Choice Hotels International, Inc. v. Atlantic Hotel Management, Inc. et al

Filing 11

MEMORANDUM OPINION. Signed by Judge George Jarrod Hazel on 2/22/2016. (kw2s, Deputy Clerk)

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FILED U.S. DISTRICT COURT DISTRICT OF tiARYLAND IN THE UNITED STATES IHSTRICT COURT FOR THE IHSTRICT OF MARYLAND Soutltem Dh'isioll IDth FEB22 A q: 3 b CLERK'S GFFIC~ '-I GH~"EN~-L;." M I * CHOICE HOTELS INTERNATIONAL, INC., IL •••• ~_ * Plaintiff, * Case No.: G.JH-15-0888 v. * ATLANTIC HOTEL MANAGEMENT, INC.. et aI., * * Defendants. * * * * * * * * * * * * * * * MEMORANDUM OPINION PlaintilTChoice Contirm Arbitration Hotels International. Award against Atlantic Inc. ("Choice Hotcls") has filcd an Application Ilotel Management. Inc. ("Atlantic") Rawal. ECF NO.1. This Memorandum Opinion and accompanying request that thc Court enter judgment by default against Defendants $303.084.98. togcther with interest at thc post judgment of this action. ECF NO.6 at'i 3. A hearing is unnecessary. rcasons stated below. Plaintiffs DENIED, motion/or to and Rajcsh 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 default judgment is GRANTED. in part. and in part. I. BACKGROUND PlaintilTChoice Management. Hotels International. Inc. liled a claim against Defendants Inc. and R,~iesh Rawal with the American NO.1 at ~ I. On July 24. 2014. Arbitrator Arbitration Association Janice Burnham ("Arbitrator") hearing aftcr due not icc of thc hearing had bccn givcn to Defendants. Atlantic Hotel ("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 2. 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 compensation):' ECF No. I at ~i Additionally. the Arbitrator decided that Plaintiffs 2. "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 \\"lIS applied:' 1<1. 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 2 the American the parties' Arbitration Arbitration C'AAA") Association 1<1. at ~ 3. The Arbitrator agreement:' issued its award pursuant for resolution to the terms of the "parties' substantive law of the State of Maryland Procedure:' ECF No. 10 at ~~ 4. 10. Additionally. State of Maryland. conducted arbitration and by following and by applying the [AAA . s J Commercial while "no in-person ECF No. 10 at \\'ith the terms of the arbitration agreement the parties were given the notice and opportunity person in the State of Maryland:' II. in accordance the Rules of hearing was held in the to pursue the claim in- 'i 7. DISCUSSION Under Federal Rule of Civil Procedure default upon "a showing otherwise defend:' (""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. 1". 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 402.405 unresponsive (D. Md. 2006) (citation entry ofa default judgment factual allegations and quotation marks omitted). 1". Delane. 446 F. Supp. 2d \\,hether a plaintitTis the Court ..takes as true the well-pleadcd other than those pertaining to damages:' 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 entitled to of the Court. Choice Hotels 111/'1 Sal'llnnah \'. a motion fiJI' dej~lllit judgment. in the complaint. I'. 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 party:' when the adversary is leli to the discretion Shakli Corp .. DKC-II-0438. In considering is available is established. it must then determine 3 the appropriate ». "If the amount of 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 '1.[ne. [11/ ".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 whether he did it well, correctly. or reasonably. but simply whether he did it." Waclu)\'io Sec .. U.C I'. Brand. 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 U.S.c. Ss 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 4 resulting from an answering defendant's 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." Here. PlaintilTis seeking $303.084.98. 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 agreemcnt clause of the agreement 1-2 at 6-7. The arbitration Maryland jurisdiction. between the parties. lOCI' NO.6-I agreement and that judgment signed by I'laintiffand statcs that the arbitrator "on the arbitration Plaintiffs while ""no in-person and opportunity S'ee lOCI' No. must apply the substantive proceeding. la\\'s of an award its failure to appear. Any arbitration oftice in Maryland." franchisc contract. its award pursuant to the substantivc will be II!. 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 the arbitration and issued 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. the arbitration or the conduct of the Arbitrator. PlaintilTrequests application both Defendants. breach of contract claim was propcrly bcfiJre the AAA under the arbitration clause of the parties' agreement, at'i 2. This claim is covered If any party fails to appear at any properly noticed arbitration at our headquarters alleged award may be entcred in any court having may be entered against the party. notwithstanding conducted rate to'confirm $400 for the costs of this action. which was not requested the arbitration 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. plus post-judgment 5 intercstuntil Fed. R. and scverally. 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 part. III. CONCLUSION 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. &I~ Date: February ~7L016 GEORGE J. HAZEL United States District Judge 6

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