Westfield Ins. Co. v. Arnold

1

WESTFIELD INSURANCE COMPANY, Plaintiff v. HARRY ARNOLD, Defendant

No. 1:23-cv-00784

United States District Court, M.D. Pennsylvania

August 3, 2023

MEMORANDUM

Yvette Kane, District Judge United States District Court

Before the Court is Plaintiff Westfield Insurance Company (“Plaintiff”)'s motion for default judgment against Defendant Harry Arnold (“Defendant”). (Doc. No. 9.) For the reasons that follow, the Court will grant Plaintiff's motion and enter default judgment against Defendant and in favor of Plaintiff.

I. BACKGROUND

On April 5, 2023, non-parties Ernest Singer and Linda Singer (the “Non-Parties”) filed a complaint against Defendant “in the Court of Common Pleas of Cumberland County at docket number 2023-02920.” (Doc. No. 1 ¶¶ 11-12.) The Non-Parties allege that Defendant negligently and recklessly shoved Ernest Singer to the floor seriously and permanently injuring him. (Doc. No. 1-2 ¶¶ 8-9.) Pursuant to an insurance policy that covers “damages because of bodily injury, property damage or personal injury caused by an [accident]” (Doc. No. 1-5 at 48, 50), Plaintiff is currently defending Defendant in the underlying action, subject to a full reservation of rights (Doc. No. 1 ¶ 32).

Plaintiff initiated the above-captioned declaratory judgment action on May 11, 2023, seeking a declaration that it “has no duty to defend or indemnify [Defendant] in connection with the civil action filed against him by Ernest Singer in the Court of Common Pleas of Cumberland County[.]” (Doc No. 1.) To this end, Plaintiff's complaint advances three counts, each asserting a separate basis for why Defendant's conduct falls outside the scope of the coverage afforded by the relevant insurance policy. (Id. at 10-14.)

A review of the docket reveals that service of the complaint upon Defendant was effectuated as follows. On May 18, 2023, Deputy Erin Reddington of the Cumberland County Sheriff's Office personally served a copy of the complaint upon Defendant at Cumberland County Prison, where he is currently an inmate, establishing a June 8, 2023 deadline for an answer to be filed. (Doc. No. 5); see Fed.R.Civ.P. 12(a). Defendant, however, has failed to appear, answer, move, or otherwise respond to Plaintiff's complaint.

On June 12, 2023, Plaintiff filed a request with the Clerk of Court for an entry of default pursuant to Federal Rule of Civil Procedure 55(a). (Doc. No. 7.) The Clerk of Court entered default on June 15, 2023 (Doc. No. 8), and Plaintiff filed a motion for default judgment (Doc. No. 9) with a brief in support (Doc. No. 10) the following day. Because Defendant has not responded to the pending motion for default judgment, the Court deems it unopposed under Local Rule 7.6. Accordingly, Plaintiff's motion is ripe for disposition.

II. LEGAL STANDARD

Default judgments are governed by a two-step process set forth under Rule 55 of the Federal Rules of Civil Procedure. An entry of default by the Clerk of Court under Rule 55(a) is a prerequisite to a later entry of a default judgment under Rule 55(b). See 10A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2682 (3d ed. 2007) (noting that, “[p]rior to obtaining a default judgment under either Rule 55(b)(1) or Rule 55(b)(2), there must be an entry of default as provided by Rule 55(a)”). Once the Clerk of Court has entered a default, the party seeking the default may then move the court to enter a default judgment under Rule 55(b)(2). Entry of default does not entitle a claimant to default judgment as a matter of right. See 10 James Wm. Moore et al., Moore's Federal Practice § 55.31 (Matthew Bender ed. 2010). Indeed, it is well settled that decisions relating to the entry of default judgments are committed to the sound discretion of the district court. See Emcasco Ins. Co. v. Sambrick, 834 F.2d 71, 74 (3d Cir. 1987).

Three factors control the exercise of the district court's discretion in assessing whether default judgment should be granted following the entry of default: “(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.” See Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000) (citing United States v. $55,518.05 in U.S. Currency, 728 F.2d 192, 195 (3d Cir. 1984)). Even so, a court may “enter a default judgment based solely on the fact that the default occurred” without considering the Chamberlain factors if the defendant has been properly served but fails to appear, plead, or defend an action. See Anchorage Assocs. v. Virgin Islands Bd. of Tax Review, 922 F.2d 168, 177 n.9 (3d Cir. 1990).

“A finding that default judgment is appropriate, however, is not the end of the inquiry.” Martin v. Nat'l Check Recovery Servs., LLC, No. 1:12-cv-01230, 2016 WL 3670849, at *1 (M.D. Pa. July 11, 2016). Prior to entering a default judgment, the Court must also determine whether the “unchallenged facts constitute a legitimate cause of action.” See Wright et al., supra, at § 2688; Broad. Music, Inc. v. Spring Mount Area Bavarian Resort, Ltd., 555 F.Supp.2d 537, 541 (E.D. Pa. 2008) (stating that, “before granting a default judgment, the Court must . . . ascertain whether ‘the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law'” (quoting Directv, Inc. v. Asher, No. 03-cv-01969, 2006 WL 680533, at *1 (D.N.J. Mar. 14, 2006))). In conducting this inquiry, “the well-pleaded, factual allegations of the complaint . . . are accepted as true and treated as though they were established by proof.” See E. Elec. Corp. of N.J. v. Shoemaker Const. Co., 652 F.Supp.2d 599, 605 (E.D. Pa. 2009). While the Court must accept as true the well-pleaded factual allegations of the complaint, the Court need not accept the moving party's factual allegations or legal conclusions relating to the amount of damages. See Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990).

III. DISCUSSION

Under the Declaratory Judgment Act (“DJA”), federal courts “may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” See 28 U.S.C. § 2201(a). A court's “discretion to exercise jurisdiction is somewhat complicated in an insurance context,” see Colony Ins. Co. v. Troensa Constr., Inc., No. 17-cv-03577, 2018 WL 4676038, at *6 (D.N.J. Sept. 28, 2018), and where, as here, an insurance company seeks a judicial declaration that it need not continue defending a party in an underlying state proceeding, courts exercise caution before asserting jurisdiction, see Certain Underwriters at Lloyd's, London v. Good Night Nursing Agency, LLC, No. 21-cv-07666, 2022 WL 1137302, at *5 (D.N.J. Apr. 18, 2022); see, e.g., Zurich Am. Ins. Co. v. Gutowski, No. 22-cv-02834, 2022 WL 17539105, at *7 (E.D. Pa. Dec. 8, 2022) (explaining that courts “must determine whether to exercise . . . jurisdiction under the DJA”; i.e., whether the circumstances of the case warrant declining jurisdiction). Accordingly, before considering the merits of Plaintiff's motion, this Court will determine whether it should exercise jurisdiction over the pending declaratory judgment action.

A. Whether the Court Should Exercise Jurisdiction Over this Action

1. Applicable Legal Standard

The Court's discretion to exercise jurisdiction over the pending declaratory judgment action turns on a two-step inquiry. At the first step, the Court must determine whether there is a parallel state proceeding. “[P]arallel proceedings are those that are ‘truly duplicative,' that is, when the parties and the claims are ‘identical,' or at least ‘effectively the same.'” Kelly v. Maxum Specialty Ins. Grp., 868 F.3d 274, 285 (3d Cir. 2017). The presence of a parallel proceeding weighs against exercising jurisdiction, whereas “the absence of [a] pending parallel state proceeding] militates significantly in favor of exercising jurisdiction[.]” See Reifer v. Westport Ins. Corp., 751 F.3d 129, 144 (3d Cir. 2014). At the second step, the Court must consider the following non-exhaustive factors articulated in Reifer:

(1) the likelihood that a federal court declaration will resolve the uncertainty of obligation which gave rise to the controversy;

(2) the convenience of the parties;

(3) the public interest in settlement of the uncertainty of obligation;

(4) the availability and relative convenience of other remedies;

(5) a general policy of restraint when the same issues are pending in a state court;

(6) avoidance of duplicative litigation.

(7) prevention of the use of the declaratory action as a method of procedural fencing or as a means to provide another forum in a race for res judicata; and

(8) (in the insurance context), an inherent conflict of interest between an insurer's duty to defend in a state court and its attempt to characterize that suit in federal court as falling within the scope of a policy exclusion.

See id. at 146; see also DiAnoia's Eatery, LLC v. Motorists Mut. Ins. Co., 10 F.4th 192, 196-97 (3d Cir. 2021) (same). In the insurance context, the Court must also consider the “additional guidance” from State Auto Insurance Cos. v. Summy, 234 F.3d 131 (3d Cir. 2000), which held that “when applicable state law is ‘uncertain or undetermined, district courts should be particularly reluctant' to exercise DJA jurisdiction,” and further cautioned that “district courts are limited to predicting-rather than establishing-state law[.]” See DiAnoia's Eatery, LLC, 10 F.4th at 197 (quoting Summy, 234 F.3d at 135).

2. Analysis

a. Whether the Underlying State Court Action is a Parallel Proceeding

Unless all the parties to a federal action are also parties to an underlying...