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Braucher v. Swagat Group

March 19, 2010

MARJORIE R. BRAUCHER, INDIVIDUALLY, AND AS SPECIAL ADMINISTRATOR OF THE ESTATE OF GEORGIA BRAUCHER, DECEASED; AND BONNIE E. LEISER, PLAINTIFFS,
v.
SWAGAT GROUP, L.L.C. ET AL., DEFENDANTS.



The opinion of the court was delivered by: Jeanne E. Scott, U.S. District Judge

OPINION

These consolidated cases come before the Court on Defendant Choice Hotels, International, Inc.'s (Choice Hotels) Motions for Summary Judgment (Case No. 3253 d/e 86 & Case No. 3254 d/e 123) (Choice Summary Judgment Motions) and Motions to Strike and Bar Opinions of David Smith (Case No. 3253 d/e 112 & Case No. 3254 d/e 145) (Motions to Bar); Defendants Himanshu M. Desai, Vasant Patel, Vijay C. Patel, and Swagat Group, LLC (LLC), and Vaidik International, Inc.'s (collectively the Swagat Defendants) Motions for Partial Summary Judgment (Case No. 3253 d/e 110 & Case No. 3254 d/e 143) (Partial Summary Judgment Motions) and Motions for Summary Judgment (Case No. 3253 d/e 111 & Case No. 3254 d/e 144) (Swagat Summary Judgment Motions). In the winter of 2006, Georgia Braucher and Bonnie Leiser stayed at the Comfort Inn in Lincoln, Illinois (Hotel), owned by the Defendant LLC and operated under a Franchise Agreement (Agreement) with Choice Hotels. The other Swagat Defendants were members of the LLC. Georgia Braucher and Bonnie Leiser became ill shortly after their stays at the Hotel, and both were diagnosed with Legionnaires Disease. Legionnaires Disease is a respiratory disease that presents symptoms similar to pneumonia. Swagat Summary Judgment Motions, Exhibit B, Deposition of Carl Fliermans, at 75. On March 10, 2006, the Illinois Health Department closed the Hotel when Legionella bacteria, the bacteria that cause Legionnaires Disease, was found in the Hotel's pool and spa. Georgia Braucher died on March 19, 2006.

Bonnie Leiser and Georgia Braucher's daughter Marjorie Braucher then brought these cases against the Defendants. Choice Hotels brought cross-claims against the Swagat Defendants for indemnification. The Defendants now seek summary judgment on the Plaintiffs' claims. The Swagat Defendants also seek partial summary judgment on Choice Hotels' cross-claims for indemnification. For the reasons set forth below, the Motions to Bar are allowed, the Choice Summary Judgment Motions are allowed, and the Swagat Summary Judgment Motions and the Partial Summary Judgment Motions are allowed in part and denied in part.

STATEMENT OF FACTS

On February 15, 2001, Choice Hotels and the Swagat Defendants entered into the Agreement. Defendant Choice Hotels International, Inc.'s Exhibits to its Memorandum of Law in Support of its Motion for Summary Judgment (Case No. 07-3253 d/e 87 Case No. 07-3254 d/e 125) (Choice Exhibits), Exhibit 6, Deposition of Vasant Patel, Deposition Exhibit 2, Agreement. All of the Swagat Defendants were parties to the Agreement, not just the LLC. The Agreement granted the Swagat Defendants a franchise to operate the Hotel as a Comfort Inn. The Agreement gave the Swagat Defendants a license to use Choice Hotels' Comfort Inn marks, its system for operating hotels, and its reservation system. Agreement, § 2. The Agreement required the Swagat Defendants to pay various fees to Choice Hotels and to comply with all of the Choice Hotels' Rules and Regulations for operating the Hotel as a Comfort Inn. Id., §§ 4, 6. The Agreement further authorized Choice Hotels to inspect the Hotel periodically to insure that the Swagat Defendants complied with the terms of the Agreement and Choice Hotels' Rules and Regulations. Id., § 6.g.

The Agreement contained a provision entitled "Indemnification" (Indemnification Clause).*fn1 The Indemnification Clause stated, in part:

Indemnification. You must defend, indemnify and hold harmless us, our affiliates and subsidiaries, our and their respective officers, directors, agents and employees (the "Indemnified Parties") from any claim, loss, cost, damage, expense and liability (a "Claim"), including reasonable attorneys' fees . . . and any court costs, resulting from any damage or loss, including personal injury, . . . connected with the Hotel construction or operation, . . . out of, or a result of, your (or your agent's or employee's) error, omission, act or failure, even where negligence of an Indemnified Party is alleged, except to the extent that the loss, costs, damage, expense or liability is proximately caused by the negligence of an Indemnified Party. The amount of our contribution will be calculated by applying principles of comparative negligence where a Claim was jointly caused by your negligence and by our negligence. . . .

Id., § 13.

The Agreement also contained a provision entitled "Business Relationship", which stated, in part:

You are an independent contractor. Nothing in this Agreement makes, or is intended to make, either party an agent, legal representative, subsidiary, joint venturer, partner, employee, independent contractor or servant of the other (except that we are acting as your agent when making reservations for your Hotel); . . .

Agreement, § 16.a.2.

The Choice Hotels' Rules and Regulations stated that Choice Hotels would perform periodic inspections. The Rules and Regulations referred to such an inspection as a "Quality Assurance Review" (QAR). Choice Exhibits, Exhibit 7 Deposition of Mark Schimmel, Deposition Exhibit 2, Comfort Inn Rules and Regulations (Rules and Regulations), § 806.0. The Rules and Regulations stated that the QAR:

[I]s designed to assist you and Choice by identifying areas in which your Hotel does not meet the minimum standards of the Comfort Inn brand, as set forth in these Rules & Regulations.

This review is not intended to determine whether your Hotel is in compliance with federal, state and local laws and regulations, which is your sole responsibility.

Id. A failing grade in a QAR could, at Choice Hotels' discretion, result in a notice of default and, ultimately, termination of the Agreement if the defaults were not cured within thirty days of the notice. Id.

The Rules and Regulations also required the Swagat Defendants to place a plaque in the lobby visible from the front desk that stated that the Hotel was independently owned and operated by the LLC. Id., § 828.1.

The Choice Hotels provided advertising, a toll-free 800 number telephone reservation system, and a website which included an internet reservation system. The Choice Hotels' reservation system was tied directly into the Hotel's computerized reservation system. The Choice Hotels' website contained a statement on the home page that each Choice Hotel was independently owned and operated. Defendant Choice Hotels International Inc.'s Memorandum of Law in Support of its Motion for Summary Judgment (Case No. 07-3254 d/e 125) (Choice/Leiser Memorandum), Statement of Undisputed Fact (SUF), ¶ 52.*fn2

The Swagat Defendants began operating the Hotel as a Comfort Inn in 2001. The Swagat Defendants placed the required plaque in the lobby, stating that the Hotel was independently owned and operated. The plaque was on display in 2006 when the Plaintiffs stayed at the Hotel. The Swagat Defendants also kept copies of the current Choice Hotels' Worldwide Hotel Directory (Directory) available in the lobby. The 2006 Directory contained a statement that each hotel was independently owned and operated. Choice/Leiser Memorandum, SUF, ¶¶ 49-54.

The Hotel participated in Choice Hotels' program that allowed guests to accumulate points toward a free stay at Choice Hotels. If a guest redeemed points for a free stay, Choice Hotels reimbursed the participating hotel for the cost of the night's stay.

The Hotel had an indoor swimming pool and spa. The Rules and Regulations required the Swagat Defendants to have either a swimming pool or a pre-approved exercise room at the Hotel. Rules and Regulations, § 710.0. The Rules and Regulations further stated, "Swimming pool, recreation areas and all filtration and chemical feed systems must meet all applicable local, state and federal codes." Id., § 710.8(f). The pool and spa area was enclosed in a separate room. The pool and spa area had a ventilation system that was separate from the rest of the Hotel, and had two exterior windows and a door that opened into an interior hallway of the Hotel. Fliermans Deposition, at 27-30.

The Hotel retained an employee of the former owner. The employee was named Wayne Filmore. Filmore handled the maintenance of the pool and spa at the Hotel until he left in 2003. Filmore showed Vasant Patel how to maintain the pool and spa. Swagat Summary Judgment Motions, SUF, ¶¶22-30. The Illinois Department of Public Health (Department) inspector, Chad Curless, also showed Patel how to use pool test kits. Choice Exhibits, Deposition Exhibit 2, Deposition of Chad Curless, at 47. After Filmore left the Hotel, Vasant Patel maintained the pool and spa. Vasant Patel had no other training or experience in pool and spa maintenance. Choice Hotels did not provide him with any training in pool and spa maintenance.

Choice Hotels' Franchise Service Director Mark Schimmel conducted the QARs at the Hotel. He tried to conduct these reviews every seven months, usually twice a year. He said that he did not make that schedule sometimes. Schimmel Deposition, at 19-20. The QAR included a visual inspection of the pool and spa. Schimmel would check to see that the water was clear. He would check pool records for chemical checks to determine if the franchisee was doing a minimum of maintenance on a daily basis and to determine if there were any problems. Schimmel, however, did not test the pool or spa water during the inspection. Schimmel would visually inspect the pool equipment. He would also note any chlorine smell in the pool area. Schimmel had the authority to shut down a pool if the water was cloudy. Cloudy water was a safety hazard because a person drowning at the bottom of the pool could not be seen if the water was cloudy. Id., at 30. If Schimmel could not see the floor drain at the bottom of the pool, he would close the pool immediately and require the franchisee to remedy the situation.

Schimmel conducted a QAR of the Hotel on November 11, 2004. This was the last QAR before the Plaintiffs' stays at the Hotel in 2006. Schimmel used a score sheet for the QAR. The sheet listed two general categories, Cleanliness (CL) and Maintenance and Capital Improvement (MCI). The Hotel started with 1000 points in each category. Schimmel assigned points for any deficiency in any listed category. These points were deducted from the initial 1000 points in one of the two categories. The Hotel received a final score in each category. A score of 750 points in each of the two general categories was passing. Id., at 66.

In the November 11, 2004, QAR, Schimmel deducted points for deficiencies in the following aspects of the pool and spa area on the QAR checklist:

* pool area/deck dirty, furniture soiled

* algae/mildew in pool, water unclear, milky, dirty

* furniture damage/needs paint and adequate ...


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