Wyndham Hotel Group International, Inc. v. Silver Entertainment LLC

Background

Wyndham brought this action after an alleged breach of a franchise agreement. The opinion states that the action originally included Silver Entertainment LLC, Veneto Hotel & Casino, S.A., and Allen Silverman. In an earlier round of this case, the court granted summary judgment to Wyndham against Silver and Veneto on liability and entered a final judgment against them. After a stay was lifted as to Silverman, he moved to dismiss Wyndham’s claim, but the court denied that motion.

Wyndham then moved for summary judgment against Silverman. It argued that the December 2007 Note, including Silverman’s guaranty, was a valid contract and that $255,000 remained due, excluding interest. Wyndham also sought attorney fees and collection costs under the franchise agreement.

Issues and Arguments

Under New Jersey law, Wyndham had to show the elements of a valid contract, including mutual assent, consideration, legality, capacity, and proper documentation. Silverman disputed consideration and capacity.

On consideration, Silverman argued that the benefit of the transaction went to Veneto, not him, and that he held no equity interest in Veneto. He therefore argued that there was a factual dispute about whether he received separate consideration for the guaranty. Wyndham identified two facts supporting consideration: the December 2007 Note replaced a March 2007 Note made by Silverman, releasing him as the primary obligor, and the December 2007 Note provided that 10 percent of the principal would be forgiven on each anniversary of the hotel’s opening date.

On capacity, Silverman relied primarily on his 2020 deposition, arguing that his memory problems and confusion raised a factual dispute about whether he had the capacity to sign the Note in March 2007 and the guaranty in December 2007. He also argued that a factual dispute existed about whether he had counsel when he signed the documents. The court applied the rule that a person seeking to set aside an agreement must prove incapacity or another extraordinary circumstance by clear and convincing evidence.

Court’s Analysis

The court held that there was no genuine factual dispute about consideration. Wyndham returned the March 2007 Note on April 15, 2008, marked it null and void, and noted that it had been replaced by the December 2007 Note signed by Veneto. The court concluded that the December 2007 Note’s release of Silverman as the primary obligor was adequate separate consideration for his guaranty.

The court also held that Silverman had not shown a genuine factual dispute about his capacity to sign either document. He provided no medical or expert reports establishing incapacity and relied only on his 2020 deposition to argue that he lacked capacity in 2007. The court found those assertions insufficient. The court also declined to strike the deposition because Silverman provided no factual or legal support for doing so.

The court further agreed that Wyndham could recover attorney fees and collection costs under the franchise agreement. The agreement allowed either party to recover those amounts when successfully enforcing the agreement.

Disposition

The court granted Wyndham’s motion for summary judgment. It directed the Clerk to enter judgment for Wyndham against Allen Silverman for $255,000 plus 18% annual interest from August 12, 2015, through February 1, 2022. Wyndham was permitted to file a motion for attorney fees and costs within four weeks, supported by documentation, and Silverman was given three weeks to respond. The court directed the Clerk to close the motion and mark the case closed.