United States District Court, D. Maryland
THEODORE D. CHUANG, UNITED STATES DISTRICT JUDGE
6, 2018, Plaintiff Choice Hotels Internationa,, Inc.
("Choice Hotels") filed an Application to Confirm
Arbitration Award against Defendant Daniel Yoon. The award at
issue was based on the alleged breach of a franchise
agreement between the parties ("the Franchise
Agreement"), specifically Yoon's failure to pay the
contractually required fees and damages at the termination of
the Franchise Agreement. Although Yoon was notified of
arbitration proceedings relating to the alleged breach of
contract, he did not present any evidence or participate in
the arbitration proceeding.. On February 9, 2018, the
arbitrator awarded Choice Hotels a total of $184, 209.75 in
damages, comprised of contractually specified franchise fees,
travel agent commission fees, lost profits, and arbitration
was served with the Application on August 12, 2018. Yoon has
not filed a response to the Application. On September
11, 2018, Choice Hotels filed a Motion for
Clerk's Entry of Default and a Motion for Default
Judgment. The Clerk entered an Order of Default on September
19, 2018. Although Yoon was served with the Motion for
Default Judgment, to date, Yoon has 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 for Default Judgment is GRANTED.
Motion for Default Judgment, Choice Hotels asserts that Yoon
has failed to file a timely responsive pleading to its
Application. Thus, Choice Hotels argues that it is entitled
to default judgment against Yoon 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. SEC 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 421-22
(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. Yoon is a citizen of California. In
addition, the amount in controversy is greater than the $75,
000 jurisdictionll 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. S 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 ¶ 21, Appl.
Ex. 1, ECF NO.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 corruption" 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. S 10(a). A misinterpretation of
a contract, or of law, does not suffice to overturn an award.
See Upshur Coals Corp. v. United Mine Workers of Am.,
Dist. 31, 933 F.2d 225, 229 (4th Cir. 1991). Where an
arbitration award is challenged, the party opposing the award
bears the burden of proving the existence of grounds for
vacating the award. Three S Del, Inc. v. DataQuick Info.
Sys., Inc., 492 F.3d 520, 527 (4th Cir. 2007).
Choice Hotels alleges, and the arbitrator awarded damages
for, unpaid franchise fees and other amounts owed under the
Franchise Agreement at the time that Choice Hotels terminated
the Franchise Agreement on the grounds that Yoon lost
possession of the hotel and was in bankruptcy proceeding.. As
noted above, the Franchise Agreement provides that a claim
arising under the agreement is subject to arbitration, so the
claims resolved by arbitration were within the scope of the
parties' agreement. Although Yoon was served in this case
and received notice of the Motion, he has failed to file an
Answer to Choice Hotels's Application or otherwise make a
showing of any grounds for vacating the arbitration award.
Nor is there anything in the record to suggest that any of
the limited grounds for setting aside an arbitration award
are present in this case. See 9 U.S.C. S 10(a).
Accordingly, the Court will grant the Motion for ...