United States District Court, D. Maryland
CHOICE HOTELS INTERNATIONAL, INC. Plaintiff.
MAA Laxmi, LLC. et al. Defendants
XINIS, UNITED STATES DISTRICT JUDGE
before the Court is Plaintiff Choice Hotels International.
Inc's ("Choice" or "Plaintiff) Application
to Confirm Arbitration Award. ECF No. 1, and Motion for
Default Judgment. ECF NO.8. For the following reasons.
Choices request for this Court to enter default judgment in
the amount of $221.789.79 is GRANTED.
October 18, 2016 Choice filed its Motion to Confirm
Arbitration Award, ECF No. I. after having obtained a
judgment against Defendants MAA Laxmi, LLC ("MAA
Laxmi"), Jayesh Bhakta. Kasmira Bhakta. and Sachin
Bhakta. collectively. "Defendants in arbitration
proceedings. Choice and Defendants had entered into a
franchise agreement on December 22, 2006 that provided for
arbitration as its dispute resolution mechanism for breach of
the agreement. ECF No. 1-3. Choice initiated arbitration
proceedings which none of the Defendants attended. On March
2, 2016, an "Ex Parte Award of Arbitrator" issued
in the amount of $121, 789.79 representing "outstanding
invoices dated from January 12, 2012 through December 13,
2012'" lost profits". interest charges on unpaid
invoices, as well as administrative fees and expense. ECF No.
1-2 at 2.
Bhakta and MAA Laxmi were properly served on July 13, 2016.
ECF NO.4, Kasmira Bhakta was properly served on August 4,
2016, ECF NO.5. and Sachin Bhakta was properly served on
September 15, 2016. ECF NO.6. Defendants failed to respond to
Choice's Motion or otherwise contest Choice's claims.
Choice then moved for entry of Default, ECF No. 7. and
Default Judgment. ECF NO.8. Defendants did not respond to
these motions, and the Clerk entered default on February 3,
2017. ECF NO.9.
Standard of Review
to Federal Rule of Civil Procedure 55(a), "[w]hen a a
party against whom a judgment for affirmative relief is
sought has failed to plead or otherwise defend, and that
failure is shown by affidavit or otherwise, the clerk must
enter the parties default." Fed.R.Civ.P. 55(a).
Thereafter, the court may enter default judgment at the
plaintiffs request and notice to the defaulting party.
Fed.R.Civ.P. 55(b)(2.. Plaintiff, however,, is not
automatically entitled to default judgment simply because the
defendant has not responded. Rather, entry of default
judgment is left to the sound discretion of the court.
See. e.g., Choice Hotels International. Inc. v. Ja I
Shree Navdurga. LLC, DKC 11-28932 2012 WL 5995248. at *1
(D. Md. Nov. 29, 2012); see also Choice Hotels
International, Inc. v. Austin Area Hospitality, Inc.,
TDC 15-05162 2015 WL 6123523. at*1 (D. Md. Oct. 14.2055).
Although the Fourth Circuit has announced a "strong
policy" in favor of deciding cases on their merits.
United States v. Schaffer Equip. Co., 11 F.3d 450,
453 (4th Cir. 1993). a default judgment may be appropriate
when a party is unresponsive. S.E.C. v. Lawbaugh,
359 F.Supp.2d 418, 421 (D. Md. 2005) (citing Jackson v.
Beech, 636 F.2d 831, 836 (D.C.Cir. 1980)).
plaintiff moving for default judgment "must show that it
is entitled to confirmation of the arbitration award as a
matter of law."' Choice, 2012 WL 5995248,
at *2 (collecting cases). The Federal Arbitration Act. 9
U.S.C. § 9, provides that "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 so specified for an order
confirming the award." Here, Plaintiff filed its motion
for confirmation within one year. Section 9 further provides
that this Court must grant the order unless the award is
modified, vacated or corrected pursuant to sections 10 and 11
of the same Act. Id.
of an arbitration award is "severely circumscribed"
because to allow for a more expansive review 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, 194
(4thCir. 1998). Accordingly. this Court may vacate an
arbitration award based on one of the grounds enumerated in
the Federal Arbitration Act or if the arbitrator acted in
manifest disregard of law. Id. Neither are at issue
the instant arbitration clause in the franchise agreement
specifically provides for final and binding arbitration for
any "controversy or claim arising out of or relating
to" the franchise agreement.. ECF No. 1-3 at 1. Although
Choice's motions do not expressly identify where
arbitration was held, the Franchise Agreement makes plain
that it would take place in Maryland, and the arbitration
award confirms the proceedings were held "in accordance
with the arbitration agreement entered into" between
Plaintiff and Defendants. ECF No. 6-2; see also
Defendant's Motion for Default Judgment. ECF NO. 8 at 3
("The arbitration was conducted in accordance with the
terms of the parties" Arbitration Agreement."). The
parties are also diverse. and the amount of the arbitration
award for which the Plaintiff seeks confirmation exceeds the
jurisdictional minimum for diversity jurisdiction in this
Court. See 28 U.S.C. § 1332(a). The pleadings
before this Court, therefore, demonstrate that the
arbitration award can and should be confirmed.
arbitrator awarded Plaintiff $121, 789.79, which was
comprised of$30, 730.58 in franchise fees. $24.230711 in
interest $57, 816.00 in liquidated damage, and $9, 012.50 in
administrative expenses and arbitrator compensation. ECF No.
1-2. Plaintiff requests entry of a default judgment in that
amount., "plus post-judgment interest until paid and
$400 for the costs of this action'" ECF NO.6. The
Court grants entry of $221, 789.79 plus $400 in costs because
Plaintiff requested the same in its initial petition for
confirmation of the arbitration award. ECF No. I.
See Fed. R. Civ. P. 54(c). Insofar as Plaintiff
seeks reimbursement for post-judgment interest, such is
awarded by operation of law and not by Court order.
See 28 U.S.C. § 1961(a); Choice, 2012
WL 5995248. at *4. Plaintiff has demonstrated that it is
entitled to the remaining requested award and a default
judgment in that amount will be entered.
above stated reason,, Plaintiff Choice's motion for
default judgment is ...