SUPER 8 WORLDWIDE, INC v. JIJ, INC et al
Filing
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OPINION. Signed by Judge William H. Walls on 9/7/16. (DD, )
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UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
SUPER $ WORLDWIDE, llSC, a South
Dakota Corporation,
Plaintiff,
:
:
v.
OPINION
Civ. No. 16-2806 (WHW)(CLW)
JIJ, INC., a North Carolina Corporation,
BALVANTBHAI K. PATEL, and individual,
and NARENDRA K. PATEL, an individual,
Defendants.
Walls, Senior District Judge
Plaintiff Super 8 Worldwide, Inc. (“Super 8”) moves under Fed. R. Civ. P. 55 for default
judgment against Defendants JIJ, Inc., Balvantbhai Patel, and Narendra Patel. Super 8 asserts
that Defendants breached a franchise agreement for the operation of a guest lodging facility.
Defendants have failed to plead or otherwise defend this lawsuit. Decided without oral argument
under Fed. R. Civ. P. 78, Plaintiffs motion is granted.
PROCEDURAL AND FACTUAL BACKGROUND
Super 8 is a South Dakota corporation with its principal place of business in Parsippany,
New Jersey. Compl., ECF No. 1
¶ 1.
JIJ, Inc. is a North Carolina corporation with its principal
place of business in North Carolina. Id.
and are citizens of South Carolina. Id.
¶ 2. Balvantbhai and Narendra Patel are principals of JIJ
¶J 3-4. On July 6, 2007, Plaintiff entered into a franchise
agreement with JIJ for the operation of a Super $ hotel in Lumberton, North Carolina (“the
Facility”). Id.
¶ 9; Aff. of Suzanne fenimore in Supp. of Mot.
Aff”) ECF No. 8-3
for Final J. by Default (“Fenimore
¶ 3. Balvantbhai and Narendra Patel also entered into a guaranty agreement
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with Super 8 in which they agreed to “make each payment and perform.
.
.
each unpaid or
unperformed obligation” should JIJ default on its franchise agreement. Id. Ex. B.
JIJ’s franchise agreement with Super 8 was to last until June 30, 2027. See Id. Ex. A
§
5.
JIJ was to make periodic payments to Super 8 for royalties, taxes, and various services it
received as a franchisee, which were known as the “Recurring Fees.” See Id.
§
7; Id. Schedule C.
Interest was due “on any past due amount payable to [Super 8] under [the] Agreement at the rate
of 1.5% per month.
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accruing from the due date until the amount is paid.” Id.
§
7.3.
Defendants ceased paying the Recurring Fees, and their account became past due on
October 31, 2014. Id. Ex. C. Super 8 sent three notification letters to JIJ on November 4, 2014,
February 3, 2015, and May 8, 2015. Id. Ex C; Ex. D; Ex. E. Each of these letters informed
Defendants that their agreement might be subject to termination if their outstanding fees were not
paid. Id. Defendants have not paid this amount, which now totals $164,664.45. Id.
¶ 17.
Super 8 brought this action on May 18, 2016. The summons and complaint were served
on Narendra Patel and JIJ on June 14, 2016, and they were served on Balvantbhai Patel on June
15, 2016. ECF Nos. 5-6; see also Certification of Bryan P. Couch in Supp. of Mot. for Final I. by
Default (“Couch Cert.”) ECF No. 8-2
¶J 4-5.
Counsel for Super 8 certified that he verified
neither Balvantbhai nor Narendra Patel are engaged in military service for the United States or
its allies. Couch Cert.
¶J 12-13. The Clerk of the Court entered default against Defendants on
July 22, 2016 for failure to plead or otherwise defend this action. Id.
Defendants of this entry of default by letter. Id.
¶ 8.
Super $ informed
¶ 9. Defendants have not responded.
Super $ now moves for default judgment, seeking $164,664.45 in damages. Fenimore
Aff.
¶ 18.
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STANDARD FOR DEFAULT JUDGMENT
Three factors are considered when evaluating a motion for default judgment under Fed.
R. Civ. P. 55: (1) whether there is “prejudice to the plaintiff if default is denied,” (2) “whether
the defendant appears to have a litigable defense,” and (3) “whether defendant’s delay is due to
culpable conduct.” Chamberlain v. Giampapa, 210 f.3d 154, 164 (3d Cir. 2000). factual
allegations in a complaint will be treated “as conceded by the defendant,” DIRECTV, Inc. v.
Fepe, 431 f.3d 162, 165 (3d Cir. 2005), but a court will inquire “into whether the unchallenged
facts constitute a legitimate cause of action.” Days Inns Worldwide, Inc. v. Mayu & Roshan,
L.L.C., 2007 WL 1674485, at *4 (D.N.J. June 8, 2007) (citations omitted). A court does not
accept the alleged amount of damages as true. Comdyne I, Inc. v. Corbin, 908 f.2d 1142, 1149
(3d Cir. 1990). A court may determine damages without a hearing “as long as [it] ensure[s] that
there [is] a basis for the damages specified in the default judgment.” Transatlantic Marine
Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997).
DISCUSSION
I.
Jurisdiction
Subject matter jurisdiction exists under 28 U.S.C.
§
1332. Super 8 is a South Dakota
Corporation with its principal place of business in New Jersey. Compl.
¶ 1. JIJ is a North
Carolina corporation with its principal place of business in North Carolina. Id. ¶2. Balvantbhai
and Narendra Patel are principals of JIJ and are citizens of South Carolina. Id.
¶J 3-4. The
amount in controversy at the time of filing exceeded $75,000. fenimore Aff. Ex. F. Personal
jurisdiction exists because Defendants consented to “non-exclusive personal jurisdiction of and
venue in.
Ex. A
§
.
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the United States District Court for the District of New Jersey.
17.6.3; id. Ex. B.
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Fenimore Aff.
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Default Judgment is Appropriate
This action arises out of an alleged breach of contract. The franchise agreement is
governed by New Jersey law because of its choice of law provision. Fenimore Aff. Ex. A
§
17.6.1. The elements of a breach of contract claim under New Jersey law are “(1) a contract
between the parties; (2) a breach of that contract; (3) damages flowing therefrom; and (4) that the
party stating the claim performed its own contractual obligations.” Frederico v. Home Depot,
507 F.3d 188, 203 (3d Cir. 2007). Plaintiff and Defendants entered into a contract for the
operation of a Super 8 hotel in exchange for the payment of Recurring Fees. Defendants
breached that contract by operating a Super 8 franchise without paying the Recurring Fees that
were owed. Plaintiff performed its own contractual obligations by providing Defendants with
services such as advertising that were called for by the agreement. See Fenimore Aff. Ex. F
(itemizing Super $s services that were the basis for the Recurring Fees). Damages resulted from
the breach because Super 8 performed these services without receiving compensation. Super 8
has pled the elements of a breach of contract claim and put forth unchallenged facts which
demonstrate a legitimate cause of action.
Default judgment is appropriate. Super 8 will suffer prejudice if default is denied because
it will continue to not receive the fees and costs to which it is contractually entitled. Defendants
have not put forward facts or argument to suggest that they have a valid defense. They have
failed to retain counsel or make an appearance since the filing of the complaint. Having
considered the Chamberlain factors in light of these facts, the Court grants default judgment.
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The Amount of Damages Is Satisfactorily Established
Super 8 seeks damages of $164,664.45 for outstanding Recurring Fees and interest.
The damages asserted do not require further inquiry and will be awarded by the Court. The Court
has also reviewed Super 8’s submissions as to the Recurring fees owed as of July 2016, which
total $159,228.21. The Court finds that these Recurring Fees documented by Plaintiff accurately
and reasonably represent the amount that Defendants owed Super 8 for its services on that date.
See Fenimore Aff.
¶J 29-36; Ex. F (Itemized Statement of Recurring Fees). The remaining
amount of $5,436.24 reflects two months of interest, compounded at the rate of 1.5%
compounded monthly as specified in
§ 7.3 of the parties’ franchise agreement. These damages
are reasonable under the circumstances.
CONCLUSION
Plaintiffs motion for default judgment is granted. Judgment is entered against
Defendants in the amount of$159,228.21.
DATE:
William H Walls
Senior United States District Court Judge
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