SUPER 8 WORLDWIDE, INC. v. RIYA HOSPITALITY GROUP, INC. et al

Filing 12

OPINION. Signed by Judge William J. Martini on 6/16/15. (gh, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

SUPER 8 WORLDWIDE, INC.,

Civil Action. No. 14-cv04527(WJM)(MF)

Plaintiff,
v.

OPINION

RIYA HOSPITALITY GROUP INC.,
JAYANT PATEL, VIRALSINH J. DESAI,
and MITALBEN PATEL,

Defendants.
THIS MATTER comes before the Court on Plaintiff’s motion for default
judgment against Defendants Riya Hospitality Group Inc., Jayant Patel, Viralsinh
J. Desai, and Mitalben Patel pursuant to Federal Rule of Civil Procedure 55(b)(2).
Defendants entered into a franchise agreement with Plaintiff, and the Complaint
alleges that Defendants have breached that agreement.
Plaintiff commenced this action on July 18, 2014. ECF No. 1. Plaintiff
served the Complaint on Defendants Riya Hospitality Group Inc., Viralsinh J.
Desai, and Mitalben Patel on August 12, 2014. ECF No. 5 and on Defendant
Jayant Patel on August 4, 2014. ECF No. 6. The time for Defendants to answer or
otherwise respond to the Complaint expired. See Fed. R. Civ. P. 12(a). To date,
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Defendants have failed to answer or otherwise respond to the Complaint. Pursuant
to Federal Rule of Civil Procedure 55(a), the Clerk entered a Default against
Defendants on December 18, 2014. ECF No. 8. Plaintiff served Defendants with
notice of the motion for default judgment on May 15, 2015 and filed the motion for
default judgment on May 15, 2015. ECF No. 11. No opposition has been filed.
The Court has subject matter jurisdiction over this matter pursuant to 28
U.S.C. § 1332 because the Plaintiff and Defendants are citizens of different states,
and there is an amount in controversy exceeding $75,000. The Court has personal
jurisdiction pursuant to the franchise agreement, in which Defendants consented to
personal jurisdiction and venue in the state courts of New Jersey and the United
States District Court for the District of New Jersey.

Affidavit of Suzanne

Fennimore, Exhibit A at Section 17.5.
The mere fact of default does not entitle Plaintiff to judgment. To enter a
default judgment, the court must first determine whether a sufficient cause of
action has been stated, taking as true the factual allegations of the Complaint. See
Chanel, Inc. v. Gordashevsky, 558 F. Supp. 2d 532, 535-36 (D.N.J. 2008). Once a
cause of action has been established, the district courts must make explicit factual
findings as to three factors: (1) whether the party subject to default has a
meritorious defense, (2) the prejudice suffered by the party seeking default, and (3)
the culpability of the party subject to default. Doug Brady, Inc. v. N.J. Bldg.
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Laborers Statewide Funds, 250 F.R.D. 171, 177 (D.N.J. 2008) (citing Emcasco
Ins. Co. v. Sambrick, 834 F.2d 71, 74 (3d Cir. 1987)). Although the facts plead in
the Complaint are accepted as true, Plaintiff must prove damages. See Comdyne I,
Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990).
At the outset, the Complaint states a cause of action for breach of contract by
alleging that Defendants entered into a valid franchise agreement with Plaintiff,
that Defendants breached this agreement, and that Plaintiff suffered resulting
damages. See Coyle v. Englander’s, 199 N.J. Super. 212, 223 (App. Div. 1985)
(“the essential elements of a cause of action for a breach of contract: a valid
contract, defective performance by the defendant, and resulting damages.”).
The Court also finds that the facts alleged and the exhibits attached merit
entry of a default judgment. First, the Court finds that there is no basis for
Defendants to claim a meritorious defense, as Plaintiff provided ample evidence
that Defendants entered into and then breached a franchise agreement with
Plaintiff. See Days Inns Worldwide, Inc. v. LT Hospitality, Inc., No. 10-6125,
2011 U.S. Dist. LEXIS 76459, at *5-6 (D.N.J. July 14, 2011). Second, it is clear
that Plaintiff has been prejudiced by Defendants’ failure to answer because
Plaintiff has incurred additional costs, has been unable to move forward with the
case, and has been delayed in receiving relief. See Malik v. Hannah, 661 F. Supp.
2d 485, 490-91 (D.N.J. 2009). Third, where, as here, Defendants have failed to
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respond, there is a presumption of culpability. See Teamsters Pension Fund of
Phila. & Vicinity v. Am. Helper, Inc., No. 11-624, 2011 U.S. Dist. LEXIS 115142,
at *10 (D.N.J. Oct. 5, 2011).
The Court further finds that Plaintiff has submitted sufficient evidence to
support its request for damages pursuant to Federal Rule of Civil Procedure 55(b),
and has submitted a reasonable request for attorneys’ fees and costs in accordance
with Local Civil Rules 54.1 and 54.2. The evidence demonstrates liability in the
amount of $292,751.35, consisting of the following:
(1) $148,299.02 in recurring fees (including prejudgment interest);
(2) $135,017.20 in liquidated damages (including prejudgment
interest); and
(3) $9,435.13 in attorneys’ fees and costs.
For the foregoing reasons, Plaintiff’s motion for default judgment will be
granted. The Clerk shall enter an order of final judgment by default.

/s/ William J. Martini
_____________________________
WILLIAM J. MARTINI, U.S.D.J.

Date: June 16, 2015

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