ATLANTA HOSPITALITY INVESTMENT, LLC v. HOLIDAY HOSPITALITY FRANCHISING, LLC

FOURTH DIVISION
MCFADDEN, P. J.,
WATKINS and PADGETT, JJ.

NOTICE: Motions for reconsideration must be
physically received in our clerk's office within ten
days of the date of decision to be deemed timely filed.
https://www.gaappeals.gov/rules

MAY 29, 2026

In the Court of Appeals of Georgia

A26A0270. ATLANTA HOSPITALITY INVESTMENT, LLC et al. v. HOLIDAY
HOSPITALITY FRANCHISING, LLC.

PADGETT, Judge.

Atlanta Hospitality Investment, LLC (“AHI”) and Mohammad Sarower

Hossain appeal from the trial court’s order denying their motion for summary

judgment and granting summary judgment to Holiday Hospitality Franchising, LLC

(“HHF”). The trial court’s order held, among other things, that a liquidated

damages provision in a license agreement between AHI and HHF (for which Hossain

served as AHI’s guarantor) was enforceable under Georgia law. AHI and Hossain

claim that the trial court erred in failing to properly apply the test to determine the

enforceability of the liquidated damages provision. For the reasons that follow, we

affirm the trial court’s judgment.
“We review a grant or denial of summary judgment de novo and construe the

evidence in the light most favorable to the nonmovant. Because this opinion

addresses cross-motions for summary judgment, we will construe the facts in favor

of the nonmoving party as appropriate.” Crown Series, LLC v. Holiday Hospitality

Franchising, LLC, 357 Ga. App. 523, 523 (851 SE2d 150) (2020) (punctuation

omitted).

So viewed, the record shows that in July 2016, Hossain applied to HHF on

behalf of AHI for a license to develop and operate a Holiday Inn Express & Suites in

Chamblee, Georgia. In January 2017, AHI and Hossain received a copy of HHF’s

franchise disclosure document, which identified and attached a copy of the proposed

license agreement and also explained the licensee’s obligation to pay liquidated

damages in the event of premature termination of the license. The franchise

disclosure document also advised the recipient to read it and its accompanying

agreements carefully and to provide the document to “an advisor, like a lawyer or an

accountant.”

Three months later, in March 2017, Hossain executed the license agreement

on behalf of AHI, under which AHI and Hossain agreed to pay HHF royalties and

other fees in exchange for the right to develop and operate the hotel. In doing so,

Hossain and AHI acknowledged that they had independently investigated the risks

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of the business and had read the franchise disclosure document. The term of the

license agreement was 20 years from the date of the opening of the hotel.1

The license agreement also contained a liquidated damages provision.

Paragraph 12.A. of the agreement provided that “[t]he parties recognize the difficulty

of ascertaining damages to [HHF] resulting from premature termination of the

License, and have provided for liquidated damages which represent their best

estimate as to the damages arising from the circumstances in which they are

provided.” More specifically, Paragraph 12.E. provided:

The parties recognize the difficulty of ascertaining damages to
[HHF] resulting from premature termination of this License, and have
provided for liquidated damages, which liquidated damages represent
the parties’ best estimate as to the damages arising from the
circumstances in which they are provided and which are only damages
for the premature termination of this License, and not as a penalty or as
damages from breaching this License or in lieu of any other payment. If
the License terminates pursuant to paragraphs 12.B or 12.C above,[2]
Licensee will promptly pay Licensor, as liquidated damages, a lump sum
equal to the total amounts required under paragraphs 3.B(1), (3) and (4)
during the 36 calendar months of operation preceding the termination
or such shorter period as equals the unexpired License Term at the time

1
Although the license agreement provided that the hotel was to be operational
no later than June 1, 2020, it did not open until October 15, 2021.
2
Paragraphs 12.B. and 12.C. delineated the bases for termination by the
licensor on advance notice and for immediate termination by the licensor. The
license agreement did not provide for termination by the licensee.
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of termination; or if the Hotel has not been in operation … for 36
months, the greater of:

(1) 36 times the monthly average of such amounts for the
period during which the Hotel has been in operation …, or

(2) 36 times such amounts as are due for the one month
preceding such termination.

Licensor and Licensee acknowledge and agree that it would be
difficult to determine the injury caused to Licensor by termination of
this License. Licensor and Licensee therefore intend and agree the
above liquidated damages calculation to be a reasonable pre-estimate of
Licensor’s probable loss and not a penalty or in lieu of any other
payment.

Less than 20 months after the hotel opened for business, AHI and Hossain

informed HHF on June 7, 2023, that they intended to “sever the relationship” with

HHF and unilaterally terminate the license agreement, and — acknowledging they

were “mindful of [their] obligations under [Paragraph 12.E.] relating to liquidated

damages” — asked HHF to “immediately provide … the amount of liquidated

damages [HHF] believes are owed[.]”HHF responded the next day, explaining that

the term of the license ran through October 15, 2041, and that under the license

agreement, AHI and Hossain did not have the contractual right to prematurely

terminate the license. AHI and Hossain thereafter informed HHF, on October 23,

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2023, that they would be effecting a “unilateral termination of the [l]icense

[a]greement,” and would “remove all Holiday Inn & Suites … brand imaging and

signage and cease operation” as an HHF-branded hotel and instead operate as “an

independent inn.”

AHI and Hossain then filed a verified petition against HHF on October 31,

2023, acknowledging that they were “intentionally … creating a default under the

License Agreement,” which default triggered their obligation to pay HHF liquidated

damages, and seeking a declaration that the license agreement had been prematurely

terminated. They requested that the trial court enforce the liquidated damages

provision in an amount they calculated and proposed. Shortly thereafter, AHI and

Hossain ceased operating the hotel as a Holiday Inn & Suites and HHF terminated

the license pursuant to the license agreement.

On December 7, 2023, AHI and Hossain filed an amended and restated

petition for declaratory judgment, asserting that the license agreement was

unconscionable and that the liquidated damages provision constituted an

unenforceable penalty. HHF answered and asserted counterclaims against AHI and

Hossain for, among other things, breach of, and default under, the license agreement

and Hossain’s guaranty of the same. HHF sought liquidated damages in the amount

required by the formula set out in Paragraph 12.E. of the license agreement. The

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parties filed cross-motions for summary judgment, with AHI and Hossain arguing

that the liquidated damages provision was unenforceable because it was “intended as

a penalty and does not produce a reasonable estimate of [HHF’s] probable damages.”

HHF, on the other hand, argued that the liquidated damages provision was valid and

enforceable under Georgia’s three-part test for determining the enforceability of

such provisions and also under a prior decision of this Court upholding the

enforceability of a “materially identical” provision in another license agreement to

which HHF was a party.

After a hearing, the trial court denied AHI’s and Hossain’s motion for

summary judgment and granted summary judgment to HHF, awarding it

$1,974,400.56 in liquidated damages. The trial court found the liquidated damages

provision was enforceable for three “independent reasons.” First, the trial court

found the provision enforceable based upon this Court’s decision in Noons v. Holiday

Hospitality Franchising, Inc., 307 Ga. App. 351 (705 SE2d 166) (2010), in which we

upheld a similar provision requiring liquidated damages of 36 months of fees based

on a hotel’s past performance. Second, the trial court found the provision

enforceable by its “plain and unambiguous terms[.]”And third, the trial court

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concluded the provision was enforceable under Georgia’s three-part test for

determining enforceability. This appeal followed.3

1. As a preliminary matter, we note that in their appellate brief, AHI and

Hossain refer this Court to discussion in their briefing before the trial court; direct

this Court to materials filed with the trial court after the filing of their notice of appeal

and that do not appear to properly be part of the record on appeal; and assert facts

without citation to the record.

We remind AHI and Hossain that incorporating by reference the arguments

made before the trial court is “a practice that is not approved by this [C]ourt and we

decline to look in the record for matters which should have been set forth in the brief.

Moreover, if we were to permit this practice a party could evade entirely the word

limitations on briefs established in our rules.” Evans v. State, 360 Ga. App. 596,

610(11)(b) (859 SE2d 593) (2021) (punctuation omitted). Furthermore, our rules

require that each enumerated error be supported by specific reference to the record.

Ga. Ct. App. R. 25(d)(1)(i). “[B]riefs that do not conform to our rules hinder our

ability to determine the basis and substance of an appellant’s contentions on appeal.

3
The trial court’s order also rejected AHI’s and Hossain’s contention that the
license agreement was unconscionable and awarded HHF monetary amounts other
than liquidated damages. However, the ruling on unconscionability and the other
monetary awards are not part of this appeal.
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In addition, the burden is on the party alleging error to show it affirmatively in the

record[.]” Tucker v. Crystal Clear Luxury Pools, 361 Ga. App. 369, 370 (864 SE2d 462)

(2021) (citation modified). Thus, while we have endeavored to review AHI’s and

Hossain’s claims of error “to the extent we are able to ascertain them, [they] will not

be granted relief should we err in construing [their] nonconforming appellate brief.”

Clemmons v. State, 340 Ga. App. 57, 58(1) (796 SE2d 297) (2017).

2. AHI and Hossain argue that the trial court erred in failing to properly apply

the three-part test to determine the enforceability of the liquidated damages

provision in the license agreement. More specifically, they claim that the liquidated

damages provision is unenforceable because it was intended to deter breach of the

agreement, making it an impermissible penalty, and that the trial court erred in failing

to consider parol evidence “to determine intent.” They also challenge the trial

court’s ruling on the ground that the liquidated damages provision “does not

approximate [HHF’s] actual losses” and “bear[s] no relation to the probable loss[,]”

rendering the provision unenforceable. We disagree.

As a threshold matter, Georgia law provides that “[i]f the parties agree in their

contract what the damages for breach shall be,” the damages “are said to be

liquidated and, unless the agreement violates some principle of law, the parties are

bound thereby.” OCGA § 13-6-7. A liquidated damages provision is thus enforceable

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if “(1) the injury caused by the breach is difficult or impossible to estimate accurately;

(2) the parties intended to provide for damages rather than a penalty; and (3) the sum

stipulated is a reasonable pre-estimate of the probable loss.” Mariner Health Care

Mgmt. Co. v. Sovereign Healthcare, LLC, 306 Ga. App. 873, 874–75(1) (703 SE2d 687)

(2010) (citing Southeastern Land Fund v. Real Estate World, 237 Ga. 227, 230 (227

SE2d 340) (1976)).4

Determining whether a liquidated damages provision is enforceable is a
question of law for the court, which necessarily requires the resolution
of questions of fact…. To obtain summary judgment, the moving party
must show there is no genuine issue of material fact as to the three
factors set out above and that the undisputed facts warrant judgment as
a matter of law.

Mariner Health Care, 306 Ga. App. at 875(1).

(a) With respect to the second prong of the test — that the parties intended to

provide for damages rather than a penalty — the record reveals no genuine issue that

the parties intended the 36-month formula in Paragraph 12.E. to serve as damages for

premature termination of the 20-year license and not a penalty. The terms of the

license agreement are clear and unambiguous as to the parties’ intent. Specifically,

4
AHI and Hossain do not enumerate or argue that the trial court erred in its
finding on the first prong of the test: “that it would be very difficult to calculate
[HHF’s] damages due to the premature termination of the License Agreement.”
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Paragraph 12.A. provides that AHI and Hossain “recognize the difficulty of

ascertaining damages to [HHF] resulting from premature termination of the

[l]icense and have provided for liquidated damages which represent their best

estimate as to the damages arising from” premature termination. Moreover,

Paragraph 12.E. provides that the agreed-to liquidated damages were “only damages

for the premature termination of th[e] [l]icense, and not as a penalty or as damages

for breaching th[e] [l]icense[,]” and that AHI and Hossain “therefore intend and

agree the … liquidated damages calculation” provided for in the paragraph “to be a

reasonable pre-estimate of [HHF’s] probable loss and not a penalty or in lieu of any

other payment.”

In view of the plain and unambiguous language of the license agreement,

which on more than one occasion explicitly demonstrates the parties’ agreement that

liquidated damages would be the remedy for premature termination of the license,

we conclude that the parties intended Paragraph 12.E. to function as a liquidated

damages provision, rather than a penalty. See Crown Series, 357 Ga. App. at 527(1)(a)

(recognizing that where “the terms of a contract are plain and unambiguous, the

contractual terms alone determine the parties’ intent.” (punctuation omitted)). And

no manner of parol evidence argued by AHI and Hossain may be allowed to

contradict or overcome the plain meaning of the unambiguous liquidated damages

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provision. Id. at 528(1)(a) n.5 (“Parol evidence is not admissible to contradict or

construe an unambiguous contract.” (punctuation omitted)). See also City of

Brookhaven v. Multiplex, LLC, 369 Ga. App. 9, 12–13 (891 SE2d 60) (2023) (noting

that where a contract lacks language indicating that liquidated damages were not

intended to be a penalty, the court can look to parol evidence in the record to

determine intent).5

(b) With respect to the third prong of the liquidated damages test, “the

touchstone question is whether the parties employed a reasonable method under the

circumstances to arrive at a sum that reasonably approximates the probable loss.” Crown

Series, 357 Ga. App. at 528(1)(b) (punctuation omitted and emphasis supplied). The

requirement is not, as AHI and Hossain argue, that the methodology “approximate

[HHF’s] actual losses.”

Here again, the parties agreed that the 36-month formula provided “a

reasonable pre-estimate of [HHF’s] probable loss and not a penalty….” As we

5
Even if the terms of the provision were ambiguous, which they are not,
Hossain testified at deposition that he agreed to the provision when he executed the
license agreement, and he swore to the provision’s validity and enforceability when
he filed his verified petition for declaratory relief in October 2023. And we reject
AHI’s and Hossain’s argument that parol evidence in the form of speculative
deposition testimony of a former employee of HHF whose professional
responsibilities did not encompass the content of the license agreement is “relevant
evidence” establishing that HHF intended the liquidated damages provision to be a
penalty.
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explained in Crown Series, while “not singularly determinative of the outcome,” the

fact that the parties agreed on this point “is not without some value because our

primary inquiry in this factor is ʻwhether the parties employed a reasonable method

under the circumstances to arrive at a sum that reasonably approximates the probable

loss’ and because, more basically, the words of a contract must mean something.” Id.

Moreover, the language of the provision explicitly ties the amount of

liquidated damages to this particular hotel’s historical operations and revenue on a

monthly basis and multiplies the average monthly amount that would have been owed

HHF by 36. The 36-month period — established prospectively, by definition, as part

of contractual liquidated damages — is based on HHF’s experience with, and

estimate of, the time period over which it would be able to identify a new licensee,

receive and process the putative licensee’s application, execute the necessary

contracts, have the licensee build or convert the physical hotel, and replace the

revenue stream of the prematurely terminated license. See Noons, 307 Ga. App. at

354(2).6 The 36-month period, as tied to past performance, is neither a pre-

determined, arbitrary flat sum nor an acceleration of damages for the remaining 18

6
Indeed, that more than five years passed between AHI’s and Hossain’s
application to HHF in July 2016 for a license and their opening of the hotel in October
2021 supports the reasonable relation of a 36-month multiplier to HHF’s probable
losses.

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years of the license. As such, we hold that the liquidated damages provision is a

reasonable pre-estimate of HHF’s probable loss. 7 See Crown Series, 357 Ga. App. at

529–30(1)(b) (concluding that amount equal to estimated payments that would have

occurred over 35-month period of license satisfied the third prong of the liquidated

damages test and the provision was not invalid for not predicting “with precision [the

licensor’s] actual damages”);8 Noons, 307 Ga. App. at 354–55(2) (holding trial court

did not err in finding that liquidated damages equal to 36-month period of certain

amounts, tied to past performance, was “a reasonable pre-estimate of [HHF’s]

probable loss upon early termination”).

7
AHI’s and Hossain’s reliance on the deposition testimony of former and
current HHF employees, which they argue undermines the reasonableness of the 36-
month period, does not alter our analysis or conclusion. Put simply, AHI and Hossain
do not accurately portray the substance of the employees’ testimony and their
testimony does not establish that any of the three prongs of the test is lacking. We
likewise reject AHI’s and Hossain’s argument that the liquidated damages formula
contains a latent ambiguity warranting the consideration of parol evidence. AHI and
Hossain do not support their argument with appropriate citation to the record, and
more fundamentally, they did not raise the issue of latent ambiguity before the trial
court. See Shelley v. Town of Tyrone, 302 Ga. 297, 308(3) (806 SE2d 535) (2017)
(“[A]n appellant may not on appeal raise questions or issues neither raised [n]or ruled
upon by the trial court.” (punctuation omitted)).

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We reiterate the point made in Crown Series that eliciting testimony from
HHF that the liquidated damages formula “did not establish the actual damages” is
not the standard set forth in the third prong of the test; “the whole point of the
liquidated damages provision is to avoid the need to calculate actual damages[.]”
Crown Series, 357 Ga. App. at 529(1)(b) n.7.

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3. In light of our holding in Division 2, above, we need not address AHI’s and

Hossain’s remaining claim that the trial court’s reliance on this Court’s decision in

Noons was erroneous.

Judgment affirmed. McFadden, P. J., and Watkins, J., concur.

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