Reliance Hospitality LLC v. 2930 Waterfront Parkway IN LLC et al

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WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
Reliance Hospitality LLC,
Plaintiff,
v.
2930 Waterfront Parkway IN LLC, et al.,
Defendants.
No. CV-23-00229-PHX-DJH
ORDER
Plaintiff Reliance Hospital LLC (“Plaintiff”) seeks summary judgment on the five
breach of contract claims it has brought against Defendants 2930 Waterfront Parkway IN,
LLC, Crown South Hill Owners LLC, 500 Mansfield Avenue Owner LLC, 101 Mall
Boulevard Owner LLC, and 383 South Center Street Windsor Locks, LLC (collectively,
“Defendants”) (Doc. 66). Defendants have not filed a response. (Doc. 69). The Court will
grant Plaintiff’s Motion (Doc. 66).
I. Background
Plaintiff is a hotel management company based in Phoenix, Arizona, overseeing
hotels across the country. Under common ownership, Defendants owned multiple hotel
properties in various states. Between 2019 and 2022, Defendants agreed to have Plaintiff
manage five separate hotel properties. To establish this arrangement, Plaintiff and each
Defendant entered into identical Hotel Management Agreements (“HMA”).
On February 3, 2023, Plaintiff, believing Defendants to be in violation of the HMAs,
brought suit against Defendants. (See Doc. 1). In its Complaint, Plaintiff brought a
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singular claim of breach of contract and the implied covenant of good faith and fair dealing
against each Defendant. (See id. at ¶¶ 34–68). Plaintiff says that each of the Defendants
breached their respective HMA by failing to adequately fund their hotels’ operating
account sufficient to cover, among other things, the hotel’s payroll, employee benefits, and
reimbursement to Plaintiff for out-of-pocket expenses it incurred in the operation of the
hotels. (Doc. 66 at 4). Defendants answered the Complaint and later twice amended their
Answer, ultimately filing their Second Amended Answer (“SAA”) on January 8, 2024, and
affirmatively alleged seven counterclaims against Plaintiff. (See Docs. 7, 20, 39).
Defendants’ counsel moved to withdraw from the case, without client consent, in
January 2025, on the grounds that Defendants had failed to pay their attorneys’ fees.
(Doc. 45). The Court permitted Defendants’ counsel to withdraw and ordered the
Defendant LLCs to obtain new counsel by February 10, 2025. (See Doc. 47). Defendants
failed to acquire new representation by the February deadline and Plaintiff accordingly
filed applications for entry of default against each of the Defendants. (Doc. 53). In light
of Defendants’ timely-filed SAA, default was not entered and the Court set the matter for
a Status Conference. (Doc. 55). Defendants, however, did not appear at the Status
Conference. (Doc. 56). After receiving several chances to respond, the Court dismissed
Defendants’ remaining counterclaims on November 5, 2025, for failure to prosecute.
(Doc. 72).1 Plaintiff now moves for summary judgment on its breach of contract claims
against Defendants.2
1 Defendants’ Count V for breach of the HMA was previously dismissed with prejudice on
September 16, 2024. (Doc. 41).
2 In its Complaint, Plaintiff’s five claims are pled as “breach of contract and the implied
covenant of good faith and fair dealing” (see Doc. 1 at ¶¶ 34–68). Plaintiff’s Motion for
Summary Judgment, however, focuses only on Defendants’ breach of contract and not their
breaches of the good faith covenant. Moreover, Plaintiff has not shown evidence of bad
faith or that the damages it seeks are separate and distinct from the breach of contract claim.
The Court has therefore only considered the merits of Plaintiff’s breach of contract claims
and presumed that any affiliated breach of the good faith covenant claims have been
abandoned. See Friends of Big Bear Valley v. U.S. Forest Serv., 776 F. Supp. 3d 824, 831
n.6 (C.D. Cal. 2025) (“In the Complaint, plaintiff also alleges violations of NEPA based
on defendants’ failure to consider scientific evidence about the Project's impact on bald
eagles and other species. None of the parties address these allegations in their respective
summary judgment motions, and as such they are abandoned.”).
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II. Legal Standard
A court will grant summary judgment if the movant shows there is no genuine
dispute of material fact and the movant is entitled to judgment as a matter of law. Fed. R.
Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986). A factual dispute is
genuine when a reasonable jury could return a verdict for the nonmoving party. Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A court does not weigh evidence to
discern the truth of the matter; it only determines whether there is a genuine issue for trial.
Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1131 (9th Cir. 1994). A fact is
material when identified as such by substantive law. Anderson, 477 U.S. at 248. Only
facts that might affect the outcome of a suit under the governing law can preclude an entry
of summary judgment. Id.
The moving party bears the initial burden of identifying portions of the record,
including pleadings, depositions, answers to interrogatories, admissions, and affidavits,
that show there is no genuine factual dispute. Celotex, 477 U.S. at 323. Once shown, the
burden shifts to the non-moving party, which must sufficiently establish the existence of a
genuine dispute as to any material fact. See Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 585–86 (1986); see also Celotex Corp., 477 U.S. at 324 (holding the
nonmoving party bears the burden of production under Rule 56 to “designate specific facts
showing that there is a genuine issue for trial”). The evidence of the non-movant is “to be
believed, and all justifiable inferences are to be drawn in his favor.” Anderson, 477 U.S.
at 255. But if the non-movant identifies “evidence [that] is merely colorable or is not
significantly probative, summary judgment may be granted.” Id. at 249–50
(citations omitted). “Where the record taken as a whole could not lead a rational trier of
fact to find for the nonmoving party, there is no genuine issue for trial.” Ricci v. DeStefano,
557 U.S. 557, 586 (2009).
“[W]here [] the moving party bears the burden of proof at trial, it must come forward
with evidence which would entitle it to a directed verdict if the evidence were
uncontroverted at trial.” Houghton v. South, 965 F.2d 1532, 1536 (9th Cir. 1992). The
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standard for granting summary judgment thus “mirrors the standard for a directed verdict
under Federal Rule of Civil Procedure 50(a)[.]” Celotex, 477 U.S. at 323.
When a summary judgment motion is unopposed, a district court must “determine
whether summary judgment is appropriate—that is, whether the moving party has shown
itself to be entitled to judgment as a matter of law.” Leramo v. Premier Anesthesia Med.
Group, 2011 WL 2680837, *8 (E.D. Cal. 2011) (quoting Anchorage Assocs. v. V.I. Bd. of
Tax Review, 922 F.2d 168, 175 (3rd Cir. 1990)). A district court “cannot base the entry of
summary judgment on the mere fact that the motion is unopposed, [] rather [it] must
consider the merits of the motion.” Id. (quoting United States v. One Piece of Real
Property, etc., 363 F.3d 1099, 1101 (11th Cir. 2004)). A court “need not sua sponte review
all of the evidentiary materials on file at the time the motion is granted, but must ensure
that the motion itself is supported by evidentiary materials.” Id. (quoting One Piece of
Real Property, 363 F.3d at 1101).
III. Discussion
To prevail on a breach of contract claim under Arizona law, “a plaintiff must show
a contract, a breach of contract, and damages.” Best W. Int’l, Inc. v. Patel, 523 F. Supp. 2d
979, 988 (D. Ariz. 2007) (citing Graham v. Asbury, 540 P.2d 656, 657 (Ariz. 1975)). In
Arizona, a plaintiff bears the burden of showing contract damages with “reasonable
certainty.” Gilmore, 386 P.2d at 82. Reasonable certainty is provided where there is “some
reasonable method of computing [the] net loss.” Lininger v. Dine Out Corp., 639 P.2d 350
(Ariz. Ct. App. 1981) (citing Irish v. Mountain States Tel. & Tel. Co., 500 P.2d 151, 154
(Ariz. 1972)); see also Gilmore v. Cohen, 386 P.2d 81, 82 (Ariz. 1963) (“[T]he evidence
must make an ‘approximately accurate estimate’ possible.”) (quoting Martin v. LaFon, 100
P.2d 182 (Ariz. 1940))..
In their SAA, Defendants do not dispute the existence or validity of the HMAs. (See
Doc. 39 at ¶¶ 35, 42, 49, 56, 63). They further state that the terms of the HMAs speak for
themselves. (See id. at ¶¶ 23–29). Therefore, the Court will assess whether Plaintiff has
met it burden of establishing breach and its alleged damages with reasonable certainty.
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A. Count I against 2930 Waterfront Parkway IN, LLC
Plaintiff and 2930 Waterfront Parkway IN, LLC (“2930 Waterfront”) entered into
its HMA (the “Waterfront HMA”) on June 25, 2020. (Doc. 66-3 at 3). The Waterfront
HMA was a 36-month agreement for a hotel property located at 2930 Parkway West Drive,
Indianapolis, IN 46214. (Id. at 3, 5). The Waterfront HMA establishes the terms under
which Plaintiff would take over the operation, direction, management, and supervision of
the above hotel property owned by 2930 Waterfront. (See generally id.).
Under the Waterfront HMA, 2930 Waterfront is responsible for “reimbursing
[Plaintiff], as part of the Operating Expenses, and shall deposit into the Operating Account,
as provided below, the salary, payroll taxes and fringe benefits under the Benefits Plans of
all Hotel Personnel for [Plaintiff].” (Id. at 5). 2930 Waterfront is required to provide the
funds for these expenses at least seven days prior to Plaintiff’s payroll date. (Id.) The
Waterfront HMA further provides that Plaintiff is not liable for any “expenses, debts,
liabilities and obligations by reason of its direction, management, supervision and
operation of the Hotel on behalf of [2930 Waterfront]” and Plaintiff may reimburse itself
from the “Operating Account” for “payroll expense of any employee” who is performing
a necessary job function at the Hotel. (Id. at 6–7). Additionally, under the Waterfront
HMA, 2930 Waterfront must pay Plaintiff a $2,500.00 monthly management fee, “until
which time the hotel opens as a franchised branded hotel[.]” (Id. at 8).
Either party was entitled to terminate the Waterfront HMA effective immediately,
in the event of the other party’s gross negligence, willful misconduct, or fraud. (Id. at 9).
Either party could also terminate the HMA in the event of either party’s failure “to pay the
other party any sums as and when they become due hereunder and such failure shall
continue for ten (10) days after notice of the failure has been given to the party who has
failed to pay these sums.” (Id.) If such an event occurred that was attributable to 2930
Waterfront, under the Liquidated Damages provision, Plaintiff is entitled to “all
Management Fees prorated to the date of termination” “all Operating Expenses that have
not been paid or reimbursed,” and “all other amounts due under this Agreement,” within
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five days of termination. (Id. at 10).
Plaintiff says 2930 Waterfront failed to add sufficient funds to the hotel’s Operating
Account from October 22, 2021, to February 20, 2022, which caused Plaintiff to incur out-
of-pocket expenses to cover its employees’ payroll, workers’ compensation premiums, and
health insurance premiums. (Doc. 66-1 at ¶ 7). Plaintiff’s executive “prepared and sent
written notice to 2930 Waterfront informing them that they were in default and gave them
10 days’ [sic] to cure.” (Id. at ¶ 8). However, 2930 Waterfront failed to cure, and Plaintiff
subsequently terminated the Waterfront HMA, effective March 1, 2022. (Id.)
Defendants denied any such breach in their SAA (Doc. 39 at ¶ 37) but has otherwise
failed to substantiate their defense. Plaintiff sent Requests for Admission (“RFA”) to 2930
Waterfront, stating “[a]dmit that [2930 Waterfront] did not adequately fund the Hotel’s
operating expenses as required by the HMA;” “[a]dmit that failing to fund the Hotel’s
operating account to cover the Hotel’s operating expenses constitutes a default under the
HMA;” and “[a]dmit that [2930 Waterfront] failed to cure [its] default under the HMA
despite Reliance providing You with notice and an opportunity to cure the default.”
(Doc. 66-2 at 19–20). The RFAs were sent to 2930 Waterfront on December 20, 2024,
but, to date, they have gone unanswered. (Doc. 66-1 at ¶ 5); F. R. Civ. P. 36(a)(3) (failure
to timely respond to requests for admission results in automatic admission of the matters
requested as Federal Rule of Civil Procedure 36(a) is self-executing). The Court will
accordingly construe 2930 Waterfront’s failure to respond as admission of its failure to
fund the Operating Account and that such a failure is a breach of the HMA.
With regard to damages, Plaintiff has offered the uncontested declaration of Bryan
Fish, an executive with Plaintiff, in which Mr. Fish attests that due to 2930 Waterfront’s
failure to fund the Operating Account, Plaintiff was unable to reimburse itself and, under
the HMA, is owed “$38,275.74 (employee payroll); $1,848.00 (workers’ compensation
premiums); and $28,774.32 (health insurance premiums).” (Doc. 66-1 at ¶ 9). Mr. Fish
also states that “[b]ecause there were sixteen months left in the initial term of the HMA,
2930 Waterfront is liable for Liquidated Damages in the amount of $40,000.00 (i.e., 16
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months x $2500).” (Id. at ¶ 10). In all, Plaintiff says its damages resulting from 2930
Waterfront’s breach are $108,898.06. These amounts are uncontested but reasonably
supported and certain.
Based on the foregoing facts, Plaintiff has established that there is no factual dispute
as to the existence of a contract, 2930 Waterfront’s breach of that contract, and Plaintiff’s
resulting damages. Defendants, conversely, have not produced any evidence that
demonstrates a disputed issue of material fact, and therefore Plaintiff is entitled to judgment
as a matter of law on its breach of contract claim against Defendant 2930 Waterfront.
B. Count II against Crown South Hill Owners, LLC
Plaintiff and Crown South Hill Owners, LLC (“Crown South”) entered into its HMA
(the “Crown HMA”) on August 4, 2021. (Doc. 66-4 at 3). The Crown HMA was a 36-
month agreement for a hotel property located at 164 Fort Couch Road, Pittsburgh, PA
15241. (Id. at 3, 5).
The Crown HMA establishes the terms under which Plaintiff would take over the
operation, direction, management, and supervision of the above hotel property owned by
Crown South. (See generally id.).
In relevant part, under the Crown HMA, Crown South is responsible for
“reimbursing [Plaintiff], as part of the Operating Expenses, and shall deposit into the
Operating Account, as provided below, the salary, payroll taxes and fringe benefits under
the Benefits Plans of all Hotel Personnel for [Plaintiff].” (Id. at 5). Crown South is required
to provide the funds for these expenses at least seven days prior to Plaintiff’s payroll date.
(Id.) The Crown HMA further provides that Plaintiff is not liable for any “expenses, debts,
liabilities and obligations by reason of its direction, management, supervision and
operation of the Hotel on behalf of [Crown South]” and Plaintiff may reimburse itself from
the “Operating Account” for “payroll expense of any employee” who is performing a
necessary job function at the Hotel. (Id. at 6–7).
Either party was entitled to terminate the HMA effective immediately, in the event
of the other party’s gross negligence, willful misconduct, or fraud. (Id. at 9). Either part
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could also terminate the HMA in the event of either party’s failure “to pay the other party
any sums as and when they become due hereunder and such failure shall continue for ten
(10) days after notice of the failure has been given to the party who has failed to pay these
sums.” (Id.) If such an event occurred that was attributable to Crown South, Plaintiff is
entitled to “all Management Fees prorated to the date of termination” “all Operating
Expenses that have not been paid or reimbursed,” and “all other amounts due under this
Agreement,” within five days of termination. (Id. at 10).
Plaintiff says Crown South failed to add sufficient funds to the hotel’s Operating
Account during the Crown HMA’s term, which required Plaintiff to incur out-of-pocket
expenses to cover its employees’ health insurance premiums in the amount of $20,888.98.
(Doc. 66-1 at ¶ 11). Crown South then “sought to terminate the Crown South Agreement
without triggering Liquidated Damages, which [Plaintiff] permitted them to do so long as
Crown South reimbursed [Plaintiff] for its out-of-pocket expenses.” (Id. at ¶ 12). The
Crown HMA was terminated in October 2022, but Crown South refused to reimburse
Plaintiff for the health insurance premiums. (Id. at ¶ 13).
Defendants denied that it breached the HMA by failing to pay for the health
insurance premiums (Doc. 39 at ¶ 44) but has failed to substantiate its defense. Moreover,
Plaintiff sent an RFA to Crown South, asking Crown South to “[a]dmit that [Crown South]
did not adequately fund the Hotel’s operating expenses as required by the HMA” and
“[a]dmit that failing to fund the Hotel’s operating account to cover the Hotel’s operating
expenses constitutes a default under the HMA.” (Doc. 66-2 at 24). The RFAs were sent
to Crown South on December 20, 2024, but the admissions have since gone unanswered.
(Doc. 66-1 at ¶ 5); Fed. R. Civ. P. 36(a)(3). Consequently, Crown South has admitted to
its failure to fund the Operating Account and that such a failure is a breach of the HMA.
Due to Crown South’s failure to fund the Operating Account, Mr. Fish says Plaintiff
was unable to reimburse itself for the employees’ health insurance premiums and is owed
$20,888.98. (Doc. 66-1 at ¶ 13).
Based on the foregoing facts, Plaintiff has established that there is no factual dispute
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as to the existence of a contract, Crown South’s breach of that contract, or Plaintiff’s
resulting damages. Defendants, conversely, have not produced any evidence that
demonstrates a disputed issue of material fact, and therefore Plaintiff is entitled to judgment
as a matter of law on its breach of contract claim against Defendant Crown South.
C. Count III against 500 Mansfield Avenue Owner, LLC
Plaintiff and 500 Mansfield Avenue Owner, LLC (“500 Mansfield”) entered into its
HMA (the “Mansfield HMA”) on June 21, 2021. (Doc. 66-5 at 3). The Mansfield HMA
was a 36-month agreement for a hotel property located at 500 Mansfield Avenue,
Pittsburgh, PA 15205. (Id. at 3, 5). The Mansfield HMA establishes the terms under which
Plaintiff would take over the operation, direction, management, and supervision of the
above hotel property owned by 500 Mansfield. (See generally id.).
Under the Mansfield HMA, 500 Mansfield is responsible for “reimbursing
[Plaintiff], as part of the Operating Expenses, and shall deposit into the Operating Account,
as provided below, the salary, payroll taxes and fringe benefits under the Benefits Plans of
all Hotel Personnel for [Plaintiff].” (Id. at 5). 500 Mansfield is required to provide the
funds for these expenses at least seven days prior to Plaintiff’s payroll date. (Id.) The
Mansfield HMA further provides that Plaintiff is not liable for any “expenses, debts,
liabilities and obligations by reason of its direction, management, supervision and
operation of the Hotel on behalf of [500 Mansfield]” and Plaintiff may reimburse itself
from the “Operating Account” for “payroll expense of any employee” who is performing
a necessary job function at the Hotel. (Id. at 6–7).
Either party was entitled to terminate the HMA effective immediately, in the event
of the other party’s gross negligence, willful misconduct, or fraud. (Id. at 9). Either part
could also terminate the HMA in the event of either party’s failure “to pay the other party
any sums as and when they become due hereunder and such failure shall continue for ten
(10) days after notice of the failure has been given to the party who has failed to pay these
sums.” (Id.) If such an event occurred that was attributable to 500 Mansfield, Plaintiff is
entitled to “all Management Fees prorated to the date of termination” “all Operating
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Expenses that have not been paid or reimbursed,” and “all other amounts due under this
Agreement,” within five days of termination. (Id. at 10).
Plaintiff says during the term of the Mansfield HMA, 500 Mansfield failed to add
sufficient funds to the hotel’s Operating Account, which required Plaintiff to incur out-of-
pocket expenses to cover its employees’ health insurance premiums in the amount of
$49,563.06. (Doc. 66-1 at ¶ 14). 500 Mansfield then “sought to terminate the [Mansfield
HMA] without triggering Liquidated Damages, which [Plaintiff] permitted them to do so
long as 500 Mansfield reimbursed [Plaintiff] for its out-of-pocket expenses.” (Id. at ¶ 15).
The Mansfield HMA was terminated in October 2022, but 500 Mansfield refused to
reimburse Plaintiff for the health insurance premiums. (Id. at ¶ 13).
Defendants have again failed to offer any evidence supporting the disavowal of the
contractual breach. (Doc. 39 at ¶ 51). Plaintiff sent an RFA to 500 Mansfield, stating
“[a]dmit that [500 Mansfield] did not adequately fund the Hotel’s operating expenses as
required by the HMA” and “[a]dmit that failing to fund the Hotel’s operating account to
cover the Hotel’s operating expenses constitutes a default under the HMA.” (Doc. 66-2 at
14–15). The RFA was sent to 500 Mansfield on December 20, 2024, but, to date, it has
gone unanswered. (Doc. 66-1 at ¶ 5); Fed. R. Civ. P. 36(a)(3). The Court consequently
finds that 500 Mansfield has admitted to its failure to fund the Operating Account and that
such a failure is a breach of the HMA.
Due to 500 Mansfield’s failure to fund the Operating Account, Mr. Fish avers that
Plaintiff was unable to reimburse itself for the employees’ health insurance premiums and
is owed $49,563.06. (Doc. 66-1 at ¶ 16).
Based on the foregoing facts, Plaintiff has established that there is no factual dispute
as to the existence of a contract, 500 Mansfield’s breach of that contract, or Plaintiff’s
resulting damages. Defendants, conversely, have not produced any evidence that
demonstrates a disputed issue of material fact, and therefore Plaintiff is entitled to judgment
as a matter of law on its breach of contract claim against Defendant 500 Mansfield.
/ / /
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D. Count IV against 101 Mall Boulevard Owner, LLC
Plaintiff and 101 Mall Boulevard Owners, LLC (“101 Mall”) entered into its HMA
(the “Mall HMA”) on January 15, 2020. (Doc. 66-6 at 3). The Mall HMA was a 36-month
agreement for a hotel property located at 101 Mall Blvd., Monroeville, PA 15146. (Id. at
3, 5).
The Mall HMA establishes the terms under which Plaintiff would take over the
operation, direction, management, and supervision of the above hotel property owned by
101 Mall. (See generally id.).
The Mall HMA provides that 101 Mall is responsible for “reimbursing [Plaintiff],
as part of the Operating Expenses, and shall deposit into the Operating Account, as
provided below, the salary, payroll taxes and fringe benefits under the Benefits Plans of all
Hotel Personnel for [Plaintiff].” (Id. at 5). 101 Mall is required to provide the funds for
these expenses at least seven days prior to Plaintiff’s payroll date. (Id.) The Mall HMA
further provides that Plaintiff is not liable for any “expenses, debts, liabilities and
obligations by reason of its direction, management, supervision and operation of the Hotel
on behalf of [101 Mall]” and Plaintiff may reimburse itself from the “Operating Account”
for “payroll expense of any employee” who is performing a necessary job function at the
Hotel. (Id. at 6–7). Additionally, 101 Mall must pay Plaintiff a monthly management fee
of $5,000.00 or 2.5% total hotel revenue, whichever is greater. (Id. at 8).
Either party could terminate the HMA in the event of either party’s failure “to pay
the other party any sums as and when they become due hereunder and such failure shall
continue for ten (10) days after notice of the failure has been given to the party who has
failed to pay these sums.” (Id. at 9). If such an event occurred that was attributable to 101
Mall, Plaintiff is entitled to “all Management Fees prorated to the date of termination,” “all
Operating Expenses that have not been paid or reimbursed,” and “all other amounts due
under this Agreement,” within five days of termination. (Id. at 10).
Plaintiff says 101 Mall failed to add sufficient funds to the hotel’s Operating
Account during the Mall HMA’s term, which caused Plaintiff to incur out-of-pocket
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expenses to cover its employees’ payroll, workers’ compensation premiums, direct deposit
liability, and health insurance premiums. (Doc. 66-1 at ¶ 17). Plaintiff’s executive
“provided 101 Mall with written notice of its default and 10 days’ opportunity to cure.”
(Id. at ¶ 18). However, 101 Mall failed to cure, and Plaintiff subsequently terminated the
Mall HMA, effective March 1, 2022.
Defendants initially denied any such breach in their SAA. (Doc. 39 at ¶ 58). But
Plaintiff later sent an RFA to 101 Mall, asking 101 Mall to admit “[a]dmit that [101 Mall]
did not adequately fund the Hotel’s operating expenses as required by the HMA” and
“[a]dmit that failing to fund the Hotel’s operating account to cover the Hotel’s operating
expenses constitutes a default under the HMA,” 101 Mall failed to timely respond.
(Doc. 66-2 at 4; Doc. 66-1 at ¶ 5). Thus, 101 Mall has admitted to its failure to fund the
Operating Account and that such a failure is a breach of the HMA.
Because of 101 Mall’s failure to fund the Operating Account, Mr. Fish says Plaintiff
was unable to reimburse itself and, under the HMA, is owed: “payroll ($152,669.16);
workers’ compensation premiums ($39,230.99); [and] direct deposit liability ($4,203.01).”
(Doc. 66-1 at ¶ 17).3 Plaintiff is also requesting liquidated damages from the Management
Fee owed under the HMA. (Doc. 66 at 10). Although Plaintiff does not support this claim
in its Declaration, its liquidated damages are readily ascertainable based on the HMA’s
terms and the above-established facts about the HMA’s termination. Because there were
ten months left in the Mall HMA’s initial term upon termination, 101 Mall is liable for
Liquidated Damages in the amount of $50,000.00 (10 months x $5000). In all, Plaintiff’s
damages resulting from 101 Mall’s breach are $246,103.16.
Thus, Plaintiff has established that there is no factual dispute as to the existence of
3 Plaintiff states that it also incurred expenses for health insurance premiums (Doc. 66-1 at
¶ 17), and it states in its Motion that it incurred expenses for employee health insurance
premiums in the amount of $39,230.99. (Doc. 66 at 10). Plaintiff does not, however,
establish its damages for health insurance premiums in its Declaration. (See Doc. 66-1 at
¶ 17). Moreover, in the Declaration, $39,230.99 is the amount claimed for workers’
compensation premiums. As this has been established by sworn statement, the Court finds
that Plaintiff’s workers’ compensation premium damages have been established as a fact,
but its health insurance damages under the 101 Mall HMA have not. The Court will
disregard the amounts claimed by Plaintiff’s counsel in its Motion and adhere to the
damages asserted in the Declaration.
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a contract, 101 Mall’s breach of that contract, or Plaintiff’s resulting damages. Defendants,
conversely, have not produced any evidence that demonstrates a disputed issue of material
fact, and therefore Plaintiff is entitled to judgment as a matter of law on its breach of
contract claim against Defendant 101 Mall.
E. Count V against 383 South Center St. Windsor Locks, LLC
Plaintiff and 383 South Center St. Windsor Locks, LLC (“383 South”) entered into
its HMA (the “South HMA”) on December 17, 2019. (Doc. 66-7 at 3). The South HMA
was a 36-month agreement for a hotel property located at 383 S. Center Street, Windsor
Locks, CT, 06096. (Id. at 3, 5).
The South HMA establishes the terms under which Plaintiff would take over the
operation, direction, management, and supervision of the above hotel property owned by
383 South. (See generally id.).
Under the South HMA, 383 South is responsible for “reimbursing [Plaintiff], as part
of the Operating Expenses, and shall deposit into the Operating Account, as provided
below, the salary, payroll taxes and fringe benefits under the Benefits Plans of all Hotel
Personnel for [Plaintiff].” (Id. at 5). 383 South is required to provide the funds for these
expenses at least seven days prior to Plaintiff’s payroll date. (Id.) The South HMA further
provides that Plaintiff is not liable for any “expenses, debts, liabilities and obligations by
reason of its direction, management, supervision and operation of the Hotel on behalf of
[383 South]” and Plaintiff may reimburse itself from the “Operating Account” for “payroll
expense of any employee” who is performing a necessary job function at the Hotel. (Id. at
6–7). Additionally, under the South HMA, 383 South must pay Plaintiff a $2,500.00
monthly management fee, “till hotels opens [sic] as a Ramada.” (Id. at 8).
Either part could also terminate the HMA in the event of either party’s failure “to
pay the other party any sums as and when they become due hereunder and such failure
shall continue for ten (10) days after notice of the failure has been given to the party who
has failed to pay these sums.” (Id. at 9). If such an event occurred that was attributable to
383 South, Plaintiff is entitled to “all Management Fees prorated to the date of termination”
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“all Operating Expenses that have not been paid or reimbursed,” and “all other amounts
due under this Agreement,” within five days of termination. (Id. at 10).
Plaintiff says 383 South failed to add sufficient funds to the hotel’s Operating
Account during the South HMA’s term, which forced Plaintiff to incur out-of-pocket
expenses to cover its employees’ payroll and health insurance premiums. (Doc. 66-1 at
¶ 19). Plaintiff “provided 383 South with written notice of its default and 10 days’
opportunity to cure.” (Id. at ¶ 20). However, 383 South failed to cure, and Plaintiff
subsequently terminated the South HMA, effective March 1, 2022.
Defendants initially denied any such breach in their SAA. (Doc. 39 at ¶ 65). But
Plaintiff’s December 20, 2024, RFA to 383 South asking it to “[a]dmit that [383 South] did
not adequately fund the Hotel’s operating expenses as required by the HMA” and “[a]dmit
that failing to fund the Hotel’s operating account to cover the Hotel’s operating expenses
constitutes a default under the HMA” went unanswered. (Doc. 66-2 at 9; Doc. 66-1 at ¶ 5).
Consequently, 383 South has admitted to its failure to fund the Operating Account and that
such a failure is a breach of the HMA.
Because of 383 South’s failure to fund the Operating Account, Mr. Fish says
Plaintiff was unable to reimburse itself and, under the HMA, is owed: “payroll
($70,408.03) and health insurance premiums ($24,452.71).” (Doc. 66-1 at ¶ 19). Plaintiff
is also requesting its liquidated damages from the Management Fee owed under the HMA.
(Doc. 66 at 10). Although Plaintiff does not support this claim in its Declaration, its
liquidated damages are ascertainable based on the HMA’s terms and the above established
facts about the HMA’s termination. Because there were nine months left in the South
HMA’s initial term upon termination, 383 South is liable for Liquidated Damages in the
amount of $22,500.00 (9 months x $2,500). In all, Plaintiff’s damages resulting from 383
South’s breach are $117,360.74.
Based on the foregoing facts, Plaintiff has established that there is no factual dispute
as to the existence of a contract, 383 South’s breach of that contract, and Plaintiff’s
resulting damages. Defendants, conversely, have not produced any evidence that
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demonstrates a disputed issue of material fact, and therefore Plaintiff is entitled to judgment
as a matter of law on its breach of contract claim against Defendant 383 South.
In sum, Plaintiff has demonstrated that it is entitled to summary judgment on each
of its claims for breach of contract.
Accordingly,
IT IS ORDERED that Plaintiff’s Motion for Summary Judgment (Doc. 66) is
GRANTED. The Clerk of Court is kindly directed to enter judgment and close this matter
as follows:
• judgment in favor of Plaintiff in the amount of $108,898.06 against
Defendant 2930 Waterfront Parkway IN, LLC;
• judgment in favor of Plaintiff in the amount of $20,888.98 against Defendant
Crown South Hill Owners, LLC;
• judgment in favor of Plaintiff in the amount of $49,563.06 against Defendant
500 Mansfield Avenue Owner, LLC;
• judgment in favor of Plaintiff in the amount of $246,103.16 against
Defendant 101 Mall Boulevard Owner, LLC; and
• judgment in favor of Plaintiff in the amount of $117,360.74 against
Defendant 383 South Center St. Windsor Locks, LLC.
IT IS FURTHER ORDERED that Plaintiff is awarded post-judgment interest at
the applicable federal rate pursuant to 28 U.S.C. 1961(a).
IT IS FINALLY ORDERED that Plaintiff may file a motion for costs and
attorneys’ fees within fourteen (14) days of the entry of this Order pursuant to the HMAs
and A.R.S. §12-341.01.
Dated this 24th day of February, 2026.
Honorable Diane J. Humetewa
United States District Judge
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