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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND CHOICE HOTELS INTERNATIONAL, INC. v. : LABREE, INC. : : : Civil Action WMN-00-3461

MEMORANDUM Before the Court is Defendant's Motion to Dismiss for Lack of Personal and/or Subject Matter Jurisdiction. No. 3. The motion is fully briefed. Paper

Upon a review of the

motion and the relevant case law, the Court determines that no hearing is necessary and that the motion will be denied, but this action will be stayed pending arbitration. This case involves yet another dispute between Choice Hotels [Choice] and one of its franchisees. Defendant Labree,

Inc. is a Georgia corporation and the hotel that was the subject of the franchise agreement is located in Orlando, Florida. As is the case in most of these lawsuits brought by

Choice, Choice alleges that Labree failed to meet the minimum quality assurance standards as set forth in the franchise agreement, which resulted in Choice terminating the agreement. Choice brings this action seeking accrued franchise-related fees, liquidated damages that Choice alleges were caused by the termination of the franchise agreement, and attorneys'

fees.

Labree has moved to dismiss the action, contending that In

this controversy has insufficient contacts with Maryland. addition, Labree argues that Plaintiff must first arbitrate the alleged breach of contract claims.1

Under very similar factual circumstances, this Court has consistently found that it has personal jurisdiction over Choice's franchisees, and that venue is proper in this District. See Choice Hotels International, Inc. v. N&G,

L.L.C., Civil Action No. WMN-00-1195 (December 12, 2001); Choice Hotels International, Inc. v. Shantu, Civil Action No. WMN-00-396 (D. Md. October 6, 1999)(collecting cases). Labree

has offered nothing unique to this action to take it out from under this long line of controlling cases. While not without exception, this Court has also typically stayed these actions pending arbitration. The

standard franchise agreement contains the following provision: Except for claims for indemnification, actions for collection of fees owed us under this Agreement, or actions seeking to enjoin you from using the Marks in

Labree also argues that the Franchise Agreement was invalid. According to Labree, the hotel property in question was operated as an independent condominium. The condominium owners disapproved the conversion to a Choice "Quality Suite" hotel and, as a result, Labree never took title to the property. Motion at 2. Under the terms of the Agreement's arbitration clause, see infra, challenges to the continued validity of the Agreement itself are also arbitrable. 2

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violations of this Agreement, any controversy or claim relating to this Agreement, or the breach of the agreement, including any claim that this Agreement or any part of this Agreement is invalid, illegal, or otherwise voidable or void, will be sent to final and binding arbitration in accordance with the Commercial Rules of the American Arbitration Association. The arbitrator will apply the substantive law of Maryland, without reference to Maryland's conflict of law provision. Judgment on the arbitration award may be entered in any court having jurisdiction. Article 22 of Arbitration Agreement, attached to Complaint. Choice claims, as it often does in these cases, that this arbitration clause is inapplicable because this an action for the collection of fees. The Court notes, however, as it

has in other cases brought by Choice, that a large portion of Choice's claims are directly related to the alleged breach of the franchise agreement. See, Choice Hotels International,

Inc. v. N&G, L.L.C., at 5; Choice Hotels International, Inc. v. San Enterprise, Civil Action No. AW-00-475 (D. Md. April 10, 2000)("the Court believes that this case is primarily about breach of the Franchise Agreement, and the court will resolve any doubts in favor of arbitration," citing Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985)). Plaintiff concedes as much, elsewhere in its pleading: "Choice's claims in this action are based upon the breach of 3

obligations owed by defendant pursuant to the franchise agreement." Opp. at unnumbered page 8.

Accordingly, the Court will stay this action pending arbitration.2 The last remaining issue relates to the award of attorneys' fees. Choice included in its Opposition a request

for attorneys' fees and costs associated with the prosecution of the opposition. The Court will deny that request, noting

that both parties have advanced positions that are largely unsupportable: Labree, that this Court does not have jurisdiction over this suit, and Choice, that its claims are not subject to arbitration. A separate order consistent with this memorandum will issue.

Labree asserts that "pursuant to the Agreement as amended, arbitration proceedings, if any, should be held in Florida applying the substantive Florida law." Motion at 9. Elsewhere, Labree claims "the parties have agreed to subject matter jurisdiction of Florida Courts." Motion at 8. The Franchise Agreement attached to the Complaint, however, clearly provides that the arbitrator will apply the substantive law of Maryland, and the arbitration will take place at Choice's headquarters in Maryland. Labree has provided no evidence of any alternative or amended agreement. 4

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William M. Nickerson United States District Judge Dated: May , 2001.

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND CHOICE HOTELS INTERNATIONAL, INC. v. : LABREE, INC. : : : Civil Action WMN-00-3461

ORDER In accordance with the foregoing Memorandum and for the reasons stated therein, IT IS this day of May, 2001, by

the United States District Court for the District of Maryland, ORDERED: 1. That Defendants' Motion to Dismiss for Lack of

Personal and/or Subject Matter Jurisdiction, Improper Venue, Forum Non-Convenience [sic], Failure to Comply with Arbitration and Plaintiff's Lack of Capacity to Maintain Suit in Maryland, Paper No. 3, is DENIED; 2. That this action is hereby stayed pending

arbitration; 3. 4. That this action is ADMINISTRATIVELY CLOSED; and That the Clerk of the Court shall mail copies of

the foregoing Memorandum and this Order to all counsel of record.

William M. Nickerson United States District Judge

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