BAYMONT FRANCHISE SYSTEMS, INC. v. 7601 BLACK LAKE RD., LLC

CourtDistrict Court, D. New Jersey
DecidedJune 14, 2022
Docket2:21-cv-18049
StatusUnknown

This text of BAYMONT FRANCHISE SYSTEMS, INC. v. 7601 BLACK LAKE RD., LLC (BAYMONT FRANCHISE SYSTEMS, INC. v. 7601 BLACK LAKE RD., LLC) is published on Counsel Stack Legal Research, covering District Court, D. New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
BAYMONT FRANCHISE SYSTEMS, INC. v. 7601 BLACK LAKE RD., LLC, (D.N.J. 2022).

Opinion

Not for Publication

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

BAYMONT FRANCHISE SYSTEMS, INC., a Delaware Corporation,

Plaintiff,

Civil Action No. 21-18049 v. OPINION 7601 BLACK LAKE RD., LLC, a Florida Limited Liability Company; and ROBERT JARVIS, an individual, Defendants.

John Michael Vazquez, U.S.D.J. This matter comes before the Court on the unopposed motion of Plaintiff Baymont Franchise Systems, Inc. (“BFS”) for default judgment against Defendants 7601 Black Lake Rd., LLC (“7601 Black Lake”) and Robert Jarvis (“Jarvis”) (collectively, “Defendants”) pursuant to Federal Rule of Civil Procedure 55(b). D.E. 9. The Court reviewed all submissions1 and considered the motion without oral argument pursuant to Federal Rule of Civil Procedure 78 and Local Civil Rule 78.1(b). For the reasons that follow, Plaintiff’s motion is GRANTED.

1 Plaintiff’s Complaint and attached exhibits, D.E. 1; Plaintiff’s moving brief and attachments, D.E. 9. I. BACKGROUND The facts of this matter derive from Plaintiff’s Complaint, D.E. 1, which the Court accepts as true for the purposes of this motion. Teamsters Pension Fund of Phila. & Vicinity v. Am. Helper, Inc., No.11-624, 2011 WL 4729023, at *2 (D.N.J. Oct. 5, 2011). On or about December 31, 2018, BFS and 7601 Black Lake entered into a Franchise

Agreement (the “Agreement”), under which 7601 Black Lake was to operate a 295-room Baymont guest lodging facility in Kissimmee, Florida (the “Facility”) for a twenty-year term. D.E. 1 ¶¶ 9- 10. Pursuant to Section 7 of the Agreement, 7601 Black Lake was required to make periodic payments to BFS, including royalties, system assessment fees, taxes, interest, and miscellaneous fees (collectively, “Recurring Fees”). Id. at 23. As to the interest rate, 7601 Black Lake agreed to a “rate of 1.5% per month or the maximum rate permitted by applicable law, whichever is less[.]” Id. 7601 Black Lake’s remaining obligations included maintaining accurate financial records and submitting monthly revenue reports to BFS. Id. at 15-16. Under Section 11.2 of the Agreement, Plaintiff could terminate the Agreement on notice if

7601 Black Lake were to “discontinue operating the Facility as a Chain Facility,” and/or “lose possession or the right to possession of the Facility.” Id. at 27. If termination occurred before the last two franchise years, 7601 Black Lake agreed to pay liquidated damages of $300,000. Id. at 29. The parties further agreed that the non-prevailing party would pay the “costs and expenses, including reasonable attorneys’ fees, incurred by the prevailing party to enforce this Agreement or collect amounts owed under this Agreement.” Id. at 34-35. Jarvis provided Plaintiff with a guaranty (“Guaranty”) of 7601 Black Lake’s obligations under the Agreement. Id. ¶ 19. Pursuant to the Guaranty, Jarvis would “immediately make each payment and perform or cause [7601 Black Lake] to perform, each unpaid or unperformed obligation of [7601 Black Lake] under the Agreement[,]” inclusive of costs incurred by BFS in enforcing the Agreement. Id. at 65. 7601 Black Lake unilaterally terminated the Agreement in a letter dated September 11, 2020, by ceasing to operate the Facility as a Baymont entity. Id. ¶ 22. On September 30, 2020, BFS acknowledged by letter that 7601 Black Lake had terminated the Agreement. Id. ¶ 23.

Plaintiff further advised 7601 Black Lake that it was required to pay Plaintiff “liquidated damages for premature termination” in the sum of $300,000 as well as “all outstanding Recurring Fees through the date of termination.” Id. Plaintiff filed a Complaint on October 4, 2021. D.E. 1. On January 5, 2022, Plaintiff requested that default be entered against Defendants for failure to plead or otherwise defend in the action, D.E. 5, which the Clerk entered on January 7, 2022. See D.E. 9-1. Plaintiff filed the instant motion on February 14, 2022. D.E. 9. II. STANDARD OF REVIEW Rule 55 of the Federal Rules of Civil Procedure permits a court to enter a default judgment

against a properly served defendant who fails to respond. Anchorage Assocs. v. V.I. Bd. of Tax Rev., 922 F.2d 168, 177 n.9 (3d Cir. 1990). “Once a party has defaulted, the consequence is that ‘the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true.’” Teamsters Pension Fund, 2011 WL 4729023, at *2 (quoting DIRECTV, Inc. v. Pepe, 431 F.3d 162, 165 & n.6 (3d Cir.2005)). “The entry of a default judgment is largely a matter of judicial discretion, although the Third Circuit has emphasized that such ‘discretion is not without limits, however, and [has] repeatedly state[d] [its] preference that cases be disposed of on the merits whenever practicable.’” Chanel, Inc. v. Gordashevsky, 558 F. Supp. 2d 532, 535 (D.N.J. 2008) (quoting Hritz v. Woma Corp., 732 F.2d 1178, 1181 (3d Cir. 1984)). Prior to entering a 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.” Moroccanoil, Inc. v. JMG Freight Grp. LLC, No. 14-5608, 2015 WL 6673839, at *1 (D.N.J. Oct. 30, 2015). The Court must also consider

the following factors: “(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); see also Nationwide Mut. Ins. Co. v. Starlight Ballroom Dance Club, Inc., 175 F. App’x 519, 522 (3d Cir. 2006). III. ANALYSIS A. Jurisdiction “Before entering a default judgment as to a party ‘that has not filed responsive pleadings, the district court has an affirmative duty to look into its jurisdiction both over the subject-matter and the parties.’” HICA Educ. Loan Corp. v. Surikov, No. 14-1045, 2015 WL 273656, at *2 (D.N.J.

Jan. 22, 2015) (quoting Ramada Worldwide, Inc. v. Benton Harbor Hari Ohm, L.L.C., No. 08- 3452, 2008 WL 2967067, at *9 (D.N.J. July 31, 2008) (internal quotation omitted)). Turning first to subject-matter jurisdiction, the Complaint alleges diversity jurisdiction under 28 U.S.C. § 1332. D.E. 1 ¶ 6. To establish such jurisdiction under 28 U.S.C. § 1332(a), “the party asserting jurisdiction must show that there is complete diversity of citizenship among the parties and an amount in controversy exceeding $75,000.” Schneller ex rel. Schneller v. Crozer Chester Med. Ctr., 387 F. App’x 289, 292 (3d Cir. 2010). “A corporation is a citizen both of the state where it is incorporated and of the state where it has its principal place of business.” Lincoln Benefit Life Co. v. AEI Life, LLC, 800 F.3d 99, 104 (3d Cir. 2015). “[T]he citizenship of an LLC is determined by the citizenship of its members.” Id.

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BAYMONT FRANCHISE SYSTEMS, INC. v. 7601 BLACK LAKE RD., LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/baymont-franchise-systems-inc-v-7601-black-lake-rd-llc-njd-2022.