Best Western International Incorporated v. American Hospitality Solution LLC et al

Filing 34

ORDER: Plaintiff's motion for default judgment (Doc. 12 ) is granted. Default judgment is entered in favor of Plaintiff on counts one, two, three, and four in the amount of $109,854.99. Plaintiff is awarded attorneys' fees and costs in the amount of $3,723.21. Plaintiff is awarded post-judgment interest at the rate established in 28 U.S.C. § 1961. The Clerk is directed to enter judgment as set forth above. Signed by Judge David G Campbell on 3/07/2017. (REK)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Best Western International Incorporated,

No. CV-16-03405-PHX-DGC

Plaintiff,

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v.

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American Hospitality Solution LLC, et al.,

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ORDER RE
DEFAULT JUDGMENT

Defendants.

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Plaintiff has filed a motion for default judgment against Defendant Deborah

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Speziale (Docs. 12, 19), and no party has requested oral argument. For the reasons that

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follow, the Court will grant the motion.

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I.

Background.

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Plaintiff Best Western International, Inc. is a non-profit corporation consisting

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of individually owned hotels that operate under the “Best Western” mark. Doc. 19 at 2.

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The rights and duties of Plaintiff and its member hotels are created and governed by a

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membership agreement that incorporates by reference certain bylaws, rules, and

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regulations. Doc. 1 at 3. Plaintiff executed a membership agreement with American

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Hospitality Solution, LLC and Defendant Deborah Speziale.

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Defendant was the voting member for this membership, binding her under the

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membership agreement and making her “personally, jointly and severally liable for all

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obligations owed to Best Western.” Id., ¶ 4; Doc. 1-2 at 18. The membership agreement

Doc. 1, ¶¶ 19-24.

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provides that “if a member [hotel] resigns or is terminated, fees and dues for the

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remainder of the fiscal year will become immediately due and payable[.]” Doc. 1, ¶ 12.

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In March 2016, Plaintiff terminated its membership agreement with American

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Hospitality Solution and Defendant.

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Defendant of the account balance and demanded payment, which at the time was

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$93,514.45. Id.; Doc. 1-3 at 24-26. Defendant did not pay, and Plaintiff filed its

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complaint in October 2016, asserting breach of contract, open account, unjust

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enrichment, and stated account. Doc. 1 at 9-12.

Doc. 1 at 8.

In May 2016, Plaintiff notified

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Defendant was properly served in this case (Doc. 8), failed to appear, and was

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notified of Plaintiff’s motion for entry of default (Doc. 10). On November 8, 2016,

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default was entered against Defendant. Doc. 11. Plaintiff has now filed a motion for

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default judgment pursuant to Rule 55(b) of the Federal Rules of Civil Procedure

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(Doc. 12) seeking $103,481.13 in unpaid fees, plus 1.5% interest per month from

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November 1, 2016 until judgment is entered. Doc. 12 at 2. Plaintiff seeks $3,723.21 in

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attorneys’ fees and costs pursuant to the membership agreement, A.R.S. §§ 12-341 and

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12-341.01, and 15 U.S.C. § 1117. Id. Plaintiff also seeks post-judgment interest on all

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amounts awarded pursuant to 28 U.S.C. § 1961. Id.

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II.

Legal Standard.

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Because Defendant’s default has been properly entered pursuant to Rule 55(a), the

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Court has discretion to grant default judgment against Defendant under Rule 55(b). See

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Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Factors the Court should

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consider include (1) the possibility of prejudice to Plaintiff, (2) the merits of the claims,

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(3) the sufficiency of the complaint, (4) the amount of money at stake, (5) the possibility

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of a dispute concerning material facts, (6) whether default was due to excusable neglect,

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and (7) the policy favoring a decision on the merits. Eitel v. McCool, 782 F.2d 1470,

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1471-72 (9th Cir. 1986).

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complaint, except those relating to the amount of damages, will be taken as true.”

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Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977); see Fed. R. Civ. P. 8(d).

In applying these factors, “the factual allegations of the

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III.

Analysis.

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Having considered Plaintiff’s motion, which addresses each Eitel factor (Doc. 12

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at 4-9), and having reviewed the supporting affidavits and documents provided by

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Plaintiff (Docs. 1-3 at 15-30, 12-1, 12-2, 13, 13-1), the Court concludes that default

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judgment is appropriate. See, e.g., Best W. Int’l, Inc. v. Universal Hospitality, Inc., No.

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CV-08-91-PHX-DGC, 2008 WL 2003784, at *3 (D. Ariz. May 8, 2008).

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A.

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The first Eitel factor weighs in favor of granting default judgment. Plaintiff served

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Possible Prejudice to Plaintiff.

Defendant four months ago.

Doc. 8.

Defendant has not answered or otherwise

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responded to the complaint. Doc. 19 at 1. If Plaintiff’s motion for default judgment is

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not granted, Plaintiff “will likely be without other recourse for recovery.” PepsiCo, Inc.

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v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002).

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B.

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The second and third Eitel factors favor a default judgment where the complaint

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states a claim for relief. See Cal. Sec. Cans, 238 F. Supp. 2d at 1175; Danning v. Lavine,

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572 F.2d 1386, 1388-89 (9th Cir. 1978). Plaintiff alleges breach of contract based on

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Defendant’s failure to pay amounts due under the membership agreement for services and

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supplies Plaintiff provided. Doc. 12 at 5-6. Plaintiff contends that Defendant agreed to

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pay interest of 1.5% per month. Id. at 6. Plaintiff has sufficiently pled a valid breach of

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contract claim and corresponding damages. See Thomas v. Montelucia Villas, LLC, 302

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P.3d 617, 621 (Ariz. 2013).

The Merits of the Claim and the Sufficiency of the Complaint.

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Plaintiff also alleges that Defendant was unjustly enriched when Plaintiff provided

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Defendant with services and supplies which Defendant accepted. Doc. 1, ¶¶ 50-53; Doc.

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12 at 8. Plaintiff subsequently rendered an account related to those services and supplies;

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Defendant neither objected to the account nor paid it. Doc. 11; Doc. 1, ¶¶ 50-53; Doc. 12

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at 7-8. Plaintiff has made out a sufficient claim for unjust enrichment. See Trustmark

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Ins. Co. v. Bank One, Arizona, NA, 48 P.3d 485, 491 (Ariz. Ct. App. 2002).

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Plaintiff asserts claims for open and stated account. Doc. 1 at 9, 11-12. To recover

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on an open account claim, a plaintiff must prove “the correctness of the account and each

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item thereof.” Holt v. W. Farm Servs., Inc., 517 P.2d 1272, 1274 (Ariz. 1974). Plaintiff

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provided Defendant with an accounting from February 2016 to October 2016 (Doc. 1-3 at

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15-30), and Defendant has not responded or objected (Doc. 11; Doc. 19 at 1). Defendant

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agreed in the membership agreement to pay identified membership fees until termination

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of the agreement, including interest of 1.5% per month. Doc. 1, ¶¶ 54-59.

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C.

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Plaintiff seeks interest of 1.5% per month from November 2016 until judgment is

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entered, for a total award of $109,854.99, plus $3,723.21 in attorneys’ fees and costs.

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Defendant agreed to pay these fees and charges (Doc. 1, ¶¶ 3-4; Doc. 1-2 at 18), was

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provided with invoices for the balance due (Doc. 1-3 at 15-30), and now refuses to pay

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(Doc. 12 at 6). Given Defendant’s actions, the fourth factor weighs in favor of a default

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judgment. See Bd. of Trs. of Cal. Metal Trades v. Pitchometer Propeller, No. C-97-

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2661-VRW, 1997 WL 7979222, at * 1 (N. D. Cal. Dec.15, 1997).

The Amount of Money at Stake.

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D.

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Given the sufficiency of the complaint and Defendant’s default (Doc. 11), “no

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genuine dispute of material facts would preclude granting [Plaintiff's] motion.” Cal. Sec.

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Cans, 238 F. Supp. 2d at 1177; see Geddes, 559 F.2d at 560.

Possible Dispute Concerning Material Facts.

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E.

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Defendant was properly served with process. Doc. 8; Fed. R. Civ. P. 4(e). It is

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“unlikely that Defendant’s failure to answer and the resulting default was a result of

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excusable neglect.” Gemmel v. Systemhouse, Inc., No. CIV 04-187-TUC-CKJ, 2008 WL

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65604, at *5 (D. Ariz. Jan. 3, 2008).

Whether Default Was Due to Excusable Neglect.

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F.

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“Cases should be decided upon their merits whenever reasonably possible.” Eitel,

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782 F.2d at 1472. But the mere existence of Rule 55(b) “indicates that this preference,

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standing alone, is not dispositive.” Cal. Sec. Cans, 238 F. Supp. at 1177 (citation

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omitted). And Defendant’s failure to answer or otherwise respond to the complaint

The Policy Favoring a Decision on the Merits.

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“makes a decision on the merits impractical, if not impossible.” Id. The Court therefore

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is not precluded from entering default judgment against Defendant. See id.; Gemmel,

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2008 WL 65604 at *5.

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G.

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Having reviewed Plaintiff’s motion and considered the Eitel factors, the Court

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Conclusion.

concludes that entry of default judgment is appropriate.

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IT IS ORDERED:

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1.

Plaintiff’s motion for default judgment (Doc. 12) is granted.

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2.

Default judgment is entered in favor of Plaintiff on counts one, two, three,

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and four in the amount of $109,854.99.

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3.

Plaintiff is awarded attorneys’ fees and costs in the amount of $3,723.21.

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4.

Plaintiff is awarded post-judgment interest at the rate established in

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28 U.S.C. § 1961.

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5.

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Dated this 7th day of March, 2017.

The Clerk is directed to enter judgment as set forth above.

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