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UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

HOWARD JOHNSON INTERNATIONAL,

a Delaware Corporation,

Plaintiff,

v.

KIRIT PATEL, an individual, 

VIDDHYABEN PATEL, an individual,

Defendants.

OPINION and ORDER

Civ. No. 11-918 (WHW)

Walls, Senior District Judge

Howard Johnson International moves for default judgment against defendants Kirit Patel 

and Viddhyaben Patel. Pursuant to Rule 78 of the Federal Rules of Civil Procedure, the motion

is decided without oral argument. Howard Johnson‟s motion for default judgement is granted.

FACTUAL AND PROCEDURAL BACKGROUND

Howard Johnson is a hotel company that entered into a license agreement dated October

25, 2006, with defendants. This agreement, which was to last 15 years, authorized the Patels to

operate a Howard Johnson lodging facility. (Compl. ¶¶ 7-8; Ex. A to Compl.) Under its terms,

the defendants were to make periodic payments to Howard Johnson for royalties, service 

assessments, taxes, interest, reservation system user fees, annual conference fees, and other fees 

(collectively, the “recurring fees”). The defendants were also required to prepare and submit 

monthly revenue reports and maintain accurate financial information. (Compl. ¶¶ 11-12; Ex. A 

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to Compl.) An addendum for satellite connectivity services was also executed between the 

parties on October 25, 2006. (Compl. ¶ 16; Ex. B to Compl.)

Howard Johnson could terminate the agreement if defendants discontinued operating the 

facility as a Howard Johnson establishment or lost possession of the facility. (Compl. ¶ 13; Ex. 

A to Compl.) If this happened, defendants agreed to pay liquidated damages according to a 

formula laid out in the license agreement. Defendants were also required to pay $2,500 in 

liquidated damages if the satellite addendum to the license agreement was terminated. (Compl. ¶

14.) Under the terms of the license agreement, the non-prevailing party would “pay all costs and 

expenses, including reasonable attorneys‟ fees, incurred by the prevailing party to enforce this

[License] Agreement or collect amounts under this [License] Agreement.” (Compl. ¶ 15.) 

On June 1, 2009, the Patels terminated the license agreement when they ceased operating 

the property as a Howard Johnson facility. (Compl. ¶ 18.) Howard Johnson wrote to the Patels

on June 19, 2009. (Compl. ¶ 19; Ex. C to Compl.) Howard Johnson acknowledged defendants‟

request to terminate the lease and explained the debts owed to Howard Johnson under the terms 

of the license agreement after the agreements‟ termination. (Compl. ¶ 19, Ex. C to Compl.) The 

Patels have not satisfied these outstanding debts.

On February 18, 2011, Howard Johnson filed a complaint alleging that the defendants 

had not fulfilled their duties and obligations under the franchise agreement. The defendants were

served with process on March 14, 2011. (ECF No. 3.) The defendants did not appear in this 

action or answer the complaint. On April 6, 2011, Howard Johnson moved for default judgment 

against defendants. On April 8, 2011, the Clerk of Court entered default against the Patels.

Howard Johnson then moved for the entry of a default judgment in the amount of 

$156,808.55. This amount is comprised of: (1) $47,953.75 for recurring fees owed under the 

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agreement, (2) $103,215.89 for liquidated damages, and (3) $5,638.91 for attorneys‟ fees and 

costs. Although served, the defendants have not filed any opposition to this motion.

STANDARD OF REVIEW

Federal Rule of Civil Procedure 55 governs the entry of default and default judgment. 

The power to grant default judgment “has generally been considered an „inherent power,‟ 

governed not by rule or statute but by the control necessarily vested in courts to manage their 

own affairs so as to achieve the orderly and expeditious disposition of cases.” Hritz v. Woma 

Corp., 732 F.2d 1178, 1181 (3d Cir. 1984) (citations omitted). Because a default judgment

prevents a plaintiff‟s claims from being decided on the merits, “this court does not favor entry of 

defaults or default judgments.” United States v. $55,518.05 in U.S. Currency, 728 F.2d 192, 

194 (3d Cir. 1984). 

Several factors are to be considered by courts in determining “whether a default judgment 

should be granted: (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).

“[T]he factual allegations in a complaint, other than those as to damages, are treated as 

conceded by the defendant.” DIRECTV, Inc. v. Pepe, 431 F.3d 162, 165 (3d Cir. 2005). 

Although, the Court makes “an independent inquiry into „whether the unchallenged facts 

constitute a legitimate cause of action‟” and “must make an independent determination” 

regarding questions of law. Days Inns Worldwide, Inc. v. Mayu & Roshan, L.L.C., No. 06-1581, 

2007 WL 1674485, at *4 (D.N.J. June 8, 2007). 

A court does not accept as true allegations pertaining to the amount of damages, and may 

employ various methods to ascertain the amount of damages. While the court may conduct a 

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hearing to determine the damages amount, Fed. R. Civ. P. 55(b)(2), a damages determination 

may be made without a hearing “as long as [the court] ensure[s] that there [is] a basis for the 

damages specified in the default judgment.” Transatlantic Marine Claims Agency, Inc. v. Ace 

Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997).

DISCUSSION

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.” 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). A default judgment entered without personal 

jurisdiction over the defendant is void. D‟Onofrio v. Il Mattino, 430 F. Supp. 2d 431, 436 (E.D. 

Pa. 2006). 

Subject Matter Jurisdiction

Howard Johnson is a Delaware corporation with a principal place of business in New 

Jersey, and both defendants are citizens of Texas. (Compl. ¶¶ 1-3.) Howard Johnson‟s 

complaint alleges breach of contract. In total, its claims have an amount in controversy greater 

than $75,000. Because “a single plaintiff may aggregate two or more claims against a single 

defendant” to satisfy the amount in controversy requirement, this Court possesses diversity 

jurisdiction over Howard Johnson‟s claims. Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 

U.S. 546, 585 (2005).

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Personal Jurisdiction

Howard Johnson has “the burden of proving personal jurisdiction, [but it] can satisfy that 

burden with a prima facie showing.” D‟Onofrio, 430 F. Supp. 2d at 438. Here, personal 

jurisdiction was obtained by service of summonses and contractual consent. Summonses were 

returned executed on March 14, 2011, (ECF No. 3), and by the terms of the license agreement, 

defendants have consented to personal jurisdiction in “the United States District Court for the 

District of New Jersey.” (Compl. ¶ 5.) This court possesses personal jurisdiction over the 

defendants.

Liability

Because a party seeking a default judgment is not entitled to such relief as a matter of 

right, the court may enter a default judgment “only if the plaintiff‟s factual allegations establish a 

right to the requested relief.” Nautilus Ins. Co. v. Triple C Const., Inc., No. 10-2164, 2011 WL 

42889, at *4 (D.N.J. Jan. 6, 2011).

Contract

Howard Johnson seeks a judgment of $156,808.55. Of this amount, $47,953.75 is for 

recurring fees due under the agreement, and $103,215.89 for liquidated damages. Howard 

Johnson alleges that it is owed these amounts due to a breach of contract. To properly make out 

a breach of contract claim, Howard Johnson must allege: (1) a valid contract, (2) breach of that 

contract, and (3) damages resulting from that breach. AT&T Credit Corp. v. Zurich Data Corp., 

37 F. Supp. 2d 367, 370 (D.N.J. 1990). 

Howard Johnson has satisfied each of these elements. It alleges that it “entered into the 

License Agreement with K. Patel and V. Patel, as joint tenants, for the operation of a 111-room 

guest lodging facility.” (Compl. ¶ 7.) Second, it alleges that the defendants breached the contract 

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because they terminated the agreement when they ceased operating as a Howard Johnson facility. 

(Compl. ¶¶ 28-29, 36-37.) Howard Johnson has also alleged damages relating to these claims 

totaling $151,169.64 because defendants have failed to pay the recurring fees and liquidated 

damages owed under the agreement.

Attorneys’ Fees

Under section 17.4 of the license agreement, the prevailing party in an action to enforce 

the agreement is entitled to recover “all costs and expenses, including reasonable attorneys‟ fees” 

from the non-prevailing party. Attorneys‟ fees clauses are enforceable in New Jersey. Howard 

Johnson Intern., Inc. v. Vraj Brig, LLC, No. 08-1466, 2010 WL 215381, at * 4 (D.N.J. Jan. 14, 

2010). Howard Johnson has submitted supporting documentation; its request for attorneys‟ fees 

will be granted. 

Propriety of Entry of Default Judgment

Howard Johnson has properly served the defendants with process, the Clerk of the Court

has entered default against them, and plaintiff has established legitimate a cause of action for 

breach of contract. The Court now determines whether default judgment is appropriate, by 

evaluating “(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, 210 F.3d at 164.

If a default judgment is not entered, Howard Johnson will continue to be harmed 

“because [it] will not be able to seek damages for [its] injuries due to defendant‟s continuing 

refusal to” participate in this case. See Newman v. Axiom Worldwide, No. 06-5564, 2010 WL 

2265227, at *5 (D.N.J. June 2, 2010). Furthermore, the amounts owed on the Recurring fees and 

the liquidated damages are subject to interest. The defendant will owe Howard Johnson more 

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money the longer it does not receive payment, causing additional harm. See Cathay Bank v. 

Green Natural Food Inc., No. 09-5200, 2010 WL 1541509, at *2 (D.N.J. Apr. 10, 2010). 

Defendants have not filed anything with the Court. Defendants have offered no defense, 

and the facts asserted in the complaint do not contain any information that could provide the 

basis for a meritorious defense. The Court assumes that the defendants have no litigable 

defenses available. Rose Containerline, Inc. v. Omega Shipping Co., No. 10-4345, 2011 WL 

1564637, at *3 (D.N.J. Apr. 25, 2011) (citing Carpenters Health & Welfare Fund of Phila. v. 

NDK Gen. Contractors, Inc., No. 06–3283, 2007 WL 1018227, at *5 (E.D. Pa. Mar. 27, 2009)).

Culpable conduct “is conduct that is taken wilfully or in bad faith.” Hill v. Williamsport 

Police Dept., 69 F. App‟x 49, 52 (3d Cir. 2003) (quotations omitted). “Reckless disregard for 

repeated communications from plaintiffs and the court . . . can satisfy the culpable conduct 

standard.” Nationwide Mut. Ins. Co. v. Starlight Ballroom Dance Club, Inc., 175 F. App‟x 519, 

523 (3d Cir. 2006) (citation omitted). Here, the Patels have disregarded all communications 

from Howard Johnson. Nor does the record suggest any good faith justification for defendants‟

failure to respond. There is no evidence before the Court “that defendants‟ failure to respond to 

plaintiff‟s complaint was caused by anything other than defendants‟ own culpability and willful 

negligence.” Platypus Wear, Inc. v. Bad Boy Club, Inc., No. 08-2662, 2009 WL 2147843, at *5 

(D.N.J. July 15, 2009). The Court presumes that they acted culpably because they have “failed 

to answer, move, or otherwise respond.” Stonebridge Bank v. Nita Props., LLC, No. 09-5145, 

2011 WL 380759, at *6 (D.N.J. Jan. 31, 2011); Slover v. Live Universe, Inc., No. 08-2645, 

2009 WL 606133, at *2 (D.N.J. Mar. 9, 2009). 

Damages

Howard Johnson requests a default judgment in the amount of $156,808.55. This amount 

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is comprised of (1) $47,953.75 for recurring fees owed under the agreement, (2) $103,215.89 for 

liquidated damages, and (3) $5,638.91 for attorneys‟ fees and costs. 

CONCLUSION

It is, on this 31st day of May,

ORDERED that plaintiff‟s motion for default judgment is granted in the amount of $156,808.55. 

s/ William H. Walls 

United States Senior District Judge

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