1 

UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF NEW JERSEY 

DAYS INNS WORLDWIDE, INC., 

 Plaintiff, 

 v. 

MAY & YOUNG HOTEL-NEW ORLEANS, 

LLC, et al.,

 Defendants.

Civ. No. 2:11-cv-01546 (WJM) 

OPINION

 

WILLIAM J. MARTINI, U.S.D.J.: 

Plaintiff Days Inns Worldwide, Inc. (“DIW”) filed this action against Defendants 

May & Young Hotel-New Orleans, LLC (“May & Young”) and Shenquan Yang 

(“Yang”) (collectively, “Defendants”). The Complaint alleged that May & Young 

breached a franchise licensing agreement with DIW (“License Agreement”), and that 

Yang breached an agreement to guarantee May & Young’s obligations under the License 

Agreement (the “Guaranty”). Defendants filed counterclaims for tortious interference 

with prospective economic advantage, breach of contract, and fraud, but decided not to 

pursue these counterclaims at trial. 

The Court conducted a one-day bench trial on December 4, 2012. Defendant 

Yang failed to appear at trial.1

 Although defense counsel was present at the trial, the 

defense was unable to present any evidence in light of Yang’s failure to appear as a 

witness. Plaintiff submitted proposed findings of fact and conclusions of law on 

December 13, 2012. After carefully considering the record evidence and the 

submissions, the Court finds that May & Young breached the License Agreement, and 

that Yang breached the Guaranty. The Court further finds that DIW is entitled to 

damages in the amount of $508,799.79, plus the costs incurred in this action in an amount 

to be determined. This Opinion constitutes the Court’s findings of fact and conclusions 

of law pursuant to Federal Rule of Civil Procedure 52(a). 

 

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 Defense counsel did not request, and the Court did not grant, an adjournment of the trial, as it 

appeared likely that Yang would never appear for trial. 

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I. JURISDICTION, VENUE, AND APPLICABLE LAW 

This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 

1332 because Plaintiff and all Defendants are citizens of different states and the amount 

in controversy exceeds $75,000. This Court has personal jurisdiction over Defendant 

May & Young by virtue of section 17.6.3 of the License Agreement. This Court has 

personal jurisdiction over Yang pursuant to the Guaranty, in which Yang agreed that he 

was personally bound by section 17 of the License Agreement. Venue is proper in this 

District pursuant to section 17.6.3 of the License Agreement, as that provision contains 

an express waiver by May & Young of any objection to venue in this District. 

II. FINDINGS OF FACT2

A. The Parties 

DIW is a Delaware corporation with its principal place of business in Parsippany, 

New Jersey. (Final Pretrial Order (“FPO”) (ECF No. 33), Stipulated Facts at 1). DIW 

owns and operates a national guest lodging facility franchise system and is widely known 

as a provider of guest lodging facility services. (FPO, Stipulated Facts at 2). 

May & Young is a limited liability company organized and existing under the laws 

of the State of Louisiana with its principal place of business in Harvey, Louisiana. (FPO, 

Stipulated Facts at 3). Yang is a citizen of the State of California residing at 10542 

Gaylemont Lane, San Diego, California 92310. (FPO, Stipulated Facts at 4). Yang is the 

principal and only constituent member of May & Young. Id.

B. The Agreements between the Parties 

On or about August 16, 2007, DIW entered the License Agreement with May & 

Young for the operation of a 106-room guest lodging facility located at 3750 Westbank 

Expressway, Harvey, Louisiana 70058 (the “Facility”). (FPO, Stipulated Facts at 8; 

Exhibit P-1). On or about August 16, 2007, DIW entered into a Satellite Connectivity 

Services Addendum (the “Satellite Addendum”) with May & Young. (FPO, Stipulated 

Facts at 6; Exhibit P-2). Effective as of the date of the License Agreement, Yang 

provided DIW with the Guaranty of May & Young’s obligations under the License 

Agreement. (FPO, Stipulated Facts at 7; Exhibit P-3). 

Pursuant to section 5 of the License Agreement, May & Young was obligated to 

operate a Days Inn® guest lodging facility for a 15-year term. (FPO, Stipulated Facts at 

9; Exhibit P-1). Pursuant to section 7, section 18, and Schedule C of the License 

Agreement, May & Young was required to make certain periodic payments to DIW for 

royalties, service assessments, mandatory marketing program charges, internet booking 

fees, reservation system charges, guest services assessments, taxes, interest, relicense fee, 

and other fees (collectively, “Recurring Fees”). (FPO, Stipulated Facts at 10; Exhibit P-

 

2

 The Court’s findings of fact are not limited to those in this section, but also include any factual 

determinations that appear elsewhere in this Opinion. 

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1). Pursuant to section 7.3 of the License Agreement, May & Young agreed that interest 

“on any past due amount [is] payable to [DIW] under this Agreement at the rate of 1.5% 

per month or the maximum rate permitted by applicable law, whichever is less, accruing 

from the due date until amount is paid.” (FPO, Stipulated Facts at 11; Exhibit P-1). 

Pursuant to section 3.8 of the License Agreement, May & Young was required to 

prepare and submit monthly reports to DIW disclosing, among other things, the amount 

of gross room revenue earned by May & Young at the Facility in the preceding month for 

purposes of establishing the amount of royalties and other Recurring Fees due to DIW. 

(FPO, Stipulated Facts at 12; Exhibit P-1). Also pursuant to section 3.8 of the License 

Agreement, May & Young agreed to maintain accurate financial information, including 

books, records, and accounts, relating to the gross room revenue of the Facility. Pursuant 

to sections 3.8 and 4.8 of the License Agreement, May & Young agreed to allow DIW to 

examine, audit, and make copies of the entries in these books, records, and accounts. 

(FPO, Stipulated Facts at 13; Exhibit P-1). Pursuant to section 3.9 of the License 

Agreement, DIW has the unlimited right to conduct unannounced quality assurance 

inspections of the Facility to determine whether the Facility was in compliance with 

DIW’s quality assurance requirements. (FPO, Stipulated Facts at 14; Exhibit P-1). 

Pursuant to section 11.2 of the License Agreement, DIW could terminate the 

License Agreement, with notice to May & Young, if May & Young (a) discontinued 

operating the Facility as a Days Inn® guest lodging facility establishment, or (b) lost 

possession or the right to possession of the Facility. (FPO, Stipulated Facts at 15; Exhibit 

P-1). Pursuant to section 12.1 of the License Agreement, May & Young agreed that, in 

the event of a termination of the License Agreement pursuant to Section 11.2, it would 

pay liquidated damages to DIW in accordance with a formula specified in the License 

Agreement. (FPO, Stipulated Facts at 16; Exhibit P-1). Pursuant to section 17.4 of the 

License Agreement, May & Young agreed that the non-prevailing party would “pay all 

costs and expenses, including reasonable attorneys’ fees, incurred by the prevailing party 

to enforce this [License] Agreement or collect amounts owed under this [License] 

Agreement.” (FPO, Stipulated Facts at 17; Exhibit P-1). 

Pursuant to the terms of the Guaranty, Yang agreed that, upon a default under the 

License Agreement, he would “immediately make each payment and perform or cause 

[May & Young] to perform each unpaid or unperformed obligation of the Licensee under 

the [License] Agreement.” (FPO, Stipulated Facts at 18; Exhibit P-3). Pursuant to the 

Guaranty, Yang agreed to pay the costs incurred by DIW in enforcing its rights or 

remedies under the Guaranty or the License Agreement, including reasonable attorneys’ 

fees. (FPO, Stipulated Facts at 19; Exhibit P-3). 

C. Defendants’ Defaults and Termination of the License Agreement 

By letter dated February 21, 2008, DIW advised May & Young that it was in 

default of its quality assurance obligations under the License Agreement. (FPO, 

Stipulated Facts at 20; Exhibit P-9). DIW further advised May & Young that, if the 

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default was not cured, the Facility’s access to DIW’s central reservation system would be 

suspended, certain special stipulations would expire automatically, and the License 

Agreement would be subject to termination. Id.

By letter dated November 5, 2008, DIW advised May & Young that it remained in 

default of its quality assurance obligations under the License Agreement. (FPO, 

Stipulated Facts at 21; Exhibit P-10). DIW further advised May & Young that, if the 

default was not cured, the Facility’s access to DIW’s central reservation system would be 

suspended, certain special stipulations would expire automatically, and the License 

Agreement would be subject to termination. Id.

By letter dated March 3, 2009, DIW advised May & Young that it remained in 

default of its quality assurance obligations under the License Agreement. (FPO, 

Stipulated Facts at 22; Exhibit P-11). DIW further advised May & Young that, if the 

default was not cured, the Facility’s access to DIW’s central reservation system would be 

suspended, certain special stipulations would expire automatically, and the License 

Agreement would be subject to termination. Id.

By letter dated May 19, 2009, DIW advised May & Young that it remained in 

default of its quality assurance obligations under the License Agreement. (FPO, 

Stipulated Facts at 23; Exhibit P-12). DIW further advised May & Young that, if the 

default was not cured, the Facility’s access to DIW’s central reservation system would be 

suspended, certain special stipulations would expire automatically, and the License 

Agreement would be subject to termination. Id.

By letter dated July 27, 2009, DIW advised May & Young that it remained in 

default of its quality assurance obligations under the License Agreement, and that the 

License Agreement remained subject to termination. (FPO, Stipulated Facts at 24; 

Exhibit P-13). 

By letter dated September 30, 2009, DIW advised May & Young that it was in 

default of its financial obligations under the License Agreement due to May & Young’s 

failure to pay Recurring Fees in the amount of $72,650.64, and that the License 

Agreement was subject to termination. (FPO, Stipulated Facts at 25; Exhibit P-15). 

By letter dated November 3, 2009, DIW advised May & Young that it remained in 

default of its quality assurance obligations under the License Agreement, and that the 

License Agreement remained subject to termination. (FPO, Stipulated Facts at 26; 

Exhibit P-16). 

By letter dated December 30, 2009, DIW advised May & Young that it remained 

in default of its quality assurance obligations under the License Agreement, and that the 

License Agreement remained subject to termination. (FPO, Stipulated Facts at 27; 

Exhibit P-18). 

Despite DIW’s notices, Defendants failed to cure the quality assurance or financial 

defaults under the License Agreement. (FPO, Stipulated Facts at 28). 

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On or about June 23, 2010, 2010, May & Young ceased operating the Facility as a 

Days Inn® guest lodging facility. (FPO, Stipulated Facts at 29). By letter dated 

September 9, 2010, DIW acknowledged May & Young’s termination of the License 

Agreement, effective June 23, 2010, and demanded that Defendants pay liquidated 

damages together with all outstanding Recurring Fees due at the time of termination. 

(FPO, Stipulated Facts at 30; Exhibit P-19). 

III. CONCLUSIONS OF LAW 

May & Young breached the License Agreement by virtue of (1) its quality 

assurance defaults under the License Agreement, (2) its financial defaults under the 

License Agreement, and (3) its termination of the License Agreement. Yang breached 

the Guaranty by virtue of his failure to make each payment due from May & Young. As 

a result of Defendants’ breaches, DIW is entitled to damages comprised of Recurring 

Fees, liquidated damages, and prejudgment interest. DIW also is entitled to an award of 

attorneys’ fees and costs of suit pursuant to section 17.4 of the License Agreement. 

IV. DAMAGES 

Defendants owe DIW $196,453.29 in Recurring Fees. Consistent with the License 

Agreement, Recurring Fees were calculated based on data reported by or collected from 

Defendants. (FPO, Stipulated Facts at 31; Exhibit P-20). As to the period of April 11, 

2010 through June 23, 2010, during which such data was not available, Recurring Fees 

were calculated based on amounts estimated by DIW using historical revenue data for the 

Facility and revenue earned at a similar facility. Id. Defendants failed to pay Recurring 

Fees to DIW in the principal amount of $125,890.30. Id. As of October 31, 2011, 

Defendants owed Recurring Fees to DIW, together with prejudgment interest, in the 

amount of $171,745.45. Id. Defendants owe additional interest for the period from 

November 1, 2011 through December 4, 2012 (the date of trial) in the amount of 

$24,707.84. (FPO, Stipulated Facts at 11; Exhibit P-1). 

Defendants owe DIW $312,346.50 in liquidated damages. Section 12.1 of the 

License Agreement provides that “liquidated damages will not be less than the product of 

$2,000 multiplied by the number of guest rooms you are then authorized to operate under 

Schedule B.” Pursuant to Section 12.1, DIW is owed $212,000.00 ($2,000.00 multiplied 

by 106 guest rooms). (FPO, Stipulated Facts at 16; Exhibit P-1). Section 13(c) of the 

Satellite Addendum provides a flat $2,500.00 fee for liquidated damages, for a total of 

$214,500.00 in liquidated damages due to DIW. (FPO, Stipulated Facts at 6; Exhibit P-2 

at §13(c)). DIW is also entitled to $97,846.50 in interest on its liquidated damages, 

which was calculated at the legal rate of interest of 1.5% per month (or 18% per year) 

from June 23, 2010 through and including December 4, 2012. (FPO, Stipulated Facts at 

11; Exhibit P-1 at §7.3). 

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Adding together Recurring Fees and liquidated damages, Defendants owe DIW a 

grand total of $508,799.79. DIW is also entitled to costs and expenses incurred in this 

action, including reasonable attorneys’ fees and costs, in an amount to be determined. 

(FPO, Stipulated Facts at 11; Exhibit P-1 at §17.4). An appropriate order and judgment 

follows. 

 

 /s/William J. Martini 

 WILLIAM J. MARTINI, U.S.D.J. 

Date: December 19, 2012

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