Presidential Hospitality, LLC v. Wyndham Hotel Grp., LLC

• Decision Date: 02 July 2018
• Docket Number: No. CIV 17-0981 JB/JHR,CIV 17-0981 JB/JHR
• Parties: PRESIDENTIAL HOSPITALITY, LLC, a New Mexico limited liability company; Ace Development, Inc., a New Mexico Corporation and Sam Blue, Plaintiff, v. WYNDHAM HOTEL GROUP, LLC, a New Jersey limited liability company; Baymont Inn and Suites Franchise Systems, Inc., a Delaware Corporation and Microtel Inn and Suites Franchising, Inc., a Georgia corporation, Defendants.
• Court: U.S. District Court — District of New Mexico

333 F.Supp.3d 1179

PRESIDENTIAL HOSPITALITY, LLC, a New Mexico limited liability company; Ace Development, Inc., a New Mexico Corporation and Sam Blue, Plaintiff,

v.WYNDHAM HOTEL GROUP, LLC, a New Jersey limited liability company; Baymont Inn and Suites Franchise Systems, Inc., a Delaware Corporation and Microtel Inn and Suites Franchising, Inc., a Georgia corporation, Defendants.

No. CIV 17-0981 JB/JHR

United States District Court, D. New Mexico.

Filed July 2, 2018

Bobbie Jo Collins, Lewis Roca Rothgerber Christie LLP, Albuquerque, NM, E. Martin Enriquez, Anovven Law, Greenwood Village, CO, for Plaintiff.

David S. Sager, Steven R. Marino, DLA Piper, Short Hills, NJ, Rufus E. Thompson, Elizabeth Ann Martinez, Modrall, Sperling, Roehl, Harris & Sisk, PA, Albuquerque, NM, for Defendants.

MEMORANDUM OPINION AND ORDER

JAMES O. BROWNING, UNITED STATES DISTRICT JUDGE

THIS MATTER comes before the Court on the Defendants' Brief in Support of Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a), filed September 29, 2017 (Doc. 19)("Motion"). The Court held a hearing on June 4, 2018. The primary issues are: (i) whether the forum selection clause in the Microtel Inns and Suites Franchising, Inc. License Agreement, filed September 27, 2017 (Doc. 15-1)("Franchise Agreement"), is contractually valid; (ii) whether the United States District Court for the District of New Jersey would have personal jurisdiction over the Plaintiffs if the Court transferred the case; (iii) whether the forum selection clause in the Franchise Agreement and incorporated in the Amendment Assignment and Assumption Agreement, filed September 27, 2017 (Doc. 15-2)("Assignment Agreement"), is void under New Mexico law, as those agreements are construction contracts under N.M. Stat. Ann. § 57-28A-1 ; and (iv) whether the Court should transfer this matter to the United States District Court for the District of New Jersey so that it can be consolidated with Microtel Inns and Suites Franchising, Inc. v. Presidential Hospitality, LLC, No. 17-5637 (D.N.J.)(Wigenton, J.)("New Jersey Action"). The Court concludes that: (i) the forum selection clause is contractually valid; (ii) New Jersey has personal jurisdiction over Plaintiff Presidential Hospitality and Plaintiff Sam Blue, but not over Plaintiff Ace Development, Inc.; (iii) the Court may not consider New Mexico public policy when it sits in diversity and considers a 28 U.S.C. § 1404(a) motion, but, even if it could, the Franchise Agreement and the Assignment Agreement are not construction contracts under N.M. Stat. Ann. § 57-28A-1, so the forum selection clause at issue would not be void as against public policy; and (iv) the Court will transfer Presidential Hospitality's and Blue's claims. The Court may not transfer Ace Development's claims, because New Jersey does not appear to have personal jurisdiction over that Plaintiff. Accordingly, the Court grants the Motion in part and denies it in part. The Court severs Ace Development's claims under rule 21 of the Federal Rules of Civil Procedure and transfers the remaining parties and claims.

FACTUAL BACKGROUND

The Court draws its facts from the First Amended Complaint for Violation of the New Mexico Unfair Practices Act; Fraudulent Inducement; Negligent Misrepresentation; and Jury Demand, filed September 25, 2017 (Eleventh Judicial District Court, County of San Juan, State of New Mexico), filed in federal court on September 26, 2017 (Doc. 1-5)("FAC") and from various attachments to the parties' briefing. The Court uses and accepts those facts as true only for the purposes of this Memorandum Opinion and Order. The Court's acceptance and use of those facts here does not mean that those facts are true or that later litigation on those facts is foreclosed. The Court also notes that the case is at an uncommon posture on a motion to transfer in that the Court has already adjudicated a motion for a temporary restraining order, see Memorandum Opinion and Order, 2018 WL 2604831, filed June 2018 (Doc. 37)(" MOO"), so it has a greater grasp on the facts than it would have on a typical motion to transfer. The Court summarizes the facts relevant to the transfer issue and then states its more detailed factual findings from the MOO.

1. Summary of Facts.

Defendant Wyndham Hotel Group, LLC, through its affiliates, Defendants Baymont Inn and Suites Franchise Systems Inc., and Microtel Inn and Suites Franchising, Inc., offers, sells, owns, and operates hotels and hotel chains throughout the United States. See FAC ¶ 1, at 2. In March, 2011, Plaintiff Sam Blue, a managing member of Plaintiff Presidential Hospitality, LLC, entered the Franchise Agreement with Microtel Inn, purchasing the rights to a Microtel Inn franchise. See Franchise Agreement at 1. In exchange for the right to build and operate a Microtel Inn hotel in Durango, Colorado, Blue agreed, among other things, to pay monthly fees to Microtel Inn. See Franchise Agreement at 1, 6, 33. The Franchise Agreement includes a forum selection clause, which reads:

Venue. Any litigation arising out of or related to this Agreement including, without limitation, any breach of this Agreement and any and all disputes between the parties, regardless of the form of action, shall be instituted exclusively at our discretion in the state or federal court of general jurisdiction closest to our then-current principal business address. You expressly agree that you are subject to the jurisdiction and venue of those courts for purposes of such litigation. You hereby waive and covenant not to assert any claim that you are not subject to personal jurisdiction in those courts or that venue in those courts is for any reason improper, inconvenient, prejudicial or otherwise inappropriate (including, without limitation, any claim under the judicial doctrine of forum non conveniens). The provisions of this Paragraph 13N shall be self-executing.

See Franchise Agreement at 29. In May, 2013, Blue, Presidential Hospitality, and Microtel Inn, entered into the Assignment Agreement, which transferred Blue's rights and obligations under the Franchise Agreement to Presidential Hospitality, and allowed Presidential Hospitality to build and operate the hotel in Aztec, New Mexico, instead of in Durango. See Assignment Agreement at 1, 4. Blue remained secondarily liable for payment and performance of the Franchise Agreement. See Assignment Agreement at 1. The Assignment Agreement incorporates the Franchise Agreement, including the Franchise Agreement's forum selection clause. See Assignment Agreement at 2; Response at 2 n.1 (admitting that the forum selection clause is incorporated into the Assignment Agreement by reference). Related to the Assignment Agreement, Blue signed a Guaranty that Presidential Hospitality will punctually pay and perform its obligations. See Guaranty at 1, filed September 27, 2017 (Doc. 15-3)("Guaranty"). Blue acknowledged in the Guaranty that the Franchise Agreement's forum selection clause applies to the Guaranty. See Guaranty at 1.

The Assignment Agreement also stipulates that a Development Incentive Note, filed September 29, 2017 (Doc. 19-2)("Dev. Incentive Note") amends the Franchise Agreement. See Assignment Agreement at 4. In the Dev. Incentive Note, Microtel Inn agrees to loan $105,000.00 to Presidential Hospitality, at no interest, on the conditions that Presidential Hospitality passes a credit review, pays an application fee, completes the hotel in compliance with the standards set forth in the Franchise Agreement, and opens the hotel no later than April 5, 2014. See Dev. Incentive Note at 1. Under the Dev. Incentive Note, one-fifteenth of the loan amount will be forgiven on each anniversary of the hotel's opening date. See Dev. Incentive Note at 1.

In March, 2015, Presidential Hospitality and Blue defaulted on their fee payments to Microtel Inn. See Letter from Wyndham Hotel Group, LLC to Presidential Hospitality, LLC and Sam Blue, at 1 (dated March 10, 2015), filed September 26, 2017 (Doc. 1-3). In August, 2015, Presidential Hospitality and Microtel Inn entered a payment plan to pay off the past amount Presidential Hospitality and Blue owed as a result of the March, 2015 default. See Payment Plan Relating to the License Agreement between Microtel Inn & Suites and Presidential Hospitality, LLC, for the Facility Designated as Unit # 47176-03078-01-MTL, Located in Aztec, New Mexico at 1 (dated August 3, 2015), filed September 26, 2017 (Doc. 1-4)("Payment Plan"). Presidential Hospitality did not make the required payments under the Payment Plan. See Letter from Wyndham Hotel Group, LLC to Sam Blue and Presidential Hospitality, LLC at 1 (dated October 8, 2015), filed September 26, 2017 (Doc. 1-4)("October Default Notice"). In July, 2017, Wyndham Hotel sent Presidential Hospitality and Blue another default notice. See Letter from Wyndham Hotel Group, LLC to Sam Blue and Presidential Hospitality, LLC at 1 (dated July 12, 2017), filed September 26, 2017 (Doc. 1-4)("July Default Notice"). Presidential Hospitality and Blue never cured that default, so Wyndham Hotel and Microtel Inn terminated the Franchise Agreement. See Letter from Wyndham Hotel Group, LLC to Sam Blue and Presidential Hospitality, LLC at 1 (dated September 12, 2017), filed September 27, 2017 (Doc. 15-5)("Termination Notice").

On August 1, 2017, Microtel Inn sued Presidential Hospitality and Blue in New Jersey for the fees owed under the Franchise Agreement. See Microtel Inns and Suites Franchising, Inc. v. Presidential Hospitality, LLC, No. 17-5637, Complaint at ¶¶ 1-3, 35-44, at 1-2, 7-8 (D.N.J.)(Doc. 1). See also Microtel Inns and Suites Franchising, Inc. v. Presidential Hospitality, LLC, No. 17-5637, First Amended Complaint at ¶¶ 1-3, 67-86, at 1-2, 14-17 (D.N.J.)(Doc. 9)("NJ FAC"). In the NJ FAC, Microtel Inn alleges that Presidential Hospitality and Blue: (i) have violated the Lanham Act, 15 U.S.C. § 1125(a), by continuing to use the Microtel registered mark after the...