UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

TRAVELODGE HOTELS, INC., : OPINION

: 

Plaintiff, : Civ. No. 11-2599 (WHW)

v. :

:

MERIDIAN GLOBAL INVESTMENTS, :

LP; MERIDIAN PREMIER :

MANAGEMENT, LLC; and EVAN :

JACOBSON, :

:

Defendants. :

Walls, Senior District Judge

Plaintiff Travelodge Hotels, Inc. (“THI”) moves for final judgment by default against 

Defendants Meridian Global Investments, LP (“Meridian Global”), Meridian Premier 

Management, LLC (“Meridian Premier”) and Evan Jacobson pursuant to Fed. R. Civ. P. 

55(b)(2). Pursuant to Rule 78 of the Federal Rules of Civil Procedure, the motion is decided 

without oral argument. THI’s motion for default judgment is granted.

FACTUAL AND PROCEDURAL BACKGROUND

This suit arises from a license agreement originally entered into between THI and SNB 

Hotels, Ltd. (“SNB”) on or about September 5, 2001 for the operation of a 201-room guest 

lodging facility (“facility”) in Texas. Compl. ¶ 18, Ex. A. On or about February 10, 2003, THI 

and SNB entered into a Satellite Connectivity Services Addendum (“the addendum”), which is 

part of the license agreement. Id. ¶ 30, Ex. C. On or about July 31, 2006, THI and SNB entered 

into an amendment to the license agreement that modified sections 18.1 and 18.3 of the license 

agreement. Id. ¶ 19, Ex. C. On March 1, 2007, THI entered into an assignment and assumption 

agreement with SNB and Meridian Global, wherein Meridian Global assumed and accepted all 

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rights and obligations of SNB under the license agreement. Id. ¶ 20, Ex. B. At this time Jacobson 

provided THI with a guaranty of Meridian Global’s obligations under the agreement and agreed 

that upon default that he would immediately make each payment and perform or cause Meridian 

Global to perform each obligation required under the agreement. Id. ¶¶ 32-34, Ex. A. 

Under the terms of the license agreement, Meridian Global was obligated to operate the 

facility for a period of fifteen years and make periodic payments to THI for royalties, system 

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

fees (collectively, the “recurring fees”). Id. ¶¶ 21-22, Ex. A. Meridian Global further agreed that 

interest would be payable on any past due amount at the rate of 1.5% per month or the maximum 

rate permitted by applicable law, whichever is less, accruing from the due date until the amount 

is paid. Id. ¶ 23, Ex. A. Meridian Global was also required to prepare and submit monthly reports 

to THI disclosing the amount of gross room revenue earned by Meridian Global at the facility in 

the preceding months for purposes of establishing the amount of royalties and other recurring 

fees due to THI as well as prepare and maintain at the facility’s accurate financial information 

for THI to examine, audit, and copy. Id. ¶¶ 24-25, Ex. A.

THI could terminate the license agreement if Meridian Global discontinued operating the 

facility as a Travelodge guest lodging establishment or lost possession or the right to possession 

of the facility. Id. ¶ 26, Ex. A. Meridian Global agreed that if the agreement was terminated, it 

would pay liquidated damages to THI according to a formula in the license agreement. Id. ¶ 27, 

Ex. C. The agreement also provided that Meridian Global’s obligations in the event of a 

termination included immediately ceasing the use of all Travelodge Marks in association with 

the operation and use of the facility. Id. ¶ 28, Ex. A. Additionally, the agreement provided that 

the non-prevailing party would “pay all costs and expenses, including reasonable attorneys’ fees, 

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incurred by the prevailing party to enforce this Agreement or collect amounts owed under this 

Agreement.” Id. ¶ 29, Ex. A. Lastly, Meridian Global agreed in the event of a termination it 

would pay additional liquidated damages to THI in the amount of $1,000 within 10 days of 

termination. Id. ¶ 31, Ex. C.

On or about June 25, 2009 Meridian Global ceased to operate the facility as a Travelodge 

facility, unilaterally terminating the lease agreement. Id. ¶ 35. THI wrote to Meridian Global on 

July 8, 2009 acknowledging the termination and advising Meridian Global to immediately 

discontinue all indicia of operation, materials and marks identifying the facility as a Travelodge 

to effectively distinguish its facility from a Travelodge facility within 14 days from receipt of 

notice. Id. ¶ 36, Ex. D. THI also requested the liquidated damages owed for premature 

termination and demanded all outstanding recurring fees through the date of termination. Id. THI 

alleges that despite the termination of the agreement and its request that Meridian Global to deidentify the facility, Meridian Global continued to use the Travelodge Marks through at least 

February 18, 2011. Id. ¶¶ 39-41, Ex. G. 

THI filed a complaint against the Defendants on May 5, 2011, alleging a breach of 

contract, premature termination and violation of the Lanham Act. Meridian Global, Meridian 

Premier and Jacobson were personally served on January 16, 2012. ECF No. 10, No. 11, No. 12. 

Defendants did not appear in this action or answer the complaint and THI requested entry of 

default against Meridian Premier, Meridian Global and Jacobson, which was entered by the 

Clerk on February 17, 2012. ECF No. 13.

THI now moves for final judgment by default in the amount of $733,522.05. Fenimore 

Aff. ¶ 42. This amount is comprised of (1) $89,097.90 for recurring fees owed under the 

agreement, (2) $45,423.62 for prejudgment interest on the recurring fees, (3) $202,000.00 for 

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liquidated damages, (4) $100,008.44 for prejudgment interest on the liquidated damages, (5) 

$288,901.08 for infringement damages, trebled pursuant to the Lanham Act, and (6) $8,091.01 

for attorneys’ fees and costs. Id.

STANDARD FOR 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 the entry of default 

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). Accordingly, the Third Circuit has clarified that, while “the entry of default 

judgment is left primarily to the discretion of the district court,” this “discretion is not without 

limits,” and cases should be “disposed of on the merits whenever practicable.” Hritz, 723 F.2d at 

1181 (citations omitted). See also $55,518,05 in U.S. Currency, 728 F.2d at 194-95. 

The Third Circuit considers three factors 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). 

In deciding a motion for default judgment, “the 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). The court must, however, make an independent inquiry into 

“whether the unchallenged facts constitute a legitimate cause of action, since a party in default 

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does not admit mere conclusions of law.” DIRECTV, Inc. v. Asher, No. 03-1969, 2006 WL 

680533, at *1 (D.N.J. Mar. 14, 2006) (quoting 10A Charles A. Wright, Arthur R. Miller & Mary 

Kaye Kane, Federal Practice and Procedure § 2688, at 63 (3d ed. 1998). While the court may 

conduct a 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

I. Jurisdiction

a. Subject Matter Jurisdiction

Subject matter jurisdiction exists pursuant to 28 U.S.C. §§ 1331 and 1338, 15 U.S.C. § 

1121 and with respect to certain claims, 28 U.S.C. § 1367. Compl. ¶ 5. THI is disputing 

Meridian Global used registered trademarks it was not permitted to use. Compl. ¶¶ 10-17, 37-41. 

See 28 U.S.C. §§ 1331 and 1338. This court has proper subject matter jurisdiction over the 

trademark claim and supplemental jurisdiction over the remaining claims since they are part of 

the same case or controversy as the trademark claim. See 28 U.S.C.§1367.

b. Personal Jurisdiction

This court possesses personal jurisdiction over Defendants. Proper service of process is 

required to establish personal jurisdiction over a defendant. Lampe v. Xouth, Inc., 952 F.2d 697, 

700-01 (3d Cir. 1991). Summonses for each defendant were returned executed on January 25, 

2012. ECF No. 10, ECF No. 11, ECF No. 12. The franchise agreement includes a clause by 

which Meridian Global and Meridian Premier consented “to the non-exclusive personal 

jurisdiction of and venue in the New Jersey state courts situated in Morris County, New Jersey 

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and the United States District Court for the District of New Jersey . . . .” to which Jacobson, as 

guarantor, was personally bound. Compl. ¶¶ 6-8, Ex. A.

II. 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 

the 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). 

a. Breach of Contract

THI seeks judgment of $733,522.05. Mot. for Final J. by Default ¶ 42. Of this amount, 

$89,097.90 is for recurring fees owed under the agreement and $202,000.00 for liquidated 

damages. Id. THI alleges that it is owed these amounts due to a breach of contract. Id. To 

properly make out a breach of contract claim, THI must allege: (1) a valid contract, (2) breach of 

that contract, and (3) damages resulting from that breach. Murphy v. Implicito, 920 A.2d 678, 

689 (N.J. Super. Ct. App. Div. 2007). THI has satisfied each of these elements. THI alleges that 

it “entered into the License Agreement with SNB Hotels, Ltd. for the operation of a 201-room 

guest lodging facility” which the Defendants were then made liable for by assignment and 

assumption. Compl. ¶ 18. Second, it alleges that the defendants breached the contract because 

they have failed to meet their financial and operational obligations in accordance with the license 

agreement. Id. ¶¶ 64, 69. Third, THI alleges damages relating to these claims because 

defendants have failed to pay the recurring fees and liquidated damages owed under the 

agreement. Fenimore Aff. ¶¶ 37-38, 41-42.

b. Lanham Act

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THI brings claims under §§ 32 and 43(a) of the Lanham Act (codified at 15 U.S.C. §§ 

1114, 1125(a)). Compl. ¶ 43-47. The elements for claims under these sections are the same 

where the argument is that the defendant’s use of a protected mark is causing confusion as to the 

affiliation of goods or services. See Freedom Card, Inc. v. JPMorgan Chase & Co., 423 F.3d 463, 

469-70 (3d Cir. 2005) (citing A & H Sportswear, Inc. v. Victoria’s Secret Stores, Inc., 166 F.3d 

197, 202 (3d Cir. 1999)). “To prove trademark infringement, a plaintiff must show that: (1) the 

mark is valid and legally protectable; (2) the mark is owned by the plaintiff; and (3) the 

defendant’s use of the mark to identify goods or services is likely to create confusion concerning 

the origin or the goods or services.” Id.

THI has satisfied each of these elements. “Registration of a mark under § 2 of the 

Lanham Act . . . entitles the owner to a presumption that its mark is valid.” Wal-Mart Stores, Inc. 

v. Samara Bros., Inc., 529 U.S. 205, 209 (2000). THI has adequately plead ownership of a valid 

and protectable mark because it alleges that it “has the exclusive right to sublicense the use of the 

service mark Travelodge and various related trade names, trademarks and service marks (certain

of which are on the principal register of the United States Patent and Trademark Office), logos, 

and derivations thereof... as well as the distinctive Travelodge” Hotels system. Fenimore Aff. ¶ 

4. THI also alleges that “certain of the Travelodge Marks are incontestable pursuant to 15 U.S.C. 

§ 1065” and that the public has been given notice of the registration of the Travelodge Marks 

pursuant to 15 U.S.C. § 1111. Id. ¶¶ 5-6. 

III.Propriety of Entry of Default Judgment

THI has properly served Defendants with process, the Clerk of the Court has entered 

default against them, and THI has established legitimate causes of action for breach of contract 

and violations of the Lanham Act. The Court now determines whether default judgment is 

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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, THI 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. 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. Defendants will owe THI more money the longer it does not receive payment, 

causing additional harm. See Howard Johnson Intern., Inc. v. Patel, No. 11-918, 2011 WL 

2148575, at *4 (D.N.J. May 31, 2011). 

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).

The Third Circuit has defined culpable conduct as “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, defendants have 

disregarded all communications from THI. 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 

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defendants’ own culpability and wilful 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 

Defendants 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). 

IV.Damages and Other Relief

THI requests a default judgment in the amount of $733,522.05. Mot. for Final J. by 

Default. This amount is comprised of (1) recurring fees in the amount of $89,097.90, (2) 

liquidated damages in the amount of $202,000.00, (3) prejudgment interest on both recurring 

fees and liquidated damages in the amounts of $45,423.62 and $100,008.44, (4) infringement 

damages, trebled pursuant to the Lanham Act, in the amount of $288,901.08 and (5) $8,091.01 

for attorneys’ fees and costs pursuant to the terms of the license agreement.

a. Recurring Fees and Liquidated Damages

The only allegations in a plaintiff’s complaint not treated as true upon the entry of a 

default judgment are those pertaining to the amount of damages. Comdyne I, Inc. v. Corbin, 908 

F.2d 1142, 1149 (3d Cir. 1990). Under Rule 55(b)(2), a district court “may conduct such hearing 

or order such references as it deems necessary and proper” in order “to determine the amount of 

damages.” There are certain limited situations, however, where a district court can enter a final 

judgment without requiring further evidence of damages. Ramada Worldwide Inc. v. ERS 

Investments Inc., No. 07-1095, 2008 WL 163640, at *6 (D.N.J. Jan. 16, 2008) (citing KPS 

Assocs., Inc. v. Designs By FMC, Inc., 318 F.3d 1, 19 (1st Cir. 2003)). First, if the damages are 

for a “sum certain or for a sum which can by computation be made certain,” a further evidentiary 

inquiry is not necessary. Fed. R. Civ. P. 55(b)(1); Comdyne I, 908 F.2d at 1149. A claim for 

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damages is not a “sum certain unless there is no doubt as to the amount to which a plaintiff is 

entitled as a result of the defendant’s default.” Ramada Worldwide Inc., 2008 WL 163640, at *6 

(quoting KPS Assocs., 318 F.3d at 19). “Such situations include actions on money judgments, 

negotiable instruments, or similar situations where the damages sought can be determined 

without resort to extrinsic proof.” Id. (quoting KPS Assocs., 318 F.3d at 19-20 (internal 

quotations omitted)). Second, claims for liquidated damages also do not require further 

evidentiary inquiry. Id. (citing KPS Assocs., 318 F.3d at 20). Here, THI’s request for recurring 

fees and liquidated damages owed under the agreement is for a specific sum and will be awarded 

by the Court. Fenimore Aff. ¶¶ 37-38. The liquidated damages and the recurring fees can be 

computed by formulas specified in the franchise agreement. Id.

b. Prejudgment Interests

THI also seeks prejudgment interest of $45,423.62 for the recurring fees and $100,008.44 

for the liquidated damages. Fenimore Aff. ¶¶ 37-38. Even in the absence of a contractual 

provision on the issue of prejudgement interest, New Jersey courts have allowed awards of 

prejudgment interest, in the discretion of the court, to “indemnify the claimant for the loss of 

what the moneys due him would presumably have earned if the payment had not been delayed.” 

Cooper Distrib. Co. v. Amana Refrigeration, Inc., 63 F.3d 262, 284 (3d Cir. 1995); accord, e.g., 

County of Essex v. First Union Nat’l Bank, 186 N.J. 46, 61 (2006) (“In awarding prejudgment 

interest, the basic consideration is that the defendant has had the use, and the plaintiff has not, of 

the amount in question”). The Court grants prejudgment interest for both the recurring fees as 

well as liquidated damages given that several New Jersey District Courts have granted 

prejudgment interest for liquidated damages. See Travelodge Hotels, Inc. v. Onyx Int’l Inc., No. 

05-3116 (D.N.J. Feb. 6, 2006); Travelodge Hotels, Inc. v. Colfax Ave. Irrevocable Trust, No. 01-

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3586, slip op. at 9-10 (D.N.J. July 14, 2004); Howard Johnson Int’l, Inc. v. Holeyfield, No. 03-

418, slip op. at 14-15 (D.N.J. July 12, 2004).

c. Infringement Damages

As to infringement damages, Section 35 of the Lanham Act allows a victorious plaintiff 

to recover, inter alia, “any damages sustained by the plaintiff.” 15 U.S.C. § 1117(a). 

Additionally, a court may treble the actual damage award if the infringement is wilful or 

intentional. Id. Some courts have awarded damages based on the amount of royalties the 

defendant would have paid during the infringement period under the now-terminated licensing 

agreement. See A&H Sportswear Co., 166 F.3d at 208-09. Here, in the absence of discovery, 

THI has no ability to ascertain the amount of Meridian Global’s gross revenue during the period 

of infringement and thereby cannot ascertain what recurring fees would be based on that 

revenue. THI can offer an estimate to the Court based on the average recurring fees paid by 

Meridian Global on its reported gross room revenue. THI alleges that the average monthly 

recurring fees owed by Defendants would have been $5,068.44 and the number of months of 

infringement was 19 months, resulting in a total of $96,300.36. Id. This number was then tripled 

because THI alleges that the violation was deliberate and wilful and seeks treble damages under 

the Lanham Act totalling $288,901.08. Id. See 15 U.S.C. 1117(a). In the absence of better 

evidence to prove lost royalties, THI’s calculations for infringement damages based on average 

recurring fees incurred by Defendants on their reported gross room revenue are acceptable. THI 

has also shown that Defendants intentionally infringed the Travelodge Marks, because 

Defendants continued to use Travelodge Marks despite receiving cease and desist letters from 

THI. Accordingly, the Court grants THI’s request for Lanham Act damages in the amount of 

$288,901.08.

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d. Attorneys Fees and Costs

Under section 17 of the license agreement, both parties agreed that “the non-prevailing 

party would pay for the costs and expenses, including reasonable attorneys’ fees and expenses, 

incurred by the prevailing party to enforce the addendum”. Fenimore Aff. ¶ 28, Ex. A. 

Attorneys’ fees clauses are enforceable under New Jersey law. See North Bergen Rex Transport, 

Inc. v. Trailer Leasing Co., 158 N.J. 561, 569 (1999). Rule 54 of the Federal Rules of Civil 

Procedure provides that “costs – other than attorney’s fees – should be allowed to the prevailing 

party.” Fed. R. Civ. P. 54(d)(1). Because THI has submitted supporting documentation, its 

request for attorneys’ fees and costs will be granted. Fenimore Aff. ¶ 28, Ex. A. 

CONCLUSION

THI’s motion for default judgment is granted.

s/ William H. Walls 

United States Senior District Judge

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