United States District Court, D. New Jersey
KEVIN MCNULTY, District Judge.
Ramada Worldwide Inc. ("RWI") brings this action to enforce a personal guaranty against the remaining defendant, Zulfikar Jafri ("Jafri"). Jafri and three other individuals were the owners and principal shareholders of Whitehall Avenue, LLC ("Whitehall"). In September 2009, RWI and Whitehall entered into a franchise agreement that permitted Whitehall to operate a Ramada hotel in Connecticut. Jafri had three partners: his brothers, Askari Jafri and Wajih Jafri, and Steven Weil. Jafri and his three partners purportedly executed a personal guaranty in connection with the franchise agreement, in which they promised to satisfy Whitehall's obligations in the event of default. Whitehall defaulted and filed for bankruptcy in January 2011. RWI then filed this action to enforce the guaranty. Jafri and his partners filed a counterclaim alleging breach of contract and fraud. RWI and Jafri's partners reached a settlement, leaving Jafri as the sole defendant. ( See Dkt. No. 19.)
Now before the Court are cross-motions for summary judgment filed by RWI and Jafri. Jafri, while admitting that he signed the guaranty, contends that his co-guarantors' signatures were forged, relieving him of liability. That defense does raise genuine, material issues, both as to the fact of forgery and RWI's knowledge of or involvement in the alleged forgery. For the reasons set forth below, both sides' summary judgment motions will be denied.
RWI, a Delaware corporation with its principal place of business in New Jersey, operates the nationally known Ramada hotel franchise. Jafri is a citizen of Connecticut. Along with his two brothers, Askari Jafri and Wajih Jafri, and a third partner, Steven Weil, Jafri owned Whitehall. Whitehall, in turn, owned a 150-room lodging facility in Mystic, Connecticut. On September 30, 2009, RWI and Whitehall executed a franchise agreement (the "Franchise Agreement") under which Whitehall would operate the lodging facility as a Ramada hotel for 15 years. (Defendant's Statement of Material Facts Not In Dispute, Dkt. No. 22-1, ¶ 1).
Under Section 7, Section 18, and Schedule C of the Franchise Agreement, Whitehall was required to make periodic payments to RWI for, inter alia, royalties, services assessments, conferences, and access to its central reservation system (collectively, "Recurring Fees"). (Plaintiff's Statement of Material Facts Not In Dispute, Dkt. No. 21-4, ¶¶ 7-11) Section 7.3 of the Franchise Agreement stated that the interest on such Recurring Fees would accrue at the rate of 1.5% per month for all payments that came past due. ( Id. at ¶ 11) If Whitehall failed to pay the Recurring Fees, Section 11.2 of the Franchise Agreement permitted RWI to terminate the contract upon notice to Whitehall. ( Id. at ¶ 14). In the event of termination under Section 11.2, Sections 12.1 and 18.1 prescribed that Whitehall would pay liquidated damages in the amount of $100, 000. ( Id. at ¶¶ 115-16) Additionally, Whitehall undertook to pay "all costs and expenses, including reasonable attorneys' fees" incurred by RWI to enforce or collect any amount owed under the Franchise Agreement. ( Id. at ¶ 17, see Franchise Agreement §17.4). The parties also executed a Connectivity Addendum for broadband services, which contained a separate liquidated damages provision in the amount of $2, 500 if either the Connectivity Addendum or Franchise Agreement were terminated. ( Id. at ¶¶ 19-20)
RWI claims that on September 30, 2009, Jafri and his three partners executed a personal guaranty of Whitehall's obligations under the Franchise Agreement. Pursuant to the terms of the guaranty, the guarantors pledged to "immediately make each payment and perform or cause [Whitehall] to perform, each unpaid or unperformed obligation of [Whitehall] under the [Franchise] Agreement." ( Id. at ¶ 23). The guarantors also agreed to pay the costs, including reasonable attorneys' fees, incurred by RWI in enforcing its rights under the Franchise Agreement or the guaranty. ( Id. at ¶ 24). Each coguarantor was to be jointly and severally liable for Whitehall's obligations to RWI. Jafri does not contest the validity of his signature, but maintains that signatures of his three partners were forged by RWI or its agents.
At some point-it is not clear exactly when-Whitehall fell behind in its payment of the Recurring Fees. On January 24, 2011, Whitehall filed for Chapter 11 bankruptcy. ( Id. at ¶ 26) On June 17, 2011, the bankruptcy court lifted the automatic stay and allowed RWI to terminate the Franchise Agreement. ( Id. at ¶ 28) In a letter dated July 14, 2011, RWI informed Whitehall that it was formally terminating the Franchise Agreement and demanded that Jafri and the other guarantors satisfy Whitehall's debts within 10 days. ( See Termination Notice, Dkt. 21-5, at 72) Jafri testified during his deposition that he received the letter. (Deposition of Zulfikar Jafri, Dkt. 33, at 39-40) It is undisputed that Whitehall has defaulted under the Franchise Agreement. It is also undisputed that none of the guarantors have satisfied, in whole or in part, Whitehall's outstanding debts to RWI.
On August 23, 2012, RWI commenced the present action to enforce the guaranty. RWI seeks to recover $259, 155.76 in outstanding Recurring Fees, liquidated damages, interest, and attorneys' fees and costs. Jafri does not deny Whitehall's default and does not deny signing the guaranty. He contends, however, that the signatures of co-guarantors Askari Jafri, Wajih Jafri, and Weil, are forged, and that any such forgery occurred after he signed and delivered the guaranty to RWI. Because three of the four signatures on the guaranty were forged, says Jafri, the guaranty is invalid and he cannot be held liable under it.
II. JURISDICTION and SUMMARY JUDGMENT STANDARD
This Court has subject matter jurisdiction over this case pursuant to 28 U.S.C. § 1332(a), as there is complete diversity of citizenship between the parties and the amount in controversy exceeds $75, 000.
Federal Rule of Civil Procedure 56(a) provides that summary judgment should be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. Civ. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Kreschollek v. S. Stevedoring Co., 223 F.3d 202, 204 (3d Cir. 2000). In deciding a motion for summary judgment, a court must construe all facts and inferences in the light most favorable to the nonmoving party. See Boyle v. County of Allegheny Pennsylvania, 139 F.3d 386, 393 (3d Cir. 1998). The moving party bears the burden of establishing that no genuine issue of material fact remains. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, (1986). "[W]ith respect to an issue on which the nonmoving party bears the burden of proof... the burden on the moving party may be discharged by showing'-that is, pointing out to the district court-that there is an absence of evidence to support the nonmoving party's case." Id. at 325.
If the moving party meets its threshold burden, the opposing party must present actual evidence that creates a genuine issue as to a material fact for trial. Anderson, 477 U.S. at 248; see also FED. R. Civ. P. 56(c) (setting forth types of evidence on which nonmoving party must rely to support its assertion that genuine issues of material fact exist). "[U]nsupported allegations... and pleadings are insufficient to repel summary judgment." Schoch v. First Fid. Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990); see also Gleason v. Norwest Mortg., Inc., 243 F.3d 130, 138 (3d Cir. 2001) ("A nonmoving party has created a genuine issue of material fact if it has provided sufficient evidence to allow a jury to find in its favor at trial.").
Where, as here, the parties file cross-motions for summary judgment, the governing standard "does not change." Clevenger v. First Option Health Plan of N.J., 208 F.Supp.2d 463, 468-69 (D.N.J. 2002) (citing Weissman v. U.S.P.S., 19 F.Supp.2d 254 (D.N.J. 1998)). The court must consider the motions independently, in accordance with the principles outlined above. Goldwell of N.J., Inc. v. KPSS, Inc., 622 F.Supp.2d 168, 184 (2009); Williams v. Philadelphia Hous. Auth., 834 F.Supp. 794, 797 (E.D. Pa. 1993), affd, 27 F.3d 560 (3d Cir. 1994). That one of the cross-motions is denied does not imply that the other must be granted. For each motion, "the court construes facts and draws inferences in favor of the party against whom the motion under consideration is made" but does not ...