Choice Hotels International, Inc. v. Jai Shree Navdurga, LLC et al
Filing
22
MEMORANDUM OPINION (c/m to Defendants 11/29/12 sat). Signed by Chief Judge Deborah K. Chasanow on 11/29/12. (sat, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
CHOICE HOTELS INTERNATIONAL,
INC.
:
v.
:
Civil Action No. DKC 11-2893
:
JAI SHREE NAVDURGA, LLC, et al.
:
MEMORANDUM OPINION
Presently pending and ready for resolution are two motions
for
default
judgment
International, Inc.
filed
by
Plaintiff
(ECF Nos. 10, 17).
Choice
Hotels
The relevant issues
have been briefed and the court now rules pursuant to Local Rule
105.6, no hearing being deemed necessary.
For the reasons that
follow, the motions will be granted in part and denied in part.
I.
Background
Plaintiff Choice Hotels International, Inc., commenced this
action on October 11, 2011, by filing an application to confirm
an arbitration award against Defendants Jai Shree Navdurga, LLC,
Ankil Patel, and Krunal Patel.
award,
dated
“liquidated
amounts
1
June
29,
damages
incurred
by
in
(ECF No. 1).1
2011,
was
the
amount
[Plaintiff]
in
in
favor
of
the
of
The attached
Plaintiff
$75,000.00,
institution
for
plus
the
of
this
A fourth defendant, Ashish Jariwala, was dismissed from
the case by a stipulation of dismissal filed July 10, 2012.
(ECF No. 15).
Arbitration
in
administrative
the
fees
of
amount
the
of
AAA
$1,975.00,
totaling
$975.00
compensation of the arbitrator totaling $1,000.00.”
1).
comprising
and
the
(ECF No. 1-
Plaintiff’s application requests entry of a judgment in the
same amounts.
The record reflects that Defendants were properly served as
of November 29, 2011.
When they failed to respond within the
requisite time period, Plaintiff separately moved for entry of
default (ECF No. 11) and default judgment (ECF No. 10) against
Jai Shree Navdurga, LLC, and Ankil Patel.
It subsequently filed
separate motions for entry of default (ECF No. 16) and default
judgment (ECF No. 17) against Krunal Patel.
Defendants did not
respond to these motions, and the clerk entered default on June
27 (ECF No. 13), and July 31, 2012 (ECF No. 20).
II.
Standard of Review
Under
Federal
Rule
of
Civil
Procedure
55(a),
“[w]hen
a
party against whom a judgment for affirmative relief is sought
has failed to plead or otherwise defend, and that failure is
shown
by
affidavit
party’s default.”
or
otherwise,
the
clerk
must
enter
the
Where a default has been previously entered
by the clerk and the complaint does not specify a certain amount
of damages, the court may enter a default judgment upon the
plaintiff’s
application
and
notice
pursuant to Fed. R.Civ.P. 55(b)(2).
2
to
the
defaulting
party,
A defendant’s default does
not automatically entitle the plaintiff to entry of a default
judgment; rather, that decision is left to the discretion of the
See Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001).
court.
The Fourth Circuit has a “strong policy” that “cases be decided
on their merits,” Dow v. Jones, 232 F.Supp.2d 491, 494 (D.Md.
2002) (citing United States v. Shaffer Equip. Co., 11 F.3d 450,
453 (4th Cir. 1993)), but default judgment may be appropriate
where
a
party
is
unresponsive,
see
S.E.C.
v.
Lawbaugh,
359
F.Supp.2d 418, 421 (D.Md. 2005) (citing Jackson v. Beech, 636
F.2d 831, 836 (D.C.Cir. 1980)).
“Upon [entry of] default, the well-pled allegations in a
complaint as to liability are taken as true, but the allegations
as
to
damages
Federal
Rule
are
of
not.”
Civil
Lawbaugh,
Procedure
359
54(c)
F.Supp.2d
limits
the
at
422.
type
of
judgment that may be entered based on a party’s default: “A
default judgment must not differ in kind from, or exceed in
amount,
what
is
demanded
in
the
pleadings.”
Thus,
where
a
complaint specifies the amount of damages sought, the plaintiff
is
limited
to
entry
of
a
default
judgment
in
that
amount.
“[C]ourts have generally held that a default judgment cannot
award additional damages . . . because the defendant could not
reasonably
amount.”
have
expected
that
his
damages
would
exceed
that
In re Genesys Data Technologies, Inc., 204 F.3d 124,
132 (4th Cir. 2000).
Where a complaint does not specify an
3
amount,
“the
court
is
required
to
make
determination of the sum to be awarded.”
F.Supp.2d
15,
17
(D.D.C.
2001)
an
independent
Adkins v. Teseo, 180
(citing
S.E.C.
v.
Management
Dynamics, Inc., 515 F.2d 801, 814 (2nd Cir. 1975); Au Bon Pain
Corp. v. Artect, Inc., 653 F.2d 61, 65 (2nd Cir. 1981)).
While
the court may hold a hearing to consider evidence as to damages,
it is not required to do so; it may rely instead on “detailed
affidavits or documentary evidence to determine the appropriate
sum.”
v.
Adkins, 180 F.Supp.2d at 17 (citing United Artists Corp.
Freeman,
605
F.2d
854,
857
(5th
Cir.
1979));
see
also
Laborers’ District Council Pension, et al. v. E.G.S., Inc., Civ.
No. WDQ–09–3174, 2010 WL 1568595, at *3 (D.Md. Apr. 16, 2010)
(“[O]n
without
default
a
judgment,
hearing
if
the
Court
the
may
record
only
award
damages
the
damages
supports
requested.”).
III. Analysis
Where
application
default
for
judgment
confirmation
is
of
sought
an
with
respect
arbitration
to
award,
an
the
petitioner “must show that it is entitled to confirmation of the
arbitration award as a matter of law.”
United Community Bank v.
Arruarana, No. 1:10cv248, 2011 WL 2748722, at *2 (W.D.N.C. July
13, 2011) (citing D.H. Blair & Co. v. Gottdiener, 462 F.3d 95,
109–10 (2nd Cir. 2006); McColl Partners, LLC v. DME Holdings,
4
LLC, No. 3:10cv247, 2011 WL 971575, at *1 (W.D.N.C. Mar. 17,
2011)).
Pursuant to 9 U.S.C. § 9:
If the parties in their agreement have
agreed that a judgment of the court shall be
entered upon the award made pursuant to the
arbitration, and shall specify the court,
then at any time within one year after the
award is made any party to the arbitration
may apply to the court so specified for an
order confirming the award, and thereupon
the court must grant such an order unless
the award is vacated, modified, or corrected
as prescribed in sections 10 and 11 of this
title. If no court is specified in the
agreement
of
the
parties,
then
such
application may be made to the United States
court in and for the district within which
such award was made.
In
this
franchise
case,
agreement
the
arbitration
provides
that
clause
“any
in
the
controversy
parties’
or
claim
arising out of or relating to this Agreement, or the breach of
this
Agreement,
.
.
.
will
be
sent
to
final
and
binding
arbitration,” and that “[j]udgment on the arbitration award may
be entered in any court having jurisdiction.”
(ECF No. 1-2).
Although Plaintiff’s motion does not identify the jurisdiction
in which the arbitration award was made, the agreement requires
that any arbitration proceeding be conducted in Maryland and
that
Maryland
parties
appear
substantive
to
be
law
diverse
applies.
and
the
In
amount
any
in
event,
the
controversy
satisfies the jurisdictional minimum for diversity jurisdiction
in this court.
See 28 U.S.C. § 1332(a).
5
Thus, the court is
satisfied that it has jurisdiction to confirm the arbitration
award.
There is no question, moreover, that Plaintiff filed its
application “within one year after the award [was] made.”
9
U.S.C. § 9.
As the Fourth Circuit has explained:
Review of an arbitrator’s award is
severely circumscribed. Indeed, the scope of
review of an arbitrator’s valuation decision
is among the narrowest known at law because
to allow full scrutiny of such awards would
frustrate the purpose of having arbitration
at all - the quick resolution of disputes
and the avoidance of the expense and delay
associated with litigation. Jih v. Long &
Foster Real Estate, Inc., 800 F.Supp. 312,
317 (D.Md. 1992). Federal courts may vacate
an arbitration award only upon a showing of
one of the grounds listed in the Federal
Arbitration Act, or if the arbitrator acted
in manifest disregard of law. In re A.H.
Robins Co., Inc., 197 B.R. 513, 516 (E.D.Va.
1994).
Apex Plumbing Supply, Inc. v. U.S. Supply Co., Inc., 142 F.3d
188, 193 (4th Cir. 1998) (internal footnotes omitted).
If there is a valid contract between the parties providing
for arbitration, and if the dispute resolved in the arbitration
was within the scope of the arbitration clause, then substantive
review is limited to those grounds set forth in § 10 of the
Federal Arbitration Act.
That section allows vacatur of an
award only:
(1)
where
the
award
was
procured
corruption, fraud, or undue means;
6
by
(2) where there was evident partiality or
corruption in the arbitrators, or either of
them;
(3) where the arbitrators were guilty of
misconduct in refusing to postpone the
hearing, upon sufficient cause shown, or in
refusing to hear evidence pertinent and
material to the controversy; or of any other
misbehavior by which the rights of any party
have been prejudiced; or
(4) where the arbitrators exceeded their
powers, or so imperfectly executed them that
a mutual, final, and definite award upon the
subject matter submitted was not made.
9 U.S.C. § 10(a).
In addition, a court may overturn a legal
interpretation of an arbitration panel if “it is in manifest
disregard for the law.”
See, e.g., Apex Plumbing, 142 F.3d at
193 (“Federal courts may vacate an arbitration award only upon a
showing of one of the grounds listed in the [FAA], or if the
arbitrator acted in manifest disregard of law”); Upshur Coals
Corp. v. United Mine Workers of America, Dist. 31, 933 F.2d 225,
229 (4th Cir. 1991).
Mere misinterpretation of a contract or an
error of law does not suffice to overturn an award.
See Upshur,
933 F.2d at 229.
Plaintiff has established that there was a valid contract
between the parties requiring arbitration of “any controversy or
claim arising out of or relating to this Agreement” (ECF No. 12) and that its demands for arbitration arose from Defendants’
breach of the parties’ franchise agreement (ECF Nos. 10-1, 17-
7
1).
Thus, the court is satisfied that the claims resolved at
arbitration
are
within
the
scope
of
the
parties’
agreement.
There has been no showing of the narrow grounds listed in the
FAA
for
vacatur
of
the
arbitration
award,
nor
is
there
any
suggestion that the arbitrator acted in manifest disregard of
the law.
The arbitrator awarded Plaintiff $76,975.00, consisting of
$75,000.00
in
fees,
$1,000.00
and
liquidated
for
damages,
fees
of
$975.00
the
for
administrative
arbitrator.
Plaintiff
requests entry of a default judgment in that amount, “plus postjudgment interest until paid” and “the costs of this action in
the amount of three hundred fifty dollars ($350.00).”
10-3, 17-3).
Because costs were not requested in the complaint,
they cannot be awarded by a default judgment.
54(c).
(ECF Nos.
See Fed.R.Civ.P.
Thus, insofar as Plaintiff seeks reimbursement of the
filing fee, its motion for default judgment will be denied.
Moreover, the court need not specifically grant an award of
post-judgment interest because Plaintiff is entitled to recover
such interest by operation of law.
See 28 U.S.C. § 1961(a)
(“[i]nterest shall be allowed on any money judgment in a civil
case recovered in a district court.”).
In all other respects,
however, Plaintiff has demonstrated entitlement to confirmation
of the arbitration award.
Accordingly, a default judgment in
that amount will be entered.
8
IV.
Conclusion
For the foregoing reasons, Plaintiff’s motions for default
judgment will be granted in part and denied in part.
A separate
order will follow.
________/s/_________________
DEBORAH K. CHASANOW
United States District Judge
9
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