Choice Hotels International, Inc. v. H B Hotels Group, LLC et al

Filing 11

MEMORANDUM OPINION. Signed by Judge George Jarrod Hazel on 4/22/2015. (aos, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Soll111erJ1 Dh'isio/l

CIIOICE HOTELS
INTERNATIONAL,

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INC.,

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Plaintiff,
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BHUPINDER MANDER

Case No.: G.III-I-I-31 S9

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Defendant.

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MEMORANDUM

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ECF No. S. Oral argument
motion for default judgment
I.

with a supporting
is unnecessary.

aflidavit.

as to Defendant

Confirm Arbitration

Defendants

Mander.

will be granted. in part. and denied. in part.

Hotels International.

Inc. ("Choice

Award" (the "Applieation")

the Application

Hotels")

Arbitration

Association

filed an "Application

to

in this Court on October S. 2014. See ECI' No.

is the "Ex Parte Award:'

Choice Hotels served an arbitration
following

Bhupinder

See Loc. R. 105.6. For the reasons that follow. the

I. Choice I Iotels named II B Iloteis Group. LI.C and Bhupinder

American

Inc. has tiled a

BACKGROUND

PlaintilTChoice

Allachedto

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OPINION

Pursuant to Fed. R. Civ. P. 55(b). Plaintiff Choice Hotels International.
motion for default judgment.

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Mander as defendants.

See id

signed by R. Bruce Beckner of the

on June 30. 2014. See ECI' No. I-I. The award states that
demand on the named defendants

wrillen notice to all parties. the arbitrator
did not appear. See hi. The arbitrator

held a preliminary

subsequently

Hotels to provide proof of service and for defendants

on January 7. 2014. and.
conference.

See hI. at 1-2.

issued an order directing

to enter an appearance.

Choice

Itl. at 2. Choice

Ilotels provided proof of service. but defendants did not enter an appearance. !d The arbitrator
then directed Choice Hotels to submit its argument and evidence to support its claim. !d Notice
was sent to defendants. which advised that they could enter an appearance and respond to Choice
Hotels' argument. !d Choice Hotels submitted its argument and the defendants did not respond.
It!. The parties were advised that the record was elosed on May 30. 20 J 4. !d
The arbitration award explains that the arbitrator had jurisdiction pursuant to the parties'
franchise agreement. which states that "any controversy or elaim arising out of or relating to this
Agreement. or breach of this Agreement ... will be sent to final and binding arbitration before
either the American Arbitration Association. J.A.M.S .. or National Arbitration Forum in
accordance with the Commercial Arbitration Rules of the American Arbitration Association .....
!d at 3.
As for the merits of the elaim. the arbitrator found that the parties' franchise agreement
permitted the defendants to operate a hotel in Memphis. Tennessee. See itl. Defendants began
operating the franchise in 2006 and fell behind on the Ice payments in 20 IO. See id On January
7.2011. Choice Hotels sent a notice to defendants. advising that they had ten days to cure their
delimit or filee termination of the agreement. See it!. Without a response. Choicc Iloteis
terminated the agreement on February J I. 20 J J. See it!.
Finding that the defendants breached the agreement and that the agrecment provided for
liquidated damages and litigation costs. the arbitrator ordered defendants to pay. jointly and
severally. the total sum of $ J 90.030.96 (consisting of $6 J .172.76 in unpaid franchise fees.
$28.808.20 in interest accrued on the unpaid fi'anehise fees. $100.800.00 in liquidated damages.
and $3.250.00 in arbitration fees). See it!. at 5-6.
Alier Choice Hotels filed the Application. Choice Hotels stipulated to the dismissal of

Defendant H B Hotels Group. LLC on Deccmber 12. 2014. due to its discharge of debts in a
bankruptcy proceeding. See ECF NO.5. Defendant Bhupinder Mander was served on December
27. 2014. See Eel' NO.6. A Clerk' s Order of Default for want of answer or other defense was
made on February 27. 2015 as to Defendant Mander for failure to plead or otherwise defend as
provided by Fed. R. Civ. P. 55(a). See ECF No. II. Choice Iloteis now requests that the Court
issue judgment by delault against Mander. See ECF No. S.
II.

DISCUSSION
A. Multiple Defendants

Choice Hotels originally named two defendants in this lawsuit. See ECF No. I. Fed. R.
Civ. P. 54(b) governs judgments against multiple defendants and authorizes entry ofa final
judgment as to one of multiple defendants in a civil action following an express finding that there
is "no just reason fiJI' delay," Fed. R. Civ. P. 54(b). As a general rule. "when an action is brought
against several defendants. charging them with joint liability," judgment cannot be entercd
against a defendant "until the mattcr has been adjudicated with regard to all defendants. or all
delendants have del:1ulted," IOA Charles Alan Wright & AI1hm R. Miller. Fed Prac. & Proc.
Civ. ~ 2690 (3d ed.) (citing Froll' v. De La Vega. 82 U.S. 552. 554 (1872)): see also United
Slales/or Use of Hudson v. Peerless 1m. Co.. 374 F.2d 942. 944 (4th Cir. 1967) (finding that the
"procedure established for multiple defendants by Rule 54(b) [pertaining to judgmcnts] is ...
applicable not only to situations of joint liability but to those where the liability is joint and/or
several'').
Ilere. while the arbitration award was entered against both H B Hotels Group. LLC and
Bhupinder Mander. jointly and severally. II B Iloteis Group. LLC was dismissed li'OIl1 case
the
on December 12.2014. due to the discharge of its debts in a bankruptcy proceeding. See ECF

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NO.5. Given that II B 1I0tels Group. LLC has been dismissed with prejudice from this suit. there
is no just rca son for delay as default judgment against Bhupinder Mander will not produce
"Iogically inconsistent judgments resulting fhJlll an answering defendant's success on the merits
and another defendant's sullering of a default judgment." .Ie/rerson \".Briner. IlIc.. 461 F.Supp.
1d 430. 434 (E.D. Va. 1006).
B. Motion for Default
"A defendant's default does not automatically entitle the plaintiff to entry ofa default
judgment: rather. that decision is leli to the discretion ofthc court." Choice nolels IllIer//.. Inc. \'.
Sawmnah Shakli Corp .. DKC-II-0438.

10 II WL 5118318 at • 1 (D. Md. Oct. 15. 10 II) (citing

Do\\' 1',.Iolles.131 F.Supp,1d 491. 494 (D. Md. 1001). When a motion for default judgment is
based on an arbitration award. the plaintiff"must

show that it is entitled to conlirmation of the

award as a matter of law'" lei. (citations and internal quotation marks omitted),
Under the Federal Arbitration Act. a court may confirm an arbitration award "[iJf the
parties in their agreement have agreed that a judgment of the court shall be entered upon the
award made pursuant to the arbitration.

, ... 9 U.S.c. ~ 9, The Court must conlirm the award

unless it vacates. modi lies. or corrects the award under 9 U.S,c. ~~ 10 or II. Id. "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," Apex I'lumhillg Supp(l' \'.

u.s.

Supply Co.. Inc.. 141 F.3d 188. 193 (4th Cir. 1998), The situations permitting a court to

vacate an arbitration award are found at 9 U.S.c. ~ 10(a). which provides:
In any of the fi.1110wing
cases the United States court in and for the
district wherein the award was made may make an order vacating
the award upon the application of any party to the arbitration-(I) where the award was procured by corruption. fraud. or undue
means:

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(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 suflicient 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 imperlcetly
executed them that a mutual. final. and definite award upon the
subject matter submitted was not made.
"The exceptions to conlirmation

of awards are strictly limited to avoid frustrating the

fundamental purpose of arbitration. i.e .. quick dispute resolution and avoidance of the expense
and delay of court proceedings:'

Jih v. Long & Fosler Real Eslale. Inc.. 800 F.Supp. 312. 317

(D. Md. 1992) (citations omitted).

In essence. the Court's role in reviewing an arbitrator's

decision is ..to determine only whether the arbitrator did his job-not

whether he did it well.

correctly. or reasonably. but simply whether he did it:' Wachovia Secllrilies, LLC v. Brant!. 671
F.3d 472. 478 (4th Cir. 2012) (citations and internal quotation marks omitted).
Here. Choice Hotels' breach of contract claims were properly before the American
Arbitration Association under the arbitration clause of the parties' fi'anchise contract. See ECI'
No. ]-2. Further. the arbitrator specillcally identified that he considered the legal and factual
presentation of Choice Hotels whcn determining the type of award to be made. See lOCI'No. 1-]
at 5 n.l. The arbitrator found. based on business records submitted by Choice Hotels. that
Mander owed Choice Hotels $61.172.76 in unpaid franchise fees and other charges. Id at 4. The
arbitrator also found interest was due on the unpaid fees alld calculated the interest through June
30.2014 to be $28.808.20./d.

The arbitrator found liquidated damages proper under the parties'

contract due to early termination of the agreement. It/. at 4. Using the Ilmllula provided in the
parties' contract. the arbitrator calculated liquidated damages to be $100.800.00. The arbitrator
also awarded costs and attorney's fees 01'$3.250.00 based on the terms of the parties' contract.

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III. at 5-6. The Court finds no reason in the record to qucstion the validity of the franchise

agreement or the conduct of the arbitrator. Further, the parties agreed that "fiJfany party fails to
appear at any properly noticed arbitration proceeding, an award may be entered against the party,
notwithstanding its failure to appear:' ,"'ee ECF No. 1-2. The parties also agreed that "judgment
shall be entered upon the award made pursuant to the arbitration:' See id.
III.

CONCLUSION

For the reasons explained above, Choice Iloteis' Request for Judgment by Default. ECF
NO.8. will be granted. In addition to the arbitration award of$190,030.96,

Choice Hotels

requests $400.00 for the costs of this action, which was not requested in the original application
to contiI'm the arbitration award. See ECI' Nos. 1 & 8. Fed. R. Civ. P. 54(c) provides that "faJ
default judgment must not diner in kind from, or exceed in amount, what is demanded in the
pleadings:' Thus. Choice Hotels is not entitled to the costs of this action and that portion of
plaintifrs

request is denied.! Choice Hotels' "Request for Judgment by Default .. will be granted

in the amount of$190,030.96.
A separate Order shall issue.

Dated: April

1-)

,,',2015
"
George J. Hazel
United States District Judge

The Court also will not order pre-judgment interest because, although awarded at arbitration, it
was not requested in the application to confirm thc arbitration award. See ECI' Nos. 1 & I-I at 6.
Conversely, Choice Hotels' is entitled to post-judgment interest by operation of law: the Court
need not specitically grant an award f(Jr post-judgment interest. 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:)
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