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Choice Hotels International, Inc. v. Mander

United States District Court, D. Maryland, Southern Division

April 22, 2015



GEORGE J. HAZEL, District Judge.

Pursuant to Fed.R.Civ.P. 55(b), Plaintiff Choice Hotels International, Inc. has tiled a motion for default judgment, with a supporting affidavit, as to Defendant Bhupinder Mander. ECF No. 8. Oral argument is unnecessary. See Loc. R. 105.6. For the reasons that follow, the motion for default judgment will be granted, in part, and denied, in part.


Plaintiff Choice Hotels International. Inc. ("Choice Hotels") tiled an "Application to Confirm Arbitration Award" (the "Application") in this Court on October 8. 2014. See ECF No. 1. Choice Hotels named H B Hotels Group, LLC and Bhupinder Mander as defendants. See id. Attached to the Application is the "Ex Parte Award, " signed by R. Bruce Beckner of the American Arbitration Association on June 30, 2014. See ECF No. 1-1. The award states that Choice Hotels served an arbitration demand on the named defendants on January 7. 2014, and following written notice to all parties, the arbitrator held a preliminary conference. See id. at 1-2. Defendants did not appear. See id. The arbitrator subsequently issued an order directing Choice Hotels to provide proof of service and for defendants to enter an appearance. Id. at 2. Choice Hotels provided proof of service, but defendants did not enter an appearance. Id. The arbitrator then directed Choice Hotels to submit its argument and evidence to support its claim. Id. Notice was sent to defendants, which advised that they could enter an appearance and respond to Choice Hotels' argument. Id. Choice Hotels submitted its argument and the defendants did not respond. Id. The parties were advised that the record was closed on May 30, 2014, Id.

The arbitration award explains that the arbitrator had jurisdiction pursuant to the parties' franchise agreement, which states that "any controversy or claim arising out of or relating to this Agreement, or breach of this Agreement... will he sent to final and binding arbitration before either the American Arbitration Association, J.A.M.S., or National Arbitration Forum in accordance with the Commercial Arbitration Rules of the American Arbitration Association..." Id. at 3.

As for the merits of the claim, the arbitrator Found that the parties' franchise agreement permitted the defendants to operate a hotel in Memphis. Tennessee. See id. Defendants began operating, the franchise in 2006 and fell behind on the fee payments in 2010. See id. On January 7, 2011, Choice Hotels sent a notice to defendants, advising that they had ten days to cure their default or face termination of the agreement. See id. Without a response. Choice Hotels terminated the agreement on February 11, 2011. See id.

Finding that the defendants breached the agreement and that the agreement provided for liquidated damages and litigation costs, the arbitrator ordered defendants to pay, jointly and severally, the total sum of $190.030.96 (consisting of $61, 172.76 in unpaid franchise fees, $28, 808.20 in interest accrued on the unpaid franchise fees, $100, 800.00 in liquidated damages and $3, 250.00 in arbitration fees). See id. at 5-6.

After Choice Hotels tiled the Application, Choice Hotels stipulated to the dismissal of Defendant H B Hotels Group, LLC on December 12, 2014, due to its discharge of debts in a bankruptcy proceeding. See ECF No. 5. Defendant Bhupinder Mander was served on December 27, 2014. See ECF No. 6. A Clerk's Order of Default for want of answer or other defense was made on February 27, 2015 as to Defendant Mander for failure to plead or otherwise defend as provided by Fed.R.Civ.P. 55(a). See ECF No. 11. Choice Hotels now requests that the Court issue judgment by default against Mander. See ECF No. 8.


A. Multiple Defendants

Choice Hotels originally named two defendants in this lawsuit. See ECF No. 1. Fed.R.Civ.P. 54(b) governs judgments against multiple defendants and authorizes entry of a final judgment as to one of multiple defendants in a civil action following an express finding that there is "no just reason for delay." Fed.R.Civ.P. 54(b). As a general rule. "when an action is brought against several defendants, charging them with joint liability, " judgment cannot be entered against a defendant "until the matter has been adjudicated with regard to all defendants, or all defendants have defaulted." 10A Charles Alan Wright & Arthur R. Miller, Fed. Prac. & Proc. Civ. ยง 2690 (3d ed.) (citing From v. De La Vega, 82 U.S. 552, 554 (1872)); see also United States for Use of Hudson v. Peerless Ins. Co., 374 F.2d 942, 944 (4th Cir. 1967) (finding that the "procedure established for multiple defendants by Rule 54(b) [pertaining to judgments] is... applicable not only to situations of joint liability but to those where the liability is joint and/or several").

Here, while the arbitration award was entered against both H B Hotels Group, LLC and Bhupinder Mander, jointly and severally, H B Hotels Group. LLC was dismissed from the case on December 12, 2014, due to the discharge of its debts in a bankruptcy proceeding. See ECF No. 5. Given that H B Hotels Group, LLC has been dismissed with prejudice from this suit, there is no just reason for delay as default judgment against Bhupinder Mander will not produce "logically inconsistent judgments resulting from an answering defendant's success on the merits and another defendant's suffering of a default judgment." Jefferson v. Briner, Inc., 461 F.Supp.2d 430, 434 (F.D. Va. 2006).

B. Motion for Default

"A defendants default does not automatically entitle the plaintiff to entry of a default judgment; rather, that decision is left to the discretion of the court." Choice Hotels Intern., Inc. v. Savannah Shakti Corp., DKC-11-0438, 2011 WL 5118328 at *2 (D. Md. Oct. 25, 2011) (citing Dow v. Jones, 232 F.Supp.2d 491. 494 (D. Md. 2002). When a motion for default judgment is based on an arbitration award, the plaintiff "must show that it is ...

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