United States District Court, D. Maryland, Southern Division
J. HAZEL UNITED STATES DISTRICT JUDGE.
to Fed.R.Civ.P. 55(b), Plaintiff Choice Hotels International,
Inc. (“Plaintiff” or “Choice”) has
filed a Motion for Default Judgment with a supporting
affidavit. ECF No. 6. A hearing is not necessary. For the
following reasons, Plaintiff's Motion for Default
Judgment will be granted.
is a “publicly-traded company incorporated under the
laws of the State of Delaware, with principal headquarters in
Rockville, Maryland.” ECF No. 1 ¶ 1. Choice is
“primarily in the business of franchising hotels
domestically and internationally . . . including but not
limited to the trade and brand marks, names and systems
associated with Quality Inn®.” Id.
Defendant is an Illinois resident who “based upon
information, knowledge, and belief” is neither employed
nor resides in Maryland or Delaware. Id. ¶ 2.
On or about November 14, 2005, Choice entered into a
Franchise Agreement with Defendant, under which Choice
granted Defendant a limited and revocable license to operate
a hotel in Carbondale, Illinois. Id. ¶ 3. The
Franchise Agreement required Defendant to comply with Comfort
Inn & Suites® Rules and Regulations. These Rules and
Regulations required Defendant to maintain a level of guest
satisfaction as high as the brand's average, measured by
a Likelihood to Recommend (LTR) score. See Id.
¶ 4; ECF No. 1-2 at 3.
the Franchise Agreement, if a franchisee breaches its duty to
maintain the brand average LTR, the franchisee is in default
and Choice may terminate the agreement if the franchisee
fails to cure. ECF No. 1-2 at 2. If Choice terminates the
agreement because a franchisee fails to cure a default, the
franchisee agrees to pay liquidated damages within thirty
days, calculated by “(i) the average monthly Gross Room
Revenues during the prior 12 full calendar months (or the
shorter time that the Hotel has been in the System),
multiplied by (ii) the Royalty Fee payable in the Remaining
Months, multiplied by (iii) the number of months until the
next date the franchisee could have terminated this Agreement
without a penalty ("Remaining Months"), not to
exceed 36 months.” See ECF No. 1-2 at 2.
Further, the franchisee owes interest on amounts not timely
paid at a rate of 1.5% per month. Id. The
parties' Franchise Agreement also contained an
arbitration clause, stating in relevant part that “any
controversy or claim arising out of or relating to this
Agreement . . . will be sent to final and binding arbitration
before . . . the American Arbitration Association . .
.” See ECF No. 1 ¶ 8; ECF No. 1-1.
about January 8, 2015, Choice sent a Notice of Default to
Defendant, notifying him of his failure to maintain the brand
average LTR scores per Ru1es and Regulations. ECF No. 1
¶ 4. Per the notice, the Defendant had six months to
cure the default. Id. Choice later revised the LTR
default cure deadline to September 8, 2015. Id.
¶ 5. Defendant failed to cure the breach within the time
allotted, so Choice terminated the Franchise Agreement per
its terms and made demand for immediate payment of
contractually specified fees, interest, and liquidated
damages. ECF No. 1 ¶ 6-7. Because Defendant did not pay
the contractually specified fees, interest, or liquidated
damages, Choice initiated arbitration proceedings on or about
April 27, 2017 with the American Arbitration Association.
Id. ¶ 8.
proceedings were scheduled for August 31, 2017. See
ECF No. 1 ¶ 11; ECF No. 1-2 at 1. Plaintiff sent notice
of the proceedings to Defendant “by regular mail,
certified mail and/or overnight FedEx delivery.” ECF
No. 1 ¶ 10. “Defendant failed to appear or
participate during any proceeding.” Id. The
Arbitrator determined that Defendant “was duly
notified” and entered an award in Choice's favor
against Defendant in the amount of $153, 723.01. ECF No. 1-2
at 1, 4. The Arbitrator also ordered Defendants to reimburse
Choice in the sum total of $4650.00for “administrative
fees and expenses.” ECF No. 1-2 at 4.
Hotels filed an “Application to Confirm Arbitration
Award” in this Court on March 14, 2018. ECF No. 1. The
Arbitrator's ex parte award, signed by George Beckwith of
the American Arbitration Association on September 17, 2017,
is attached to the Application. ECF No. 1-2. The Court issued
a summons to Defendant on March 14, 2018, and the summons was
executed on March 27, 2018. ECF No. 3-4. The Clerk made an
entry of default for want of answer against Defendant on July
20, 2018. ECF No. 8. Choice Hotels now requests that the
Court issue judgment by default against Defendant. ECF No. 6.
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.”
Choice Hotels Intern., Inc. v. Savannah Shakti
Corp., DKC-11-0438, 2011 WL 5118328 at * 2 (D. Md. Oct.
25, 2011) (citing Dow v. Jones, 232 F.Supp.2d 491,
494 (D. Md. 2002)). When a motion for default judgment is
based on an arbitration award, the plaintiff “must show
that it is entitled to confirmation of the award as a matter
of law.” Id. (citations and internal quotation
the Federal Arbitration Act, a court may confirm an
arbitration award “[i]f the parties in their agreement
have agreed that a judgment of the court shall be entered
upon the award made pursuant to the arbitration . . .”
9 U.S.C. § 9. The Court must confirm the award unless it
vacates, modifies, or corrects the award under 9 U.S.C.
§§ 10 or 11. Id. “Federal courts may
vacate an arbitration award only upon a showing of one of the
grounds listed in the Federal Arbitration Act, or if the
arbitrator acted in manifest disregard of law.”
Apex Plumbing Supply v. U.S. Supply Co., Inc., 142
F.3d 188, 193 (4th Cir. 1998). The situations permitting a
court to vacate an arbitration award are found at 9 U.S.C.
§ 10(a), which provides:
In any of the following cases the United States court in and
for the district wherein the award was made may make an order
vacating the award upon the application of any party to the
(1) where the award was procured by corruption, fraud, or
(2) where there was evident partiality or corruption in the