The chancellor has interpreted the agreement in

accordance with the natural and ordinary meaning of the language

employed.

187 So. 2d at 58; see also Layton v. AAMCO Transmissions, Inc., 717 F. Supp. 368, 372-

73 (D. Md. 1989) (granting summary judgment to franchisor on franchisee’s claim for

breach of a contractual duty of good faith, where “it [was] undisputed that [the

franchisor] had the right under its agreement with [franchisees] to change the terms of

the franchise unilaterally”); Remus v. Amoco, 794 F.2d 1238, 1241-42 (7th Cir. 1986)

(holding that the defendant oil company did not violate its credit card contract with its

franchisee-dealer by adopting a system-wide “discount for cash” program, even though

the change was potentially detrimental to some dealers); cf. Economou v. Physicians

Weight Loss Ctrs. of Am., 756 F. Supp. 1024, 1028 (N.D. Ohio 1991) (granting

franchisor preliminary injunctive relief requiring enforcement of covenant not to

compete by franchisees, based in part on the franchisor’s right under its contract to make

changes in its diet program). 

In sum, we reject Heartland’s assertion that Baymont breached the License

Agreement through its implementation of the L.I.S.A. System and insistence that

Heartland adopt its new reservation system. Baymont did not breach the License

Agreement, but Heartland did when it failed to comply with its contractual obligation

to adopt new System Standards. The district court therefore did not err in granting

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5

Because Heartland fails to elaborate on how the other cited provisions of the L.I.S.A. Agreement

materially altered or diminished any rights it enjoyed under the License Agreement, it has waived any such

argument. See In re Travel Agent Comm’n Antitrust Litigation, 583 F.3d 896, 901 (6th Cir. 2009)

(“[I]ssues adverted to in a perfunctory manner, unaccompanied by some effort at developed argumentation,

are deemed waived.” (citing United States v. Phinazee, 515 F.3d 511, 520 (6th Cir. 2008)). 

6

Wisconsin recognizes the common law claim for tortious interference with a contractual

relationship. See Hoey Outdoor Adver., Inc. v. Ricci, 653 N.W.2d 763, 770 (Wis. Ct. App. 2002). 

summary judgment in favor of Baymont, and denying Heartland’s motion, regarding the

parties’ respective breach of contract claims.5

 

In light of this determination, Heartland’s claims against Baymont for breach of

the implied covenant of good faith and fair dealing, and La Quinta for intentional

interference with a contractual relationship,6

 necessarily fail. Heartland has not shown

that Baymont engaged in any overt acts or inaction that might be deemed bad faith

conduct. See Foseid v. State Bank of Cross Plains, 541 N.W.2d 203, 213 (Wis. Ct. App.

1995). In fact, 

where the contracting party complains of acts of the other party that are

specifically authorized in their agreement, we cannot see how there can

be any breach of good faith and fair dealing. Indeed, it would be a

contradiction in terms to characterize an act contemplated by the plain

language of the parties’ contract as a bad faith breach of that contract.

M & I Marshall & Ilsley Bank v. Schlueter, 655 N.W.2d 521, 525 (Wis. Ct. App. 2002)

(citations and internal quotation marks omitted). See also Howe v. Neenah Springs, Inc.,

No. 02-1657, 671 N.W.2d 864, 2003 WL 22254702, at *4 (Wis. Ct. App. Oct. 2, 2003)

(unpublished table decision) (“The covenant of good faith and fair dealing cannot

override a contract’s express terms.”); cf. Travelers Ins. Co. v. Corporex Props., Inc.,

798 F. Supp. 423, 425 (E.D. Ky. 1992) (“Although it is recognized that implied in each

contract is a covenant of ‘good faith and fair dealing,’ such a covenant does not preclude

a party from enforcing the terms of the contract. It is not ‘inequitable’ or a breach of

good faith and fair dealing in a commercial setting for one party to act according to the

express terms of a contract for which it bargained.”) (internal citation omitted). 

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7

Only from a very generous reading of Heartland’s complaint can we extract a claim for tortious

interference with contract against La Quinta. 

With respect to La Quinta’s role in this matter, Heartland argues that “La Quinta

was the party behind the actions to force Heartland . . . to sign the [L.I.S.A.]

Agreement.” We agree with the district court, however, that “[t]o the extent that

Heartland contends that La Quinta ‘interfered’ with its ability to perform under the

agreement, it contends, at the same time, that its acts were the acts of ‘Baymont/La

Quinta.’ It does so to assert that their acts in connection with the L.I.S.A. System

constituted a breach of the licensing agreement.”7 As we have determined that

Baymont’s actions in implementing the L.I.S.A. System were authorized under the

License Agreement, Heartland has failed to establish that La Quinta “interfered” with

its franchise relationship with Baymont. 

IV.

The district court awarded Baymont $111,325.37 in liquidated damages, using

the following formula set forth in Section 14.a of the License Agreement: 

[I]f the Inn ceases to be operated under the System for any reason

(including, but not limited to, Section 13.b termination for Licensee’s

uncured default . . . ), Licensee shall pay [Baymont] within 30 days

following the effectiveness of such event, as “Liquidated Damages” (to

compensate [Baymont] for lost revenues in an amount difficult to

ascertain, and not as a penalty) an amount equal to 100% of the aggregate

Recurring Fees which accrued with respect to Inn operations during the

immediately preceding 36 full calendar months . . . . 

Section 14.c of the License Agreement provides that Section 14.a does not apply

if the licensee terminates the license term pursuant to Section 13.a, the non-renewal

option at the ten-year anniversary of opening, which requires “12 months prior written

notice to [Baymont].” 

As in the proceedings below, Heartland does not dispute the calculation that

$111,325.37 in liquidated damages was due under this thirty-six-month formula.

Heartland instead argues that the award is unreasonable because a shortened period of

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loss should have been used as the basis for the liquidated damages award. It reasons that

because it had the right to terminate the License Agreement on September 25, 2006, and

purportedly provided the requisite one-year advance notice of non-renewal, Baymont’s

maximum loss of royalties should be limited to the period of March 25, 2005 to

September 25, 2006, or eighteen months. 

Under Wisconsin law, liquidated damages provided for in a contract must be

reasonable. Wassenaar v. Panos, 331 N.W.2d 357, 361-63 (Wis. 1983). WIS. STAT.

ANN. § 402.718(1) states: 

Damages for breach by either party may be liquidated in the agreement

but only at an amount which is reasonable in the light of the anticipated

or actual harm caused by the breach, the difficulties of proof of loss, and

the inconvenience or nonfeasibility of otherwise obtaining an adequate

remedy. A term fixing unreasonably large liquidated damages is void as

a penalty.

In determining reasonableness, a court must “inquire into all relevant

circumstances,” Wassenaar, 331 N.W.2d at 361, and consider three factors: (1) whether

the parties intended to provide damages or for a penalty; (2) whether the injury caused

by the breach would be difficult or incapable of accurate estimation at the time of

entering into the contract; and (3) whether the stipulated damages are a reasonable

forecast of the harm caused by the breach. Id. at 363; see Rainbow Country Rentals &

Retail, Inc. v. Ameritech Publ’g, Inc., 706 N.W.2d 95, 103 (Wis. 2005). “If the damages

provided for in the contract are grossly disproportionate to the actual harm sustained, the

courts usually conclude that the parties’ original expectations were unreasonable.”

Wassenaar, 331 N.W.2d at 364 (footnote omitted). The Wisconsin courts “employ[] the

prospective-retrospective approach in determining the reasonableness of the stipulated

damages clauses and . . . look[] at the harm anticipated at the time of contract formation

and the actual harm at the time of breach (or trial).” Id. The party challenging the

bargained-for contractual provision stipulating damages has the burden of proving facts

which would justify non-enforcement of the liquidated damages clause. Id. at 361. 

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After reviewing the particular circumstances of the present case, we conclude

that the district court’s award of liquidated damages was reasonable. Baymont submitted

concrete evidence that its lost royalties over the entire remaining term of the License

Agreement would have exceeded $430,000. Actual damages, in the context of the

hospitality industry, are difficult to quantify and not strictly monetary; a franchise

operation yields not only future royalties, but additional intangibles such as brand

recognition and loyalty, and a competitive presence in a geographic region. The full

term of Heartland’s License Agreement was twenty years. Thus, Baymont conceivably

could have had a presence in the Shepherdsville market through 2012, but lost these

benefits through Heartland’s breach. 

The thirty-six-month formula, based on Recurring Fees that actually accrued, was

at the time of contracting not an arbitrary calculation, but a “reasonable forecast” of the

damages Baymont would sustain in the event of Heartland’s breach. See Wassenaar,

331 N.W.2d at 363. The formula was based on common business practices and the

parties’ recent historical performance under the License Agreement, resulting in

ascertainable losses in the event of breach. Id. 

In Travelodge Hotels, Inc. v. Elkins Motel Assocs., Inc., No. Civ. 03-799

(WHW), 2005 WL 2656676 (D.N.J. Oct. 18, 2005) (unpublished), the United States

District Court for the District of New Jersey upheld as reasonable a similar liquidated

damages clause in a hotel franchise agreement, taking into account the economic

complexities of the market: 

The liquidated damages clause in this case is contained in section 12.1

of the License Agreement, and reads that liquidated damages shall total

an amount equal to the sum of accrued Royalties and

System Assessment Fees during the immediately

preceding 24 full calendar months . . . . Liquidated

Damages will not be less than the product of $2,000.00

multiplied by the number of guest rooms in the Facility.

Section 7 of the Addendum specifically set liquidated damages at “an

amount equal to the product of $1,000.00 multiplied by the number of

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guest rooms . . . in the Facility.” THI [the plaintiff/franchisor] contends

that this represents a negotiated reduction on liquidated damages from

the formula set forth in section 12.1 of the License Agreement. 

According to THI, the language of the liquidated damages clause

“demonstrates the parties’ clear intent to choose among the available

remedies rather than to set an arbitrary number having no bearing on the

contractual relationship.” THI also points out the inherent difficulty of

calculating its lost earnings under the License Agreement, as it is

dependent upon a percentage of monthly gross room revenues. The room

revenues, in turn, are dependent upon the number of bookings in a given

month, which can fluctuate drastically from month to month. 

[THI] bargained with the [franchisees] to receive income over the period

of the License Agreement, and has lost the benefit of its bargain due to

the Defendants’ breach. [Defendants] ha[ve] not offered proof of any

contractually acceptable excuses to avoid the application of the

liquidated damages clause.

2005 WL 2656676, at *11 (internal citation omitted). 

Like the franchisee in Travelodge Hotels, Inc., Heartland has not proffered “any

contractually acceptable excuses” to avoid the liquidated damages award. Id.

Heartland’s argument favoring a shortened period of loss is based on the fallacy that it

terminated the License Agreement on September 25, 2006, and provided the requisite

twelve-month advance notice, so as to be excepted from the License Agreement’s

liquidated damages provision contained in Section 14.c. It did not. Baymont terminated

the License Agreement on March 25, 2005, because Heartland was in noncompliance.

Moreover, as the district court observed, the record is devoid of any evidence supporting

Heartland’s claim that it gave Baymont advance notice of its option not to renew the

agreement. Under the circumstances, the district court’s award of $111,325.37 in

liquidated damages was eminently reasonable. 

V.

Lastly, Heartland argues that the district court’s award of treble damages for its

Lanham Act violations constitutes an impermissible “penalty” under the statute, which

authorizes the trebling of damages for willful trademark infringement, but admonishes

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8

15 U.S.C. § 1117(a) states in pertinent part: 

When a violation of any right of the registrant of a mark registered in the Patent and

Trademark Office, a violation under section 1125(a) or (d) of this title, or a willful

violation under section 1125(c) of this title, shall have been established in any civil

action arising under this chapter, the plaintiff shall be entitled, . . . subject to the

principles of equity, to recover (1) defendant’s profits, (2) any damages sustained by the

plaintiff, and (3) the costs of the action. The court shall assess such profits and damages

or cause the same to be assessed under its direction . . . . In assessing damages the court

may enter judgment, according to the circumstances of the case, for any sum above the

amount found as actual damages, not exceeding three times such amount. . . . Such sum

in either of the above circumstances shall constitute compensation and not a penalty. 

9

“Royalty” is defined in the License Agreement as “5% of gross revenues attributable to or

payable for rentals of guest rooms and meeting rooms at the Inn (collectively, ‘Gross Room Revenues’),

including all credit transactions, whether or not collected, but excluding only telephone charges, vending

machine receipts, and sales, [and] occupancy and use taxes[.]” 

10“Royalties normally received for the use of a mark are the proper measure of damages for

misuse of those marks.” Ramada Inns, Inc. v. Gadsden Motel Co., 804 F.2d 1562, 1565 (11th Cir. 1986)

(citation omitted). 

that such an award “shall constitute compensation and not a penalty.” 15 U.S.C.

§ 1117(a).8

 

The district court awarded Baymont $117,866.16 in treble damages for

Heartland’s willful and unauthorized use of Baymont’s intellectual property and marks

during the holdover period from April 25, 2005 to April 30, 2006. This award was

derived from the parties’ agreement that the appropriate measure of damages under the

Lanham Act was the royalties, as defined in Section 9.a of the License Agreement,9

 that

Baymont would have received from Heartland.10 The district court accepted Heartland’s

computation of royalties, $39, 288.72, a lesser amount than proposed by Baymont, and

trebled the sum “inasmuch as it appears clear that the defendants’ holdover was willful

and unjustified.” 

We review the district court’s award of damages under the Lanham Act for an

abuse of discretion. U.S. Structures, Inc. v. J.P. Structures, Inc., 130 F.3d 1185, 1191

(6th Cir. 1997) (“Section 1117(a) grants a district court a great deal of discretion in

fashioning an appropriate remedy in cases of trademark infringement.”); see also Banjo

Buddies, Inc. v. Renosky, 399 F.3d 168, 173 (3d Cir. 2005) (“We [] review the District

Court’s award of equitable remedies under . . . the Lanham Act under an abuse of

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discretion standard.” (citation omitted)); Taco Cabana Int’l, Inc. v. Two Pesos, Inc., 932

F.2d 1113, 1127 (5th Cir. 1991) (“We must respect the fact that [§ 1117(a)] endows the

district court with considerable discretion in fashioning an appropriate remedy for

infringement” and “acknowledge the trial court’s superior capacity to discern the

elements of equitable compensation.”); Ramada Inns, Inc., 804 F.2d at 1564 (“[T]he

Lanham Act . . . expressly confers upon district judges wide discretion in determining

a just amount of recovery for trademark infringement.” (citation omitted)). 

“The general proof and measure of damages in a trademark action is governed

by the law of damages of tort actions.” Broan Mfg. Co., Inc. v. Assoc. Distrib., Inc., 923

F.2d 1232, 1235 (6th Cir. 1991). “Under general tort principles . . . the

infringer/tortfeasor is liable for all injuries caused to plaintiff by the wrongful act,

whether or not actually anticipated or contemplated by the defendant when it performed

the acts of infringement.” Id. (citation and internal quotation marks omitted).

“[D]amages are not permitted which are remote and speculative in nature.” Id. (citation

and internal quotation marks omitted). “[I]n trademark cases courts draw a sharp

distinction between proof of the fact of damage and proof of the amount of damage.”

Id. Thus, “[t]he plaintiff is held to a lower standard of proof in ascertaining the exact

amount of damages,” and, “‘[o]nce the existence of damages has been shown, all that an

award . . . requires is substantial evidence in the record to permit a factfinder to draw

reasonable inferences and make a fair and reasonable assessment of the amount of

damages.’” Chain, L.P. v. Tropodyne Corp., Nos. 99-6268/6269, 238 F.3d 421, 2000

WL 1888719, at *4 (6th Cir. Dec. 20, 2000) (unpublished table decision) (quoting Broan

Mfg. Co., 923 F.2d at 1236). 

Certainly, as Heartland argues, the Lanham Act expressly prohibits levying

damages that may be classified as a “penalty.” See Taco Cabana Int’l, Inc., 932 F.2d at

1127 (“An enhancement of damages may be based on a finding of willful infringement,

but cannot be punitive.”); Getty Petroleum Corp. v. Bartco Petroleum Corp., 858 F.2d

103, 113 (2d Cir. 1988) (holding that § 1117(a) “does not authorize an additional award

of punitive damages for willful infringement of a registered trademark. So long as its

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purpose is to compensate a plaintiff for its actual injuries – even though the award is

designed to deter wrongful conduct – the Lanham Act remains remedial.”); Metric &

Multistandard Components Corp. v. Metric’s, Inc., 635 F.2d 710, 715 (8th Cir. 1980)

(“The language of [§ 1117(a)] is clear: the district court is given broad discretion to

award the monetary relief necessary to serve the interests of justice, provided it does not

award such relief as a penalty.”). Generally, “if a sum of money is to be recovered by

a third person for violation of a statute instead of a person injured, . . . or if the sum

exacted is greatly disproportionate to the actual loss, . . . it constitutes a penalty rather

than damages.” Bowles v. Farmers Nat’l Bank of Lebanon, 147 F.2d 425, 428 (6th Cir.

1945) (emphasis added) (internal citations omitted). 

Because “the Lanham Act gives little guidance on the equitable principles to be

applied by a court in making an award of damages,” Synergistic Int’l, LLC v. Korman,

470 F.3d 162, 174 (4th Cir. 2006), the courts have weighed the equities of disputes on

a case-by-case basis, considering a wide range of factors including, inter alia, the

defendant’s intent to deceive, whether sales were diverted, the adequacy of other

remedies, any unreasonable delay by the plaintiff in asserting its rights, the public

interest in making the misconduct unprofitable, and “palming off,” i.e., whether the

defendant used its infringement of the plaintiff’s mark to sell its own products to the

public through misrepresentation. See id. at 175-76 (citing Banjo Buddies, Inc., 399

F.3d at 175; Quick Techs, Inc. v. Sage Group PLC, 313 F.3d 338, 349 (5th Cir. 2002)).

Moreover, “enhancement could, consistent with the ‘principles of equity’ promoted in

[§ 1117(a)], provide proper redress to an otherwise undercompensated plaintiff where

imprecise damage calculations fail to do justice, particularly where the imprecision

results from defendant’s conduct.” Taco Cabana Int’l, Inc., 932 F.2d at 1127. 

In the present case, the record demonstrates that, despite the express language in

Section 15 of the License Agreement prohibiting the use of Baymont’s marks after

termination of the Agreement, and notification to this effect from Baymont in its March

25, 2005, notice of termination, Heartland continued to use and display Baymont’s

marks in advertising and on its internet page, and even to advertise its new water park,

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without paying royalties, until the end of April 2006 – one year after the termination and

two months after the district court entered the preliminary injunction ordering it to cease.

Thus, there is no question that Heartland acted in deliberate defiance of the License

Agreement. 

Further, in accepting Heartland’s computation of royalties as the basis for the

Lanham Act damages award, the district court excluded royalties on Heartland’s

revenues from movies and pool charges, even though Heartland previously had remitted

such royalties to Baymont. Baymont likewise received no royalties on Heartland’s

income from its new water park or restaurant, even though Heartland admittedly used

Baymont’s trademarks to advertise these attractions. Because of Heartland’s

infringement, Baymont lost the ability to control its brand image and reputation and was

prevented from operating in the Shepherdsville region – all intangible, but valuable, lost

assets. 

The fact that Heartland brought suit and challenged Baymont’s termination of the

License Agreement does not ameliorate its willful, continued use of Baymont’s Systems

and trademarks after termination of the Agreement. In Gorenstein Enters., Inc. v.

Quality Care-USA, Inc., 874 F.2d 431 (7th Cir. 1989), the Seventh Circuit found the

defendants’ argument that they had the right to use the plaintiff’s nursing home

trademark after termination of the franchise agreement for as long as their action for

rescission was pending to be “frivolous”: 

No more impressive is the [franchisees’] further argument that they kept

on using the trademark because they were duty-bound to return the

franchise in the condition in which they had obtained it, trademark and

all, after their claim for rescission was decided. It was Quality Care’s

trademark; it was for Quality Care to decide whether to let the

[franchisees] continue to use it after the franchise was terminated.

Id. at 435. See also Green River Bottling Co. v. Green River Corp., 997 F.2d 359, 362

(7th Cir. 1993) (“Unauthorized use of a trademark is an infringement, and we have held

that the infringement of a trademark is not a proper self-help remedy for a breach of

contract.” (citation omitted)). 

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Moreover, contrary to Heartland’s claim, the award of both liquidated damages

for breach of contract and treble damages for trademark infringement does not

contravene the language of § 1117(a) and necessarily make the statutory damages

duplicative or punitive. The Eleventh Circuit addressed and properly rejected this

argument in Ramada Inns, Inc.: 

[The franchisees] [] contend that the district court erred in awarding

Ramada Inns damages under both the liquidated damages clause of the

franchise agreement and under the Lanham Act. The [franchisees] point

out that the purpose of including the liquidated damages in the agreement

was to compensate Ramada Inns for lost franchise fees and expenditures

to attract a new franchisee for a period of two years after breach of the

franchise agreement. Because some of the trademark infringement award

was based upon the same items considered for liquidated damages, the

[franchisees] claim that Ramada Inns received a “double recovery for a

single injury.” 

* * *

First, we note that Ramada Inns’ observation that damages were awarded

for two “sets of wrongs” is as irrefutable as the [franchisees’] contention

that the damage awards included common elements. Liquidated damages

were awarded because the partners breached the franchise agreement;

trademark infringement damages were awarded because they held over

for six months after the agreement was terminated. The franchise

agreement stated clearly that upon termination, Ramada Inns was entitled

to liquidated damages. Under the Lanham Act, Ramada Inns was entitled

to damages for the [franchisees’] impermissible “holding over.” After

all, “holding over” is no different than unlawfully using the Ramada

Inns’ marks from the beginning of operations. By committing these two

indiscretions, the [franchisees] became liable for two damage awards.

Since damages are not always given to precise calculation, a possibility

always exists that some overlap will occur when separate awards are

made to compensate for separate wrongs. 

Second, were we to hold that the district court erred in awarding

trademark infringement damages, we would undoubtedly subvert the

purpose behind the Lanham Act. When a trademark infringement action

is established because a franchisee “holds over” as here, and damages are

based on the franchisor’s losses, royalties normally received by the

franchisor and expenditures necessary to establish a new franchise will

constitute substantial elements in the damage award. Were we to hold

that trademark infringement damages could not be recovered if the

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franchisor received like damages in a separate action for breach of the

franchise agreement, we would provide an incentive for some infringers

to “hold over.” With the knowledge that they could only be answerable

for contractual damages, unscrupulous infringers would “hold over” with

impunity.

Ramada Inns, Inc., 804 F.2d at 1565-67 (internal citations and footnote omitted). 

Here, as in Ramada Inns, Inc., Baymont’s claims for breach of contract and

trademark infringement are distinct actions, based on separate conduct and addressing

disparate harms. In addition, as we have determined, the liquidated damages award fell

short of the $430,000 in lost royalties that Baymont would have received over the

remainder of the license term and, consequently, was not tantamount to a double

recovery. 

Given the abundant evidence that Heartland willfully infringed upon Baymont’s

trademarks, and that an award of royalties alone was inadequate to compensate Baymont

for the true extent of its injuries, we find no abuse of discretion, or prohibited “penalty,”

in the district court’s award of treble damages. 

We, along with numerous other courts, have found enhanced damages under

§ 1117(a) to be appropriate in analogous cases. See, e.g., U.S. Structures, Inc., 130 F.3d

at 1187-88 (affirming the district court’s award of treble damages where, after franchise

agreement was terminated for lack of payment, the defendants-franchisees admittedly

continued to use the franchise trademarks, including participation in a profitable

advertising program, while attempting to negotiate a settlement of their dispute); see also

Gorenstein Enter., Inc., 874 F.2d at 435 (holding that terminated franchisees’ continued

use of the franchisor’s trademark was “so deliberate,” and their justifications “so weak,”

that “it might have been an abuse of discretion for the district judge not to have awarded

. . . treble damages”); Taco Cabana Int’l, Inc., 932 F.2d at 1127 n.20 (affirming doubled

damages award under § 1117(a) where “[t]he weight of the evidence persuades us . . .

that Two Pesos brazenly copied Taco Cabana’s successful trade dress, and proceeded

to expand in a manner that foreclosed several lucrative markets within Taco Cabana’s

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11See also New York Racing Ass’n, Inc. v. Stroup News Agency Corp., 920 F. Supp. 295, 301-02

(N.D.N.Y. 1996) (awarding treble damages to licensor under § 1117(a) for the former licensee’s willful

infringing conduct); KFC Corp. v. Lilleoren, 821 F. Supp. 1191, 1193 (W.D. Ky. 1993) (awarding treble

damages where the franchisee “deliberate[ly] and willful[ly]” “continued to operate under the KFC

trademark for a substantial period after notice of termination had been received and even after the action

had been instituted”); Holiday Inns, Inc. v. Airport Holiday Corp., 493 F. Supp. 1025, 1028 (N.D. Tex.

1980), aff’d sub nom. Holiday Inns, Inc. v. Alberding, 683 F.2d 931 (5th Cir. 1982) (trebling damages

award under § 1117(a) where the franchisees continued to use the franchisor’s marks in “flagrant disregard

of the rights of Plaintiff”); cf. Travelodge Hotels, Inc., 2005 WL 2656676, at *12 (awarding treble damages

to franchisor under 15 U.S.C. § 1117(b) where franchisees “were put on notice on several occasions that

they were displaying the Travelodge marks in violation of their termination duties, yet the sign was not

removed until over 15 months after termination of the Franchise Agreement”). But see Ramada Franchise

Sys., Inc. v. Boychuk, 283 F. Supp. 2d 777, 791 (N.D.N.Y. 2003) (finding that hotel franchisor was not

entitled to trebling of damages under § 1117(a) absent a showing that the amount awarded as actual

damages was inadequate to compensate for trademark infringement and franchisor “offered no nonpunitive reasons for the enhancement”). 

natural zone of expansion”); Ramada Inns, Inc., 804 F.2d at 1566-67 (affirming

franchisor’s treble damages award where franchisees held over for six months after the

agreement was terminated).11 

We therefore affirm the district court’s award of treble damages for trademark

infringement to Baymont. 

VI. 

For the reasons stated, we affirm the judgment of the district court.

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