UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY
August 16, 2011
SUPER 8 WORLDWIDE, INC.,
SHIVRAJ, INC., ET AL.,
The opinion of the court was delivered by: Hon. Faith S. Hochberg
NOT FOR PUBLICATION CLOSED
HOCHBERG, District Judge:
This matter comes before the Court upon plaintiff's motion for default judgment against defendants Shivraj, Inc., Nirmala Patel, and Indrajit Patel pursuant to Federal Rule of Civil Procedure 55(b)(2); and it appearing that plaintiff filed the instant action against defendants on May 4, 2011, alleging that defendants had breached their obligations under a franchise agreement between the parties and that the franchise agreement had been prematurely terminated, and alleging that the individual defendants, Nirmala Patel and Indrajit Patel had breached a personal guaranty; and defendants having been served on May 24, 2011 and having failed to answer or appear in this action in any manner; and default having been entered against defendants on June 21, 2011; and plaintiff having provided defendants with written notice of their default; and defendants having failed to respond to the instant motion and the time for such response having elapsed; and plaintiff seeking damages in the form of recurring fees, liquidated damages, prejudgment interest, and attorney's fees and costs as a result of the breach and premature termination of the franchise agreement between plaintiff and defendants and as a result of the breach of the guaranty between plaintiff and the individual defendants; and plaintiff's submissions having been considered pursuant to Federal Rule of Civil Procedure 78; and it appearing that plaintiff seeks liquidated damages in an amount equal to the sum of accrued royalties and system assessment fees (together "Recurring Fees") during the 36 calendar months immediately preceding the termination of the franchise agreement, including payment of plaintiff's applicable taxes, not to be less than the product of $2,000 times the number of rooms (117) for a total of $234,000, plus $1,000 in liquidated damages for the early termination of an addendum to the franchise agreement for the provision of satellite services; and it appearing that plaintiff has not adduced sufficient proofs that the provision requiring the liquidated damages to be $2,000 multiplied by the number of guest rooms is reasonable;*fn1 and it appearing that plaintiff is capable of calculating its damages based on the actual Recurring Fees during the 36 calendar months immediately preceding the termination of the franchise agreement; and it appearing that the actual Recurring Fees during the 36 months preceding the termination of the franchise agreement totaled $142,662.60; and it therefore appearing that the liquidated damages clause is not reasonable in this case; and it appearing that the alternative measure of liquidated damages in the amount of the sum of Recurring Fees during the 36 calendar months immediately preceding termination, including payment of plaintiff's applicable taxes, is reasonable;
IT IS on this 16th day of August 2011, ORDERED that plaintiff has judgment against defendants Shivraj, Inc., Nirmala Patel, and Indrajit Patel, jointly and severally, in the total amount of $266,774.85. This amount consists of $55,123.31 in Recurring Fees and prejudgment interest on those fees, $205,441.44 in liquidated damages and prejudgment interest on the liquidated damages, and $6,210.10 in attorney's fees and costs. The liquidated damages amount equals the sum of the accrued Recurring Fees during the 36 full calendar months immediately preceding the termination of the franchise agreement, $142,662.60, plus $1,000 in liquidated damages under an addendum to the franchise agreement for satellite connectivity services, plus prejudgment interest of $61,778.85 calculated at the rate of 1.5% per month from March 27, 2009 through the date of this order.
Hon. Faith S. Hochberg, U.S.D.J.