Opinion
Civ. No. 16-2477 (KM)(JBC)
06-30-2017
RAMADA WORLDWIDE INC., Plaintiff, v. KHAN HOTELS LLC, RASHAD KHAN, and IRAM KHAN Defendants.
NOT FOR PUBLICATION
OPINION
This matter comes before the Court on the unopposed motion of Plaintiff Ramada Worldwide Inc. ("Ramada") to amend, pursuant to Fed. R. Civ. P. 59(e), the default judgment this Court entered against Defendants Khan Hotels LLC ("Khan Hotels"), Rashad Khan ("Rashad") and Iram Khan ("Iram") on January 17, 2017. (ECF No. 11 (Amended Order & Judgment)) Ramada Worldwide Inc. v. Khan Hotels LLC, No. CV 16-2477 (KM)(JBC), 2017 WL 187384, at *1 (D.N.J. Jan. 17, 2017) (Amended Opinion). For the reasons set forth below, the Court will recalculate and alter the Amended Order & Judgment to award Ramada $70,059.38 in "Recurring Fees" in addition to the $54,108.24 in liquidated damages and interest previously awarded.
The original Order & Judgment and accompanying Opinion (ECF Nos. 8, 9), dated January 13, 2017, granted default judgment but transposed certain dollar figures. The amended versions (ECF Nos. 10,11) corrected those figures.
BACKGROUND
On January 17, 2017, I entered an Amended Order & Judgment against the defendants in the amount of $54,108.24, representing liquidated damages and interest due under a franchise agreement that Ramada and Khan Hotels entered into on December 30, 2011 (the "Franchise Agreement"). The Franchise Agreement provided that Khan Hotels would operate a hotel under the Ramada name in Colorado Springs, Colorado, for a period of fifteen years. See Ramada Worldwide Inc. v. Khan Hotels LLC, 2017 WL 187384, at *1. The Franchise Agreement obligated Khan Hotels, in exchange, to make periodic payments to Ramada for royalties, taxes, and various fees, collectively referred to as "Recurring Fees". Id.
On August 4, 2015, Khan Hotels "unilaterally terminated" the Franchise Agreement when it ceased to operate its hotel as a Ramada facility. Id. at *2. Ramada acknowledged the termination by letter dated September 4, 2015. Id. The letter advised Khan Hotels that, under the Franchise Agreement, it owed Ramada liquidated damages as well as outstanding Recurring Fees, among other charges. Id.
As set forth in my January 17, 2017 Amended Opinion, Ramada satisfied all prerequisites for default judgment and all three factors a court must evaluate when addressing a motion for default judgment weighed in favor of entry of default judgment against the defendants. Id. at *3-5. Ramada does not dispute this.
Ramada takes issue, however, with the part of the Amended Opinion that determined Ramada's remedies. There, I granted Ramada's request for liquidated damages calculated pursuant to the Franchise Agreement, but denied Ramada's request for Recurring Fees in the amount of $70,969.89. Id. at *6-7. I declined to award Ramada Recurring Fees on the ground that Ramada had failed to explain why it should receive Recurring Fees that post-date the termination of the Franchise Agreement. Id. I reasoned that post-termination Recurring Fees would be duplicative of the Liquidated Damages to which Ramada was entitled "because the purpose of Liquidated Damages is to compensate Ramada for lost Recurring Fees it otherwise would have received but for premature termination . . . ." Id.
At the time, however, I recognized that I might not have understood the nature of the requested Recurring Fees, because of ambiguities in the itemized statement Ramada submitted to support its request for Recurring Fees. (Exhibit D to the Affidavit of Suzanne Fenimore (ECF no. 7-3) (hereinafter, "Exhibit D", appended to this Opinion)). I therefore granted Ramada leave to file with the Court a supplemental application to amend the judgment. I instructed that Ramada "may submit, within 30 days, a supplemental certification and supporting exhibit(s) showing outstanding amounts Ramada owed, if any, as of August 4, 2015, [i.e., the date of termination] and has not yet paid." Id. at *7.
Ramada took me up on my offer and on February 7, 2017, timely filed the motion to amend judgment that is now before me.
LEGAL STANDARD
The standard governing a motion to alter or amend judgment under Fed. R. Civ. P. 59(e) is well settled. Generally, "[a] judgment may be altered or amended only if the party seeking reconsideration shows: (1) an intervening change in the controlling law; (2) the availability of new evidence that was not available when the court granted the motion for summary judgment; or (3) the need to correct a clear error of law or fact or to prevent manifest injustice." Spyer v. Navient Sols., Inc., No. 15-3814 (NLH/JS), 2016 WL 5852849, at *1 (D.N.J. Oct. 4, 2016); see also Blystone v. Horn, 664 F.3d 397, 415 (3d Cir. 2011). "[R]econsideration of a judgment after its entry is an extraordinary remedy," to be granted "sparingly." NL Indus. Inc. v. Commercial Union Ins. Co., 935 F. Supp. 513, 516 (D.N.J. 1996).
Here, however, I invited the motion for reconsideration, recognizing at the time I entered judgment that there might be an ambiguity in the record. To the extent Ramada shows that the Court made a clear error of fact resulting in the denial of a substantial sum in damages, there is no question that alteration of judgment is necessary in the interest of justice.
ALTERATION OF JUDGMENT
Ramada has not submitted supplemental exhibits, but has further explained the timing and provenance of most of the Recurring Fee entries listed in Exhibit D, the ambiguous itemized statement. Ramada claims that of the $70,969.89 it requests in unpaid Recurring Fees, only $11,368.73 of that total relates to post-August 4, 2015 (i.e., post-termination) entries. Of this $11,368.73, Ramada says, $11,225.48 stem from outstanding Recurring Fees related to audit charges from May and June of 2015, and therefore accrued prior to termination of the Franchise Agreement.
When Ramada claims that only $11,368.73 of the Recurring Fees relate to post-August 4, 2015 entries, it seems to refer to entries associated with an invoice date from September 2015 or later. Ramada fails to acknowledge that another $12,449.74 (or $14,323.93, depending on which column one views in Exhibit D) worth of entries on the itemized statement, although broadly labeled as August 2015 entries, have invoice dates from August 17, 2015, or later. Therefore, these $12,449.74 worth of entries appear to post-date termination of the Franchise Agreement as well. Nevertheless, it seems plausible that entries bearing invoice dates from mid-to-late August 2015 would relate to charges incurred before August 4, 2015. Therefore, on this unchallenged motion to alter an unchallenged motion for default judgment, I will assume the accuracy of Ramada's representation as to this aspect of Exhibit D. --------
Indeed, several of the entries with September 2015 invoice dates bear the description "[Month, Year] NT Audit," with month and year designations pre-dating August 2015. (See Exhibit D p.5 (May and June 2015 "NT Audit" entries)) Therefore, I accept Ramada's submission that certain of the Recurring Fee charges, despite having invoice dates that post-date August 4, 2015, relate to audits that pre-dated termination of the Franchise Agreement and therefore, are fair game for Ramada to collect.
Ramada avers that the remaining $143.15 of the $11,368.73 figure, corresponding to October 2015 through February 2016 entries, "also relate back to charges that accrued prior to termination." (Br. 2, 4) Ramada nevertheless offers to waive its claim to the $143.15 worth of fees "if the court is not satisfied that these amounts are properly owed." (Id.) I accept this offer; in contrast with the audit charges, nothing on the itemized statement supports the notion that these $143.15 in charges truly "relate back" to pre-termination charges. Subtracting $143.15 from the $70,969.89 in Recurring Fees Ramada requests comes out to $70,826.84.
I still believe there may be a discrepancy of approximately $800 in the calculation of Recurring Fees in this (apparently snakebit) case. In clarifying Exhibit D, it seems that Ramada has made a mathematical error or else, without explanation, vacillated between the "Billing" and "Total" columns. Applying my own renewed understanding of Exhibit D, aided by Ramada's helpful clarifications, I calculate as follows. Because Ramada appears to take the overall $70,969.89 figure it requests from the "Total" column on Exhibit D, (see Exhibit D p. 6, last row, "Total" column), I will use the figures listed in the "Total" column in my calculations. Subtracting all such figures from September 2015 or later (a sum of $12,885.27) from $70,969.89 equals $58,084.62. Adding back in the figures associated with pre-termination audit charges (see Exhibit D p.5 (May and June 2015 "NT Audit" entries (a sum of $11,974.76))) results in the final Recurring Fees amount that I will award to Ramada: $70,059.38.
Because, as Ramada observes, this $70,059.38 figure turns out to represent pre-termination rather than post-termination Recurring Fees, it is not duplicative of the liquidated damages I awarded Ramada. (See Br. 5-6) Rather, pre-termination Recurring Fees "are meant to compensate [Ramada] for the royalties, service assessments, taxes, interest, reservation system user fees, and other fees Defendants accrued while operating under the Franchise Agreement prior to termination." (Id. 5)
Overall, however, I accept Ramada's explanation and argument and will therefore amend my previous Amended Order & Judgment to include an award of $70,059.38 in Recurring Fees.
CONCLUSION
For the foregoing reasons, Ramada's motion is granted and an amended default judgment will be entered against defendants Khan Hotels, Rashad, and Iram, and in favor of plaintiff Ramada, in the amount of $54,108.24 with post- judgment interest from January 17, 2017, and in the amount of $70,059.38 with post-judgment interest from this date, both at the appropriate rate pursuant to 28 U.S.C. § 1961.
An appropriate second amended order and judgment will issue.
/s/ _________
KEVIN MCNULTY, U.S.D.J. Date: June 30, 2017
EXHIBIT D
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