ROBINSON v. WINGATE INNS INTERNATIONAL, INC. et al

Filing 13

OPINION. Signed by Judge Claire C. Cecchi on 12/20/2013. (nr, )

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

(CCC)

OPINION
v.
I
I

WINGATE INNS INTERNATIONAL, INC. :
and WYNDHAM
AND RESORTS, :
LLC
:
'

I

Defendants.

CECCHI, District Judge.
This matter comes before the Court on Defendants' Motion to Dismiss the First, Fourth,
Fifth, and Sixth counts of Plaintiffs complaint. The Court decides this matter without oral
argument pursuant to Rule 78 of the Federal Rules of Civil Procedure. 1 For the reasons set forth
below, the Court grants Defendants' motion. Plaintiff will be granted thirty days in which to file
an Amended Complaint that cures, to the extent possible, the pleading deficiencies identified in

I.

BACKGROUND

A.

The Wingate Agreement

r-r-rn·rt11nn

to
was

that

was

on

to obtain financing to meet

obligations

Wingate Agreement.

(Compl. ~~ 13-14). Plaintiff states that the Wingate Franchise Disclosure Document2 represented
that Wingate offered development incentives and arranged to offer project financing with a third
party, and that he obtained no such incentives or financing. (Compl. ~~ 15-21, 40-41; 54). Plaintiff
alleges that the reason he was unable to obtain financing was because of Wingate or Windham's
reputation. (Compl.

~~

13-14). According to Plaintiff, Wingate knew that Plaintiff would not be

able to obtain financing to meet his obligations under the Agreement. (Compl.

~

55). Plaintiff

avers that he offered to pay Wingate to guarantee part of a loan so that he could obtain financing
to comply with the Wingate Agreement, and that Wingate refused to do so and otherwise failed to
perform its obligations detailed in sections three and four of the Wingate Agreement. (Compl. ~~
19-21' 38-39).
breach

out
covenant

B.

The Wyndham Agreement
made
was executed on February

building

Plaintiff
(CompL, 27).

agreement required the

a hotel in Las Vegas, Nevada. (Compl. , 28). Plaintiff alleges that other rr-::~ 1"',...., 1 CI""'"'CI

of Defendants had failed in Las Vegas, Nevada and elsewhere prior to the execution of the
Wyndham Agreement. (Compl. ,, 25-28). The complaint states that Plaintiff was not provided
with the Wyndham Franchise Disclosure Document prior to the execution of the Wyndham

436.2(a). Plaintiff further alleges that Wyndham knew that Plaintiff would not be able to obtain
financing to build a hotel pursuant to the Wyndham Agreement, yet-with this knowledge-still
sold Plaintiff a franchise. (Compl. ,, 48; 61-62).
Arising out of this relationship with Wyndham, Plaintiff alleges violation of a FTC Rule
on Franchising (Count One), breach of the covenant of good faith and fair dealing (Count Three),
and

II.

the

a

"

to

at
III.

DISCUSSION
A.

Count One: Violation of the FTC Rule on Franchising (Wyndham)

This count arises out of Plaintiffs

that Defendant Wyndham did not comply

with applicable FTC franchise disclosure rules. It is well settled that there is no a private cause of
action for violation of the

franchise disclosure rules. Sandoz Pharm. Corp. v. Richardson-

Vicks, Inc., 902 F .2d 222, 231 (3d Cir. 1990) (noting that the FTC statute does not create "an
express or implied private right of action"); Palermo Gelato, LLC v. Pino Gelato, Inc., No. 12-cv931, 2013 WL 285547 *6 (W.D. Pa. Jan. 24, 2013).
Accordingly, Count One is dismissed.
B.

Counts Four and Five: Fraud in the Inducement (Wingate and Wyndham)

Plaintiff avers that Wingate fraudulently induced him to enter into the Wingate Agreement
using financing representations in Wingate's Franchise Disclosure Document. (Compl. ~~53-57).
u.-.>.L,Lki.LL

avers

fraudulently induced

to enter

statute
4

run.

a

to

must

) a

or

(5)

Rule 9(b)
must be pled with particularity. This heightened pleading requirement applies to state law claims
462 F .3d 294, 310 (3d Cir. 2006) (citing ..::::::::!!:~~~~~

of fraud.

Penn. Mortg. Trust, 717 F.2d 96, 99 (3d Cir. 1983)).
Under New Jersey law, the statute of limitations for fraud is six years. N.J. Stat.§ 2A:141; Nobile v. Ford Motor Co., No. 10-cv-1890, 2011 WL 90019 *4 n.2 (D.N.J. 2011). The Fraud
allegations against each Defendant are addressed in tum.

1.

Fraud Allegations Against Wingate

Plaintiffs fraud claim against Wingate was not brought within the six-year statute of
limitations. Timeliness under a statute of limitations is typically an affirmative defense brought in
the answer.
rt.a-t·o~''"""

to

Rule 8(c). However, the so-called Third Circuit Rule "permits a limitations
a motion

Rule 1

time

statement

cause

out
to

to

on

11'

statute

run.
acts
the

statute
to
with a

not excuse

limitations period.

1

765

},

to

an action outside of

187 (N.J. 2001) (lack of"knowledge

of a specific basis for legal liability" does not toll the statute of limitations). With respect to (2),
to the extent that Plaintiff complains of fraud occurring because of acts occurring before 2005, the
statute of limitations has run; and to the extent that Plaintiff is alleging additional acts by Wingate
constituting fraud, these were not pled in compliance with Rules 8 and 9(b ). Accordingly, Count
Four is dismissed as untimely.

2.

Fraud Allegations Against Wyndham

Plaintiff fails to allege that Wyndham made any material misrepresentation. Accordingly,
the fraud claim against Wyndham is dismissed.
far as the Court can determine, the Complaint alleges fraud arising out of the failure of
Plaintiff

1n

6

to Complaint

8
to state a

C.

Count Six: Violation of the NJCFA (Wingate and Wyndham)
the

1274 (3d

1994).

The NJCFA declares that fraudulent practices "in connection with the sale or advertisement
of any merchandise or real estate" are unlawfuL N.J. Stat. Ann. § 56:8-2 (2012). The NJCFA
defines "merchandise" to include "any objects, wares, goods, commodities, services or anything
offered, directly or indirectly to the public for sale." Id. at § 56:8-2. The NJCF A is intended to
protect consumers who purchase "goods or services generally sold to the public at large."
Marascio v. Campanella, 689 A.2d 852, 856-57 (N.J.Super.Ct.App.Div. 1997). The NJCFA's
focus is "pointed to products and services sold to consumers in the popular sense." Id. at 638.
In
explained:

the Third Circuit held that the NJCFA did not apply to franchises. The court

31

at
Div.

customer."
was
"a substantial and complex commercial transaction." Id. at 679.
in the face of contrary New Jersey Appellate court decisions on this issue, this Court
is obligated to follow the Third Circuit's prediction of New Jersey law in J & Runless the New
Jersey Supreme Court holds to the contrary. Debiec v. Cabot Corp., 352 F.3d 117, 131 (3d Cir.
2003) (holding that Third Circuit prediction of Pennsylvania law was binding, "notwithstanding .
. . contradictory Pennsylvania Superior Court opinions" on the issue); Smith v. Calgon Carbon
Corp., 917 F .2d 1338, 1343 (3d Cir. 1990) ("in the absence of a clear statement by the Pennsylvania
Supreme Court to the contrary or other persuasive evidence of a change in Pennsylvania law, we
are bound by the holdings of previous panels of this court."); In re Schering-Plouh Corp.
~~~~~~~~~~~~~,No.

1

at

06-cv-5774, 2009 WL 2043604 at *31 n.24 (D.N.J.

IV.

CONCLUSION

purposes

DATED: December 20,

3
CLAIRE C. CECCHI, U.S.D.J.