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)

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

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CHOICE HOTELS INTERNATIONAL, INC.,

IL

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Plaintiff,

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Case No.: G.JH-15-0888

v.

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ATLANTIC HOTEL MANAGEMENT,
INC.. et aI.,

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Defendants.

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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

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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

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