Nurse Next Door Home Healthcare Services (USA), Inc. v. Four Gloves, Inc.

          MEMORANDUM OPINION

          Paula Xinis United States District Judge.

         Pending before the Court are Plaintiff Nurse Next Door Home Healthcare Services (USA), Inc.'s two Motions for Default Judgment. ECF Nos. 10, 18. For the following reasons, Plaintiff's first Motion for Default Judgment (ECF No. 10) is DENIED as moot, and the second Motion for Default Judgment (ECF No. 18) is GRANTED IN PART and DENIED IN PART.

         I. Background

         Plaintiff Nurse Next Door Home Healthcare Services (USA), Inc. (“Nurse Next Door”) is a Washington corporation, offering “franchise agreements to qualified franchisees who in turn provide comprehensive home medical services and supplemental healthcare staff to home care and institutional clients.” ECF No. 1 ¶ 8. Nurse Next Door entered into a Franchise Agreement with Defendant Four Gloves, Inc. (“Four Gloves”) on April 28, 2016, obligating Four Gloves “to operate a Nurse Next Door-branded home nursing and health care business . . . in and adjacent to Prince George's County.” Id. ¶ 15. Defendant Kenneth Stokes signed the Agreement as the “authorized agent” for Four Gloves. Id. On the same day, Stokes also executed a guaranty agreement with Nurse Next Door for Four Gloves in which he insured performance under the Franchise Agreement. Id. ¶ 17; see also ECF No.1-1 at Schedule C.

         The Franchise Agreement provided Four Gloves with Nurse Next Door's training, planning, and technology resources in exchange for an Initial Franchise fee (“initial fee”), a Technology Start-Up fee (“start-up fee”), and royalties. ECF No. 1 ¶¶ 18-19, 23. Shortly after Four Gloves paid the initial and start-up fees totaling $55, 000, Nurse Next Door refunded the same amount as per a supplemental Franchise Disclosure Document. ECF No. 1 ¶ 21-22; ECF No. 1-2 at 9. The parties agreed that once Four Gloves opened its doors for business, Four Gloves would repay the same franchise fees to Nurse Next Door. ECF No. 1 ¶ 22.

         The fees in question became due on September 30, 2016. Id. ¶ 25. However, Four Gloves never repaid the fees, and in November 2017, Nurse Next Door provided Four Gloves and Stokes written notice of the failure to pay. Id. ¶ 26. Four Gloves also missed scheduled royalty fee payments required under the Agreement. Id. ¶ 26; ECF No. 1-1 § 6(a)(i-ii). To the best of Plaintiff's knowledge, Four Gloves has yet to open and operate the Prince George's Franchise. ECF No. 1 ¶ 26.

         Nurse Next Door initially filed suit in Washington State pursuant to the Franchise Agreement's forum selection clause. However, Defendants evaded service of process in Washington state, ^[1] leaving Nurse Next Door little option but to bring this case in this Court where the Defendants are domiciled. The Complaint asserts claims against Four Gloves for breach of contract and against Stokes for breach of his guaranty agreement. ECF No. 1. After a protracted service history in this Court, Defendants have failed to answer or otherwise respond to the Complaint.^[2]

         II. Standard of Review

         Rule 55 governs default judgments entered “[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.” Fed.R.Civ.P. 55(a). The Court may enter default judgment at the plaintiff's request and with notice to the defaulting party. Fed.R.Civ.P. 55(b)(2). Although courts maintain “a strong policy that cases be decided on the merits, ” United States v. Schaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993), default judgment is appropriate when the “adversary process has been halted because of an essentially unresponsive party.” S.E.C. v. Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005).

         In deciding whether to grant default judgment, the Court takes as true the well-pleaded factual allegations of the complaint, other than those pertaining to damages. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001); see Fed. R. Civ. P. 8(b)(6) (“An allegation - other than one relating to the amount of damages - is admitted if a responsive pleading is required and the allegation is not denied.”). The Court applies the pleading standards announced in Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), in this context. See Balt. Line Handling Co. v. Brophy, 771 F.Supp.2d 531, 544 (D. Md. 2011). Accordingly, where a complaint avers bare legal conclusions or “naked assertion[s] devoid of further factual enhancement, ” the Court will not enter default judgment. Russell v. Railey, No. DKC 08-2468, 2012 WL 1190972, at *3 (D. Md. Apr. 9, 2012) (quoting Iqbal, 556 U.S. at 678); see, e.g., Balt. Line Handling Co., 771 F.Supp.2d at 545 (“The record lacks any specific allegations of fact that ‘show' why those conclusions are warranted.”).

         If the complaint pleads sufficient facts from which the court may find liability, the Court next turns to damages. See Ryan, 253 F.3d at 780-81. Damages are circumscribed by that which is requested in the complaint. See Fed. R. Civ. P. 54(c) (“A default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.”). The damages request must be supported by evidence introduced either at a hearing or by affidavit or other records. See id.; Lawbaugh, 359 F.Supp.2d at 422.

         III. Discussion

         Nurse Next Door moves for default judgment against Four Gloves for breach of contract and against Stokes for breach of guaranty. ECF No. 18. “Federal courts sitting in diversity apply the law of the state in which the court is located, including the forum state's choice of law rules.” H & M Co. v. Tech. Heat Transfer Servs., Inc., No. TDC-14-1518, 2015 WL 1472000, at *2 (D. Md. Mar. 30, 2015) (citing Colgan Air, Inc. v. Raytheon Aircraft Co., 507 F.3d 270, 275 (4th Cir. 2007)). In Maryland, courts typically respect contractual choice of law provisions. See Cunningham v. Feinberg, 107 A.3d 1194, 1204 (Md. 2015) (internal citations omitted). Pursuant to the choice of law provision in the parties' Franchise Agreement (ECF No. 1-1 § 19(h)), this Court applies the substantive law of Washington state.

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