FDD Items 3 & 4 · 2023 filing

Shilo Inns litigation history

What Shilo Inns disclosed about lawsuits, arbitrations and bankruptcy in the 2023 Franchise Disclosure Document. Item 3 lists the material legal actions a franchisor must report; Item 4 covers bankruptcy. This is the franchisor's own disclosure, not a court record, and not legal advice.

Items 3 (litigation) & 4 (bankruptcy) at a glance

What the filing discloses

Cases disclosed: 12; Item 3, as counted in the filing

Largest settlement, franchisor's own cases: None stated

Bankruptcy (Item 4): Disclosed; Franchisor, parent, predecessor or officer

Filing year: 2023; Disclosures cover the prior ten years

Extracted from the 2023 Franchise Disclosure Document

Item 3: litigation

Extensive history of creditor/lender litigation (bank defaults, foreclosures, judgments) against Mark Hemstreet, Shilo Management Corporation, and various Shilo Company Entities arising from real estate/commercial loan defaults during the 2008 downturn and COVID-19. Most cases settled or dismissed via property sale or negotiated settlement; one case (Cathay Bank) is ongoing as of the FDD date.

Item 3 (litigation) · 12 matters disclosed · 1 pending listed

Litigation cases

Parent, affiliates, master franchisor and subfranchisor

Pending (1)

Cathay Bank v. Mark S. Hemstreet, Shilo Management Corp., and Cascade Hotel Corporation
pending
Brought by a third party · Shilo Management Corp., Mark S. Hemstreet and Cascade Hotel Corporation · filed 2020-07-13 · U.S. District Court, District of Oregon · 3:20-cv-1024-MO
“… U.S. District Court, District of Oregon, Case No. 3:20-cv-1024-MO (filed July 13, 2020).”Page 10 of the 2023 FDD, Item 3

Concluded (9)

Shilo Inn, Twin Falls, LLC, Shilo Inn, Boise Airport, LLC, Shilo Inn, Nampa Blvd., LLC, Shilo Inn, Newberg, LLC, Shilo Inn, Seaside East, LLC, Shilo Inn, Moses Lake, LLC, and Shilo Inn, Rose Garden, LLC vs. California Bank & Trust, N. A.
settled
Shilo Company Entities (Hemstreet-owned hotel entities) · filed 2014 · U.S. Bankruptcy Court (adversary proceeding) · Lead Case No. 2:13-bk-21601-VZ; Adv. Case No. 2:14-ap-01224-VZ
“Moses Lake, LLC, and Shilo Inn, Rose Garden, LLC, plaintiffs, vs. California Bank & Trust, N. A., Lead Case No. 2:13-bk-21601-VZ, Adv.”Page 9 of the 2023 FDD, Item 3
VFS Financing, Inc. v. Shilo Management Corporation and Mark S. Hemstreet
settled
Brought by a third party · Shilo Management Corporation and Mark S. Hemstreet · filed 2013-11-14 · Washington County, Oregon · C137477CV
“VFS Financing, Inc., plaintiff, v. Shilo Management Corporation and Mark S. Hemstreet, defendants. Case No. C137477CV, Washington County, Oregon (2013) (filed November 14, 2013).”Page 9 of the 2023 FDD, Item 3
Outcome: “paying an agreed upon amount of $300,000. VFS Financing, Inc. was a creditor to Mark S. Hemstreet and Shilo Management Corporation.”
United Commercial Bank v. Shilo Inn, Ocean Shores, LLC
dismissed
Brought by a third party · Shilo Inn, Ocean Shores, LLC (a Shilo Company Entity) · filed 2012-04-11 · Grays Harbor County, Washington · WA 12-2-116-9
“United Commercial Bank, plaintiff v. Shilo Inn, Ocean Shores, LLC, defendant. Case number WA 12-2-116-9 (Grays Harbor County), (Filed April 11, 2012).”Page 8 of the 2023 FDD, Item 3
ZB, N.A. dba California Bank & Trust v. Shilo Inn, Boise Airport, LLC and Mark S. Hemstreet
dismissed
Brought by a third party · Shilo Inn, Boise Airport, LLC (former Shilo Company Entity) and Mark S. Hemstreet · filed 2012-03-19 · U.S. District Court, District of Idaho · 1:12-cv-00141-CWD
“… United States District Court, District of Idaho Case No. 1:12-cv-00141-CWD (filed March 19, 2012).”Page 9 of the 2023 FDD, Item 3
ZB, N.A. dba California Bank & Trust v. Shilo Inn, Moses Lake, Inc., et al.
dismissed
Brought by a third party · Shilo Inn, Moses Lake, Inc. (former Shilo Company Entity) · filed 2012-03-20 · U.S. District Court, Eastern District of Washington · CV-12-161-LRS
“… United States District Court, Eastern District of Washington Case No. CV-12-161-LRS (filed March 20, 2012).”Page 10 of the 2023 FDD, Item 3
ZB, N.A. dba California Bank & Trust v. Shilo Inn, Rose Garden, LLC, et al.
dismissed
Brought by a third party · Shilo Inn, Rose Garden, LLC (former Shilo Company Entity) · filed 2012-03-21 · U.S. District Court, District of Oregon · 3:12-CV-509-HZ
“… United States District Court, District of Oregon Case No. 3:12-CV-509-HZ (filed March 21, 2012).”Page 10 of the 2023 FDD, Item 3
ZB, N.A. dba California Bank & Trust v. Shilo Inn, Seaside East, LLC, et al.
dismissed
Brought by a third party · Shilo Inn, Seaside East, LLC (former Shilo Company Entity) · filed 2012-03-21 · U.S. District Court, District of Oregon · 3:12-CV-506-HZ
“… United States District Court, District of Oregon Case No. 3:12-CV-506-HZ (filed March 21, 2012).”Page 9 of the 2023 FDD, Item 3
ZB, N.A. dba California Bank & Trust v. Shilo Inn, Twin Falls, LLC and Mark S. Hemstreet
dismissed
Brought by a third party · Shilo Inn, Twin Falls, LLC (former Shilo Company Entity) and Mark S. Hemstreet · filed 2012-03-19 · U.S. District Court, District of Idaho · 1:12-cv-00143-CWD
“… United States District Court, District of Idaho Case No. 1:12-cv-00143-CWD (filed March 19, 2012).”Page 9 of the 2023 FDD, Item 3
Bank of America, N.A. v. Mark S. Hemstreet and Shilo Management Corporation; related case Merrill Lynch Commercial Finance Corp. v. Mark S. Hemstreet, Shilo Management Corporation, JDCK, LLC, Troy Lodge, LLC and LSSR, LLC
settled
Brought by a third party · Shilo Management Corporation (Hemstreet-owned hotel manager) and Mark S. Hemstreet · filed 2002 · Circuit Court, Washington County, Oregon · C01-3272CV; C11-5161CV
“Bank of America, N.A., plaintiff, v. Mark S. Hemstreet and Shilo Management Corporation, defendants, No. C01-3272CV, Circuit Court, Washington County, Oregon (2002) and a related case Merrill Lynch Commercial Finance Corp., plaintiff, v. Mark S. Hemstreet, Shilo Management Corporation, JDCK, LLC, Troy Lodge, LLC and LSSR, LLC, defendants.”Page 8 of the 2023 FDD, Item 3
Outcome: “The cases were settled with defendants paying an agreed upon settlement amount of $2,225,000, and dismissed in February 2016.”

Officers and directors (individuals, not the company)

Concluded (2)

East West Bank v. Mark S. Hemstreet
settled
Brought by a third party · Mark S. Hemstreet (founder and executive officer) · filed 2013-12-18 · Los Angeles County Superior Court, California · BC530576
“East West Bank, plaintiff v. Mark S. Hemstreet, defendant. Case No. BC530576, Los Angeles County Superior Court, California (2013) (filed December 18, 2013).”Page 9 of the 2023 FDD, Item 3
Outcome: “payment of an agreed upon amount of $150,000 and the litigation was dismissed in November 2015. Shilo Inn, Casper, LLC was a Shilo Company Entity, that at one time owned a Shilo hotel property located at 739 Luker Lane, Evansville, Wyoming, which it no longer owns, and the entity has been dissolved.”
ZB, N.A. dba California Bank & Trust v. Mark S. Hemstreet; Z.B., N.A. dba California Bank & Trust v. Mark S. Hemstreet (domestication)
settled
Brought by a third party · Mark S. Hemstreet (founder and executive officer) · filed 2012-03-16 · Superior Court of California, Orange County; Circuit Court of Oregon, Washington County · 30-2012-00554759; 16CV24290
“ZB, N.A. dba California Bank & Trust v. Mark S. Hemstreet, Superior Court of the State of California, Orange County, Case No. 30-2012-00554759 (filed March 16, 2012).”Page 10 of the 2023 FDD, Item 3

Item 3 lists the litigation the franchisor must disclose; a matter against a parent, an affiliate or a named officer is not a matter against the franchisor, and pending claims are allegations, not findings.

Disclosed in the 2023 Franchise Disclosure Document

Item 4: bankruptcy

Shilo Inn, Newberg, LLC 501 Sitka Avenue, Newberg, OR, 97132 11600 SW Shilo Lane, Portland, OR, 97225 5/1/2013 Plan filed 6/5/2015 Property Sold to Third Party and matter dismissed as a result of settlement In re. Shilo Inn, Newberg, LLC; United States Bankruptcy Court, Central District of California – Los Angeles Division 2:13-bk- 21605 ... Shilo Inn, Boise Airport, LLC 4111 Broadway Avenue, Boise, ID, 83705 11600 SW Shilo Lane, Portland, OR, 97225 5/1/2013 Plan Filed 6/5/2015 Dismissed by Settlement In re. Shilo Inn, Boise Airport, LLC; United States Bankruptcy Court, Central District of California – Los Angeles Division 2:13-bk- 21603 ... Shilo Inn, Seaside East, LLC 900 S Holladay, Seaside, OR, 97138 11600 SW Shilo Lane, Portland, OR, 97225 5/1/2013 Plan Filed 6/5/2015 Dismissed by Settlement In re: Shilo Inn, Seaside East, LLC; United States Bankruptcy Court, Central District of California – Los Angeles Division 2:13-bk- 21606 ... Shilo Inn, Casper, LLC 739 Luker Lane, Evansville, WY, 82636 7/24/2013 5/8/2014 4/23/2014 Property Sold to Third Party and matter dismissed as a result of settlement In re: Shilo Inn, Casper, LLC; United States Bankruptcy Court for the District of ...

Disclosure signals that moved the score

How this shows up in the verdict

Multiple 2013 affiliate Chapter 11 bankruptcies (resolved ~2015)

The verdict grade is FranchiseVerdict's editorial assessment across SBA loan performance, unit growth, revenue and disclosure signals. It is not investment advice.

Before you weigh a lawsuit

How to read Item 3

A franchisor must disclose pending actions and any material civil action involving the franchise relationship, plus convictions or civil judgments for fraud, unfair or deceptive practices, or franchise-law violations, going back ten years. A case the franchisor brought against a franchisee counts too. Item 3 does not include every dispute: settled claims below the materiality line and matters resolved in private arbitration can be absent.

Questions worth asking current and former franchisees, using the contact list in Item 20:

Were you, or anyone you know in the system, party to a dispute with the franchisor?
Was it resolved by settlement, arbitration or a court, and on what terms?
Has the number of disputes gone up or down since you signed?

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