United States District Court, D. Maryland, Southern Division
CHOICE HOTELS INTERNATIONAL, INC. Plaintiff,
SHREE SAI PROPERTIES, et at, Defendants.
J Hazel United States District Judge.
Choice Hotels International, Inc. ("Plaintiff or
"Choice") filed an Application to Confirm the
Arbitration Award against Defendants Shree Sai Properties,
LLC, Sandip Patel, and Ketan Patel (collectively,
"Defendants"). Presently pending before the Court
is Defendants' Motion to Dismiss Plaintiffs'
Application to Confirm Arbitration Award, ECF No. 11, and
Plaintiffs' Motion to Enforce Arbitration Clause, ECF No.
22. No hearing is necessary. See Loc. R. 105.6 (D.
Md.). For the following reasons, Defendants' Motion to
Dismiss is denied, and Plaintiffs Motion to Enforce
Arbitration Clause is granted.
is a Delaware corporation primarily engaged in the business
of hospitality franchising. ECF No. 1 at 1; ECF No. 18
¶ 1. On or about September 16, 2008, Plaintiff entered
into a franchise agreement (the "Franchise
Agreement*') with Defendants Shree Sai Properties, an
Indiana limited liability company, Sandip Patel, and Ketan
Patel, individually, jointly and severally. ECF No. 18 ¶
1. Under this Agreement, Defendants, as franchisees, would
open and operate a hotel at 7275 South County Road 75 East
Exit 78, 1-69, Warren, Indiana 46792 using Choice's
Comfort Inn® mark. Id. The parties'
Franchise Agreement contained an arbitration clause, stating
in relevant part that:
Any controversy or claim arising out of or relating to this
Agreement, or the breach of this Agreement, including any
claim that this Agreement or any part of this Agreement is
invalid, illegal, or otherwise voidable or void, as well as
any claim that we violated any laws in connection with the
execution or enforcement of this Agreement and any claim for
declaratory relief, will be 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 . . .
ECF No. 1-2 at 1; see also ECF No. 11-2 at 19. The
arbitration clause further provided that "[i]f any party
fails to appear at any properly noticed arbitration
proceeding, an award may be entered against the party,
notwithstanding its failure to appear." Id.
September 16, 2008 to approximately April 9, 2012, Defendants
operated the hotel in Warren, Indiana as a Comfort Inn Hotel.
ECF No. 18-13 at 2. By 2011, however, Defendants had
"[fallen] behind in their monthly payment
obligations" to franchisor Choice. Id. Choice
sent Defendants two notices of default, in February 2011 and
October 2011. Id. Additionally, Choice learned in
April 2012 that the property had "changed
ownership" via a Purchase Agreement from Sandip and
Ketan Patel to non-party Kailash Varkal. Id.; see
ECF No. 11-1. Under the parties" Franchise Agreement,
Defendants were prohibited from transferring the hotel
without Choice's prior written consent. See ECF
No. 11-2 at 10; ECF No. 18-13 at 3.
about September 23, 2014, Choice filed an arbitration demand
against Defendants with the American Arbitration Association
("AAA") alleging breach of contract and requesting
an award for liquidated damages, costs, and expenses. ECF No.
18 ¶ 3; ECF No. 18-1. Choice sent an arbitration demand
to Defendants' last known addresses, including an address
in Monee, Illinois; Round Lake, Illinois; and Warren,
Indiana. Id.; ECF No. 18-1 at 1-6. The AAA case
administrator also sent an initiation letter to these
addresses on September 26, 2014. ECF No. 18 ¶ 4; ECF No.
18-2 at 1-2. Choice states that they received a
"certified returned receipt" for the demand sent to
Ketan Patel at 25542 E. Sunrise Drive, Monee, IL 60449,
signed by "E.R. Patel, " and confirming that the
demand was received at the address sent. ECF No. 18 ¶ 5;
ECF No. 18-3 at 1. However, the AAA notified Choice that the
mail sent to Sandip Patel at 252 W. Spruce Drive, Round Lake,
IL 60073 was returned as undeliverable. ECF No. 18 ¶ 6;
ECF No. 18-3 at 3. According to Choice, they were obliged by
the Franchise Agreement to continue sending correspondence to
this address until the franchisees changed it, but Choice
''performed [an] additional search" and
identified a new personal address for Sandip Patel at 5409
Castle Pines, Knoxville, TX 37920. Id. ¶ 7; ECF
No. 18-5 at 1. Choice attests that neither they nor the AAA
received undeliverable returned mail from the Knoxville
address. ECF No. 18 ¶ 8. Thus, all further
correspondence was sent to the addresses in Monee, IL,
Warren, IL. and Knoxville, TN. Id. ¶ 9.
January 2015 and October 2015, numerous communications were
sent by Choice or the AAA to the Defendants, including
letters selecting and appointing the arbitrator, scheduling
various hearings, and reporting the results of those
hearings. ECF No. 18 at 4-6; ECF Nos. 18-6-18-16. A
preliminary hearing was held by conference call on March 27.
2015. ECF No. 18 ¶ 14. Defendants did not attend the
call. Id. The AAA sent Defendants the Report of the
Preliminary Hearing on April 13, 2015. Id. ¶
15; ECF No. 18-11 at 1. A return receipt for the Report
signed by "C.R. Patel" at the Knoxville address was
received. ECF No. 18 ¶ 16; ECF No. 18-12 at 3. The
Report of the Preliminary Hearing established a motions
deadline of May 8, 2015, a deadline for responses of May 15,
2015, and stated that if "no Response is received[, ]
the Arbitrator will issue a decision on May 29, 2015."
ECF No. 18-11 at 5. Choice filed a Motion for Judgment on or
about May 8, 2015 and sent copies to Defendants. ECF No. 18
¶ 18; ECF No. 18-13. Defendants did not respond. ECF No.
18 ¶ 18. The Arbitrator rendered her final award on
October 8, 2015. ECF No. 18 ¶ 21; ECF No. 18-16 at 1-3.
Another certified return receipt signed by "S.
Patel" was received from the Knoxville address on
October 17. 2015. ECF No. 18 ¶ 21; ECF No. 18-16 at 4.
Defendants did not participate in any part of these
proceedings. See ECF No. 18 at 6.
filed the instant Complaint in this Court on January 27,
2016. seeking confirmation of the arbitration award. ECF No.
18 ¶ 22. On June 14, 2016, Defendants Ketan Patel and
Sandip Patel filed a Motion to Dismiss, ECF No. 11, and
separately filed an Answer to the Complaint, a Third Party
Complaint against Kailash Varkal, a Cross-Claim against Shree
Sai Properties, and a Counterclaim against Choice Hotels
International, ECF No. 12. Plaintiff filed a Response in
Opposition to the Motion to Dismiss on July 8, 2016, ECF No.
18, and a Motion to Enforce Arbitration Clause and Answer to
the Counterclaim, ECF No. 22, on August 30, 2016. Defendants
filed their Response in Opposition to the Motion to Enforce
Arbitration Clause on September 19, 2016. ECF No. 25. The
pending motions are now ready for resolution.
terms of the parties" signed Franchise Agreement, the
authenticity of which has not been disputed, the parties
agreed to submit claims arising out of the Agreement to
arbitration. See ECF No. 1-2 at 1; ECF No. 11-2 at
19. The Federal Arbitration Act, 9 U.S.C. § 1 el
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. . .
9 U.S.C. § 9 (emphasis added). An award has been issued
in this matter by an arbitrator. ECF No. 1-1 at 1. The
arbitration clause of the parties' Agreement states that
"[j]udgment on the arbitration award may be entered in
any court having jurisdiction." See ECF No. 1-2
at 1; ECF No. 11-2 at 19. Defendants have not filed a Motion
to Vacate in this case; rather, they have filed a Motion to
Dismiss. Nonetheless, the Court will construe Defendants'
Motion liberally as a Motion to Vacate. As ...