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Howard Johnson Intl., Inc. v. MAC Trade

November 20, 2008

RE: HOWARD JOHNSON INTL., INC.
v.
MAC (USA) TRADE, INC.



The opinion of the court was delivered by: William J. Martini, U.S.D.J.

MARTIN LUTHER KING JR. FEDERAL BLDG. & U.S. COURTHOUSE 50 WALNUT STREET, P.O. BOX 419 NEWARK, NJ 07101-0419 (973) 645-6340

WILLIAM J. MARTINI JUDGE

LETTER OPINION

Dear Counsel:

This matter comes before the Court on two motions. Plaintiff moves for summary judgment on Counts One, Three, Five, Seven, and Eight of its complaint. In addition, Plaintiff moves for summary judgment and dismissal of Defendants' four counterclaims.

These motions are unopposed by Defendants.*fn1 There was no oral argument. Fed. R. Civ. P. 78. For the reasons stated below, both of Plaintiff's motions are GRANTED.

I. BACKGROUND*fn2

Plaintiff Howard Johnson International ("HJI") is Delaware corporation with its principal place of business in Parsippany, New Jersey. (Affidavit of Valerie Capers Workman ¶ 3) ("Workman Aff."). HJI is not a hotel operator; instead, HJI operates a guest lodging facility franchise system. (Workman Aff. ¶ 5). HJI enters into individual license agreements with its franchisees, allowing the franchisees to operate their independentlyowned hotels under the "Howard Johnson" trade name and federally-registered service marks ("Howard Johnson marks"). (Workman Aff. ¶ 6).

On December 6, 2001, Defendant MAC Trade ("MAC") entered into a license agreement with Plaintiff to operate a Howard Johnson hotel in Kissimmee, Florida. (Workman Aff. ¶ 9). Under the license agreement, MAC was required to operate the facility in compliance with HJI's "system standards," which included HJI's quality assurance and insurance requirements. (Workman Aff. ¶ 13). Defendant Harsh Manchanda provided a personal guaranty of MAC's obligations. (Workman Aff. ¶ 33). Specifically, Manchanda agreed that upon default of the license agreement, he would "immediately make each payment and perform or cause [MAC] to perform, each unpaid or unperformed obligation of [MAC] under the Agreement." (Workman Aff. Ex. B).

Beginning in August 2003, Defendant MAC's hotel failed four consecutive quality assurance inspections. (Workman Aff. ¶¶ 37, 39, 42, 46). In April 2004, HJI notified MAC that, due to the quality assurance defaults, reservation services to the hotel were being suspended. (Workman Aff. ¶ 40).

In addition, MAC failed to pay its recurring fees and submit proof of insurance coverage, as required under the license agreement. (Workman Aff. ¶¶ 41, 44, 45, 47). As a result, HJI terminated the license agreement on June 10, 2005. (Workman Aff. ¶ 48). After termination of the license agreement, MAC continued to use the Howard Johnson marks at the Kissimmee hotel until February 23, 2006. (Workman Aff. ¶ 55).

On November 21, 2006, HJI filed an eight-count complaint in this Court, praying for the following: Lanham Act damages (Count One); an accounting of revenue derived during the infringement period (Count Two); liquidated damages (Count Three); actual damages (Count Four); recurring fees not paid prior to termination (Count Five); recurring fees not paid post-termination (Count Six); reimbursement for the cost of removing the exterior sign from MAC's facility (Count Seven); and payment by Machanda of MAC's liquidated damages and recurring fees, pursuant to the Guaranty (Count Eight).

MAC then filed a counterclaim, alleging that HJI: (1) breached the license agreement; (2) violated Florida law by not disclosing certain information to Defendants before executing the license agreement; (3) damaged the Kissimmee hotel's exterior sign; and (4) breached an oral promise to Plaintiffs.

HJI now seeks summary judgment on Counts One, Three, Five, Seven, and Eight of its Complaint, as well as dismissal of Defendants' four counterclaims.*fn3

II. SUMMARY JUDGMENT ON PLAINTIFF'S CLAIMS

Summary judgment is appropriate when "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 a judgment as a matter of law." Fed.R.Civ.P. 56(c). If the non-movant fails to oppose the motion, Rule 56(e) provides that the Court may grant summary judgment only "if appropriate." Fed. R. Civ. P. 56(e). Where the moving party has the burden of proof on the relevant issues, summary judgment is appropriate where the moving party is entitled to judgment as a matter of law. See, e.g. Anchorage Assocs. v. Virgin Islands Bd. of Tax Review, 922 F.2d 168, 175 (3d Cir. 1990).

The counts on which HJI seeks summary judgment fall into two categories: (1) liability and damages under the Lanham Act; and (2) liability and damages under the license agreement. ...


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