The Appellate Division of the New Jersey Superior Court recently affirmed summary judgment in favor of Subway, holding that a former franchisee was required to reimburse Subway for a settlement payment in a lease dispute, plus attorneys’ fees and costs, and further holding that the attorneys’ fees and costs were reasonable. Woodrose Props. Golden Swan Urb. Renewal LLC v. Subway Real Est., LLC, 2026 WL 1255825 (N.J. Super. Ct. App. Div. May 7, 2026).
In April 2011, Subway and a landlord, Woodrose, entered into a master lease for a space that Subway later subleased to a franchisee entity owned by Keyur Patel. After the onset of the COVID-19 pandemic, Patel failed to make several lease payments to Woodrose. Woodrose, Subway, and Patel entered into a rent relief agreement, but Patel continued to miss rent payments and eventually vacated the premises. Shortly thereafter, Woodrose sued Subway and Patel for the unpaid rent. Subway and Patel then filed crossclaims against each other. Woodrose, Subway, and Patel eventually entered into a settlement agreement under which Subway paid Woodrose $125,000 and, in turn, the parties stipulated to dismiss Woodrose’s claims but not dismiss Subway’s and Patel’s crossclaims. Subway then moved for summary judgment against Patel, alleging that Patel failed to reimburse Subway for the settlement amount, plus attorneys’ fees and costs. Patel, in turn, cross-moved for summary judgment against Subway, seeking Subway’s indemnification of certain payments owed by Patel. The trial court granted Subway’s motion and denied Patel’s. Patel then appealed.
The Appellate Division affirmed the trial court’s decision in its entirety. Patel argued that he was improperly excluded from settlement negotiations and that the settlement terminated his liability for damages. The Appellate Division disagreed, noting that Patel and his attorney were on several settlement-related emails, that Patel signed the settlement agreement, and that Patel remained liable for damages under the terms of the sublease. Patel also asserted that the trial court erred in awarding Subway attorneys’ fees in excess of $170,000. The Appellate Division held that the trial court properly reviewed the amount of time expended and the hourly rates claimed; the award was not an abuse of discretion despite exceeding the settlement amount.