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Microtel Inns and Suites Franchising, Inc. v. Anira Hotels, Inc.

United States District Court, N.D. Georgia, Atlanta Division

January 31, 2017

MICROTEL INNS AND SUITES FRANCHISING, INC., Plaintiff,
v.
ANIRA HOTELS, INC., NAYANKUMARI PATEL, and CHUNILAL PATEL, Defendants.

          OPINION AND ORDER

          WILLIAM S. DIJFFEY, JR. UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Plaintiff Microtel Inns and Suites Franchising, Inc.'s ("MISF") Motion for Entry of Default Judgment as to Defendants Anira Hotels, Inc., Nayankumari Patel, and Chunilal Patel (collectively, "Defendants") [13].

         I. BACKGROUND

         A. Facts.

         MISF is a Georgia corporation with its principal place of business in Parsippany, New Jersey. (Compl. [1] ¶ 1). Defendant Anira Hotels, Inc. ("Anira") is a Florida corporation with its principal place of business in Jacksonville, Florida (Id. ¶ 2). Individual Defendants Nayankumari Patel and Chunilal Patel are the principals of Anira and are citizens of Florida. (Id. ¶¶ 3-4).

         On January 6, 2006, Anira entered into a license agreement (the "License Agreement") with MISF to operate a 97-room Microtel® guest lodging facility located at 4940 Mustang Road, Jacksonville, Florida 32216 (the "Hotel") for twenty years. (Id. ¶¶ 9-10). Under the terms of the License Agreement, Anira agreed to make monthly payments to MISF for "royalties, marketing/reservation contribution, taxes, interest, reservation system user fees, and other fees" (collectively, "Recurring Fees"). (Id. ¶ 11). Anira also agreed to an interest penalty equal to "the lesser rate of one and one-half percent (1.5%) per month or the maximum rate permitted by law" for late payments of Recurring Fees. (Id. ¶ 12). The License Agreement allowed MISF to terminate the agreement with notice to Anira "if Anira failed to pay MISF any fees or other amounts due under the License Agreement." (Id. ¶ 15). In the event of a termination, the License Agreement permitted MISF to demand liquidated damages in an amount equal to $3000 for each guest room Anira operated at the Hotel. (Id. ¶ 16; License Agreement [1.1], [1.2] ¶IOE).

         To help Anira defray the cost of converting the Hotel to a Microtel® guest lodging facility, the License Agreement provided a $100, 000 financial incentive from MISF to Anira. (Id. ¶ 17). On each anniversary of the Hotel's opening date, one-tenth (l/10th) of the original principal amount of the financial incentive would be forgiven without payment, but, in the event of a termination, Anira agreed to repay the outstanding balance of the financial incentive. (Id. ¶¶ 17-18).

         Contemporaneously to to the execution of the License Agreement, N. and C. Patel executed a joint and several guaranty of Anira's obligations under the agreement. (Id. ¶ 20; Guaranty [1.3]).

         Beginning February 7, 2012, MISF sent a series of letters advising Anira that it was in breach of the License Agreement for failing to meet its financial obligations under the License Agreement. ([1] ¶¶ 23-28; February 7, 2012, Letter [1.4]; March 22, 2012, Letter [1.5]; July 10, 2012, Letter [1.6]; August 20, 2012, Letter [1.7]; November 20, 2012, Letter [1.8]). MISF warned Anira that if the default was not cured, the License Agreement might be subject to termination. (Id.). On December 31, 2012, MISF terminated the License Agreement. ([1] ¶ 29; December 31, 2012, Letter [1.9]).

         B. Procedural History

         On May 22, 2015, MISF filed this action for breach of contract. (Id.). On June 6, 2015, MISF served the Complaint on Anira and C. Patel. ([5], [6]). On March 13, 2016, MISF served the Complaint on N. Patel.[1] ([11]). Defendants failed to respond, and no counsel appeared on their behalf.

         On April 26, 2016, MISF filed its Motion for Clerk's Entry of Default Against Defendants [12] based on Defendants' failure to respond to the Complaint. On April 27, 2016, the Clerk entered default against Defendants.

         On July 29, 2016, MISF moved for default judgment. ([13]). MISF is seeking to recover outstanding Recurring Fees, liquidated damages, remaining principal balance of the financial incentive, prejudgment interest, and postjudgment interest. (Id.).

         II. DISCUSSION

         A. Legal Standard

         Rule 55(b) of the Federal Rules of Civil Procedure provides that default judgment may be entered against defaulting defendants as follows:

(1) By the Clerk. If the plaintiff s claim is for a sum certain or a sum that can be made certain by computation, the clerk-on the plaintiff's request, with an affidavit showing the amount due-must enter judgment for that amount and costs against a defendant who has been defaulted for not appearing and who is neither a minor nor an incompetent person.
(2) By the Court. In all other cases, the party must apply to the court for a default judgment. . . . If the party against whom a default judgment is sought has appeared personally or by a representative, that party or its representative must be served with written notice of the application at least 7 days before the hearing. The court may ...

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