Choice Hotels International, Inc. v. Shive, LLC et al
MEMORANDUM OPINION Signed by Judge Paula Xinis on 5/3/2017. (cags, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
CHOICE HOTELS INTERNATIONAL, INC.
Civil Action No. PX 16-3560
Shive, LLC, et al.
Pending before the Court is Plaintiff Choice Hotels International, Inc.’s (“Choice” or
“Plaintiff”) Application to Confirm Arbitration Award, ECF No. 1, and Motion for Default
Judgment, ECF No. 6. For the following reasons, Choice’s request for this Court to enter default
judgment in the amount of $ 105,679.58 is GRANTED.
On October 26, 2016, Choice filed its Application to Confirm Arbitration Award, ECF
No. 1, after having obtained a judgment against Defendants Shive, LLC (“Shive”), and Rupesh
V. Patel, collectively, “Defendants,” in arbitration proceedings. Choice and Defendants had
entered into a franchise agreement on June 16, 2008, that provided for arbitration as its dispute
resolution mechanism for breach of the agreement. ECF No. 1-2. Choice initiated arbitration
proceedings which none of the Defendants attended. On June 6, 2016, an “Award of Arbitrator”
issued in the amount of $105,679.58 representing unpaid franchise and related fees, interest
accrued through April 2016 and liquidated damages as well as Defendants’ portion of arbitration
expenses. ECF No. 1-1.
Shive and Patel were properly served on December 8, 2016. ECF No. 4. Defendants
failed to respond to Choice’s Motion or otherwise contest Choice’s claims. Choice then moved
for entry of Default, ECF No. 5, and Default Judgment, ECF No. 6. Defendants did not respond
to these motions, and the Clerk entered default on January 31, 2017. ECF No. 8.
Standard of Review
Pursuant to Federal Rule of Civil Procedure 55(a), “[w]hen a 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 or otherwise, the clerk must enter the parties default.” Fed. R. Civ. P. 55(a).
Thereafter, the court may enter default judgment at the plaintiff’s request and notice to the
defaulting party. Fed. R. Civ. P. 55(b)(2). Plaintiff, however, is not automatically entitled to
default judgment simply because the defendant has not responded. Rather, entry of default
judgment is left to the sound discretion of the court. See, e.g., Choice Hotels International, Inc. v.
Ja I Shree Navdurga, LLC, DKC 11-2893, 2012 WL 5995248, at *1 (D. Md. Nov. 29, 2012); see
also Choice Hotels International, Inc. v. Austin Area Hospitality, Inc., TDC 15-0516, 2015 WL
6123523, at *1 (D. Md. Oct. 14, 2015). Although the Fourth Circuit has announced a “strong
policy” in favor of deciding cases on their merits, United States v. Schaffer Equip. Co., 11 F.3d
450, 453 (4th Cir. 1993), a default judgment may be appropriate when a party is unresponsive.
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)).
A plaintiff moving for default judgment “must show that it is entitled to confirmation of
the arbitration award as a matter of law.” Choice, 2012 WL 5995248, at *2 (collecting cases).
The Federal Arbitration Act, 9 U.S.C. § 9, provides that “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 so specified for an order confirming the award.”
Here, Plaintiff filed its motion for confirmation within one year. Section 9 further provides that
this Court must grant the order unless the award is modified, vacated or corrected pursuant to
sections 10 and 11 of the same Act. Id.
Review of an arbitration award is “severely circumscribed” because to allow for a more
expansive review 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.” Apex
Plumbing Supply, Inc. v. U.S. Supply Co., Inc., 142 F.3d 188, 194 (4th Cir. 1998). Accordingly,
this Court may vacate an arbitration award based on a ground enumerated in the Federal
Arbitration Act or if the arbitrator acted in manifest disregard of law. Id. Neither are at issue
Rather, the instant arbitration clause in the franchise agreement specifically provides for
final and binding arbitration for any “controversy or claim arising out of or relating to” the
franchise agreement. ECF No. 1-3 at 1. Although Choice’s motions do not expressly identify
where arbitration was held, the Franchise Agreement makes plain that it would take place in
Maryland, and the arbitration award confirms the proceedings were held “in accordance with the
terms of the parties’ Arbitration Agreement.” ECF No. 1, p. 4. The parties are also diverse, and
the amount of the arbitration award for which the Plaintiff seeks confirmation exceeds the
jurisdictional minimum for diversity jurisdiction in this Court. See 28 U.S.C. § 1332(a). The
pleadings before this Court, therefore, demonstrate that the arbitration award can and should be
The arbitrator awarded Plaintiff $105,679.58, which is comprised of $27,174.46 in
unpaid franchise and related fees, $16,637.12 in interest through April 2016, $57,600.00 in
liquidated damages, and $ 4,268.00 in administrative expenses and arbitrator compensation. ECF
No. 6-2. Plaintiff requests entry of a default judgment in that amount, “plus post-judgment
interest until paid and $400 for the costs of this action.” ECF No. 6. The Court grants entry of
$105,679.58 plus $400 in costs because Plaintiff requested the same in its initial petition for
confirmation of the arbitration award. ECF No. 1. See Fed. R. Civ. P. 54(c). Insofar as Plaintiff
seeks reimbursement for post-judgment interest, such is awarded by operation of law and not by
Court order. See 28 U.S.C. § 1961(a); Choice, 2012 WL 5995248, at *4. Plaintiff has
demonstrated that it is entitled to the remaining requested award and a default judgment in that
amount will be entered.
For the above-stated reasons, Plaintiff Choice’s motion for default judgment is granted. A
separate order will follow.
United States District Judge
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