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Best Western International Inc. v. American Hospitality Solution LLC

United States District Court, D. Arizona

March 7, 2017

Best Western International Incorporated, Plaintiff,
American Hospitality Solution LLC, et al., Defendants.


          David G. Campbell United States District Judge

         Plaintiff has filed a motion for default judgment against Defendant Deborah Speziale (Docs. 12, 19), and no party has requested oral argument. For the reasons that follow, the Court will grant the motion.

         I. Background.

         Plaintiff Best Western International, Inc. is a non-profit corporation consisting of individually owned hotels that operate under the “Best Western” mark. Doc. 19 at 2. The rights and duties of Plaintiff and its member hotels are created and governed by a membership agreement that incorporates by reference certain bylaws, rules, and regulations. Doc. 1 at 3. Plaintiff executed a membership agreement with American Hospitality Solution, LLC and Defendant Deborah Speziale. Doc. 1, ¶¶ 19-24. Defendant was the voting member for this membership, binding her under the membership agreement and making her “personally, jointly and severally liable for all obligations owed to Best Western.” Id., ¶ 4; Doc. 1-2 at 18. The membership agreement provides that “if a member [hotel] resigns or is terminated, fees and dues for the remainder of the fiscal year will become immediately due and payable[.]” Doc. 1, 12.

         In March 2016, Plaintiff terminated its membership agreement with American Hospitality Solution and Defendant. Doc. 1 at 8. In May 2016, Plaintiff notified Defendant of the account balance and demanded payment, which at the time was $93, 514.45. Id.; Doc. 1-3 at 24-26. Defendant did not pay, and Plaintiff filed its complaint in October 2016, asserting breach of contract, open account, unjust enrichment, and stated account. Doc. 1 at 9-12.

         Defendant was properly served in this case (Doc. 8), failed to appear, and was notified of Plaintiff's motion for entry of default (Doc. 10). On November 8, 2016, default was entered against Defendant. Doc. 11. Plaintiff has now filed a motion for default judgment pursuant to Rule 55(b) of the Federal Rules of Civil Procedure (Doc. 12) seeking $103, 481.13 in unpaid fees, plus 1.5% interest per month from November 1, 2016 until judgment is entered. Doc. 12 at 2. Plaintiff seeks $3, 723.21 in attorneys' fees and costs pursuant to the membership agreement, A.R.S. §§ 12-341 and 12-341.01, and 15 U.S.C. § 1117. Id. Plaintiff also seeks post-judgment interest on all amounts awarded pursuant to 28 U.S.C. § 1961. Id.

         II. Legal Standard.

         Because Defendant's default has been properly entered pursuant to Rule 55(a), the Court has discretion to grant default judgment against Defendant under Rule 55(b). See Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Factors the Court should consider include (1) the possibility of prejudice to Plaintiff, (2) the merits of the claims, (3) the sufficiency of the complaint, (4) the amount of money at stake, (5) the possibility of a dispute concerning material facts, (6) whether default was due to excusable neglect, and (7) the policy favoring a decision on the merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). In applying these factors, “the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true.” Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977); see Fed. R. Civ. P. 8(d).

         III. Analysis.

         Having considered Plaintiff's motion, which addresses each Eitel factor (Doc. 12 at 4-9), and having reviewed the supporting affidavits and documents provided by Plaintiff (Docs. 1-3 at 15-30, 12-1, 12-2, 13, 13-1), the Court concludes that default judgment is appropriate. See, e.g., Best W. Int'l, Inc. v. Universal Hospitality, Inc., No. CV-08-91-PHX-DGC, 2008 WL 2003784, at *3 (D. Ariz. May 8, 2008).

         A. Possible Prejudice to Plaintiff.

         The first Eitel factor weighs in favor of granting default judgment. Plaintiff served Defendant four months ago. Doc. 8. Defendant has not answered or otherwise responded to the complaint. Doc. 19 at 1. If Plaintiff's motion for default judgment is not granted, Plaintiff “will likely be without other recourse for recovery.” PepsiCo, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1177 (C.D. Cal. 2002).

         B. The Merits of the Claim and the Sufficiency of the Complaint.

         The second and third Eitel factors favor a default judgment where the complaint states a claim for relief. See Cal. Sec. Cans, 238 F.Supp.2d at 1175; Danning v. Lavine, 572 F.2d 1386, 1388-89 (9th Cir. 1978). Plaintiff alleges breach of contract based on Defendant's failure to pay amounts due under the membership agreement for services and supplies Plaintiff provided. Doc. 12 at 5-6. Plaintiff contends that Defendant agreed to pay interest of 1.5% per month. Id. at 6. Plaintiff has ...

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