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. has filed a Request for Default Judgment, with a
supporting affidavit, against Defendants Laxmee, Inc.
(“Laxmee”) and Vijay Patel. ECF No. 6. No.
hearing is necessary. Loc. R. 105.6 (D. Md. 2016). For the
following reasons, Plaintiff's Motion for Default
Judgment is 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. Plaintiff 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 Laxmee is a limited liability company that,
“based upon information, knowledge and belief . . . has
no place of business in either the State of Maryland or the
State of Delaware.” Id. ¶ 2. Defendant
Vijay Patel is, “based upon information, knowledge and
belief, ” the owner of Laxmee and a citizen of the
State of Iowa. Id. ¶ 3. On or about April 30,
2012, Plaintiff entered into a Franchise Agreement with
Defendants under which Plaintiff licensed Defendants to open
and operate a Quality Inn Suites hotel in Peosta, IA.
Id. ¶ 4. The parties' Franchise Agreement
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 either the American Arbitration
Association, (“AAA”) J.A.M.S., or National
Arbitration Forum...” See ECF No. 1-2 at
Plaintiff explains that the Franchise Agreement required
Defendants to pay monthly Royalty and
Marketing/Reservation/System Fees, and that Defendants fell
behind in paying these fees. ECF No. 1 ¶¶ 5-6.
Plaintiff sent a written Notice of Default stating that the
default would have to be cured within ten days; Defendants
failed to cure the breach, and Plaintiff terminated the
Franchise Agreement. Id. ¶ 6.
about October 3, 2017, Plaintiff initiated arbitration
proceedings against Defendants with the AAA, No.
01-17-0005-9179, “seeking resolution of its dispute
with Defendants.” Id. ¶ 8.
“Specifically, Plaintiff claimed that Defendant
materially breached the parties' Franchise Agreement and
owed Choice fees, damages, interest, and costs incurred as a
result of Defendant's breach.” Id.
sent notices of the arbitration to Defendants “by
regular mail, certified mail and/or overnight FedEx delivery,
” but “Defendants failed to appear or participate
during any proceeding.” Id. ¶ 10. The
Arbitrator noted that Defendants had “failed to
respond” and “failed to submit documents after
due notice by mail in accordance with the Rules.” ECF
No. 1-1. After review of the documents submitted by
Plaintiff, the Arbitrator awarded damages in the amount of
$83, 726.63. Id. The Arbitrator also ordered
Defendants to reimburse Plaintiff in the sum total of $2,
750.00 for “administrative filing fees of the
AAA” and “fees and expenses of the
arbitrator.” ECF No. 1-1.
filed an “Application to Confirm Arbitration
Award” in this Court on June 19, 2018. ECF No. 1. The
“Award of Arbitrator, ” signed by Robert S.
Culpepper of the AAA on February 16, 2018, is attached to the
Application. ECF No. 1-1. The court issued summons to
Defendants on June 26, 2018, and the summons were returned as
executed on August 20, 2018. ECF Nos. 3, 4. The Clerk made an
entry of default for want of answer against Defendants on
July 30, 2019. ECF No. 8.
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:
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
arbitrators, or either of them;
(3) where the arbitrators were guilty of misconduct in
refusing to postpone the hearing, upon sufficient cause
shown, or in refusing to hear evidence pertinent and material
to the controversy; or of any other misbehavior by ...