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Ramada Worldwide Inc. v. Kim

July 15, 2010

RAMADA WORLDWIDE INC., PLAINTIFF,
v.
STEVE YOUNG KIM, AND YOUNG SOON KIM, DEFENDANTS.



The opinion of the court was delivered by: Walls, Senior District Judge

OPINION

Plaintiff Ramada Worldwide Inc. ("RWI") moves for default judgment against defendants Steve Young Kim and Young Soon Kim, pursuant to Rule 55(b) of the Federal Rules of Civil Procedure. Defendants have not responded to plaintiff's summons and complaint, nor have they replied to plaintiff's motion for default judgment. (Aff. ¶¶ 8-9.) Pursuant to Rule 78 of the Federal Rules of Civil Procedure, the Court decides this motion without oral argument. The motion is granted.

FACTS AND PROCEDURAL BACKGROUND

On September 25, 2007, plaintiff entered into a License Agreement with defendants for the operation of a 158-room guest lodging facility in Tulsa, Oklahoma. (Compl. ¶ 8 and Ex. A. thereto.) Plaintiff alleges that, under the agreement, defendants were obligated to operate the Ramada facility for a term of fifteen years. (Id. ¶¶ 9-10.) Pursuant to the agreement, defendants were required to make periodic payments to plaintiff for royalties, service assessments, taxes, interest, reservation system user fees, annual conference fees, and other fees (collectively known as "Recurring Fees"). Additionally, defendants provided plaintiff with a guaranty of their obligations, agreeing that, upon default, they would "immediately make each payment and perform or cause to be performed each obligation required of Licensee under the Agreement." (Id. ¶¶ 15-16 and Ex. B. thereto.)

On May 27, 2009, plaintiff notified defendants that they were in default under the license agreement and owed $70,398.10 in recurring fees. (Id. ¶ 19.) Plaintiff then informed defendants that, as of July 8, 2009, they owed $81,412.11. (Id. ¶ 20.) Finally, on August 10, 2009, the plaintiff alerted defendants that the total amount of recurring fees owed was $88,301.63. (Id. ¶ 21.) The plaintiff noted that the accuracy of the amount owed could not be confirmed "without an accounting of the receipts and disbursements, profits and loss statements, and other financial materials, statements, and books." (Id. ¶ 25.)

On September 10, 2009, plaintiff, through the Recon Management Group, attempted to personally serve the defendants with the summons and complaint but, despite diligent effort and inquiry, was unable to locate them. (Aff. ¶¶ 3-5 and Ex. A & Ex. B thereto.) Plaintiff then sent a copy of the summons and complaint via certified and regular mail to defendants last known business address. (Id. ¶¶ 6-7.) On January 13, 2010, the Clerk of the Court entered default against defendants, based upon defendants' failure to plead or otherwise defend their actions. (Id. ¶ 8 and Ex. D thereto.) The Request for Entry of Default was served upon defendants on January 18, 2010. (Id. ¶ 9 and Ex. E thereto.) Plaintiff now moves for default judgment against defendants.

STANDARD OF REVIEW

Default Judgment

Rule 55 of the Federal Rules of Civil Procedure governs a court's decision to grant default judgment. Parties seeking default judgment are not entitled to such relief as a matter of right. See Petrucelli v. Bohringer & Ratzinger, 46 F.3d 1298, 1303 (3d Cir. 1995). The clerk of the court must first approve plaintiff's request for entry of default, after which a court may enter default judgment. Fed. R. Civ. P. 55(a). In order to determine if default judgment should be granted, the court must ascertain whether "the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law." Directv v. Croce, 332 F. Supp. 2d 715, 717 (D.N.J. 2004). Courts should accept as true the well-pleaded factual allegations of the complaint, but need not accept the moving party's legal conclusions or factual allegations relating to the amount of damages. See Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990). A court must "conduct its own inquiry 'in order to ascertain the amount of damages with reasonable certainty.'" Int'l Assoc. of Heat & Frost Insulators v. S. Jersey Insulation Servs., No. 05-3143, 2007 WL 276137, at *1 (D.N.J. Jan. 26, 2007) (quoting In re Indus. Diamonds, 119 F. Supp. 2d 418, 420 (S.D.N.Y. 2000)).

Once a legitimate cause of action is established, a court decides whether to issue a default judgment by looking at: "(1) prejudice to the plaintiff if default is denied; (2) whether the defendant appears to have a litigable defense; and (3) whether defendant's delay is due to culpable conduct." Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000). The issuance of a default judgment is largely a matter of judicial discretion. Hritz v. Woma Corp., 732 F.2d 1178, 1181 (3d Cir. 1984). This "discretion is not without limits," as the Third Circuit's preference is "that cases be disposed of on the merits whenever practicable." Id.

DISCUSSION

I. Service of Process

The court must first assess the adequacy of service of process in order to determine whether default judgment should be entered. Lampe v. Xouth, Inc., 952 F.2d 697, 700-01 (3d Cir. 1991). Proper service of process is required to establish personal jurisdiction over a defendant. Lampe, 952 F.2d at 700-01. Without personal jurisdiction, the court cannot enter a default judgment against the defendant. Id.

Rule 4 of the Federal Rules of Civil Procedure states that a summons may be served upon an individual by "following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made." Fed. R. Civ. P. 4(e)(1); see also Midlantic Nat'l Bank v. Ridgedale Farms, No. 87-1802, 1989 U.S. Dist. LEXIS 1325, at *6 (D.N.J. Feb. 7, 1989) (affirming personal jurisdiction in federal ...


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