DAYS INNS WORLDWIDE, INC. v. TAJJ ASSOCIATES, LLC et al

Filing 10

OPINION fld. Signed by Judge Kevin McNulty on 8/4/15. (sr, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

DAYS INN WORLDWIDE, INC.
Plaintiff,
Civ. No. 2: 14-7170 (KM)(MAH)
TAJJ ASSOCIATES, LLC; JAYESH V.
PATEL; ANITA J. PATEL; JIGNESH
BHAKTA; TRUPTESH BHAKTA,
Defendants.

OPINION

Days Inn Worldwide, Inc., entered into a franchise agreement with
defendant Tajj Associates, LLC. Tajj allegedly failed to pay certain fees. Days
Inn therefore brought this action for breach of contract. It also brought suit
against the four owners of Tajj, each of whom, according to Days Inn,
guaranteed Tajj’s obligations under the franchise agreement. Because three of
the defendants have not appeared in this action, Days Inn now moves for a
default judgment against them. That motion is granted.

Background
Tajj Associates, LLC, entered into a franchise agreement with Days Inn
Worldwide, Inc. Under the terms of the Agreement, Tajj was to operate a Days
Inn franchise. (Agreement,

¶

1) In exchange, Tajj agreed to pay various

recurring fees, including royalties, system assessment fees, basic service
charges, and others. (Agreement, 1) Each of the four owners of Tajj Associates,
defendants Jayesh Patel, Anita Patel, Jignesh Bhakta, and Truptesh Bhakta,
personally guaranteed Tajj’s obligations under the Agreement. (Agreement, 35)
Days Inn alleges that Tajj failed to pay various fees required by the
Agreement. (Fenimore Affidavit,

¶J

14-17) When Tajj failed to remedy the

delinquency, Days Inn exercised its right under section 11.2 of the Agreement
1

to terminate the contract. In April of 2012, Days Inn notified the defendants
that it was terminating the Agreement on (Dkt. No. 9-5, Exh. F)
Days Inn brought suit in this Court. Days Inn alleges that the defendants
owe the following:

• $

284,667.61 in unpaid recurring fees and interest (Dkt. No. 9-5,

Exh. G)

• $

4,528.67 in attorneys’ fees and costs (Couch Cert,

¶J

12,14)

Days Inn settled its claims against two defendants: Jingseh Bhakta and
Truptesh Bhakta. (Dkt. No. 8) The three remaining defendants, Tajj Associates,
Jayesh Patel, and Anita Patel, have not entered an appearance or otherwise
defended the case before this Court. Days Inn therefore requested an entry of
default, which the Clerk’s Office entered on March 17, 2015. Now before the
Court is Days Inn’s motion for a default judgment (Dkt. No. 9).
Discussion
When a litigant moves for a default judgment, a court must determine
whether the factual allegations, if true, make out a claim for relief. DirecTV, Inc.
v. Asher, 03-cv-1969, 2006 WL 680533, at *1 (D.N.J. Mar.14, 2006) (citing
Wright, Miller, Kane, 1OA Federal Practice and Procedure: Civil 3d

§

2688, at

58—59, 63). In so doing, the Court must take the factual allegations of the
plaintiff’s complaint as true. Doe v. Simone, CIV.A. 12-5825, 2013 WL
3772532, at *2 (D.N.J. July 17, 2013). However, the Court need not accept as
true the plaintiff’s allegations with respect to damages. Id. (citing Chanel, Inc. v.
Gordashevsky, 558 F.Supp.2d 532, 536 (D.N.J. 2008)). Those allegations are
subject to the Court’s scrutiny. In addition, for a default judgment to enter, the
plaintiff must have properly served the Complaint. Gold Kist Inc. v. Laurinburg
Oil Co., Inc., 756 F.2d 14, 18—19 (3d Cir. 1985); Fed. R. Civ. P. 12(a).
Here, I find that service is proper, that Days Inn’s factual allegations
establish a claim for breach of contract, that Days Inn has supported its claim
for damages with evidence, and that Days Inn’s request for attorneys’ fees and

2

costs is reasonable and consistent with the franchise agreement. Accordingly, a
default judgment in the amount requested is appropriate.
Service
Federal law provides that a plaintiff may serve a defendant by following
the rules for serving a summons in the state court where the district court is
located. FED. R. Civ. P. 4(e)(1). New Jersey law, in turn, provides that if a
plaintiff is unable to personally serve a defendant “despite diligent effort and
inquiry,” then the plaintiff may accomplish service through certified mail and
regular mail. New Jersey Rules of Court

§

4:4-4(b)(1)(C).

Here, Days Inn has filed three affidavits explaining that despite diligent
efforts and inquiry, it was unable to accomplish personal service on defendants
Tajj Associates, LLC, Jayesh Patel, and Anita Patel. (Dkt. No. 9-2, Exhs. A-C)
Days Inn therefore served those three defendants via regular and certified mail.
(Couch Cert.,’

¶

8) Service therefore appears proper.

Breach of Contract and Damages
I next consider whether the facts that Days Inn alleges make out a claim
2
for breach of contract. Under New Jersey law, a breach of contract claim has
three elements: a valid contract, a breach of that contract by the defendant,

Citations to the record will be abbreviated as follows:
“Account Statement”
“Agreement”

—

—

Itemized Statement dated April 2, 2015, Dkt. No. 9-5, Exh. G.

Days Inn Worldwide, Inc. License Agreement, Dkt. No. 9-4, Exh. A.

“Couch Cert.” Certification of Brian P Couch in Support of Motion for Final Judgment
by Default, Dkt. No. 9-2.
-

“Fenimore Affidavit” Affidavit of Suzanne Fenimore in Support of Motion for Final
Judgment by Default as to Tajj Associates, LLC, Jayesh Patel, and Anita Patel
Only.
—

Although the franchise at issue here was located in Georgia (see Agreement, 1),
the Agreement has a choice of law provision that provides that the Agreement will be
governed by New Jersey Law.

2

3

and damage to the plaintiff. Murphy v. Implicito, 920 A.2d 678, 689 (N.J. Super.
Ct. App. Div. 2007).
Days Inn alleges that it has a contract with Tajj which Anita Patel and
Jayesh Patel guaranteed. Defendants allegedly breached that contract by
failing to make the payments the contract required. And Days Inn has alleged
that it suffered damages in the form of the recurring fees due but unpaid. Days
Inn has therefore stated a valid claim for breach of contract.
The Agreement provides that Tajj must pay to Days Inn various

§ 7.1.1); a “Basic service
charge” (Agreement, § 7.1.2); a marketing fee (Agreement, Schedule C, ¶ B);
and booking fees (Agreement, Schedule C, ¶ C). Days Inn has provided a

“recurring fees,” including royalty fees (Agreement,

breakdown of the unpaid fees. (Account Statement) (see, e.g., entries for August
2008 (listing royalty fees, marketing fees, and booking fees); entries for
September 2008 (same)). Because these fees appear consistent with the
Agreement, and because the defendants have not contested them, I will accept
them as accurate.
Days Inn also seeks recovery of interest. The Agreement provides that
Days Inn may charge interest at a rate of 1.5% per month on any charges
invoiced to Tajj. (Agreement,

§ 7.3) In its filings, Days Inn has provided a

breakdown of the original recurring fees for which it invoiced the defendants,
plus the “finance charges” (I take this to refer to interest) that it has charged on
those fees. (Account Statement) I have performed an approximate recalculation
of the interest Days Inn has calculated for the period September 30, 2009
through September 2012. It appears that, under the terms of the Agreement,
Days Inn may have been entitled to recover interest of up to $167,395.00 on
the $148,260.12 in recurring fees it charged to Tajj. (See chart attached to this
opinion as addendum.) Days Inn has calculated a lesser amount: $110,804.75.
3
I will therefore permit recovery of that amount.

My figure is calculated on delinquencies beginning as of September 30, 2009.
See chart attached to Opinion as Addendum.

3

4

In addition to the fees listed above, Days Inn charged interest on recurring fees
billed during the period June 2008 through August 2009. (Account Statement,
1-3) For this period, the records that Days Inn provided to the Court reflect $0
billed as recurring fees, but lists some $24,352.04 in Finance Charges (which,
4
again, I take to represent interest). This is somewhat curious. However, even if
all of these fees were erroneous, they are offset entirely by the $56,590 in
interest that Days Inn could have charged, but hasn’t, for the period September
2009 through September 2012. (See chart above) Therefore, I do not find this
apparent anomaly to be problematic.
A default judgment is therefore appropriate for recurring fees and
interest of some $284,667.61. (Account Statement, 12)

Attomeys’fees arid costs
The Agreement provides that if either party pursues any of the remedies
provided for in the Agreement, the non-prevailing party will pay the prevailing
party’s reasonable attorneys’ fees and costs. (Agreement,

¶

17.4) Here, Plaintiffs

have requested $4,000 in legal fees and $528 in costs.
Plaintiff’s counsel has presented billing records of its legal fees pertaining
to this matter. I note that counsel’s billing records contain a line entry, but no
description, for a charge of $1,382.68 (more than a quarter of the total amount
that counsel is requesting) on December 31, 2014. Despite this ambiguity, I
find the total amount counsel requests, $4,000 representing 8.6 hours of work,

Days Inn’s interest calculation includes $24,352.04 in interest on recurring fees
billed during the an earlier period: June 2008 through August 2009. (Account
Statement, 1-3) For that period, however, the billings reflect $0 in recurring fees. I am
unable to account for this seeming discrepancy, unless perhaps it represents a
reduction for the settlement with codefendants. Nevertheless, because defendants are
jointly and severally liable, and because the total interest sought by Days Inn is lower
than the amount I calculate to have been owed, I will permit it.
SeeAccount Stmt., 1-3, (86.68 + 2,318.91 + 2,700.01 + 3,652.55 + 2,516.43 ÷
53.72 + 65.58 + 2,340.32 ÷ 454.72 + 2,320.33 + 2,838.66 + 2,527.66+ 2,476.47 +
2,4352.04 = 24,352.04)
5

to be reasonable. Counsel have not sought reimbursement for some $3,464.10
in legal fees incurred in connection with settling the plaintiff’s claims against
defendants Jignseh Bhakta and Truptesh Bhakta. The $528.67 in costs that
counsel seeks are customary and reasonable. I will therefore award counsel
$4,528.67 in legal fees and costs.

Conclusion
A default judgment for a total of $289,196.28 will be entered. A separate
order will issue.

Dated August 4, 2015
Newark, New Jersey

United States District

6

ADDENDUM:
Interest Recalculation
Recurring fee
assessment
date
9/30/2009
10/31/2009
11/30/2009
1/31/2010
3/31/2010
4/30/2010
5/31/2010
6/30/2010
7/31/2010
8/31/2010
9/30/2010
10/31/2010
11/30/2010
12/31/2010
1/31/2011
2/28/2011
3/31/2011
4/30/2011
5/31/2011
6/30/2011
7/31/2011
8/31/2011
9/30/2011
10/31/2011
11/30/2011
12/31/2011
1/31/2012
2/29/2012
3/31/2012
4/30/2012
5/31/2012
6/30/2012
9/30/2012

Interest
No. of
Caic
months
Date
4/2/2015
67
4/2/2015
66
4/2/2015
65
4/2/2015
63
4/2/2015
61
4/2/2015
60
4/2/2015
59
4/2/2015
58
4/2/2015
57
4/2/2015
56
4/2/2015
55
4/2/2015
54
4/2/2015
53
4/2/2015
52
4/2/2015
51
4/2/2015
50
49
4/2/2015
4/2/2015
48
4/2/2015
47
4/2/2015
46
4/2/2015
45
4/2/2015
44
4/2/2015
43
4/2/2015
42
4/2/2015
41
4/2/2015
40
4/2/2015
39
4/2/2015
38
4/2/2015
37
4/2/2015
36
4/2/2015
35
4/2/2015
34
4/2/2015
31

Recurring
Fees Billed

Interest
Charged

491
3,551
2,713
2,337
1,978
5,945
5,625
6,439
9,040
7,lsg
6,795
5,482
7,414
5,192
5,205
5,466
5,754
5,178
4,004
4,718
4,931
6,915
6,824
5,351
4,540
3,623
3,737
4,302
3,987
3,220
336
8
3

3,520
3,401
2,547
2,128
1,741
5,170
4,807
5,377
7,518
5,955
5,385
4,245
5,668
3,885
3,878
3,972
4,093
3,667
2,742
3,124
3,185
4,398
4,115
3,227
2,686
2,070
2,071
2,322
2,090
1,647
168
4
1

.

Recalculation*
841
5,935
4,427
3,634
2,928
8,581
7,914
8,831
12,082
9,320
8,615
6,767
8,907
6,069
5,917
6,041
6,181
5,403
4,058
4,640
4,706
6,399
6,120
4,649
3,819
2,949
2,942
3,273
2,929
2,283
230
6
1

Difference (Actual
vs Recalc)
2,679
(2,534)
(1,880)
(1,506)
(1,187)
(3,410)
(3,107)
(3,454)
(4,564)
(3,365)
(3,230)
(2,522)
(3,239)
(2,184)
(2,040)
(2,069)
(2,088)
(1,736)
(1,315)
(1,516)
(1,520)
(2,001)
(2,006)
(1,422)
(1,134)
(879)
(871)
(951)
(840)
(637)
(62)
(2)
(0)

167,395 $
(56,590)
$ 148,260 $ 110,805 $
The recalculation uses the formula P x (l÷i)- p
where
P =the Recurring Fee Billed
I =the interest rate per period, here 1.5% per month
t =the number of periods, here the number of months between the Fee Assessment Date and the Interest Calc Date.
*

7