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Budget Inns of Bridgeport, LLC v. Patel

United States District Court, D. Montana, Missoula Division

January 5, 2015

ROHIT PATEL, Defendant.


DONALD W. MOLLOY, District Judge.

Plaintiff Budget Inns of Bridgeport, LLC ("Budget Inns") filed this action seeking a declaration that Defendant Rohit Patel ("Patel") is in default of his guaranty obligations related to a lease and agreement entered into in Michigan. (Compl., Doc. 1.) Budget Inns also seeks judgment against Patel in the amount of $2, 707, 111.47 (joint and several with his co-guarantors) and an award of attorneys' fees, costs, and interest. ( Id. ) Now before the Court is Budget Inns's Motion for Summary Judgment. (Doc. 20.) The Court has jurisdiction under 28 U.S.C. § 1332(a)(1). The motion is granted in part and denied in part.


Budget Inns owns commercial property located at 6379 Dixie Highway, Bridgeport, Michigan (the "Property"). (Patel SDF, Doc. 30 at ¶ 1.) On July 5, 2012, Budget Inns, as Landlord, entered into a lease of the Property with Bridgeport Hospitality, LLC ("Bridgeport"), as Tenant, for a term of 10 years ending on July 4, 2022 (the "Lease").[1] ( Id. at ¶ 2.) The Lease provided for personal guarantees in Section 16.1 (the "Guaranty"):

In consideration of Landlord's agreement to lease to Tenant, Tenant's full and timely performance of this Lease shall be guaranteed as set forth in the Guaranty set forth below.

( Id. at ¶ 3; Lease, Doc. 23-1 at 17-18.) Five individuals, including Patel, executed the Guaranty (the "Guarantors"). (Doc. 30 at ¶ 4; Doc. 23-1 at 17.) The Guaranty provides:

[T]he undersigned, Vellaichamy Muthukumar, Manjula Jothi Muthukumar, Rohit Patel, Nainesh Patel and Alopi Patel (collectively, "Guarantor"), irrevocably guarantees to Landlord the full and prompt payment when due and at all times thereafter of Rent (as defined in the Lease) and all other existing and future indebtedness and liabilities of every nature and kind, now or hereafter owing from Tenant, its successors and assigns to Landlord, and all interest and late charges accrued thereon (the "Indebtedness"). Guarantor further guarantees the full and timely performance and observance of all the covenants, terms, conditions and agreements that Tenant, its successors and assigns must perform pursuant to the Lease (this "Obligation"). The term "Lease" as used in this Guaranty shall include the Lease and all renewals, extensions and modifications thereof.
Guarantor guarantees that if Tenant, its successors or assigns shall for any reason default under the Lease, including default in the payment of Rent or Indebtedness or the performance of Obligations, Guarantor shall forthwith, without further action by Landlord against Tenant, pay such Rent or Indebtedness and arrears thereof to Landlord, and faithfully perform and fulfill all obligations. Guarantor further guarantees to pay Landlord all damages, including, without limitation, all attorneys' fees and expenses that may arise in consequence of any default by Tenant, its successors or assigns under the Lease, and/or by the enforcement of this Guaranty.
Without affecting Guarantor's obligations to Landlord hereunder, Guarantor consents that Landlord may, in its sole discretion and without notice to Guarantor, renew extend or modify th Lease at any time. Guarantor waives: (a) notice of acceptance of this Guaranty by Landlord; and (b) notice of presentment, demand for payment, protest, or of action of any nature on any default under the Lease, including the right to require Landlord to sue or otherwise to enforce payment of Rent or Indebtedness or the performance of obligations under the Lease.
All of Landlord's rights and remedies under the Lease and/or under this Guaranty are intended to be distinct, separate and cumulative, and no such right or remedy therein or herein mentioned, whether exercised by Landlord or not, is intended to be in exclusion or a waiver of any of the others. This Guaranty represents the entire agreement between Guarantor and Landlord with respect to the subject matter hereof and can only be modified, waived or terminated by a writing signed by Landlord. This Guaranty shall be construed according to the laws of the State of Michigan that are applied to guaranties made and to be performed in that state.
If the Guarantor is more than one person, the liability of the undersigned hereunder is joint and several. This Guaranty shall be binding upon the Guarantor, and the Guarantor's heirs, executors, administrators, legal representatives, successors and assigns, and shall inure to the benefit of Landlord, its successors and assigns.

(Doc. 30 at ¶ 5; Doc. 23-1 at 17-18.)

Following execution of the Lease and Guaranty, Bridgeport took possession of the Property and began running its hotel. (Doc. 30 at ¶ 6.) In the fall of 2012, Bridgeport defaulted on certain aspects of the Lease, in part, by failing to make required payments. ( Id. at ¶ 7.) On October 29, 2012, Budget Inns and Bridgeport entered into an Agreement Regarding Lease and Guaranty Dated July 5, 2012 (the "Agreement"). ( Id. at ¶ 8; Agreement, Doc. 23-2.) The Agreement features signatures by all five Guarantors, (Doc. 23-2 at 3); however, Patel insists his signature is a forgery as he was never informed of the existence of the Agreement, (Doc. 30 at ¶ 8; Patel Aff., Doc. 31 at ¶¶ 10, 11). The primary function of the Agreement was to modify the payment schedule to enable Bridgeport to become current on its payment obligations. (Doc. 30 at ¶ 10.) Bridgeport defaulted on its payment obligations under the Lease and the Agreement by failing to timely make the April 5, 2013 payment. ( Id. at ¶ 11.) Bridgeport again defaulted by failing to make the August 5, 2013 payment. ( Id. at ¶ 12.)

On September 11, 2013, Budget Inns filed suit in the Tenth Circuit for Saginaw County in the State of Michigan against Bridgeport and the Guarantors to recover amounts due and owing under the Lease (the "underlying action"). ( Id. at ¶ 19; Underlying Compl., Doc. 23-5.) Bridgeport was evicted from the Property on September 26, 2013. (Doc. 30 at ¶ 13; Or. of Eviction, Doc. 30-2.) After Bridgeport and Guarantor Nainesh Patel failed to appear in the underlying action, Budget Inns moved for a default judgment. On November 18, 2013, the Michigan court held a hearing and entered Judgments against Bridgeport and Guarantor Nainesh Patel in the amount of $2, 707, 111.47 plus costs, fees including reasonable attorney fees, and statutory interest. (Doc. 30 at ¶¶ 20-22; Default Judms., Docs. 23-7, 23-9.) On December 2, 2013, Patel was dismissed from the underlying action for lack of personal jurisdiction, as he is a resident of Montana. (Doc. 30 at ¶ 23; Or., Doc. 23-10.) On January 18, 2014, the Michigan court also entered default judgment against Guarantor Alopi Patel. (Doc. 30 at ¶ 25.) Guarantors Vellaichamy Muthukumar and Manjula Muthukumar appeared in the suit and have subsequently on July 17, 2014, submitted a consent judgment awarding Budget Inns $1, 250, 000. ( Id. at ¶¶ 26, 27; Consent Judm., Doc. 30-5.)

On December 17, 2013, Budget Inns filed this action against Patel claiming that, based on the default judgment entered by the Michigan court against Bridgeport and under the terms of the Guaranty, Patel is jointly and severally ...

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