Choice Hotels International, Inc. v. Atlantic Hotel Management, Inc. et al
MEMORANDUM OPINION. Signed by Judge George Jarrod Hazel on 2/22/2016. (kw2s, Deputy Clerk)
U.S. DISTRICT COURT
DISTRICT OF tiARYLAND
IN THE UNITED STATES IHSTRICT COURT
FOR THE IHSTRICT OF MARYLAND
IDth FEB22 A q: 3 b
CHOICE HOTELS INTERNATIONAL, INC.,
Case No.: G.JH-15-0888
ATLANTIC HOTEL MANAGEMENT,
INC.. et aI.,
Award against Atlantic
Hotcls") has filcd an Application
Rawal. ECF NO.1. This Memorandum
Opinion and accompanying
request that thc Court enter judgment
by default against Defendants
togcther with interest at thc post judgment
of this action. ECF NO.6 at'i 3. A hearing is unnecessary.
rcasons stated below. Plaintiffs
Ordcr addrcss Plaintil'i's
in the amount of
ratc until paid. plus $400.00 for the cost
Loc. R. 105.6 (D. Md. 2014). For the
in part. and
Inc. liled a claim against Defendants
Inc. and R,~iesh Rawal with the American
NO.1 at ~ I. On July 24. 2014. Arbitrator
Janice Burnham ("Arbitrator")
hearing aftcr due not icc of thc hearing had bccn givcn to Defendants.
("AAA "). ECF
held a preliminary
ECF No. I-I at ~; I. Alicr
submissions by the Plaintin: and Defendants not submitting evidence or arguments for
consideration. the Arbitrator closcd thc hcaring on Dccember 8. 20 I4. ECF No. I-I at ~i
The Arbitrator decided in favor of Choicc Hotcls in thc "sum of $303.084.98
($297,884.98 for unpaid and past duc royalty and franchise fees, interest on unpaid principal
sums, and liquidated damagcs. and $5.200.00 for administrative expenses and arbitrator
ECF No. I at ~i Additionally. the Arbitrator decided that Plaintiffs
"reasonable attorneys' fees and costs shall be bourne by Respondents. jointly and severally:'
ECF No. I-I at ~ 6.
Plaintiff filed its Application to Confirm Arbitration Award on March 30. 2015. ECF No.
J, and submitted a Return of Service as proof that both Defendants were served on May 3. 2015.
ECF NO.4. The time for Defendants to plead or otherwise defend expired on May 26. 2015. See
ECF Nos. 4, 8. On June 9. 2015. Plaintiff tiled a Request fiJI'Judgment by Default. attaching an
affidavit of Zachary Bcrgc and the Award of Arbitrator. ECF NO.6. The Clerk entered an Order
of Default on July 16.2015. ECF NO.8.
On July 22. 2015. thc Court ordered Plaintiff to supplemcnt its motion for default
judgmcnt to providc the Court with information surticicnt to show that thc arbitration was
conductcd pursuant to the parameters set forth in the arbitration clause of the parties' contract.
ECF NO.9. Specifically. the Court noted that ..the partics' arbitration clause indicates that the
arbitration shall take place in Maryland and the arbitrator shall apply Maryland law. yet
Plaintiffs submission does not indicate where the arbitration took place or what law
PlaintifT submitted a supplemental artidavit of Zachary Berge on August 5. 2015. ECF
No. 10. In Berge's supplemcntal affidavit. hc stated ... the undcrlying dispute was submitted to
1<1. at ~ 3. The Arbitrator
issued its award pursuant
to the terms of the "parties'
law of the State of Maryland
ECF No. 10 at ~~ 4. 10. Additionally.
State of Maryland.
and by following
the [AAA . s J Commercial
while "no in-person
ECF No. 10 at
\\'ith the terms of
the parties were given the notice and opportunity
person in the State of Maryland:'
hearing was held in the
to pursue the claim in-
Under Federal Rule of Civil Procedure
default upon "a showing
(""Rule") 55(a). the Clerk must enter a party's
that a party against whom judgment
is sought has failed to plead or
Fed. R. Civ. P. 55(a). Alier the Clerk has entered a default. the Plaintiff may
See Fed. R. Civ. P. 55(b): Ball. Line Handling Co,
seek a default judgment.
Brophy. 771 F.
Supp. 2d 531. 540 (D. Md. 2011). The Fourth Circuit has a strong policy that cases be decided
on the merits, but "default judgment
because of an essentially
(D. Md. 2006) (citation
entry ofa default judgment
Delane. 446 F. Supp. 2d
the Court ..takes as true the well-pleadcd
other than those pertaining
Choice Ilole!s !Ill 'I.
2014 U.S. Dist. LEXIS 160347. at * 6 (D. Md. Nov. 14.
Homecomings Fill. Netll'ork. 253 F.3d 778. 780 (4th Cir. 2001
Court finds that 'Iiability
of the Court. Choice Hotels 111/'1 Sal'llnnah
a motion fiJI' dej~lllit judgment.
in the complaint.
Disney Enlers .. Inc.
process has been halted
20 II U.S. Dist. LEXIS 123162. at *2 (D. Md. Oct. 25. 20 II ).
Inc. \'. Vislwl. Inc.. No. I'\\'G-13-2078.
2014) (citing Ryan
when the adversary
is leli to the discretion
Shakli Corp .. DKC-II-0438.
it must then determine
damages .... [d. at *7. Rule 54( c) providcs that a "dcfault judgment must not di f1er in kind fi-OIll.
or exceed in amount. what is demanded in the plcadings'" Fed. R. Civ. P. 54(c).
"When a motion for default judgment is based on an arbitration award. the plaintifT'must
show that it is entitled to confirmation of the award as a matter of law .... Choice [[olels
".lv/ander. No. GJH-14-3159, 2015 U.S. Dist. LEXIS 53551. at *5 (D. Md. Apr. 22. 2015)
(citation omitted). Under thc Fedcral Arbitration Act. a court mav conlirm an arbitration award
"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
9 U.S.c. ~ 9 (2012). A court's role in reviewing
an arbitrator's decision is "to determine only whether the arbitrator did his job-not
did it well, correctly. or reasonably. but simply whether he did it." Waclu)\'io Sec .. U.C
671 F.3d 472, 478 (4th Cir. 2012) (citations and internal quotation marks omitted). The Court
must confirm the arbitration award "unless it vacates. modifies. or corrects the award under 9
10 or II'" Mander. 2015 U.S. Dist. LEXIS 53551. at *6. Vacating an arbitration
award requires "a showing of one of the grounds listed in the Federal Arbitration Act or [that]
the arbitrator aet[ ed] in manifest disregard of law'" Apex Plumhing SlIp!,ly \'. US. Supply Co..
Inc., 142 F.3d 188. 193 (4th Cir. 1998).
When there are multiple defendants. Rule 54(b) "authorizes entry ofa tinal judgment as
to one of multiple defendants in a civil action 1()llowing an cxpress linding that there is 'no just
reason for delay ...• Mander, 2015 U.S. Dist. LEXIS 53551. at *4 (citing Fed. R. Civ. P. 54(b». In
actions charging multiple defendants with joint liability. "judgment cannot be entered against a
defendant 'until the matter has been adjudicated with regard to all defendants. or all defendants
have defaulted .•" Jd. A default judgment should not producc "logically inconsistcnt judgments
from an answering
success on the merits and another defendant' s suffering
Jefferson\'. Briner. Inc.. 461 l". Supp. 2d 430. 434 (E.D. Va. 2006).
ofa default judgment."
together with interest at the postjudgmcnt
until paid, plus $400.00 for the cost of this action. Eel" NO.6 at'i 3. for Dcfendants
breach of the franchise
by the arbitration
clause of the agreement
1-2 at 6-7. The arbitration
between the parties. lOCI' NO.6-I
and that judgment
signed by I'laintiffand
statcs that the arbitrator
"on the arbitration
while ""no in-person
S'ee lOCI' No.
must apply the substantive
its failure to appear. Any arbitration
oftice in Maryland."
its award pursuant to the substantivc
Id The Arbitrator conducted
law of the State of Maryland.
hearing was hcld in thc State of Maryland.
to pursue the claim in-person
finds no reason in the record to question
IOcr NO.1 0 at ~~ 4. 10. And.
the parties were given the notice
in thc State of Maryland."
Id at'i 7. The Court
the validity of the franchise agreement.
or the conduct of the Arbitrator.
breach of contract claim was propcrly bcfiJre the AAA under the arbitration
clause of the parties'
at'i 2. This claim is covered
If any party fails to appear at any properly noticed arbitration
at our headquarters
award may be entcred in any court having
may be entered against the party. notwithstanding
$400 for the costs of this action. which was not requested
in the original
award. See ECF Nos. 1 & 6. Becausc a "dcfuultjudgmcnt
must not di fter in kind lI'om. or exceed in amount. what is demanded
in the pleadings."
Civ. P. 54(c), the Court will deny that portion of the motion. Defcndants.jointly
are ORDERED to pay PlaintifT$303.084.98.
paid. lOCI' No. I at
2. Accordingly, Defendants are found liable for breach of contract as determined by the
Arbitrator and Plaintiff's Request for Default Judgment is GRANTED, in part, and DENIED, in
For the reasons discussed, Plaintitl's Request for Judgment by Default (ECF No.6) is
GRANTED, in part, and DENIED, in part. Defendants, jointly and severally, are ORDERED to
pay Plaintiff $303,084.98, plus post-judgment interest until paid. A separate Order follows.
Date: February ~7L016
GEORGE J. HAZEL
United States District Judge
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