United States District Court, D. Maryland, Southern Division
J. HAZEL UNITED STATES DISTRICT JUDGE
termination of their franchise agreement, Plaintiff Midas
International Corporation ("Midas'") initiated
this action against Defendants Poulah Investors, LLC
("Poulah"), Laurent Djampa, Clovis Djeutcha, Atanis
Kadjemse. Apolin Pougoum. and Martin Tegangtchouang (the
"Individual Defendants"), alleging trademark
infringement in violation of the Lanham Act, 15 U.S.C. S 1051
el seq., common law unfair competition, and breach
of contract against Poulah. and breach of guarantees against
the Individual Defendants. ECF NO.1. Two motions are
currently pending before the Court: Midas' Motion for
Default Judgment against Poulah, ECF No. 34, and its Motion
for Summary Judgment against the Individual Defendants, ECF
No. 35. No hearing is necessary to resolve these Motions.
See Loc. R. 105.6 (D. Md.). For the reasons that
follow, both motions are granted, in part, and denied, in
is a franchisor of automotive specialty shops that service
and install exhaust systems, brake components, suspension
parts, heating and cooling system parts, tires, batteries,
and other motor vehicle parts, and also performs services in
connection with these sales and performs general vehicle
maintenance services. ECF No. 1¶10; ECF No. 35-1 at
Midas has approximately 1, 000 franchises in the United
States, at least twenty-five of which are in Maryland, each
doing business as "Midas." ECF No. 1¶ 11; ECF
No. 35-1 at1. The relationship between Midas and each of its
franchisees is governed by a franchise agreement allowing
franchisees to use, for a term of years, Midas'
trademarks, service marks, trade dress, and licensed methods
in exchange for, among other things, monthly royalties. ECF
No. 1 ¶ 12; ECF No. 35-1 at 2. Midas is the owner of
numerous trademark registrations issued by the United States
Patent and Trademark Office ("PTO"), the first of
which was issued in 1957, on various trade names and service
marks, including "MIDAS, " "MIDAS
MUFFLER"" and "MIDAS MUFFLER SHOPS." ECF
No. 1 ¶ 13; ECF No. 35-1 at 2, 9-26. Midas has
established significant goodwill throughout the years it has
operated as a franchisor with respect to the goods and
services it offers. ECF No. 1¶14; ECF No. 35-1 at 3.
November 7, 1994, Midas entered into a franchise agreement
with J&D Automotive. Inc. ("J&D"). in which
Midas licensed the use of its service marks for a twenty-year
term (the "Franchise Agreement" or
"Agreement"). ECF No. 1 ¶ 15; ECF No. 35-1 at
3, 27-43. The Franchise Agreement allowed J&D to assign
its rights thereunder to another party, subject to Midas'
consent. ECF No. 35-1 at 34-35. J&D operated a Midas
franchise at 8528 Piney Branch Road in Silver Spring,
Maryland (the "Shop") until, on April 1, 2012,
J&D assigned the Franchise Agreement to Poulah (the
"Assignment"). ECF No. 1 ¶ 15-16; ECF No. 35-1
at 3; 44-48. Pursuant to the Assignment, Poulah, as well as
the Individual Defendants, agreed to be bound by the
Franchise Agreement.. ECF No. 1¶ 16; ECF No. 35-1 at 3,
to the Franchise Agreement, . Poulah acknowledged the
validity of Midas' trademarks and further acknowledged
that the marks are the sole property of Midas, but that
Poulah was granted the right to use the marks so long as the
Franchise Agreement remained in force. ECF No. 35-1 at 28.
The Franchise Agreement further provided that the Midas marks
were the exclusive property of Midas and that Poulah was
prohibited from using the marks during or after the term of
the Agreement except in accordance with the terms of the
Franchise Agreement.. Id. During the term of the
Agreement, . Poulah agreed to pay Midas monthly royalties of
10 percent of the franchise's total gross revenue.
Id. at 30. If such royalties were not paid when due,
Poulah was obligated to pay interest at a per annum rate of
three percentage points above the prime lending rate of the
First National Bank of Chicago. Id.
Franchise Agreement specified the obligations of a franchisee
after termination of the Agreement. Specifically, the
Agreement provided that upon its termination, Poulah was
required to, among other things, promptly pay all liquidated
damages owed to Midas; immediately discontinue use of any
Midas trademarks or service marks; remove or destroy all
signs containing any Midas marks, and destroy or surrender to
Midas all stationary, letterheads, forms, promotional
displays, and advertising containing Midas marks.
Id. at 39. In the event of default or breach of the
Franchise Agreement, Poulah "acknowledge[d] that it
would be difficult to ascertain the exact amount of damages
incurred by Midas ... and that.. . Midas
shall be entitled to recover from (Poulah) ... as and for its
liquidated damages, the sum of $100.00 for each day's
continuance of such breach or default after written
notification ... by Midas . . . ."
Id. The Franchise Agreement further provided that,
in the event Midas was required to obtain counsel or other
legal expenses to enforce any obligations under the
Agreement. Midas was entitled to recover attorneys' fees
and costs from Poulah. Id. at 41.
they agreed to the Assignment of the Franchise Agreement, the
Individual Defendants also executed a personal guaranty
whereby they each agreed to be held jointly and severally
liable for any payment that would become due to Midas from
Poulah (the "Guaranty"). See ECF No. 1
¶17; ECF No. 35-1 at 49-50. Pursuant to the Guaranty,
the Individual Defendants also agreed to reimburse Midas for
"all expenses, collection charges, court costs and
attorney's fees incurred in endeavoring to collect or
enforce any of the [listed obligations] against [Poulah]
and/or [the Individual Defendants]...."
ECF No. 35.1 at 49.
the Franchise Agreement was set to expire in November 2014,
Poulah was delinquent in its financial obligations to Midas.
See ECF No. 1 ¶18; ECF No. 35-1 at 5. Midas,
however, offered Poulah the opportunity to either renew the
Agreement if its default was cured, or to extend the term of
the Agreement to give Poulah more time to review its renewal
opportunity. ECF No. 1¶ 19; ECF No. 35-1 at 5. Poulah
did not take advantage of either opportunity, and the
Franchise Agreement terminated in accordance with its terms
on November 7, 2014. ECF No. 1 ¶¶
20-21; ECF No. 35-1 at 5-6. Poulah nevertheless continued to
operate as a Midas shop. ECF No. I ~ 22; ECF No. 35-1 at 6.
December 17, 2014, Midas sent a letter to Poulah and the
Individual Defendants notifying them of the expiration of the
Franchise Agreement.. ECF No. 35-1 at 52; see also
ECF No. 1¶ 23; ECF No. 35-1 at 6. As of that date,
Poulah was at least $13, 587.10 delinquent on its financial
obligations to Midas. ECF No. 35-1 at 5; see a/so
ECF No. 1 ¶18. Midas" December 17 letter reminded
Poulah and the Individual Defendants of their
post-termination obligations under the Franchise Agreement,
and further noted that, if Midas was required to obtain
counsel to enforce the terms of the Agreement, the Individual
Defendants would be jointly and severally liable for all
court costs and attorneys' fees. ECF No. 35-1 at 53-54.
Poulah nevertheless continued to operate as a Midas shop, and
on January 14, 2015, Midas sent another letter to Poulah and
the Individual Defendants demanding that they immediately
cease and desist identifying as a Midas business. ECF No.
35-1 at 56-58. In the months that followed, Midas repeatedly
urged Poulah and Defendant Kadjemse, who served as
Poulah's manager, to cease using Midas' marks and to
cease holding itself out as an authorized Midas franchisee.
ECF No. 1 ¶ 24; ECF No. 35-1 at 6.
Poulah nevertheless continued to use Midas' trademark,
including on the Shop's exterior pole sign, ECF No. 1
¶25; ECF No. 35-1 at 6, 60, until August 9, 2015, when
it went out of business without having paid the $13, 587.10
it owed to Midas. ECF No. 35-1at6.
initiated the present action on July 30, 2015. ECF NO.1.
Defendants Pougoum, Tegangtchouang, Djeutcha, and Kadjemse
each filed Answers to the Complaint on August 27, 2015. ECF
Nos. 20, 21, 22 & 23. After the Court granted multiple
motions for extension of time for Defendant Djampa to answer
the Complaint, Djampa subsequently consented to the entry of
a permanent injunction against him, and Midas then dismissed
any claims it had against Djampa with prejudice. ECF No. 31.
Additionally, the Court administratively closed this action
with respect to Pougoum pursuant to 11 U.S.C. S 362(a) upon
receiving notice that Pougoum had filed for bankruptcy
relief. See ECF Nos. 45 & 48. Poulah failed to
respond to the Complain, and default was entered against it
on April 12, 2016. ECF No. 54. Midas' Motion for Default
Judgment against Poulah, ECF No. 34, and its Motion for
Summary Judgment against the Individual Defendants, ECF No.
35, which now only seeks judgment against Tegangtchouan,
Djeutcha, and Kadjemse, see ECF No. 53 at 2 n.1, are
now pending before the Court. Kadjemse and Djeutcha have
opposed Midas' Motion for Summary Judgment, but
Tegangtchouang has not. ECF Nos. 51 & 52. Midas filed a
combined reply in further support of its Motion for Summary
Judgment, ECF No. 53, and, accordingly, both of its Motions
are now ripe for review.
MOTION FOR DEFAULT JUDGMENT AGAINST POULA
Standard of Review
defendant's 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
Carp., No. DKC-11-0438, 2011 WL 5I18328 at * 2 (D. Md.
Oct. 25.201I) (citing Dow v. Jones, 232 F.Supp.2d
491, 494 (D. Md. 2002)). Although "[t]he Fourth Circuit
has a 'strong policy' that 'cases be decided on
their merits, "' id. (citing United
States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th
Cir.I993)), "default judgment may be appropriate when
the adversary process has been halted because of an
essentially unresponsive party[.]" Id. (citing
S.E.C. v. Lawbaugh, 359 F.Supp.2d418, 421 (D. Md.
default, the well-pled allegations in a complaint as to
liability are taken as true, although the allegations as to
damages are not." S.E.C. v. Lawbaugh, 359
F.Supp.2d 418, 422 (D. Md. 2005). Rule 54(c) of the Federal
Rules of Civil Procedure limits the type of judgment that may
be entered based on a party's default: "A default
judgment must not differ in kind from, or exceed in amount,
what is demanded in the pleadings." In entering default
judgment, a court cannot, therefore, award additional damages
"because the defendant could not reasonably have
expected that his damages would exceed th[e] amount [plead in
the complaint]." In re Gene;ys Data Techs..
Inc., 204 F.3d 124, 132 (4th Cir. 2000). Where a
complaint does not specify an amount, "the court is
required to make an independent determination of the sum to
be awarded." Adkins v. Teseo, 180 F.Supp.2d 15,
17 (D.D.C. 2001) (citing S.E.C. v. Management Dynamics.
Inc., 515 F.2d 801, 814 (2nd Cir, 1975); Au Bon Pain
Corp. v. Artect, Inc., 653 F, 2d 61, 65 (2nd Cir.
1981)), While the Court may hold a hearing to prove damages,
it is not required to do so; it may rely instead on
"detailed affidavits or documentary evidence to
determine the appropriate sum.-Adkins, 180 F.Supp.2d
at 17 (citing United Artists Corp. v. Freeman, 605
F.2d 854, 857 (5th Cir. 1979)); see also Laborers'
Districl Council Pension, el al. v. E.G.S.,
Inc., No. WDQ-09-31742 2010 WL 1568595, at *3 (D.
Md. Apr.I6, 2010) C'[O]n default judgment, the Court may
only award damages without a hearing if the record supports
the damages requested.'').
considering a motion for default judgment, the Court accepts
as true the well-pleaded factual allegations in the Complaint
as to liability, but nevertheless "must determine
whether the well-pleaded allegations ... support the relief
sought in th[e] action." Int'l Painters &
Allied Trades Indus. Pension Fund v. Capital Restoration
& Painting Co.,919 F.Supp.2d 680, 685 (D. Md. 2013)
(citation and internal quotation marks omitted). In the
Complaint, Midas alleged three claims against Poulah: breach
of contract, trademark infringement in violation of the
Lanham Act, and common law unfair competition. ECF No. 1
¶¶ 28-45. In its Motion for Default Judgment, Midas
indicated that ...