United States District Court, D. Maryland
THEODORE D. CHUANG UNITED STATES DISTRICT JUDGE.
January 19, 2018, Plaintiff Choice Hotels International, Inc.
(“Choice Hotels”) filed an Application to Confirm
Arbitration Award against Defendants Three Diamond
Enterprises, LLC (“Three Diamond”), Sam Parabia,
Perin Parabia, Prakash Shah, and Ratansha Parabia
(collectively, “Defendants”). This action was
later stayed as to Defendant Prakash Shah after Shah's
suggestion of bankruptcy. See Stay Order, ECF No. 7.
Three Diamond was later dismissed as a Defendant.
See Dismissal Order, ECF No. 10.
arbitration award at issue was based on Defendants'
alleged breach of a franchise agreement between the parties
(“the Franchise Agreement”), specifically the
failure of Defendants to timely commence construction of a
hotel. Although Defendants were notified of arbitration
proceedings relating to the alleged breach of contract and
participated in preliminary arbitration matters, they did not
present any evidence or participate in the final arbitration
proceedings. On September 28, 2017, the arbitrator awarded
Choice Hotels a total of $183, 750.00 in damages, comprised
of contractually specified franchise fees, interest,
liquidated damages, and arbitration expenses.
was served with the Application on January 26, 2018. Perin
Parabia, Ratansha Parabia, and Sam Parabia (“the
Parabia Defendants”) were each served with the
Application on April 8, 2018. None of these Defendants has
filed a response to the Application. On May 7, 2018, Choice
Hotels filed a Motion for Clerk's Entry of Default and a
Motion for Default Judgment against the Parabia Defendants.
The Clerk entered an Order of Default as to the Parabia
Defendants on May 8, 2018. Although the Parabia Defendants
were served with the Motion for Default Judgment, to date, no
Defendant has 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 for
Default Judgment is GRANTED.
Motion for Default Judgment, Choice Hotels asserts that the
Parabia Defendants have failed to file a timely responsive
pleading to its Application. Thus, Choice Hotels argues that
it is entitled to default judgment against those Defendants
in the amount of the arbitration award 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, 421
(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 Hotels is
a Delaware corporation with its headquarters located in
Rockville, Maryland. Perin Parabia, Ratansha Parabia, and Sam
Parabia are citizens of California. Shah is a citizen of New
Jersey. Three Diamond is a limited liability corporation
whose members consist of the named Defendants in this action,
and thus it is a citizen of California and New Jersey for
purposes of diversity jurisdiction. Central West Virginia
Energy Co. Inc. v. Mountain State Carbon, LLC, 636 F.3d
101, 103 (4th Cir. 2011) (“For purposes of diversity
jurisdiction, the citizenship of a limited liability company
… is determined by the citizenship of all of its
members[.]”). In addition, the amount in controversy is
greater than the $75, 000 jurisdictional minimum under 28
U.S.C. § 1332.
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.
1, ECF No. 1-1. Choice Hotels filed its application to
confirm the award within one year of the arbitrator's
decision. The award was rendered in the State of Maryland.
The Court is therefore satisfied that the requirements of the
FAA are met, such that it may review the arbitration award.
review of an arbitration award is “severely
circumscribed, ” and, in fact, is “among the
narrowest known at law because to allow full scrutiny of such
awards 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, 193 (4th Cir. 1998) (footnote omitted). Thus, where
there is a valid contract between the parties providing for
arbitration, and the arbitration resolved a dispute within
the scope of the arbitration clause, federal courts may
vacate an arbitration award only upon a showing of one of the
grounds set forth in the FAA, or if the arbitrator acted in
manifest disregard of law. Id. Section 10 of the FAA
limits review to the following grounds: (1) “the award
was procured by corruption, fraud, or undue means”; (2)
“there was evident partiality or misconduct” on
the part of the arbitrators; (3) “the arbitrators were
guilty of misconduct” by which “the rights of any
party have been prejudiced”; or (4) “the
arbitrators exceeded their powers.” 9 U.S.C. §
10(a). A misinterpretation of a contract, or of law, does not
suffice to overturn ...