NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

RAMADA WORLDWIDE INC., formerly:

known as RAMADA FRANCHISE : Hon. Dennis M. Cavanaugh

SYSTEMS. INC.. a Delaware Corporation.:

OPINION

Plaintiff, Civil Action No. I 1-cv-03676 (DMC)(JAD)

SOUTHPORT, LLC a Missouri Limited

Liability Company; and GARY ALLEN,

an individual; and IRA DOCKINS, an

individual.

Defendants.

DENNIS M. CAVANAUGH. U.S.D.J.:

This matter having come before the Court upon Plainti IT Ramada Worldwide Inc.’s,

formerly known as Ramada Franchise Systems, Inc., (“Plaintiff’ or “Ramada”) Motion for

Summary Judgment as to the Second. Fourth. Sixth. and Seventh Counts of its Complaint and to

Dismiss Defendants Southport, LLC (“Southport”), Gary Allen (AIlen”), and Ira Dockins’

(“Dockins”) Counterclaim (collectively “Defendants”) Counterclaim. (Pl.’s Mot. for Sumrn.

.Iudg.. Nov. 9. 2012, ECF No. 19). Pursuant to FED. R. Civ. P. 78. no oral argument was heard.

After carefully considering the submissions of the parties, and based upon the following, it is the

tThding of this Court that Plaintiff’s Motion for Summary Judgment and Motion to I)ismiss are

granted.
I. BcKcRouND’

Ramada tiled this Motion for Summary Judgment on November 9. 20 1 2 against

Defendants Southport. Allen. and Dockins seeking an Order with respect to the Second. Fourth.

Sixth and Seventh Counts of its Complaint to recover damages and other monies allegedly

withheld by Defendants under a license agreement.

Ramada, formerly known as Ramada Franchise Systems. Inc., is a Delaware corporation

with its principal place of business in Parsippany, New Jersey. (All, of Valerie Capers Workman

( \\ oikman Alt ) at ¶ 3 No 9 2012 FCF No 19-5) Ramada opei ltcs a gucst lodging I 1cl11t\

franchise system, which consists of federally-registered trade names, service marks, logos and the

distinctive Ramada System. (Id. at ¶ 5).

Southport is a Missouri limited liability company with its principal place of business at

2121 Ridge Road, Arnold, Missouri. (Id. at ¶ 6). Allen and Dockins are the principals of

Southport and are citizens of Missouri and Wisconsin iespectneh (j4 at ¶J 7-8)

On or about May 8. 2003. Southport executed a license agreement (the “License

Agreement”) with Ramada to operate a 70-room Ramada guest lodging facility located at 2 1 2 1

Ridue Road, Arnold. Missouri 63010 (the “Facility”). (Id. at ¶ 9). Pursuant to the terms of the

License Agreement. Southport agreed to make certain periodic payments to Ramada for royalties.

service assessments, taxes, interest, reservation system user fees, and other fees (collectively,

“Recurring Fees”). (Id. at ¶ 11). Southport also agreed to be subject to an interest penalty equal

to 1 .5% per month or the maximum rate allowed by applicable law, whichever is less, for late

payments. (Id. at ¶ 14). The License Agreement further provided that Ramada could terminate

Unless otherwise indicated, facts contained in the Background section are derived from Plaintiff’s Statement

ot Lndisputcd Mateinl Flcts (P1 s Statement of Undisputed Mateini Hcts Fcbiuii 29 2012 FCI No 19 2)
the agreement for various reasons, including Southport’s failure to render payment to Ramada.

(Id. at ¶ 17). In the event of termination, the License Agreement provided that Southport would

pay liquidated damages to Ramada in an amount equal to $2,000 for each guest room it operated at

the Facility. (Id. at ¶I 1 8-19). In addition, pursuant to an addendum to the License Agreement.

Southport agreed to pay an additional $1,000 of liquidated damages to Ramada upon termination.

(Pl.’s Mot. Br.. Exh. 3 at ¶ 24, 27, ECF No. 19-3). Both Allen and Dockins also personally

guaranteed Southport’s obligations to Ramada under the License Agreement. (Workman Aft’. at

¶28).

On June 16, 2003. in connection with entering into the License Agreement. Allen and

Dockins signed a Development Incentive Note (“Note”) with Ramada on behalf of Southport br

$105,000. (Id. at ¶ 28). The Note provided that one-fifteenth of the initial principal would he

extinguished without payment on each anniversary of the Facility’s first day of business. (ii)

However, Southport. Allen and Dockins were obligated to repay any outstanding principal until

the entire loan was forgiven. (Id. at ¶ 30). The Note also provided that. in the event of

termination, it would be subject to simple interest at a rate the lesser of 1 8% or the maximum rate

permitted under the applicable law. (Id. at ¶ 32).

Beginning on February 1 8, 2010. Ramada sent a series of letters advising Southport that it

was in breach of the License Agreement for its failure to remit required periodic payments of

Recun’ing Fees to Ramada. (Id. at ¶ 33-36). Ramada warned that if the deftiult was not cured.

the License Agreement might he subject to termination. (Id.) On September 27, 2010, Ramada

terminated the License Agreement for Southport’s continued failure to satisfy its financial

obligations under the contract. (Id. at ¶ 37). Ramada is seeking to recover outstanding recurring

fees, interest, liquidated damages, unpaid principal balance of the Note, and attorneys’ fees in

-3
connection with Southport’s alleged breach of the License Agreement. (I4 at ¶[ 38, 52).

II. LEGAL STDARD

Summary judgment is granted only if all probative materials of record. viewed with all

inferences in favor of the non-moving party, demonstrate that there are no genuine issues of

material fact and that the movant is entitled to judgment as a matter of law. e FED. R. Civ. P.

56(c), Celotex Corp Catrett, 477 U S 317, 330 (1986) Ihe moving patty hcais thL hurdcn 01

showing that there is no genuine issue of fact. Celotex Corp., 477 U.S. at 330. “This burden has

two distinct components: an initial burden of production. which shifts to the nonmoving party i F

satisfied by the moving party; and an ultimate burden of persuasion, which always remains on the

moving party.” Id. The non-moving party “may not rest upon the mere allegations or denials of

his pleading” to satisfy this burden, but must produce sufficient evidence to support a jury verdict

in his favor FFD R Civ P 56(e), see Matsushita Flec Indus Co ‘ Zcnith Radio (nip 47

U.S. 574. 586 (1986). “In determining whether there are any’ issues of material fact. the Court

must resolve all doubts as to the existence of a material fact against the moving party and draw all

reasonable inferences—including on issues of credibility—in favor of the nonmoving party.”

Newsome v. Admin. Office ofthe Courts ofthe State ofN.J.. 103 F. Supp.2d 807. 815 (D.N.J.

2000), afFd, 51 Fed. App’x 76 (3d Cir. 2002) (citing Watts v. Univ. of Del,, 622 F.2d 47, 50 (3d

Cir. 1980)).

If the non—movant fails to oppose the motion for summary judgment. Fin. R. Civ. P. 56(c)

provides that the Court may only grant the motion for summary judgment “if appropriate.” $‘e.

gig.. Anchorage Assoc. v. Virgin Islands Bd. of Tax Review. 922 F.2d 168. 175 (3d Cir.1990): gc

also Damiano v. Sony Music Entm’t ., 975 F. Supp. 623. 627 (D.N.J. 1996) (granting summary

judgment motion because plaintiffs argument was unopposed and created no genuine issue of

4
material fact). The motion is appropriately granted when that party is entitled to judgment as a

matter of law. Anchorage Assoc,, 922 F,2d at 175.

When “the non-moving party fails to oppose the motion for summary judgment by written

objection, memorandum, affidavits and other evidence, the Court will accept as true all material

facts set forth by the moving party with appropriate record support.” p,yJRS, No, 00-5992,

2002 WL 373448, at *2 (D.N.J. Jan. 28, 2002) (quoting Anchorage Assoc,, 922 F.2d at 175).

Even if a record contains facts that might provide support for a non-rnovanfs position. “the burden

is on the [non-movanti, not the court, to cull the record and affirmatively identify genuine, material

factual issues sufficient to defeat a motion for summary judgment.” Morris v. Orman, No.

87-5 149, 1989 WL 17549, at *8 (E.D. Pa. Mar.1, 1989) (citing Childers v. Joseph, 842 F,2d 689

(3d Cir.1988)); gjAtkinson v. City of Phila.,No. 99-1541, 2000 WL 793193, at *5 n. 8

(ED. Pa. June 20, 2000).

ilL DiscussioN

A. Liability under Count Two, Four, and Seven of the Complaint

Ramada contends that there is no question of fact to preclude summary judgment on the

issue of whether Defendants failed to comply with the contractual terms set forth in the License

Agreement. Ramada thus demands, in Count Two of its Complaint, judgment against Southport

for liquidated damages in the amount of $141,000,000, together with interest, attorneys’ fees, and

costs of suit. (Compl. at ¶ 45, June 24, 2011, ECF No. 1). In Count Four, Ramada seeks

judgment against Southport for the Recurring Fees due and owed under the License Agreement, in

the amount of $229,021 .89, together with interest, attorneys’ fees, and costs of suit. (Pl.’s N/Jot,

Br. l7 Cornpl. at ¶ 53). Ramada seeks judgment against Southport, Allen, and Dockins for
damages in the amount of $56,000 due and owed under the Note, together with interest, attorneys’

fees, and costs of suit in Count Seven. (Compl. at ¶ 66).

Under New Jersey law2 where the “terms ola contract are clear and unambiguous there is

no room fbr interpretation or construction and the courts must enforce those terms as written”

City of Orange Tp v Empire Mortg Seivices Inc , 775 A 2d 174 179 (N J Sup Ct App Div

2001) (citations omitted). The initial determination of whether a contract’s terms are clear or

ambiguous is a question of law, suitable for decision on a motion for summary judgment. JJ

Ilass Co Inc v Gilbane Bldg Co, 881 F 2d 89 92 (3d Cii 1989) cert denicd 493 U S 1080

(1990) (recognizing that when a contract is unambiguous “the determination of the parties intent is

purely a question of law within the exclusive province ofthe trial court”): Driscoll Consi. Co.. Tnç

\ State Dept of lianspoitation 853 A 2d 270 276 (N T Sup Ct pp Di 2004) (noting the

interpretation of a contract is typically a legal question that may be decided by the court on a

summary judgment motion). A review of the relevant provisions of the License Agreement and

Guaranty lead this Court to conclude that the clauses regarding the Recurring Fees, liquidated

damages, amount due on the Note, and attorneys fees are not ambiguous. (See Workman Aff,,

Lxh. A, B. Nov. 9, 2012, ECF No. 19-5). Further. Defendants do not dispute the validity of the

contractual provisions providing for these damages and fees.

This Court next looks to whether Southport complied with the terms of the License

Agreement. This Court agrees that there is no question of fact that precludes summary judgment

as to whether Southport violated the terms ofthe License Agreement. Pursuant to Section 7 and

Schedule C of the License Agreement. Southport was bound to make periodic payments to

2 Tn the diversity of citizenship action, for purposes of the present motion, New Jersey law governs the claims asserted

by

1

Ramada in the Complaint based on the choice of law provision contained in Section 176. 1 of the License

\greemeni.

6
Ramada for Recurring Fees. Under Section 7.1 .1 of the License Agreement, Southport was

obligated to pay Ramada a monthly royalty fee equal to “four percent (4.0%) of Gross Room

Revenues of the Facility.” (Workman Aff,, Exh, A § 7.1.1). Southport was further obligated to

pay Ramada a monthly Ramada Inns National Association (“RTNA”) Services Fee equal to “4.5%

of Gross Room Revenues” ofthe Facility, pursuant to Section 7.1.2 and Schedule C of the License

Agreement. (Workman Aff., Exh. A § 7.1.2, Sch. C). Under Section 7.3, Southport agreed that

interest is payable “on any past due amount payable to [Ramada] 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 the amount is paid.” (Workman Aff., Exh. A § 7.3).

Defendants do not dispute that they breached the License Agreement, specifically

acknowledging that they failed to pay the franchise fees owed. (Certification of Bryan P. Couch

“Couch Cert.” at J 5, Nov. 9, 2012, Exh, C at ¶ 17). Beginning in 2010. Southport failed to remit

timely payments to Ramada for outstanding Recurring Fees, as provided for under the terms of the

License Agreement. (Workman Aff., at ¶ 3$). Additionally, after termination ofthe Agreement,

Defendants acknowledge that they did not pay outstanding fees, the unamortized principal balance

of the Note, and liquidated damages as required by the terms of the License Agreement and Note.

(Couch Cert. at ¶ 5, Exh, C at ¶J 15-17); gç gg, Port Auth. ofN,Y. and N.J. v. Affiliated FM Ins.,

245 F. Supp. 2d 563, 572 n.9 (D.N.J. 2001) (“. . . it is incumbent on the responding party to issue a

meaningful rejoinder to a given statement of material fact, lest that fact be deemed undisputed”).

This Court finds that because these contractual provisions are not reasonably susceptible to

differing interpretations, there is no ambiguity to be resolved that would preclude summary

judgment. See American Cyanamid v. Fermenta Animal Health Co., 54 F.3d 177, 181 (3d Cir.

1995). The obligations to be incurred by Southport, if it were to fail to comply with the

7
provisions of the License Agreement, were set forth in the Agreement and are not disputed.

“iAlnv material fact not disputed shall be deemed undisputed for purposes of the summar

judgment motion.” L. Civ. R. 56.1(a). In light of this lack of contradicted evidence and the

unambiguity of the contract terms, all the elements necessary to establish a breach of the License

Agreement by Southport are present.

Defendants attempt to assert defenses to the breach, and that is the focus of the pleading in

opposition to the instant motion. Primarily. I)efendants argue that they can successfully maintain

a defense under the doctrine of unclean hands and that this presents a genuine issue of material

fact. (Defs.’ Opp’n Br. 11, Nov. 20, 2012, ECF No. 20). In support of this theory. Defendants’

assert that Ramada’s representatives fraudulently induced 1)efendants to enter into the License

Agreement by promising a 20% increase in revenue immediately upon opening. as well as

improved advertising and support. (Defs.’ Opp’n Br. 10).

In order for the doctrine of unclean hands to be applicable, a relationship between the

inequitable conduct and the claims must be found, and if found, the Court maintains discretion to

apply the doctrine to onl a portion of the plaintiffs claims. , gg.. Keystone I)riller Co. v.

General Excavator Co.. 290 U.S. 240, 146 (1933). To successfully apply this doctrine.

Defendants must prove fraud, unconscionability, or bad faith on Ramada’s part. S & R Corp.

v. Jiffy Lube Intern., Inc., 968 F.2d 371, 377, n. 7 (3d Cir. 1992) (“To prevail on an unclean hands

defense, the defendant must show fraud, unconscionabilitv. or bad faith on the pail of the

plaintifF). Defendants are unable to meet his burden. Defendants allege only that Ramada: (I

fuiled to inform Defendants that the “Ramada Limited and Suites” brand would he removed 1I’om

their fttmily of hotels, (2) made representations that the revenue for the Facility would increase due

to Ramada’s marketing efforts, (3) induced Defendants to terminate their existing agreement with

8
the Microtel® brand by offering a loan. (Defs.’ Opp’n Br. 15). However, this is both

unsupported by the record and insufficient to thwart summary judgment in Ramada’s favor.

Fuithei. the record demonstrates that Defendants agreed to each of these modifications at the lime

the license Agreement was made, evidenced by Allen’s signature on the punchlist he executed on

behalf of Southport. (See Workman Aff, Exh, A, Sch. B). Additionally, to the extent that

Defendants allege that they were told they would receive a 20% increase in revenue by switching

to the Ramada brand because of Ramada’s marketing. this argument is similarly unpersuasive.

Section 4.3.1 of the License Agreement provides that Ramada will market the Ramada brand In

[its] discretion” including: “(i) The nature and type of media placement: (ii) The nature and type of

advertising copy, other materials and programs. (See Workman All.. 1xh. A. § 43.1).

Additionall, as per the terms of the License Agreement. Ramada does “not promise that the

Facility or [Southport] will benefit directly or proportionately from marketing activities.” (See

Workman Aff, Exh. A, § 4.3.1). Furthermore, subsequent provisions of the License Agreement

explicitly state that the writing is wholly integrated and disclaim any and all oral or written

promises or representations not included in the contract. (See Workman Aff.. Exh. A. § 14.3.

1 7.7.2. 1 7.7.3). Therefore. to the extent that the Defendants attempt to rd on an exception to the

parole evidence rule to introduce the aforementioned statement, that argument is inapplicable.

Furthermore, even ifthe defenses asserted were recognized as valid, they do not excuse

Southport’s admitted breaches of the License Agreement and Note to which they were bound.

See S & R Corp. v. Jiffy Lube Int’l Inc.. 968 F.2d 371, 376 (3d Cir. 1992) (“Under no

circumstances may the non-breaching party stop performance and continue to take advantage of

the contract’s benefits”); Specialties Dcv. Corp., v. C-O-Two Fire Equipment Co., 109 F. Supp.

732. 735 (D.N.J. 1953) (recognizing the legal premise that a defendant’s failure to terminate the

9
contract in the face of a material breach of the license agreement may constitute a waiver of the

breach and an election to continue performance thereunder).

Due to Southports failure to make required payments pursuant to the License Agreement

while continuing to operate in accordance with the Agreement. the Plaintiff is entitled to summary

judgment on the issue of liability for Counts Two. Four, and Seven, “It is clear that defendants’

allegations . . . are separate, unrelated claims which, even if proven, would not bar summar

judgment on this cause of action.” McDonald’s Corp. v. Robert A. Makin, Inc., 653 F. Supp. 401,

404 (W.D.N.Y. 1986). The affirmative defenses raised by Defendants are not sufficient to delat

the instant Motion. Ramada’s Motion for Summary Judgment is thus granted on Counts Two.

Four, and Seven.

B. Liability Under Count Six of the Complaint

Plaintiff further alleges that Ramada is entitled to Summary Judgment as to liability on the

sixth count of the Complaint as no genuine issue of material fact exists regarding Allen and

Dockin’s breach of the Guaranty. (Compi. at ¶ 66). To be entitled to a judgment on a guaranty.

a plaintiff must show: “(1) execution of the guarantee by the guarantor (i.e. that it was the

defendant who signed the guarantee); (2) the principal obligation and terms ofthe guaranty: (3) the

lender’s reliance on the guaranty in extending monies to the borrower: (4) default by principal

obligator: (5) written demand for payment on the guarantee: (6) failure of the guarantor to pa

upon written demand,” U.S. on Behalf of Small Business Admin. v. DelGuercio, 818 F. Supp.

725, 727-28 (D.N.J. 1993) (citing 38 C.J.S. Guaranty § 8-14 and 38 Am. Jur. 2d § 119). Each

element has been established here.

First, Defendants Allen and Dockins do not dispute that they each executed the Guaranty

(Couch Cert.. at 3, Exh. A at 28:15-25, and ¶ 5, Exh. C at ¶T 5.7). Second. the terms of the

10
Guaranty and the obligations therein are unambiguous. If the terms of he contract are

unambiguous. the court may construe the meaning or requirements of a contract as a matter ol law

for purposes of summary judgment Nevets C M Inc v Mack Tiucks Inc 726 1 Supp 52

531 (D.N,J. 1989), af[’d, 899 F. 2d 1218 (3d Cir, 1990). Allen and Dockins were required under

the terms ofthe Guaranty to irnmediately make each payment and perform or cause [Southportj to

perform, each unpaid or unperformed obligation of [Southportj under the Agreement.”

(Workman Aff,, at ¶ 26, Exh. C). Defendants have not alleged any inability to understand the

terms of the Guaranty. The contractual provisions of the Guaranty are not subject to differences

ol interpretation and therefore there is no ambiguity to be resolved that would preclude summary

judgment. See American Cvanamid v. Fermenta Animal Co.. 54 F.3d 177. 181 (3d Cir. 1995).

Third, by its own terms, the express purpose of the Guaranty was to induce Ramada to

enter in to the License Agreement with Southport. (Workman Aff., at ¶ 25). The reliance

element has thus been fulfilled. As discussed above, it is similarly not disputed that Southport

defaulted under the terms of the License Agreement by failing to timely pay Ramada the fees

owed, in fulfillment of the fourth element. Fifth. Ramada has demonstrated that it notihed Allen

and Dockins of Southport’s default under the terms of the License Agreement and its intention to

terminate the License Agreement ifthe defaults were not cured in letters dated February 18, 20 1 0,

Ma\ 10 2010 Scptembei 23 2010 and September27 2010 (Woikman All at134-37 Lxh

E-H). Finally, despite these written demands for payment. Allen and Dockins have not remitted

payment of outstanding Recurring Fees, liquidated damages, and unamortized principal balance of

the Note owed due to the early termination of the License Agreement. (Workman Aff., at ¶ 38;

Couch Cert., ¶ 5, Exh. C at ]J 15-17).

Ramada has asserted facts to prove each element of breach ol the Guarant . and such Ilicts

11
are appropriately supported by the record and, in some cases, undisputed by the Defendants.

Ramada has demonstrated that there is no genuine issue of material fact and thus is entitled to

summary judgment on the Sixth Count of the Complaint.

C. Damages

Plaintiff has also requested this Court grant its motion for summary judgment with respect

to the following damage claims: (1) outstanding Recurring Fees in the amount of $229,021.89

(inclusive of interest through November 5, 2012); (2) liquidated damages in the amount of

$141,000,000; (3) the unamortized principal balance of the Note in the amount of $56000.00, due

to Ramada at the time of termination of the License Agreement. (Pl.’s Mot. Br. 16). Ramada

also seeks an award of prejudgment interest on the above amounts, as well as attorneys’ fees and

costs of suit. Defendants have not addressed Ramada’s damage claims in their opposition

pleading.

1. Recurring Fees

Ramada asserts that Section 7 and Schedule C ofthe License Agreement obligate

Defendants to make payment of Recurring Fees, an obligation that Defendants have failed to

fulfill. (See Ph’s Brief 1 6). Defendants raise no arguments concerning the payment of or

amount to be paid in Recurring Fees. The obligations incurred by Defendants pursuant to the

aforementioned sections of the License Agreement are presented in a detailed listing of required

Recurring Fees, leaving no question as to how such fees should be calculated, When the License

Agreement was terminated, Defendants were in default of their financial obligations to Ramada.

Ramada also seeks prejudgment interest on Recurring Fees, in accordance with Section 7.3

ofthe License Agreement. Prejudgment interest is intended to reimburse the claimant lbr the loss

of the use of its investment or its funds from the time of the loss until judgment is entered. In re

12
Bankers Trust Co., 658 F.2d 103, 108 (3d Cir. 1981). Section 7.3 of the License Agreement

applies interest on past-due recurring fees at a rate of 1.5% per month. (Workman All.. Exh. A. §

7.3). Accordingly, this Court grants summary judgment on this claim and Ramada is entitled to

summary judgment in the amount of $229,021.89, inclusive of interest, in damages pursuant to the

Fourth and Sixth Counts of the Complaint. This figure includes interest through November 5,

2012, as calculated in Ramada’s pleadings. Ramada has attached an itemized statement of those

fees to the Workman Affidavit and the Court is satisfied that Ramada has demonstrated the amount

of Recurring Fees owed by Southport. (Workman All.. Exh. 1).

2. Liquidated Damages

Ramada seeks liquidated damages from Defendants pursuant to Section 12.1 of the License

Agreement and Section 13(c) of the Satellite Addendum. (PI.’s Mot. Br. 18). Under New Jersey

law, liquidated damages provisions are enforceable where: (1) the damage sustained by the

non-breaching party would be difficult to ascertain, and (2) the amount is a reasonable lorecast ol

the loss sustained. Wasserman’s Inc. v. Middletown, 645 A.2d 100, 106 (N..1. Sup. Ct. 1994)

(citations omitted). In evaluating a liquidated damages clause, the court looks to the

reasonableness of the clause “either at the time of contract formation or at the time of the breach.”

Naporano Assocs., L.P. v. B & P Builders, 309 N.J. Super, 166, 176 (App. Div 1998) (quoting

Wasserman’s, 645 A.2d at 107). When two commercial parties have comparable bargaining

poxver. a presumption exists that the liquidated damages clause is valid. Wasserman’s. 645 r\.2d

at 107. The party owing liquidated damages had the burden “to offer proof of contractually

acceptable excuses in order to avoid the application of the liquidated damages clause.” Monsen

En’g Co. v. Tami-Githens, Inc.. 530 A.2d 313, 318 (App. Div. 1987). Whether an unambiguous

liquidated damages clause is valid and enforceable is a question for the court. Naporano, 309 N ..J.

1,,

Ii
Super. at 176 (citing Wasserman’s, 645 A.2d at 109).

Section 12.1 of the License Agreement sets liquidated damages as the product of

$2,000.000 multiplied by the number of guest rooms Southport was authorized to operate at the

Facility. At the time of termination of the License Agreement, Southport was operating 70 guest

rooms at the Facility. Therefore, $2,000.000 multiplied by 70 guest rooms is $140,000.00.

(Workman AfT., at ¶ 46, Exh, A § 12.1). Section 13(c) ofthe Satellite Addendum specifically sets

liquidated damages for termination ofthe Satellite Addendum at $1,000.00. (Workman Aff,, at ¶

47, Exh. B § 13(c)).

The language presented in the liquidated damages clauses demonstrates a clear intent by

the parties to choose among the available remedies and a good faith attempt to fix adequate

compensation for a loss resulting from the premature termination of the License Agreement.

Further, as the amount of fees is tied to monthly gross room revenues of the Facility, Ramada

correctly asserts that actual damages resulting from the breach amount are extremely difficult to

estimate as room rates and occupancy levels are constantly in flux. Even without this, Defendants

have failed to establish, and have made no attempt to establish, that the liquidated damage clauses

are invalid nor offered proof of any contractually acceptable excuse to avoid the application of the

clauses, Ramada is therefore entitled to summary judgment on the issue of liquidated damages in

the amount of $141,000,000.

Ramada further claims it is entitled to interest on this amount calculated at the rate of

interest of 1.5% per month, totaling $47,141.34 from January 25, 2011 30 days from the date of

termination — through December 3, 2012 — the motion return date on the instant motion (678

14
days), 3 This Court disagrees. Section 7, providing for Recurring Fees, specifically discusses a

1.5% interest rate, The liquidated damages clause, contained in Section 12, contains no mention

of interest nor references Section 7. Section 7 similarly does not refer to Section 1 2. A contract

is required to be construed as a whole and the Court must ascertain the interests ofthe parties based

on “the entire instrument and not from detached portions.” Krosnowski v. Krosnowski, 126 A,2d

182, 188 (N.J. Sup. Ct. 1956) (citations omitted); see Ramada Franchise Sys, Inc., v. Polmere

Lodging Corp., No. 98 -2909, 1999 U.S. Dist. LEXTS 23435, at * 11 (D.N.J. July 30, 2009)

(finding the interest provision contained in the section of the licensing agreement pertaining to

recurring fees not applicable to the subsequent section regarding liquidated damages). Viewing

the License Agreement in whole, the Court finds Section 12 cannot be read to infer application of

an interest provision contained in Section 7 of the agreement. The Court therefore grants

summary judgment on the amount of liquidated damages without interest.

3. The Note Claim

Ramada also seeks the principal sum of the Note, $105,000.00, less amounts forgiven of

$49,000.00, for a total of $56,000.00. Pursuant to the terms of the Note, Defendants were

obligated to pay the outstanding, unamortized principal balance of the Note immediately upon the

termination of the License Agreement. (Workman Aff., at J 31, Exh. D). However, Defendants

have failed to make such a payment to Ramada despite the clear and unambiguous contract

provision requiring such payment. See Fleming Co. v. Thriftway Medford Lakes, Inc., 913 F.

Supp. 837, 847 (D.N.J. 1995) (enforcing an unambiguous contract provision by way of summary

judgment).

3 This figure is calculated by multiplying $141,000.00 by 18% per year, which equals $25,3 8000 in interest per year.

The amount is then divided by 365 days to equal $69.53 in interest per day. When the per diem interest of $6953 is

multiplied by the applicable 678 day period. the interest Ramada seeks is $47,141.34.

15
Ramada is entitled to interest on the unamortized principal balance of the Note calculated

at the legal rate of interest of 1 8% per annum in the amount of $19,527.34. The time frame from

which this figure is garnered spans from December 27. 2010—the date the Note became due and

payable after Defendants’ termination — through December 3. 2012— the motions returnable date.

as set forth in Ramada’s pleadings. See Utica Mut. Ins, Co. v. DiDonato, 1.87 N.J. Super. 30. 43

(App. Div. 1982) (allowance of prejudgment interest in a criminal case may be determined by a

provision in a contract). The $19,527.34 figure is calculated by multiplying $56,000 by 18%

which equals $10,080.00 in inteest per year; that amount is then divided by 365 days at $27.62 in

interest per day. When that per diem rate is multiplied by 707 days, the interest owed is

$l9.527.34. (WorkmanAtT.. at50).

4. Attorneys’ Fees and Claims

Ramada also requests attorneys’ fees incurred in this suit. Under New Jersey law. parties

are permitted to contract to shift fees and costs in the event of litigation between them. provided

such contractual provisions are reasonable. North Bergen Rex Transport. Inc. v. Trailer Leasing

Co., 730 A.2d 843, 848 (N.J. Sup. Ct. 1999). An assessment of reasonableness is made through

consideration of the amount of success achieved by the party seeking reimbursement and the

prevailing rates for legal services in the relevant professional and geographical communities. I.

at 848-49. New Jersey “does not have a public policy which would prevail over the enforcement

of an express contract between private parties.” Papalexiou v. Tower West Condominium, 167

N.J. Super. 516, 531 (Ch. Div. 1979).

In the instant case, Defendants consented, pursuant to Section 1 7.4 of the License

agreement. as incorporated by the Guaranty, to “pay all costs and expenses, including reasonable

attorneys’ fees, incurred by the prevailing party to enforce this Agreement or collect amounts owed

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under this Agreement.” (Workman Aff., at ¶ 20. A. § 1 7.4). It has been determined that

Ramada is the prevailing party, and thus, is entitled to reasonable attorneys’ fees and costs incurred

in connection with the instant action. Pursuant to L. Civ. R. 54.2, Ramada has submitted the

billing records of Clyde & Co. US, LLP, detailing how attorney& fees and costs were calculated.

(Couch Cert. at ¶ 1 9. Exh. 0). Therefore, this Court awards Ramada its incurred attorneys’ fees

and costs totaling $5,000.00 and $3,395.01, respectively, during the course of this matter.

1). Counterclaims

This Court briefly address Defendants’ counterclaims, Defendants allege that

Ramada breached Section 4.3.1 of the License Agreement by failing to market Ramada. in a

manner consistent with Defendants’ reasonable expectations and causing Defendants to he unable

to generate reasonably expected profits. However, Section 4.3.1 of the License Agreement

explicitly states that the manner in which Ramada markets the Ramada® brand is within Ramada’s

“sole discretion.” (Workman Aff., at ¶ 21, Exh. A, § 4.3.1). Furthermore, as detailed in initial

section of this Opinion, the License Agreement states that “[Ramada does noti pise that the

Facility or [Southportj will benefit directly or proportionately from marketing activities.” (14.)

Furthermore. Defendants have failed to depose a witness or produce an documents in

support of their claim. Therefore, Defendants’ breach of contract claim may not stand. g

Celotex Corp v. Catrett. 477 U.S. 317, 325 (1986) (moving party’s burden may be satisfied by

pointing out the absence of evidence to support the non-movant’s claims); 4o Aronsohn v.

Mandara. 98 N.J. 92 (1 984) (party cannot prevail on breach of contract claim where no express

provision of the contract has been violated). Defendants counterclaim is thus dismissed,

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IV. CoNcLusioN

For the reasons stated herein, it is the finding of this Court that Plaintiffs Motion for

Summary Judgment as to the Second, Fourth, Sixth, and Seventh Counts of its Complaint is

granted. Ramada is awarded Recurring Fees in the amount of$ 229,02189. with a 15% interest

rate; liquidated damages in the amount of $141,000.00, without interest; $56,000 in damages fir

the principal sum of the Note, plus interest in the amount of$19.527.34: and attorneys’ fes in the

amount of $5,000 and costs in the amount of $3,395.01. Ramada’s Motion to Dismiss

Deflndants’ Counterclaim is also granted. An appropriate Order accompanies this Opinion.

Date: June J, 2013

Original: Clerk’s Office

cc: I-Ton. Joseph A. Dickson, U.S.M.J.

All Counsel of Record

File

M. Cavanaugh,

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