United States District Court, D. Maryland
THEODORE D. CHUANG United States District Judge
August 19, 2016, Plaintiff Choice Hotels International, Inc.
("Choice Hotels") filed an Application to Confirm
Arbitration Award against Defendant Kawaljit Walia. The award
at issue was based on Walia's alleged breach of a
franchise agreement between the parties ("the Franchise
Agreement"), specifically Defendant's failure to pay
various fees due under its terms. On March 21, 2016, the
arbitrator awarded Choice Hotels a total of $173, 079.18,
comprised of fees, interest, liquidated damages, and
arbitration expenses. Walia did not present any evidence or
participate in the arbitration proceedings.
was served with the Application on September 18, 2016 but did
not file any response to it. On October 24, 2016, Choice
Hotels filed a Motion for Clerk's Entry of Default and a
Motion for Default Judgment against Walia. The Clerk entered
a default against Walia on December 16, 2016.
Walia was served with the Motion for Default Judgment, to
date, he has not responded to it, or to any other filing in
this case. The Motion is now ripe for disposition, and the
Court finds no hearing necessary. See D. Md. Local
R. 105.6. For the reasons set forth below, the Motion for
Default Judgment is GRANTED.
Motion for Default Judgment, Choice Hotels asserts that Walia
has failed to file a timely responsive pleading to its
Application. Thus, Choice Hotels argues that it is entitled
to default judgment against Defendants in the amount of the
arbitration award and costs.
Federal Rule of Civil Procedure 55(b)(2), a default judgment
after an entry of default is left to the discretion of the
court. S.E.C. v. Lawbaugh, 359 F.Supp.2d 418, 421
(D. Md. 2005). Although the United States Court of Appeals
for the Fourth Circuit recognizes a "strong policy that
cases be decided on their merits, " United States v.
Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993), a
default judgment may be appropriate when a party is
unresponsive, Lawbaugh, 359 F.Supp.2d at 422-23
(citing Jackson v. Beech, 636 F.2d 831, 836 (D.C.
Cir. 1980)). When default judgment is sought with respect to
an application for confirmation of an arbitration award, the
plaintiff must show that it is entitled to confirmation as a
matter of law. See D.H. Blair & Co. v.
Gottdiener, 462 F.3d 95, 109-10 (2d Cir. 2006).
The Arbitration Award
Court is satisfied that it has diversity jurisdiction over
this case pursuant to 28 U.S.C. § 1332. Choice Hotels is
a Delaware corporation with its headquarters located in
Rockville, Maryland. Walia is a citizen of California. In
addition, the amount in controversy is greater than the $75,
000 jurisdictional minimum under 28 U.S.C. § 1332.
Federal Arbitration Act ("FAA"), 9 U.S.C.
§§ 1-16 (2012), provides in part that:
If the parties in their agreement have agreed that a judgment
of the court shall be entered upon the award made pursuant to
the arbitration, and shall specify the court, then at any
time within one year after the award is made any party to the
arbitration may apply to the court so specified for an order
confirming the award, and thereupon the court must grant such
an order unless the award is vacated, modified, or corrected
as prescribed in sections 10 and 11 of this title. If no
court is specified in the agreement of the parties, then such
application may be made to the United States court in and for
the district within which such award was made.
9 U.S.C. § 9. Here, the Franchise Agreement contains an
arbitration clause that states that "any controversy or
claim arising out of or relating to this Agreement, or the
breach of this Agreement, . . . will be sent to final and
binding arbitration, " and that "[j]udgment on the
arbitration award may be entered in any court having
jurisdiction." Franchise Agreement ¶ 21, Appl. Ex.
1, ECF No. 1-2. Choice Hotels filed its application to
confirm the award within one year of the arbitrator's
decision. The Motion for Default Judgment states that the
award was rendered in the State of Maryland. The Court is
therefore satisfied that the requirements of the FAA are met,
such that it may review the arbitration award.
review of an arbitration award is "severely
circumscribed, " and, in fact, is "among the
narrowest known at law because to allow full scrutiny of such
awards would frustrate the purpose of having arbitration at
all-the quick resolution of disputes and the avoidance of the
expense and delay associated with litigation." Apex
Plumbing Supply, Inc. v. U.S. Supply Co., Inc., 142 F.3d
188, 193 (4th Cir. 1998) (footnote omitted). Thus, where
there is a valid contract between the parties providing for
arbitration, and the arbitration resolved a dispute within
the scope of the arbitration clause, federal courts may
vacate an arbitration award only upon a showing of one of the
grounds set forth in the FAA, or if the arbitrator acted in
manifest disregard of law. Id. Section 10 of the FAA
limits review to the following grounds: (1) "the award
was procured by corruption, fraud, or undue means"; (2)
"there was evident partiality or misconduct" on the
part of the arbitrators; (3) "the arbitrators were
guilty of misconduct" by which "the rights of any
party have been prejudiced"; or (4) "the
arbitrators exceeded their powers." 9 U.S.C. §
10(a). A misinterpretation of a contract, or of law, does not
suffice to overturn an award. See Upshur Coals Corp. v.
United Mine Workers of Am., ...