United States District Court, D. Maryland
CHOICE HOTELS INTERNATIONAL, INC.
MUHAMMAD KHAN, et al.
DEBORAH K. CHASANOW United States District Judge
pending and ready for resolution are an application to
confirm arbitration award against Defendant Muhammad Khan
(ECF No. 1) and motions for clerk's entry of default (ECF
No. 7) and default judgment (ECF No. 8) as to Defendant Khan,
filed by Plaintiff Choice Hotels International, Inc.
(“Plaintiff”). The issues have been briefed, and
the court now rules, no hearing being deemed necessary. Local
Rule 105.6. For the following reasons, the motions will be
commenced this action on December 1, 2017, by filing an
application to confirm an arbitration award against Defendant
Khan and Abdus Salam. (ECF No. 1). Mr. Salam was dismissed as
a Defendant, without prejudice, on January 11, 2018. (ECF No.
6). The attached “ex-parte award of arbitrator, ”
dated August 31, 2017, recites that Plaintiff established by
a preponderance of the evidence that: Defendant Khan, Mr.
Salam, and Frontier Hotels Inc. materially defaulted on the
franchise agreement, entered into on November 20, 2008; the
agreement was properly terminated; and Plaintiff incurred
damages under the franchise agreement for unpaid royalty fees
and liquidated damages. (ECF No. 1-3, at 1-2). The arbitrator
ordered Defendant Khan, Mr. Salam, and Frontier Hotels Inc.
to pay, jointly and severally, the total sum of $307, 118.85
(consisting of $63, 501.52 for unpaid royalty fees, $24,
162.38 in interest, $214, 704.95 for unpaid liquidated
damages, and $4, 750 for administrative fees and arbitrator
compensation) within thirty days of the date of the
award. (Id. at 2-3). Plaintiff's
application requests entry of a judgment in favor of
Plaintiff and against Defendant Khan in the amount of $307,
118.85, plus post-judgment interest until paid, and $400.00
for the costs of this action. (ECF No. 1, at 6).
filed a return of service on January 11, 2018, indicating
that Defendant Khan was served personally on December 30,
2017. (ECF No. 4-1). On January 29, Plaintiff filed the
pending motions for entry of default (ECF No. 7) and default
judgement (ECF No. 8). Defendant Khan has not responded to
Motion for Entry of Default
to Fed.R.Civ.P. 55(a), “[w]hen 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 party's
default.” Although this rule refers to entry of default
by the clerk, “it is well-established that a default
also may be entered by the court.” Breuer Elec.
Mfg. Co. v. Toronado Sys. of Am., Inc., 687 F.2d 182,
185 (7th Cir. 1982).
Khan was served personally on December 30, 2017. (ECF No.
4-1). He was required to respond within twenty-one days after
service and has failed to do so or otherwise defend this
action. Accordingly, Plaintiff's motion for entry of
default as to Defendant Khan will be granted.
Motion for Default Judgment
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. See Dow
v. Jones, 232 F.Supp.2d 491, 494 (D.Md. 2002). The
United States Court of Appeals for the Fourth Circuit has a
“strong policy” that “cases be decided on
their merits, ” United States v. Shaffer Equip.
Co., 11 F.3d 450, 453 (4th Cir. 1993),
“but default judgment may be appropriate when the
adversary process has been halted because of an 
unresponsive party, ” SEC v. Lawbaugh, 359
F.Supp.2d 418, 421 (D.Md. 2005).
entry of default, the well-pled allegations in a complaint as
to liability are taken as true, but the allegations as to
damages are not. Id. at 422. Fed.R.Civ.P. 54(c)
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.” Thus, where a complaint specifies the
amount of damages sought, the plaintiff is limited to entry
of a default judgment in that amount. “[C]ourts have
generally held that a default judgment cannot award
additional damages . . . . because the defendant could not
reasonably have expected that his damages would exceed that
amount.” In re Genesys Data Techs., Inc., 204
F.3d 124, 132 (4th Cir. 2000).
application for confirmation of arbitration award and motion
for default judgment both request entry of judgment in the
amount of $307, 118.85, together with interest at the
post-judgment rate until paid, plus $400.00 for the costs of
this action. (ECF Nos. 1, at 6; 8 ¶ 3). The court need
not specifically grant an award of post-judgment interest as
Plaintiff is entitled to recover such interest by operation
of law. See 28 U.S.C. § 1961(a)
(“Interest shall be allowed on any money judgment in a
civil case recovered in a district court.”).
default judgment is sought with respect to an application for
confirmation of an arbitration award, the petitioner
“must show that it is entitled to confirmation of the
arbitration award as a matter of law.” United Cmty.
Bank v. Arruarana, 2011 WL 2748722, at *2 (W.D. N.C.
July 13, 2011) (citing D.H. Blair & Co. v.
Gottdiener, 462 F.3d 95, 109-10 (2d Cir.
2006); McColl Partners, LLC v. DME Holdings, LLC,
2011 WL 971575, at *1 (W.D. N.C. Mar. 17, 2011)). As set
forth in 9 U.S.C. § 9:
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 ...