United States District Court, D. Maryland
CHOICE HOTELS INTERNATIONAL, INC.
GOPI HOSPITALITY, LLC, et al.
DEBORAH K. CHASANOW UNITED STATES DISTRICT JUDGE.
filed a motion for default judgment on July 24, 2018. (ECF
No. 6). For the following reasons, the motion will be granted
as to the corporate defendant and denied as to the individual
commenced this action on June 8, 2018 by filing an
application to confirm an arbitration award against
Defendants Gopi Hospitality, LLC, Upesh Shah (“Mr.
Shah”), and Vipul M. Patel (“Mr. Patel”).
(ECF No. 1). The attached “Final Award, ” dated
January 31, 2018 states Plaintiff established by a
preponderance of the evidence that: (1) Defendants Gopi
Hospitality, LLC, Mr. Shah, and Mr. Patel materially
defaulted on the franchise agreement entered into on May 7,
2007; (2) the agreement was properly terminated; and (3)
Plaintiff incurred damages under the franchise agreement.
to the arbitration clause in the parties' franchise
agreement, Plaintiff commenced arbitration proceedings with
the American Arbitration Association on November 23, 2016.
(ECF No. 1-2, at 1-2). Richard T. Seymour (“the
arbitrator”) ordered Defendants Gopi Hospitality, LLC,
Mr. Shah, and Mr. Patel to pay, jointly and severally, the
total sum of $229, 526.65. (ECF No. 1-2, at 4). The total
award was comprised of $165, 900 in damages for lost profits,
$52, 138.15 in damages other than lost profit but including
interest, and $11, 488.50 for arbitration expenses.
served Defendants with a summons and copy of the application
on June 16, 2018. (ECF No. 4). Plaintiff moved for an entry
of default by the Clerk (ECF No. 5) and for default judgment
(ECF No. 6) on July 24, 2018. The Clerk entered default
against all defendants on August 3, 2018. (ECF No. 8).
Defendants Mr. Shah and Mr. Patel filed a motion for
extension of time on August 13, 2018, requesting an
additional 30 days to answer Plaintiff's complaint. (ECF
No. 9). The court construed Defendants' motion as a
motion to vacate the entry of default and provided Plaintiff
fourteen (14) days to respond. (ECF No. 10).
filed a “reply by the defendant towards the application
filed by the plaintiff for the arbitration award” on
August 11, 2018. (ECF No. 11). Plaintiff did not respond to
Defendants' motion. In a memorandum opinion and order
dated September 4, 2018, the court accepted the Individual
Defendants' reply as an answer to Plaintiff's
application on behalf of the Individual Defendants Mr. Shah
and Mr. Patel and reminded the corporate defendant, Gopi
Hospitality, LLC, that it may appear only through counsel.
(ECF No. 12). The opinion and order also vacated the
Clerk's entry of default as to the Individual Defendants,
Mr. Shah and Mr. Patel. (Id.). Thus, the motion for
default judgment can only apply to the corporate defendant.
Motion for Default Judgment
defendant's default does not automatically entitle the
plaintiff to entry of a default judgment. Instead, the
decision to enter default is within the court's
discretion. See Dow v. Jones, 232 F.Supp.2d 491, 494
(D.Md. 2002); 10A Charles Alan Wright et al., Federal
Practice and Procedure § 2682 (4th ed.
1998) (“Rule 55(a)  authorizes a default to be
entered against any party who fails to plead or otherwise
defend within the 21 days allowed by Rule 12(a). Of course,
the court has discretion to grant additional time to a party
to plead or otherwise defend.”). 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 recognizes the
court's discretion to grant default judgment “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, although 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). Here, the damages request in Plaintiff's motion
for default judgment is an exact replica of the amount
Plaintiff sought in the application for confirmation of
arbitration award. Because both the motion and the
application request damages in the amount of $229, 526.65,
exclusive of interest and costs, Plaintiff's motion for
default judgment complies with the damages requirement of
Fed.R.Civ.P. 54(c). (ECF Nos. 1, at 6; 6, at
default judgment is sought with respect to an application for
confirmation of an arbitration award, the petitioner
“must [also] 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, No. 3:10cv274, 2011 WL 971575, at *1
(W.D. N.C. Mar. 17, 2011)). As set forth in 9 U.S.C. §
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.
arbitration clause in the parties' franchise agreement
provides, in part, 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.” (ECF No. 1-1 ¶ 21). In compliance
with the arbitration clause, arbitration occurred in and a
judgment was awarded in the State of Maryland. (ECF No. 1
¶ 17). Plaintiff properly complied with 9 U.S.C. §
9 by filing its application ...