KNIGHTS FRANCHISE SYSTEMS, INC. v. PARADISE MOTEL, INC et al
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NOT FOR PUBLICATION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
KNIGHT FRANCHISE SYSTEMS, INC.,
Civil Action. No. 14-cv-4579
PARADISE MOTEL, INC., VIJAY
PAJPUT, KETAN KHER, HARISH
KHER, and ASHWIN KHER
THIS MATTER comes before the Court on Plaintiff’s motion for
default judgment against Defendants Paradise Motel, Inc., Vijay Pajput,
Ketan Kher, Harisgh Kher, and Ashwin Kher 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
Plaintiff commenced this action on July 21, 2014.
ECF No. 1.
Plaintiff served the Complaint on Defendants Harisgh Kher, Ashwin Kher,
Paradise Motel, Inc., Vijay Pajput, on August 4, 2014. ECF No. 5 and
Defendant Ketan Kher on August 13, 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, 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 January
15, 2015. ECF No. 9. Plaintiff served Defendants with notice of the motion
for default judgment on May 18, 2015 and filed the motion for default
judgment on May 18, 2015. ECF No. 12. 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 17.6.
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. 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 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 $115,394.34, consisting of the
(1) $85,641.39 in recurring fees (including prejudgment
(2) $19,959.72 in liquidated damages (including prejudgment
(3) $9,793.23 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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