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Choice Hotels International, Inc., A Delaware Corporation v. Kusum Vali

July 9, 2012

CHOICE HOTELS INTERNATIONAL, INC., A DELAWARE CORPORATION,, PLAINTIFF,
v.
KUSUM VALI, INC., A CALIFORNIA CORPORATION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Barry Ted Moskowitz, Chief Judge United States District Court

ASIDE ENTRY OF DEFAULT AND ORDER DENYING MOTION TO SET GRANTING DEFAULT JUDGMENT

On September 19, 2011, Plaintiff Choice Hotels International, Inc., filed a motion for default judgment. On December 1, 2011, Defendants Kusum Vali, Inc. ("Kusum"), Sunil Patel ("S. Patel"), and Tejas Patel ("T. Patel") filed a motion to set aside entry of default. In an order filed on May 3, 2012, the Court conditionally granted the motion to set aside entry of default. The Court granted the motion to set aside entry of default on the condition that the moving defendants pay Plaintiff $7,500 as reasonable attorney's fees for bringing the motion for default judgment. The Court ordered the defendants to pay the $7,500 to Plaintiff and file a certification of payment with the Court within 30 days of the filing of the Order. The defendants have not filed anything indicating that they have complied with the Court's order. Therefore, their motion to set aside entry of default is DENIED, and the Court proceeds to Plaintiff's motion for default judgment. For the reasons set forth below, Plaintiff's motion for default judgment is GRANTED.

I. FACTUAL BACKGROUND

On June 10, 2011, Plaintiff Choice Hotels International, Inc. ("Plaintiff") commenced this action. Plaintiff is the owner of a number of trademarks for the mark "ECONO LODGE" for use in connection with the provision of hotel and motel services. (Compl. ¶¶ 21-30.)

On or about March 31, 2007, Plaintiff entered into a Franchise Agreement with Kusum, S. Patel, T. Patel, and Navnit Khatri ("Khatri") (collectively "Defendants"), which permitted them to operate an ECONO LODGE® hotel franchise at 330 North Imperial Avenue, El Centro, CA 92243 (the "Hotel"). (Compl. ¶ 31.) The Franchise Agreement licensed the ECONO LODGE family of marks to Defendants for so long as the Franchise Agreement remained in effect. (Compl. ¶ 32.)

On or about March 11, 2010, Plaintiff issued a Notice of Termination of the Franchise Agreement to Defendants based on their failure to pay certain required fees under the terms of the Agreement. (Compl. ¶ 40.) The Notice of Termination instructed Defendants to cease use of any and all of the ECONO LODGE family of marks. (Compl. ¶¶ 41-42.) The Notice also advised Defendants that under the terms of the Agreement, they were obligated to pay Plaintiff $7,912.89 in franchise and related fees, $797.47 in travel agent commission fees, and $37,375.00 in lost profits. (Compl. ¶ 43.)

Plaintiff alleges that Defendants continued to use the ECONO LODGE family of marks in, around, and in publicity for, the Hotel from March 2010 to June 2011. (Compl. ¶ 46; Baehr Decl. ¶ 5.) Plaintiff asserts claims for infringement of federally registered trademark (15 U.S.C. § 1114), false designation of origin (15 U.S.C. § 1125(a), trademark infringement under California law, and violation of the California Unfair Competition Law (Cal. Bus. & Prof. Code § 17200). Plaintiff seeks injunctive relief as well as economic damages. Plaintiff also requests treble damages and attorney's fees and costs.

On July 18, 2011, default was entered against Kusum. On July 20, 2011, default was entered against S. Patel and T. Patel. On August 12, 2011, default was entered against Khatri.

II. STANDARD

Entry of default judgment is governed by Federal Rule of Civil Procedure 55(b) and is left to the trial court's sound discretion. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). After default has been entered, the well-pleaded factual allegations of the complaint, except those relating to the amount of damages, shall be taken as true. Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977). In determining damages, the court can rely on evidence submitted by the plaintiff or may conduct a full evidentiary hearing. Fed. R. Civ. P. 55(b)(2). A judgment by default shall not award damages that are different from or exceed the amount requested in the plaintiff's complaint. Fed. R. Civ. P. 54(c).

Factors which may be considered by courts in exercising their discretion as to whether to enter default judgment include: (1) the possibility of prejudice to plaintiff; (2) the merits of plaintiff's substantive claims; (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect; and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986).

III. DISCUSSION

Plaintiff seeks default judgment against Defendants. As discussed below, the Court finds that Plaintiff is entitled to default judgment against ...


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