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DAYS INN OF AMERICA, INC. v. PATEL

April 5, 2000

DAYS INN OF AMERICA, INC., PLAINTIFF,
V.
ISHWARLAL B. PATEL, DEFENDANT.



The opinion of the court was delivered by: Richard Mills, District Judge.

OPINION

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.

I. BACKGROUND

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 this case.

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 franchise agreement.

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 ...


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