United States District Court, D. Maryland
CHOICE HOTELS INTERNATIONAL, INC. Plaintiff,
Shive, LLC, et al . Defendants
Paula 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. 6. For the following
reasons, Choice's request for this Court to enter default
judgment in the amount of $ 105, 679.58 is GRANTED.
October 26, 2016, Choice filed its Application to Confirm
Arbitration Award, ECF No. 1, after having obtained a
judgment against Defendants Shive, LLC (“Shive”),
and Rupesh V. Patel, collectively, “Defendants, ”
in arbitration proceedings. Choice and Defendants had entered
into a franchise agreement on June 16, 2008, that provided
for arbitration as its dispute resolution mechanism for
breach of the agreement. ECF No. 1-2. Choice initiated
arbitration proceedings which none of the Defendants
attended. On June 6, 2016, an “Award of
Arbitrator” issued in the amount of $105, 679.58
representing unpaid franchise and related fees, interest
accrued through April 2016 and liquidated damages as well as
Defendants' portion of arbitration expenses. ECF No. 1-1.
and Patel were properly served on December 8, 2016. ECF No.
4. Defendants failed to respond to Choice's Motion or
otherwise contest Choice's claims. Choice then moved for
entry of Default, ECF No. 5, and Default Judgment, ECF No. 6.
Defendants did not respond to these motions, and the Clerk
entered default on January 31, 2017. ECF No. 8.
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
plaintiff's 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 11-2893, 2012 WL 5995248,
at *1 (D. Md. Nov. 29, 2012); see also Choice Hotels
International, Inc. v. Austin Area Hospitality, Inc.,
TDC 15-0516, 2015 WL 6123523, at *1 (D. Md. Oct. 14, 2015).
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 (4th Cir. 1998).
Accordingly, this Court may vacate an arbitration award based
on a ground enumerated in the Federal Arbitration Act or if
the arbitrator acted in manifest disregard of law.
Id. Neither are at issue here.
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 terms of the parties' Arbitration
Agreement.” ECF No. 1, p. 4. 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 $105, 679.58, which is comprised
of $27, 174.46 in unpaid franchise and related fees, $16,
637.12 in interest through April 2016, $57, 600.00 in
liquidated damages, and $ 4, 268.00 in administrative
expenses and arbitrator compensation. ECF No. 6-2. 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 $105, 679.58 plus $400 in costs because Plaintiff
requested the same in its initial petition for confirmation
of the arbitration award. ECF No. 1. 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
above-stated reasons, Plaintiff Choice's motion for
default judgment is ...