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Ramada Worldwide, Inc. v. Grand Rios Investments, LLC

United States District Court, Third Circuit

October 23, 2013

Ramada Worldwide, Inc., a Delaware Corporation, Plaintiff,
v.
Grand Rios Investments, LLC, a Minnesota Limited Liability Company Percy Pooniwala, an individual Shreekanth Maripally, an individual; and Ashok Shetty, an individual, Defendants.

OPINION

MICHAEL A. HAMMER, Magistrate Judge.

I. Introduction

This matter comes before the Court upon motion by Defendants Grand Rios Investments, LLC ("Grand Rios") and Percy Pooniwala ("Pooniwala") for change of venue pursuant to 28 U.S.C. §1404(a) and erroneously under Fed R. Civ. P. 12(b)(3).[1] Mot. for Change of Venue ("Motion"), ECF No. 5. Plaintiff Ramada Worldwide, Inc. ("RWI" or "Plaintiff") opposes the Motion. Def.'s Opp'n Br., ECF No. 6. The Court has considered Defendants' Motion without oral argument pursuant to Federal Rule of Civil Procedure 78. For the reasons set forth below, Defendants' Motion is denied.

II. BACKGROUND

A. Factual Background

The underlying dispute In this matter involves an alleged breach of a Franchise Agreement between Plaintiff RWI and Defendant Grand Rios. Compl., ECF No. 1, ¶ 11. Plaintiff RWI is a Delaware corporation with its principal place of business In Parsippany, New Jersey. Id. at ¶ 1. Defendant Grand Rios is a Minnesota limited liability company with its principal place of business In Brooklyn Park, Minnesota. Id. at ¶ 2. Defendants Pooinwala, Maripally, and Shetty are the only members of Grand Rios authorized to enter into obligations on its behalf. Id. at ¶ 6. All three are Minnesota residents. Id. at ¶ 3-5.

On September 8, 2010, Grand Rios and RWI signed a Franchise Agreement, pursuant to which Grand Rios would operate a 224-room Ramada guest lodging facility In Brooklyn Park, Minnesota (the "Facility"), for a period of fifteen years. Id. at ¶ 11-12. RWI and Grand Rios also entered into an Addendum to the Franchise Agreement ("Addendum"), pursuant to Minnesota Franchise Investment Law. Addendum, attached as ex. B to Complaint, ECF No. 1. Also at that time, Pooniwala, Maripally, and Shetty signed personal Guarantees. Guaranty, attached as ex. C to Complaint, ECF No.1.[2] Grand Rios was also required to make certain periodic payments to RWI for royalties, service assessments, taxes, interest, reservation system user fees, and other fees. Compl., ECF No. 1, ¶ 13. On or about June 14, 2011, Grand Rios allegedly ceased operations of the Facility. Id. at ¶ 25. RWI sent a letter to Pooniwala, Maripally, and Shetty dated June 22, 2011, demanding damages and the completion of other obligations. June 22, 2011 Letter, attached as ex. D to Complaint, ECF No 1.

B. Procedural History

Plaintiff filed a Complaint against the Defendants on June 24, 2013, demanding: (1) an accounting of all revenue derived by Grand Rios as a result of marketing, promoting, and selling guest lodging at the Facility from the inception of the agreement until the date of termination; (2) judgment of actual damages against Grand Rios for premature termination of the Franchise Agreement; (3) judgment of actual damages for recurring fees pursuant to section 7, section 18.5, and Schedule C of the Franchise Agreement; (4) remittance by Grand Rios of recurring fees owed before the termination of the Franchise Agreement under breach of contract and unjust enrichment; and (5) alternatively, remittance of actual damages and recurring fees by Pooniwala, Maripally, and Shetty under the Guaranty. Compl., June 24, 2013, ECF No. 1.

On July 24, 2013, Defendants Grand Rios and Pooniwala filed a motion to transfer venue to the United States District Court for the District of Minnesota. Defs.' Mot. Change of Venue ("Def.'s Mot."), July 24, 2013, ECF No. 5. Defendants argue that the parties specifically agreed to Minnesota as the forum for disputes, and that Plaintiff is barred from requiring litigation to be conducted outside that state. Id. at 2-3. On August 5, 2013, Plaintiff opposed the motion. Pls.' Opp'n Brief ("Pl.'s Br."), ECF No. 6. Plaintiff argues that the Franchise Agreement contained a forum selection clause, which was incorporated In the Guaranty, In which Defendants consented to the non-exclusive personal jurisdiction of this Court and venue within this District. Id. at 4.

III. Discussion

A. Forum Selection

In support of their Motion to Transfer Venue, Grand Rios and Pooniwala rely on the Minnesota Franchise Act and the Addendum to the Franchise Agreement to support their claim that the parties agreed to a forum selection clause In Minnesota. The relevant provision of the Minnesota Franchise Act states:

Any condition, stipulation or provision, including any choice of law provision, purporting to bind any person who, at the time of acquiring a franchise is a resident of this state, or, In the case of a partnership or corporation, organized or incorporated under the laws of this state, or purporting to bind a person acquiring any franchise to be operated In this state to waive compliance or which has the effect of ...

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