Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-00876/USCOURTS-azd-2_10-cv-00876-0/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1125 Trademark Infringement (Lanham Act)

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

BEST WESTERN )

INTERNATIONAL INCORPORATED, )

)

Plaintiff, ) CIV 10-00876 PHX MEA

)

v. ) REPORT AND RECOMMENDATION 

) 

SIDDHI HOSPITALITY LLC, )

HARSHADRAI M. PATEL, , )

) 

Defendants. )

___________________________ )

)

HARSHADRAI M. PATEL, )

SIDDHI HOSPITALITY LLC, )

)

Counter-Claimant, )

)

v. )

)

BEST WESTERN )

INTERNATIONAL INCORPORATED, )

)

Counter-Defendant.) ____________________________

TO THE HONORABLE G. MURRAY SNOW:

Plaintiff Best Western International Incorporated has

agreed to the exercise of magistrate judge jurisdiction over all

of the claims asserted, including the entry of final judgment.

Defendants have appeared but have not consented to the exercise

of magistrate judge jurisdiction. Before the Court is

Plaintiff’s motion for the entry of judgment by default (Doc.

22).

Case 2:10-cv-00876-MEA Document 25 Filed 12/14/10 Page 1 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

-2-

I Procedural Background

Plaintiff filed its complaint on April 20, 2010.

Service was returned as executed on each Defendant on or about

May 16, 2010. See Doc. 8 & Doc. 9. The complaint alleges a

cause of action based on the Lanham Act, i.e., trademark

infringement in violation of 15 U.S.C. §§ 1114 and 1125.

Defendants are prior members and licensees, who were ordered to

discontinue use of Plaintiff’s trade marks in 2009. Plaintiff

contends that, as of September 13, 2010, Defendants had ceased

to display Plaintiff’s trade marks and, accordingly, Plaintiff

“seeks liquidated damages only through March 24, 2010, the last

date photographic proof exists of Defendants’ misconduct.” Doc.

22.

On or about June 11, 2010, Defendants filed an answer

to the complaint and filed a counter-claim against Plaintiff.

See Doc. 10. On June 15, 2010, Plaintiff moved to strike the

answer and counter-complaint. See Doc. 11. Plaintiff filed an

answer to the counter-complaint on June 16, 2010. See Doc. 13.

On June 22, 2010, the Magistrate Judge ordered

Defendants to either consent to the exercise of Magistrate Judge

jurisdiction over this matter or elect to have the matter

assigned to a District Judge. See Doc. 14. Defendants did not

respond to that order. On July 13, 2010, the Magistrate Judge

issued an Order to Show Cause why Defendants should not be

sanctioned or held in contempt for their failure to comply with

the order at Doc. 14. See Doc. 15. Defendants failed to

respond to the Order to Show Cause. 

Case 2:10-cv-00876-MEA Document 25 Filed 12/14/10 Page 2 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

-3-

On July 26, 2010, the Honorable Susan Bolton set a

show cause hearing for August 23, 2010. Defendants did not

appear at the show cause hearing. See Doc. 19. Accordingly,

Judge Bolton ordered Defendants to show cause in writing within

ten days why their answer should not be stricken and their

default entered. See Doc. 19 & Doc. 20. Judge Bolton ordered

that, if Defendants failed to show cause, their answer would be

stricken from the record and their default entered. See Doc.

20. Defendants did not respond to the order at Doc. 20 and

Defendants’ default was entered on September 9, 2010, and the

answer to the complaint and counter-complaint were stricken from

the record pursuant to Judge Bolton’s order. 

Plaintiff filed a motion for judgment by default

against both Defendants on September 22, 2010. See Doc. 22. 

II Analysis

Rule 55 provides that if “a party against whom a

judgment for affirmative relief is sought has failed to plead or

otherwise defend as provided by these rules and that fact is

made to appear by affidavit or otherwise, the clerk shall enter

the party’s default.” Fed. R. Civ. P. 55(a) (2010). Rule

55(b)(2) requires the application be accompanied with a

declaration that the defaulting defendants are not minors,

incompetent, or members of the armed services. Additionally,

Rule 55 does not require the entry of judgment against a

defaulting party and the entry of a judgment by default is

completely within the Court’s discretion. See, e.g., DIRECTV,

Inc. v. Hoa Huynh, 503 F.3d 847, 852 (9th Cir. 2007), cert.

denied, 129 S. Ct. 40 (2008); Draper v. Coombs, 792 F.2d 915,

Case 2:10-cv-00876-MEA Document 25 Filed 12/14/10 Page 3 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

-4-

924-25 (9th Cir. 1986); Aldabe v. Aldabe, 616 F.2d 1089, 1092

(9th Cir. 1980). Default judgments are disfavored because

public policy favors the resolution of civil cases on their

merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir.

1986); Lacy v. Sitel Corp., 227 F.3d 290, 292 (5th Cir.

2000)(“federal courts should not be agnostic with respect to the

entry of default judgments, which are ‘generally disfavored in

the law’ and thus ‘should not be granted on the claim, without

more, that the defendant had failed to meet a procedural time

requirement.’”). Cf. Latsham v. Trainer Wortham & Co., Inc.,

452 F.3d 1097, 1103 (9th Cir. 2006).

When exercising its discretion in this regard, the

Court may consider a variety of factors, including:

(1) the possibility of prejudice to the

plaintiff, (2) the merits of plaintiff’s

substantive claim, (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, 782 F.2d at 1471-72. See also DIRECTV, Inc., 503 F.3d at

852. 

When determining whether judgment by default should

be granted, the Court must take as true all factual allegations

in the complaint, except for those related to the amount of

Plaintiff’s damages. See Geddes v. United Fin. Grp., 559 F.2d

557, 560 (9th Cir. 1977); Twentieth Century Fox Film Corp. v.

Streeter, 438 F. Supp. 2d 1065, 1070 (D. Ariz. 2006).

Defendants’ default functions as their admission of the

Case 2:10-cv-00876-MEA Document 25 Filed 12/14/10 Page 4 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

-5-

complaint’s well-pleaded allegations of fact. See Cripps v.

Life Ins. Co., 980 F.2d 1261, 1267 (9th Cir. 1992); Danning v.

Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978). Facts necessary to

establish each element of the cause of action stated in the

complaint that are not themselves stated in the complaint and

claims that are legally insufficient are not established by a

defendant’s default. See Cripps, 980 F. 2d at 1267; Danning,

572 F.2d at 1388.

A. The prejudice to Plaintiff if default judgment is

denied

Plaintiff will be substantially prejudiced if default

judgment is denied. Defendants’ answer to the complaint was

stricken from the record for Defendants’ failure to respond to

the Court’s repeated orders to show cause. Defendants have not

otherwise defended this matter. There is no indication in the

record that Defendants will make any further appearance or

otherwise defend against the claims stated in the complaint.

Additionally, Plaintiff will be prejudiced, in the form of

accumulating additional attorneys’ fees, by any further delay in

resolving these proceedings.

B. The merits of Plaintiff’s substantive claim

The Court finds that Plaintiff’s substantive claims

are meritorious. Taking the facts of the complaint as true,

Plaintiff has properly pled a claim for trademark infringement

and unfair competition under 15 U.S.C. §§ 1114 and 1125. 

Plaintiff has also properly pled a cause of action for breach of

contract.

Case 2:10-cv-00876-MEA Document 25 Filed 12/14/10 Page 5 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

-6-

C. The sufficiency of the complaint

The complaint sufficiently alleges jurisdiction over

the parties and the subject matter at issue in this suit. The

complaint sufficiently allege a factual predicate for the relief

sought. The complaint names eligible defendants. The complaint

and the motion for judgment by default are properly verified and

accompanied by required affidavits.

D. The sum of money at stake in this action

Plaintiff seeks liquidated damages in the amount of

$79,470.72. See Doc. 22 at 12. Plaintiff also seeks damages on

Counts I and II of the complaint in the amount of $8,553.03,

plus interest thereon at the rate of 1.5% per month from and

after September 1, 2010. Plaintiff has represented to the Court

that its claim for injunctive relief is moot. See id.

Additionally, the contract between the parties specified that in

the event of a breach the Defendants would be liable to

Plaintiff for attorney’s fees, costs, and expenses incurred with

respect to the breach. Plaintiff requests an award of its

attorney’s fees, costs, and expenses, in the amount of

$5,050.38.

E. The possibility there would be a dispute concerning

material facts if the case were to proceed

It is unlikely that there would be a dispute

concerning material facts if this case proceeds. 

F. Whether the default was due to Defendants’

excusable neglect

Defendants have had notice of these proceedings and

Defendants have been repeatedly warned regarding their failure

Case 2:10-cv-00876-MEA Document 25 Filed 12/14/10 Page 6 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

-7-

to appear and abide by the Court’s orders. Defendants have not

objected to the striking of their answer and counter-complaint

nor have Defendants responded to the motion for judgment by

default. Defendants’ default in this matter is not due to

excusable neglect.

G. The strong policy underlying the Federal Rules of

Civil Procedure favoring decisions on the merits

The entry of default judgment is disfavored. The

Court should not enter a default judgment if Defendants would be

entitled to have the default judgment set aside pursuant to Rule

60(b), Federal Rules of Civil Procedure. See, e.g., Educational

Servs., Inc. v. Maryland State Bd. for Higher Educ., 710 F.2d

170, 177 (4th Cir. 1983); Martin v. Coughlin, 895 F. Supp. 39,

42 (N.D.N.Y. 1995). 

At this time, Defendants would not be entitled to have

a default judgment set aside and Plaintiff will be prejudiced if

default judgment is not entered. It is also unlikely that

Defendants could present meritorious defenses to Plaintiff’s

claims. Finally, it is unlikely that Defendants would be able

to show good cause for their failure to answer the complaint or

otherwise appear in this matter.

 The majority of courts hold that a

defendant’s conduct will be considered

culpable only if the defendant has

defaulted willfully, or has no excuse for

the default. See, e.g., EEOC v. Mike Smith

Pontiac GMC, Inc., 896 F.2d 524 (11th Cir.

1990) (denial of motion to vacate default

affirmed where defendant offered no

meaningful reason for its having

defaulted). A defendant’s conduct has been

determined to be “culpable” if he has

received actual or constructive notice of

the filing of the action and failed to

Case 2:10-cv-00876-MEA Document 25 Filed 12/14/10 Page 7 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

-8-

answer. Pena v. Seguros La Comercial,

S.A., 770 F.2d 811, 814 (9th Cir. 1985).

If the default was the result of culpable

conduct on the part of the defendant, the

court need not consider anything else in

refusing to set aside the default judgment.

Meadows v. The Dominican Republic, 817 F.2d

517, 522 (9th Cir. 1987); Pena v. Seguros

Comercial, S.A., 770 F.2d 811, 814 (9th

Cir. 1985).

Hunt v. Cling Motor Co., 841 F. Supp. 1098, 1106-07 (D. Kan.

1994) (citations omitted).

Accordingly,

IT IS RECOMMENDED that Plaintiff’s motion (Doc. 22)

for the entry of judgment by default against all Defendants is

granted. Judgment against Defendants with regard to all of the

claims stated in the amended complaint should be entered in

favor of Plaintiff.

IT IS RECOMMENDED that the Court award liquidated

damages to Plaintiff in the amount of $79,470.72, and that the

Court further award damages to Plaintiff in the amount of

$8,553.03, plus interest thereon at the rate of 1.5% per month

from and after September 1, 2010. Additionally, Plaintiff

should be awarded Plaintiff’s reasonable attorney’s fees, costs,

and expenses, in the amount of $5,050.38.

DATED this 13th day of December, 2010.

Case 2:10-cv-00876-MEA Document 25 Filed 12/14/10 Page 8 of 8