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Ramada Worldwide Inc. v. SB Hotel Mangement Inc.

United States District Court, D. New Jersey

February 23, 2015

RAMADA WORLDWIDE INC. formerly known as RAMADA FRANCHISE SYSTEMS, INC., Plaintiff,
v.
SB HOTEL MANGEMENT INC., et al., Defendants.

OPINION

WILLIAM J. MARTINI, District Judge.

Plaintiff Ramada Worldwide Inc. f/k/a Ramada Franchise Systems, Inc. ("RWI") brings this action against Defendants SB Hotel Management, Inc. ("SB Hotel"), Amarjit Singh ("A. Singh"), Surinder Singh ("S. Singh"), and Kenwahl Singh ("K. Singh"). Plaintiff alleges that Defendants breached a license agreement for the operation of a Ramada Inn. This matter comes before the Court on Defendants' motion to dismiss for improper venue under Federal Rules of Civil Procedure 12(b)(3) or, alternatively, to transfer venue under 28 U.S.C. § 1404(a). There was no oral argument. Fed.R.Civ.P. 78(b). For the reasons set forth below, the Court will DENY Defendants' motion.

I. BACKGROUND

Plaintiff RWI is a Delaware corporation with its principle place of business in Parsippany, New Jersey. Compl. ¶ 1. RWI is engaged in guest lodging facility franchise operations throughout the United States. Defendant SB Hotel is a Minnesota Corporation with its principal place of business in Minneapolis, Minnesota. Compl. ¶ 2. Defendants A. Singh, S., Singh, and K. Singh (together, the "Principals") are principals of SB Hotel. Compl. ¶¶ 3-4. A. Singh and S. Singh are citizens of Minnesota, and K. Singh is a citizen of Wisconsin. Compl. ¶¶ 3-4.

On April 13, 2004, SB Hotel entered into a license agreement (the "Franchise Agreement") with RWI for the operation of a Ramada Inn located in Eau Clair, Wisconsin. Compl. ¶ 10. Under the Franchise Agreement, SB Hotel was required to make certain periodic payments to RWI. Compl. Ex. A at §§ 7, 18, and Schedule C. SB Hotel also entered into an Addendum to the Franchise Agreement (the "Minnesota Addendum") with RWI, pursuant to the Minnesota Franchise Act, Minn. Stat. 80C.01 et se q. (the "Act"). Compl. ¶ 17. Section 4 of the Minnesota Addendum provides that SB would pay certain damages in the event of an early termination of the Franchise Agreement. Compl. Ex. B. Additionally, effective as of the date of the Franchise Agreement, the Principals provided RWI with a guaranty of SB Hotel's obligations under the Franchise Agreement (the "Guaranty"). Compl. ¶ 20, Ex. C.

RWI alleges that, on August 8, 2013, SB Hotel unilaterally terminated the Franchise Agreement. Compl. ¶ 23. RWI initiated the instant action against Defendants to recover outstanding fees and damages.

II. DISCUSSION

Defendants' arguments are confusing and, frankly, inconsistent. Defendants argue that dismissal under Rule 12(b)(3) is warranted because the parties have, through a forum selection clause, expressly chosen Minnesota as the venue for all litigation. Alternatively, Defendants ask the Court to transfer this case to Minnesota under 28 U.S.C. § 1404(a). In their reply, Defendants "incorporate by reference" their previous arguments, but also seem to concede that the parties consented to personal jurisdiction in New Jersey. Defs.'s Reply Br. 1, ECF No. 15. They then argue that the forum selection clause is ambiguous and invalid.

As an initial matter, Defendants incorrectly seek dismissal under Rule 12(b)(3). Rule 12(b)(3) is not the proper procedural mechanism for enforcing a forum selection clause. See generally Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, 134 S.Ct. 568 (2013). Further - contrary to Defendants' initial assertions - the forum selection clause does not require the parties to litigate in Minnesota. Rather, the forum selection clause, which is neither ambiguous nor invalid, creates non-exclusive personal jurisdiction and venue in New Jersey courts. Finally, as explained below, transfer is not warranted under Section 1404(a).

A. The forum selection clause unambiguously provides for non-exclusive jurisdiction in New Jersey.

A review of the relevant contractual provisions is helpful at this juncture. Section 17.6.3 of the Franchise Agreement includes a forum selection clause, which states:

You consent and waive your objection to the non-exclusive personal jurisdiction of and venue in the New Jersey state courts situated in Morris County, New Jersey and the United States District Court for the District of New Jersey for all cases and controversies under this Agreement or between we and you.

Compl. Ex. A at § 17.6.3. Section 1 of the Minnesota Addendum amends Section 17.6.3 of the Franchise Agreement by adding the following two sentences:

Minnesota Statutes, Section 80C.21 and Minn. Rule 2860.440J prohibit us from requiring litigation to be conducted outside Minnesota. Nothing in the Offering Circular or this Agreement can abrogate or reduce any of your rights as provided for in Minnesota Statutes 1987, Chapter 80C, or your rights ...

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