In La Quinta Franchising LLC v. Shin Hosp., Inc., 2025 WL 2751542 (D.N.J. Sept. 29, 2025), the franchisor brought claims for breach of a Franchise Agreement and liquidated damages against Shin Hospitality, Inc., Percy Pooniwala, and Dinaz Surtee (collectively, “Shin Hospitality”) after Shin Hospitality unilaterally terminated its franchise agreement with La Quinta.
Shin Hospitality counterclaimed alleging breach of the Minnesota Franchise Act and Franchise Disclosure Document (FDD) misrepresentations. Shin Hospitality moved for summary judgment as to La Quinta’s liquidated and actual damages. La Quinta moved for summary judgment on the merits of its claims and Shin Hospitality’s counterclaims.
The court denied Shin Hospitality’s summary judgment motion and granted La Quinta’s motion. First, the court rejected Shin Hospitality’s motion as to La Quinta’s liquidated damages claim. Shin Hospitality argued that a conflict of laws mandated the application of Minnesota law to La Quinta’s claims because the defendants are Minnesota residents and a Minnesota corporation; Shin Hospitality further argued that liquidated damages are not enforceable under the Minnesota Franchise Act. The court rejected this argument and found that the franchise agreement’s New Jersey choice of law provision was enforceable. The court concluded that Shin Hospitality failed to establish the unenforceability of the provision under the Restatement (Second) Conflict of Laws because neither New Jersey’s nor Minnesota’s interests outweighed the other’s. Next, the court rejected Shin Hospitality’s motion for summary judgment on La Quinta’s claim for actual damages. The court found that under New Jersey law, La Quinta was entitled to seek both liquidated and actual damages in its complaint even if it could only ultimately recover one or the other. Finally, the court granted La Quinta summary judgment on all counts because the record reflected that Shin Hospitality unilaterally terminated the agreement, failed to articulate a genuine issue of material fact regarding the FDD disclosures, failed to pay obligatory recurring fees, and that La Quinta suffered damages as a result. The court also held that La Quinta was entitled to prejudgment interest and attorney’s fees and costs pursuant to the terms of the Franchise Agreement. The court reserved ruling on the total damages pending a full accounting.
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