DAYS INNS WORLDWIDE, INC. v. JINISHA INC. et al
OPINION. Signed by Judge Madeline C. Arleo on 7/24/15. (DD, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
DAYS INNS WORLDWIDE, INC., formerly
known as DAYS INNS OF AMERICA, INC.,
a Delaware Corporation,
Civil Action No. 14-6794
July 24, 2015
JINISHA INC., a Georgia corporation; and
MUKUND R. PATEL, an individual,
ARLEO, UNITED STATES DISTRICT JUDGE.
This matter comes before the Court on Plaintiff Days Inn Worldwide, Inc., formerly known
as Days Inns of America (“DIW”) motion for final judgment by default pursuant to Federal Rule
of Civil Procedure 55(b)(2) [Dkt. No. 15]. For the reasons set forth herein, the motion is
DIW is one of the largest guest lodging franchise systems in the United States. DIW owns
and has the exclusive right to license the service mark DAYS INN and various related trade names,
trademarks, as well as service marks, logos, and derivations thereof (“the Days Inn Marks”).
On or about May 28, 1997, DIW entered into a license agreement (the “License
Agreement”) with Defendant Jinisha, Inc (“Jinisha”). Compl. ¶ 8, Dkt. No. 1. Through this
License Agreement, Jinisha agreed to operate a Days Inn facility for a term of eighteen years, and
was required to make certain periodic payments to DIW for royalties, taxes, interest, reservation
system user fees, and other fees (collectively, “Recurring Fees”). Id. ¶ 10; see License Agreement
¶ 5, Dkt. No. 1-1, Ex. A. Defendant Mukund R. Patel provided DIW with a Guaranty of Jinisha’s
obligations under the License Agreement. See Guaranty, Dkt. No. 1-1, Ex. B. Pursuant to the
Guaranty, Defendant agreed to pay the costs, including reasonable attorneys’ fees, incurred by
DIW in enforcing its rights or remedies under the Guaranty. Compl. ¶ 20. Beginning in 2010,
Jinisha failed to meet its financial obligations to DIW under the License Agreement. Id. ¶ 21.
From June 8, 2012, to June 11, 2013, DIW subsequently sent Jinisha a total of nine letters
informing Jinisha that it was in breach of the License Agreement because it owed DIW outstanding
Recurring Fees, which had compounded between every letter. Id. ¶¶ 22-30. DIW then terminated
the License Agreement. Id. ¶ 30.
DIW filed a Complaint on October 30, 2014, seeking damages as a result of the breach of
the License Agreement. See id.; Couch Cert. ¶ 3, Dkt. No. 15-2. Defendants Jinisha and Patel
have been personally served with a summons and complaint. See Summons Returned Executed,
Dkt. No. 5. Despite diligent efforts and inquiry, however, Defendant Jinisha was unable to be
located, and was instead served with a summons and complaint via both regular and certified mail
pursuant to Federal Rule of Civil Procedure 4(e)(1) and New Jersey Rule of Civil Practice 4:44(b)(1)(C). See Aff. of Diligent Efforts as to Defendant Jinisha, Inc., Dkt. No. 15-2, Ex. A. The
time for Defendants to answer or otherwise move as to the Complaint has expired. The Clerk
entered default against Defendant Patel on January 22, 2015, and against Defendant Jinisha on
March 23, 2015. On April 22, 2015, DIW filed the instant motion for final judgment by default.
To date, Defendants have not filed any opposition to the motion.
STANDARD OF REVIEW
“The district court has the discretion to enter default judgment, although entry of default
judgments is disfavored as decisions on the merits are preferred.” Animal Sci. Prods., Inc. v. China
Nat’l Metals & Minerals Imp. & Exp. Corp., 596 F. Supp. 2d 842, 847 (D.N.J. 2008).
entering default judgment the court must: (1) determine it has jurisdiction both over the subject
matter and parties; (2) determine whether defendants have been properly served; (3) analyze the
Complaint to determine whether it sufficiently pleads a cause of action; and (4) determine whether
the plaintiff has proved damages. See Chanel, Inc. v. Gordashevsky, 558 F. Supp. 2d 532, 535-36
(D.N.J. 2008); Wilmington Savings Fund Soc., FSB v. Left Field Props., LLC, No. 10-4061, 2011
WL 2470672, at *1 (D.N.J. June 20, 2011). Although the facts pled in the Complaint are accepted
as true for the purpose of determining liability, the plaintiff must prove damages. See Comdyne
I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990).
Additionally, prior to granting default judgment, the Court must make explicit factual
findings as to: (1) whether the party subject to the default has a meritorious defense; (2) the
prejudice suffered by the party seeking default judgment; 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
A. Jurisdiction & Service
The Court concludes it has both subject matter jurisdiction over this dispute and personal
jurisdiction over the Defendants. First, the Court has subject matter jurisdiction under 28 U.S.C.
§§ 1331 and 1332. See Ramada Worldwide Inc. v. Courtney Hotels USA, LLC, No. 11-896, 2012
WL 924385, at *3 (D.N.J. Mar. 19, 2012). The Court also has personal jurisdiction over
Defendants pursuant to their consent to jurisdiction as set forth in the License Agreement and
Guaranty. Id.; Compl. ¶¶ 5-6; see also License Agreement ¶ 17.4; Guaranty. Additionally, DIW
provided the Court with proof of service as to all Defendants.
The Court concludes DIW has pled a breach of contract claim against Defendants as
Plaintiff has pled the existence of a contractual relationship, that Defendants breached the License
Agreement by failing to remit the required payments, and resulting damages. See Ramada, 2012
WL 924385, at *3; Super 8 Worldwide, Inc. v. Sairam Corp., No. 13-6161, 2014 WL 4388697, at
*1 (D.N.J. Sept. 4, 2014).
C. Appropriateness of Default Judgment
Next, the Court must consider: (1) whether the party subject to the default has a meritorious
defense; (2) the prejudice suffered by the party seeking default judgment; and (3) the culpability
of the party subject to default. Doug Brady, 250 F.R.D. at 177. The Court concludes that in the
absence of any responsive pleading and based upon the facts alleged in the Complaint, the
Defendants do not have a meritorious defense. See Ramada, 2012 WL 924385 at *5. Second, the
Court finds that DIW will suffer prejudice absent entry of default judgment as DIW will have no
other means of obtaining relief. Finally, the Court finds the Defendants acted culpably as they
have been served with the Complaint, are not infants or otherwise incompetent, and are not
presently engaged in military service. See Cert. of Bryan P Couch, Dkt. No. 15-2, ¶¶ 16-17; see
also Super 8, 2014 WL 4388697 at *2; see also Nationwide Mut. Ins. Co. v. Starlight Ballroom
Dance Club, Inc., 175 F. App’x 519, 523 (3d Cir. 2006) (holding that a defendant’s failure to
respond to communications from the plaintiff and the court can constitute culpability).
D. Monetary Damages
DIW first seeks $120,772.73 in “Recurring Fees” as defined in the License Agreement.
Plaintiff has provided sufficient evidence of these damages. See Fenimore Aff. ¶ 26, Dkt. No. 153; Itemized Statement of Recurring Fees, Dkt. No. 15-5, Ex. L; License Agreement ¶ 7.1.
DIW also seeks $29,334.60 in liquidated damages. Again, Plaintiff has provided sufficient
proof of these damages. See License Agreement ¶ 12; Fenimore Aff. ¶¶ 27-34.
DIW also seeks $8,722.62 in attorneys’ fees and costs, which the License Agreement
expressly authorizes. License Agreement ¶ 17.4. DIW has provided the Court with sufficient
proof of these damages. See Couch Cert. ¶¶ 12-14; Ex. D to Couch Cert.
Based upon the foregoing, judgment shall be entered against the Defendants Jinisha, Inc.,
and Mukund R. Patel jointly and severally, for: (1) $120,772.73 in Recurring Fees; (2) $29,334.60
in liquidated damages; and (3) $8,722.62 in attorneys’ fees and costs.
For the reasons set forth above, DIW’s motion for final judgment by default is GRANTED.
An appropriate order will follow.
/s Madeline Cox Arleo___________
MADELINE COX ARLEO
UNITED STATES DISTRICT JUDGE
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