Travelodge Hotels, Inc. v. Wilcox Hotel, LLC, Civil Action No. 17-0391
| Decision Date | 23 April 2018 |
| Docket Number | Civil Action No. 17-0391 |
| Parties | TRAVELODGE HOTELS, INC., Plaintiff, v. WILCOX HOTEL, LLC and MARVIN DODD Defendants. |
| Court | U.S. District Court — District of New Jersey |
NOT FOR PUBLICATION
THIS MATTER comes before the Court on Plaintiff Travelodge Hotels, Inc.'s ("THI") motion for a permanent injunction and default judgment against Defendant Wilcox Hotel ("Wilcox Hotel") and Marvin Dodd ("Dodd") (collectively, "Defendants") pursuant to Federal Rule of Civil Procedure 55(b)(2). ECF No. 12. For the reasons set forth herein, the motion is GRANTED.
Plaintiff THI is a Delaware corporation with its principal place of business in Parsippany, New Jersey. Compl. ¶ 1, ECF No. 1. THI is a franchisor of guest lodging facilities. Id. ¶¶ 16. Wilcox Hotel is a limited liability company organized and existing under the laws of the State of Arizona, where it also has its principal place of business. Id. ¶ 2. Dodd is the sole member of Wilcox Hotel and a citizen of the State of Arizona. Id. ¶ 3. On January 19, 2017, THI initiated a Complaint in this action against Wilcox Hotel and Dodd. ECF No. 1.
On or about December 31, 2015, THI entered into the Franchise Agreement with Wilcox Hotel for the operation of an 80-room Days Inn guest lodging facility located at 1100 W. Rex Allen Drive, Wilcox, Arizona 85643 (the "Facility"). Id. ¶ 20. Wilcox Hotel was obligated to operate the Facility for a fifteen-year term, during which time Wilcox Hotel was permitted to use the Travelodge Marks in associate with the operation and use of the Facility as part of THI's franchise system. Id. ¶ 21. In addition, Wilcox Hotel agreed to make certain periodic payments to THI for royalties, system assessments, taxes, interest, reservation system user fees, and other fees (collectively, "Recurring Fees"); to accurately report its monthly gross revenue for the purpose of determining the amount of royalties and other Recurring Fees due to THI; and to maintain accurate financial information and permit THI to examine and audit its books and records. Id. ¶¶ 21-25. For all past due amounts payable to THI, Wilcox Hotel agreed to pay interest at the rate of 1.5% per month or the maximum rate permitted by law, whichever is less. Id. ¶ 23.
Pursuant to Section 11.2 of the Agreement, THI had the right to terminate the Agreement with notice to Wilcox Hotel, if Wilcox Hotel (a) discontinued operating the Facility as a Travelodge guest lodging establishment and/or (b) lost possession or the right to possession of the Facility. Id. ¶ 26.
Sections 12.1 and 18.5 of the Agreement provided that upon termination pursuant to Section 11.2, Wilcox Hotel would be required to pay liquidated damages to THI in accordance with a formula specified by the Agreement. Id. ¶ 17. Section 18.5 set liquidated damages for the Facility at the lesser of $1,000.00 for each guest room of the Facility that Wilcox Hotel was authorized to operate at the time of termination, or the total amount of Recurring Fees generated at the Facility during the year of operation immediately preceding the date of termination. Id. ¶ 18. Pursuant to Section 17.4 of the Agreement, Wilcox Hotel also agreed that in the event of litigation, the non-prevailing party would pay all legal costs and expenses, including reasonable attorneys' fees. Id. ¶ 30.
Effective as of the date of the Franchise Agreement, Dodd provided THI with a Guarantyof Wilcox Hotel's obligations under the Franchise Agreement. Id. ¶ 31. Pursuant to the Guaranty, Dodd agreed, among other things, that upon a default under the Franchise Agreement, he would "immediately make each payment and perform or cause [Wilcox Hotel] to perform, each unpaid or unperformed obligation of [Wilcox Hotel] under the [Franchise] Agreement." Id. ¶ 32. In addition, Dodd agreed to pay the costs, including reasonable attorneys' fees, incurred by THI in enforcing its rights or remedies under the Guaranty or Franchise Agreement. Id. ¶ 33.
On or about September 19, 2016, Wilcox Hotel unilaterally terminated the Franchise Agreement by closing the Facility. Id. ¶ 34. By letter dated September 28, 2016, THI acknowledged Wilcox Hotel's unilateral termination of the Franchise Agreement, effective September 19, 2016, and advised Wilcox Hotel that it was to immediately (a) de-identify the Facility and remove all signage and other items bearing the Travelodge marks, (b) perform all post-termination obligations specified in the Systems Standards Manual; (c) change all signs, billboards, and listings in telephone directories, travel guides, hotel indexes, and similar materials in which the Facility was identified as a Travelodge-facility; (d) remove the Travelodge marks from any advertising or promotional activities on, around, or directed towards the Facility, including any web sites, web pages, or search engines; (e) pay $80,000 in liquidated damages for premature termination; and (f) pay all outstanding Recurring Fees through the date of termination. Id. ¶ 35. Since the termination of the Franchise Agreement, THI alleges that Wilcox Hotel has continued to use the Travelodge marks to induce the traveling public to rent guest rooms at the facility. Id. ¶ 38. THI also alleges that Wilcox Hotel has continued to use the Travelodge marks without authorization through, among other things, failure to remove Travelodge signage and continuing to identify the Facility as a Travelodge guest lodging facility. Id. ¶ 39.
On January 19, 2017, THI filed the instant Complaint. ECF No. 1. The Complaint containseight counts against Defendants: (1) a Lanham Act claim, 15 U.S.C. §§ 1114 and 1125(a) and (c), to enjoin Wilcox Hotel from using the Travelodge marks, id. ¶ 41-51; (2) a restitution claim for revenue derived from using the Travelodge marks, id. ¶ 52-55; (3) a claim for liquidated damages of $80,000.00, id. ¶ 56-62; (4) a claim for actual damages, id. ¶ 63-66; (5) a claim for $39,233.07 in outstanding Recurring Fees, id. ¶ 67-70; (6) an unjust enrichment claim for failure to remit Recurring Fees to THI, id. ¶ 71-75; (7) a claim against Dodd under the Guaranty for Wilcox Hotel's failure to remit Recurring Fees to THI, id. ¶ 76-79; and (8) a claim for the right to enter the property at the Facility and remove any and all exterior signage, exterior items and other exterior materials displaying the Travelodge marks, id. ¶ 80-85.
On February 18, 2017, THI served Defendants with the Complaint. ECF No. 6. On March 30, 2017, THI requested the entry of default against Wilcox Hotel and Dodd, and the Clerk entered default the following day. ECF No. 7. On August 30, 2017, THI filed the instant motion for default judgment against Wilcox Hotel and Dodd. ECF No. 12. THI seeks $150,467.42, consisting of $43,090.08 in Recurring Fees, inclusive of interest at the rate of 1.5% per month per the Franchise Agreement, $93,728.60 in liquidated damages, inclusive of interest, and $13,648.74 in Lanham Act damages ($4,549.58 trebled). Id. THI also seeks an injunction enjoining Defendants from marketing, promoting, or renting guest lodging services at the Facility under the Travelodge marks. Id. In support of its motion, THI attaches an Affidavit from Michael Piccola, Vice President of Contracts Administration at THI, containing an explanation of the figures THI seeks and documents to support THI's calculations. ECF 12.3 ("Piccola Aff.").
"The district court has the discretion to enter default judgment, although entry of default judgments is disfavored as decisions on the merits are preferred." Animal Sci. Prods., Inc. v. China Nat'l Metals & Minerals Imp. & Exp. Corp., 596 F. Supp. 2d 842, 847 (D.N.J. 2008). Beforeentering default judgment the court must: (1) determine it has jurisdiction both over the subject matter and parties; (2) determine whether defendants have been properly served; (3) analyze the Complaint to determine whether it sufficiently pleads a cause of action; and (4) determine whether the plaintiff has proved damages. See Chanel, Inc. v. Gordashevsky, 558 F. Supp. 2d 532, 535-36 (D.N.J. 2008); Wilmington Savings Fund Soc., FSB v. Left Field Props., LLC, No. 10-4061, 2011 WL 2470672, at *1 (D.N.J. June 20, 2011). Although the facts pled in the Complaint are accepted as true for the purpose of determining liability, the plaintiff must prove damages. See Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990).
In addition, prior to granting default judgment, the Court must make explicit factual findings as to: (1) whether the party subject to the default has a meritorious defense; (2) the prejudice suffered by the party seeking default judgment; and (3) the culpability of the party subject to default. Doug Brady, Inc. v. N.J. Bldg. Laborers Statewide Funds, 250 F.R.D. 171, 177 (D.N.J. 2008).
The Court has both subject matter jurisdiction over this dispute and personal jurisdiction over Defendants. The Court has subject matter jurisdiction by virtue of diversity jurisdiction under 28 U.S.C. §1332 because THI and Defendants are citizens of different states and there is an amount in controversy exceeding $75,000. See Compl. ¶¶ 1-8. The Court has personal jurisdiction over Wilcox Hotel based upon consent to jurisdiction in this district in Section 17.6.3 of the Agreement, which states that Wilcox Hotel consented to and waived objection to "the non-exclusive personal jurisdiction of and venue in . . . the United States District Court for the District of New Jersey . . . ." Id. ¶ 6. This Court has personal jurisdiction over Dodd pursuant to the terms of the Guaranty,in which Dodd acknowledged that he was personally bound by Section 17 of the Agreement. Id. ¶ 7. THI also provided the Court with proof of personal service on Defendants. See Executed Summonses, ECF Nos. 4, 6; Couch Cert. ¶¶ 5-8, ECF No. 12.
As Defendants have not filed an Answer or otherwise...
To continue reading
Request your trial