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Choice Hotels International, Inc. v. Airport Hospitality, LLC

United States District Court, D. Maryland

May 9, 2016

CHOICE HOTELS INTERNATIONAL, INC. Plaintiff,
v.
AIRPORT HOSPITALITY, LLC, et. al, Defendant.

MEMORANDUM

A. David Copperthite United States District Judge

This Memorandum Opinion[1] addresses the Complaint for Judgment by Confession ("Complaint") (ECF No.) filed by Plaintiff Choice Hotels International, Inc. ("Choice") against Defendants Airport Hospitality, LLC ("Airport"), Prashant B. Patel, Kirit Patel, Dipak Patel, Shailesh Patel, and Kaushik "Ken" Talati (collectively, "Defendants"). For the reasons stated herein, I direct that the Clerk of the Court enter judgment by confession against Defendants.

Local Rule 108.1 ("Judgment by Confession") provides:

A complaint requesting the entry of judgment by confession shall be filed by the plaintiff accompanied by the written instrument authorizing the confession of judgment and entitling the plaintiff to a claim for liquidated damages and supported by an affidavit made by the plaintiff or someone on that party's behalf stating the specific circumstances of the defendant's execution of said instrument and including, where known, the age and education of the defendant, and further including the amount due thereunder, and the post office address (including street address if needed to effect mail delivery) of the defendant.

Loc. R. 108.1.a.

Upon review of the documents required to be submitted by Local Rule 108.1,

the Court may direct the entry of judgment upon a finding that the aforesaid documents prima facie establish (1) a voluntary, knowing, and intelligent waiver by the defendant of the right to notice and a prejudgment hearing on the merits of the claim of the plaintiff for liquidated damages and (2) a meritorious claim of the plaintiff for liquidated damages against the defendant.

Loc. R. 108.1.b.

Here, Choice attached to its Complaint a Settlement and Release Agreement ("the Settlement Agreement") (ECF No. 1-1) and a Promissory Note in the amount of $331, 790.00 ("the Note") (ECF No. 1-2). Both the Settlement Agreement and the Note are signed by Defendants Prashant B. Patel, Kirit Patel, Dipak Patel, Shailesh Patel, and Ken Talati, both individually and as members of Airport.

According to the terms of the Settlement Agreement, Choice waived its claim against Defendants for liquidated damages owed to Choice by Defendants due to the premature termination of an initial franchise agreement between the parties in exchange for Defendants promise to (1) pay Choice $24, 000.00 in accordance with the schedule set forth in the Settlement Agreement; (2) execute a first new franchise agreement ("First New Franchise Agreement") and a second new franchise agreement ("Second New Franchise Agreement") with Choice; and (3) begin to rent sleeping rooms to the public at the Econo Lodge hotel ("First New Hotel") and the Rodeway Inn hotel ("Second New Hotel") by March 31, 2015 pursuant to the First New Franchise Agreement and Second New Franchise Agreement made with Choice, respectively. See ECF No. 1-1 at 1.

Under the terms of the Note, the entire principal balance of the Note "shall be waived and forgiven" if "no default occurs under the Settlement and Release Agreement or this Note before or on the Maturity Date." ECF No. 1-2 at 1. In the event of a default, however, the Note provides that:

[T]he undersigned hereby irrevocably authorizes any attorney at law to appear for them in any court of record at any time after the Agreed Amount remains unpaid and to confess a judgment against Makers, without process, in favor of the Holder of this Note, in the principal sum of three hundred thirty-one thousand, seven hundred ninety dollars and 00/100 ($331, 790.00), less any payments, together with interest often percent (10%) per annum from default until paid, costs, and, if not prohibited by law, fifteen percent (15%) of the unpaid principal and interest of this Note as an attorney's fee, and to waive and release all errors that may intervene in any such proceedings.

Id. (emphasis added). The Note further provides that:

The occurrence of one or more of the following events constitute a default under this Note: (1) if any installment due under paragraph 2 of the Settlement and Release Agreement remains unpaid ten (10) days after its due date; or (2) the Makers fail to execute the First New Agreement for the First New Hotel by March 31, 2014; or (3) the Makers fail to begin renting sleeping rooms to the public at the First New Hotel in accordance with the terms of the First New Agreement; or (4) the Makers fail to execute the Second New Agreement for the Second New Hotel by March 31, 2014; or ...

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