United States District Court, D. Maryland
THEODORE D. CHUANG UNITED STATES DISTRICT JUDGE.
September 30, 2015, Choice Hotels International Inc.
("Choice") filed an Application to Confirm
Arbitration Award against Defendants. This Court dismissed
the action on May 11, 2016 based on Choice's failure to
articulate the jurisdictional basis for the Application and
reopened the case on August 18, 2016 upon Choice's Motion
for Reconsideration. On August 31, 2016, Choice filed an
Amended Application to Confirm Arbitration Award against
award at issue is based on Defendants' alleged breach of
a franchise agreement between the parties ("the
Franchise Agreement"), specifically Defendants'
failure to commence construction of a hotel in Virginia
Beach, Virginia within 18 months of the date on which the
Franchise Agreement was executed. On April 16, 2015, the
arbitrator awarded Choice a total of $134, 917.50, comprised
of liquidated damages, accumulated interest, fees, and
arbitration expenses. The award also includes interest on the
liquidated damages and accumulated interest amount "at
the rate of 1.5% per month or portion of a month" until
paid. Award 2, Appl. Ex. 1, ECF No. 1-4; Am. Appl. ¶ 15,
ECF No. 19. Defendants did not present any evidence or
participate in the arbitration proceeding..
were served with the Application to Confirm Arbitration Award
on or about November 10, 2055 and the Amended Application on
or about August 31, 2016, but they have not filed any
response to either Application. On February 2, 2017, Choice
filed an Amended Request for Entry of Default and an Amended
Request for Judgment by Default ("the Motion")
against Defendants. The Clerk entered a default against
Defendants on February 13, 2017.
Defendants were served with the Motion, to date, they have
not responded to it or to any other filing in this case. The
Motion is now ripe for disposition, and the Court finds no
hearing necessary. See D. Md. Local R. 105.6. For
the reasons set forth below, the Motion is granted.
Motion, Choice asserts that Defendants have failed to file a
timely responsive pleading to its Amended Application. Thus,
Choice argues that it is entitled to default judgment against
Defendants in the amount of the arbitration award,
post-judgment interest, and costs.
Federal Rule of Civil Procedure 55(b)(2), a default judgment
after an entry of default is left to the discretion of the
court. S.E.C. v. Lawbaugh, 359 F.Supp.2d 418, 411
(D. Md. 2005). Although the United States Court of Appeals
for the Fourth Circuit recognizes a "strong policy that
cases be decided on their merits, " United States v.
Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993), a
default judgment may be appropriate when a party is
unresponsive, Lawbaugh, 359 F.Supp.2d at 422-23
(citing Jackson v. Beech, 636 F.2d 831, 836 (D.C.
Cir. 1980)). When default judgment is sought with respect to
an application for confirmation of an arbitration award, the
plaintiff must show that it is entitled to confirmation as a
matter of law. See D.H. Blair & Co. v.
Gottdiener, 462 F.3d 95, 109-10 (2d Cir. 2006).
The Arbitration Award
Court is satisfied that it has diversity jurisdiction over
this case pursuant to 28 U.S.C.§ 1332. Choice is a
Delaware corporation with its headquarters located in
Rockville, Maryland. Defendants are citizens of North
Carolina. In addition, the amount in controversy is greater
than the $75, 000 jurisdictional minimum under 28 U.S.C.
Federal Arbitration Act ("FAA"), 9 U.S.C.
§§ 1-16 (2012), provides in part that:
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
as prescribed in sections 10 and 11 of this title. If no
court is specified in the agreement of the parties, then such
application may be made to the United States court in and for
the district within which such award was made.
9 U.S.C. § 9. Here, the Franchise Agreement contains an
arbitration clause that states that "any controversy or
claim arising out of or relating to this Agreement or the
breach of this Agreement . . . will be sent to final and
binding arbitration, " and that "[j]udgment on the
arbitration award may be entered in any court having
jurisdiction"" Franchise Agreement ¶ 22, Appl.
Ex. 2, ECF No. 1-5. The dispute relating to the failure to
construct a hotel arises under the Franchise Agreement Choice
filed its application to confirm the award within one year of
the arbitrator's decision. The Amended Application states
that the award was rendered in ...