The opinion of the court was delivered by: Richard Mills, District Judge.
Who wants to stay in a dirty motel room?
Days Inns believed that no one would and also believed that
Defendant breached the franchise agreement by not keeping his
facility up to snuff.
Defendant argues that he was relieved of his obligations under
the franchise agreement because the road leading to his facility
from the interstate was closed for a period of time by the
Illinois Department of Transportation.
However, under New Jersey law, a bridge's closure does not
absolve Defendant of his duty to keep his motel rooms clean.
Motion for summary judgment allowed.
On June 1, 1994, Days Inns of America, Inc. ("Days Inns"), and
Ishwarlal Patel entered into a franchise agreement for the
operation of a 60 room guest lodging facility located at 2011
Kickapoo Street, Lincoln, Illinois.*fn1 This franchise
agreement provided that Patel was to operate the facility for a
15 year term ending on June 1, 2009. The franchise agreement
also contained the following provisions which are relevant to
First, pursuant to section 8 of the franchise agreement, Patel
agreed to pay Days Inns certain fees for royalties, taxes,
interest, etc., referred to as "recurring fees." Second, section
3 provided that Patel was to make renovations to the facility in
order to bring it into compliance with Days Inns' "system
standards," "appropriate plans," and "punch list" as defined
within the franchise agreement. Specifically, Patel agreed to
achieve a quality inspection score of at least 425 or an
equivalent score within nine months of the effective date of the
Third, section 19 gave Days Inns the right to terminate the
franchise agreement upon Patel's failure to cure certain
breaches of his obligations under the franchise agreement
including (1) a failure to maintain the property in accordance
with Days Inns' quality assurance requirements and to remedy
such a failure within 30 days of receipt of notice from it
specifying one or more breaches and (2) a failure to pay all
recurring fees on a timely basis and to pay amounts due to Days
Inns under the franchise agreement within ten days of receipt of
its written demand. Fourth, section 20 contained a liquidated
damages clause to be invoked by Days Inns in the event of a
breach of the franchise agreement by Patel. Finally, section 28
of the franchise agreement provided that the agreement was
governed by New Jersey law.
On December 29, 1995, Days Inns conducted a quality assurance
inspection of the facility. During the inspection, the inspector
noted dirty and damaged guest rooms, including burns in the
bedding, dirty toilets, severely stained carpets and ceilings,
and food left uncovered in the restaurant. Accordingly, the
facility received a failing grade of 313.
On January 24, 1996, Days Inns notified Patel that the
facility had failed the December 29, 1995 inspection. It also
informed him that he was in default of his quality assurance
obligations under the franchise agreement and that he would have
30 days within which to cure the defaults identified during the
December 29, 1995 inspection. If he did not fix the problems,
Days Inns advised Patel that the franchise agreement would be
subject to termination.
On December 17, 1996, C.K. Patel, the general manager of the
facility, entered into an agreement with Days Inns on behalf of
the facility to make certain improvements in order to satisfy
Days Inns' minimum quality assurance standards. Under this
agreement, C.K. Patel agreed to make all of the agreed upon
improvements by February 28, 1997.
On March 6, 1997, Days Inns conducted a third quality
assurance inspection of the facility. At the conclusion of the
inspection, the facility received its third failing score,
i.e., 314. The inspector also noted that several of the
problems which C.K. Patel had agreed to fix in the December 17,
1996 agreement had not been corrected. On March 18, 1997, Days
Inns notified Patel that the facility had failed its third
consecutive quality assurance inspection, and therefore, the
agreement was subject to termination.
On August 5, 1997, Days Inns performed a fourth quality
assurance inspection of the facility which resulted in a failing
grade of 287. On September 8, 1997, Days Inns notified Patel
that the facility had failed a fourth consecutive quality
assurance inspection and warned that the franchise agreement
was, therefore, subject to termination.
On November 10, 1997, Days Inns conducted a fifth quality
assurance inspection. After this inspection, the facility
received its fifth failing grade, i.e., 283. Accordingly, on
November 26, 1997, Days Inns notified Patel that it was
terminating the franchise agreement, advised him that he owed
approximately $2,240.37 in recurring fees, and demanded
$120,000.00 in liquidated damages for breaching the franchise
agreement. Since November 26, 1997, Days Inns has not operated
or maintained a facility in Lincoln, Illinois.
II. STANDARD FOR SUMMARY JUDGMENT
Federal Rule of Civil Procedure 56(c) provides that summary
judgment "shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party
is entitled to judgment as a matter of law." Fed.R.Civ.Pro.
56(c); see Ruiz-Rivera v. Moyer, 70 F.3d 498, 500-01 (7th Cir.
1995). The moving party has the burden of providing proper
documentary evidence to show the absence of a genuine issue of
material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24,
106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine issue of
material fact exists when "there is ...