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Days Inns Worldwide, Inc. v. Jpm, Inc.

United States District Court, D. New Jersey

August 4, 2014

DAYS INNS WORLDWIDE, INC., a Delaware Corporation, Plaintiff,
v.
JPM, INC., a Georgia Corporation, and JAYANTILAL SHAH, an individual, Defendants.

OPINION

KEVIN McNULTY, District Judge.

This matter comes before the Court on the unopposed motion of Plaintiff Days Inns Worldwide, Inc. ("DIW") for default judgment against Defendants, JPM, Inc., and Jayantilal Shah, pursuant to Fed.R.Civ.P. 55(b)(2). For the reasons set forth below, I will enter a default judgment.

I. BACKGROUND

DIW is a corporation organized under Delaware law and based in Parsippany, New Jersey. Docket No. 1 ("Compl.") ¶ 1. Defendant JPM, Inc. ("JPM") is a corporation organized under Georgia law, with a principal place of business in Rincon, Georgia. Id. ¶ 2. Defendant Jayantilal Shah is a principal of JPM who resides in Rincon, Georgia. Id. ¶ 3.[1]

On October 3, 1997, DIW entered into a License Agreement with Jayantilal Shah for the operation of a forty-room guest lodge facility located at 582 Columbia Avenue, Rincon, Georgia 31326, Site No. 00654-92227-03. Id. ¶ 10; Exhibit A ("License Agreement"). On May 4, 2000, Jayantilal Shah, DIW, and JPM entered into an Assignment and Assumption Agreement ("Assignment Agreement") whereby JPM assumed all of Shah's right and obligations under the License Agreement. Id. ¶ 11; Exhibit B ("Assignment Agreement"). Shah provided DIW with a guaranty of JPM's obligations under the License Agreement upon the effectuation of the Assumption Agreement. Id. ¶ 20; Exhibit C ("Guaranty").

Pursuant to the License Agreement, JPM was obligated to operate a Days Inn guest lodging facility for twenty-two years and to make certain periodic payments[2] to DIW for royalties, service assessments, taxes, interest, reservation system user fees, and other recurring fees (collectively referred to herein as "recurring fees"). Id. ¶¶ 12, 13. JPM agreed to pay interest on delinquent payments, to prepare and submit monthly reports to DIW, to maintain accurate financial information, and to allow DIW to examine and audit financial records. Id. ¶¶ 14-16.

Under the terms of the Agreement, DIW could terminate the Agreement for various defaults. In the event of termination, JPM agreed to pay liquidated damages to DIW in accordance with a formula set for in the License Agreement. The License Agreement also provided that the non-prevailing party would be required to pay attorneys' fees and costs incurred by the prevailing party to enforce the License Agreement or to collect amounts owed. Id. ¶¶ 17-19.

On November 9, 2011, DIW advised JPM that it owed DIW approximately $115, 739.25 in outstanding recurring fees. JPM was given ten days in which to cure the default and was warned that continued default-a breach of the License Agreement-could result in termination of the License Agreement. Id. ¶ 23. A March 15, 2012 letter advised JPM that it now owed $130, 712.71 in outstanding recurring fees. JPM was again given ten days to cure the default. Id. ¶ 24. By letter dated March 28, 2012, DIW exercised its right to terminate the License Agreement because of JPM's continued default. Id. ¶ 25. DIW informed JPM that it was required to pay $80, 000 in liquidated damages for premature termination and all outstanding recurring fees. Id. ¶ 25.

DIW now seeks a judgment against JPM and Shah, jointly and severally, awarding various remedies provided for in the License Agreement. Specifically, DIW seeks: (1) liquidated damages in the amount of $80, 000, pursuant to Section 12.1 of the License Agreement; and (2) recurring fees in the amount of $137, 286, [3] pursuant to Section 7 and Schedule C of the License Agreement. Id. at 6-11.

As to the liquidated damages and recurring fees it seeks, DIW alleges that it is entitled to prejudgment interest, pursuant to section 7.3 of the franchise agreement. Id. ¶ 14. DIW also alleges that it is entitled to its attorneys' fees and costs pursuant to Section 17.4 of the License Agreement, as it is the prevailing party and it incurred these fees and costs while pursuing the defaulted amounts owed. Id. ¶¶ 19, 22.

The Complaint was filed on May 10, 2013. Docket No. 1. The Summons and Complaint were served upon Defendants JPM, Inc. and Jayantilal Shah on June 1, 2013. Docket No. 5. Pursuant to Fed.R.Civ.P. 12(a)(1), Defendants had 21 days to respond to the complaint; their time to respond has long since expired and Defendants have not answered or otherwise responded to the Complaint. On DIW's request, the Clerk of Court entered default against the Defendants on July 26, 2013. On April 21, 2014, DIW filed the now-pending motion for default judgment against JPM and Shah. Docket No. 11.

This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. Section 1332, as the Plaintiff and Defendants are citizens of different states and the amount in controversy exceeds $75, 000. See Compl. ¶ 6.

II. DISCUSSION

A. Legal Standard for Entry of ...


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