Permanent General Assurance Corporation v. Villanueva et al, No. 1:2020cv03022 - Document 41 (E.D. Wash. 2020)
Court Description: ORDER GRANTING 35 MOTION FOR DEFAULT JUDGMENT. This file is CLOSED. Signed by Judge Salvador Mendoza, Jr. (CLP, Case Administrator)
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Permanent General Assurance Corporation v. Villanueva et al Case 1:20-cv-03022-SMJ ECF No. 41 Nov 18, 2020 2 SEAN F. MCAVOY, CLERK UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON 3 5 6 7 8 9 10 11 PageID.349 Page 1 of 8 FI LED I N THE U.S. DI STRI CT COURT EASTERN DI STRI CT OF WASHI NGTON 1 4 Doc. 41 filed 11/18/20 PERMANENT GENERAL ASSURANCE CORPORATION, a Wisconsin corporation, Plaintiff, No. 1:20-cv-03022-SMJ ORDER GRANTING MOTION FOR DEFAULT JUDGMENT v. DIEGO VILLANUEVA, a Washington resident, and ESTATE OF FRANCES NORTHOVER, a Washington resident, Defendants. 12 Before the Court, without oral argument, is Plaintiff Permanent General 13 Assurance Corporation’s (“PGAC”) Motion for Default Judgment, or Alternatively, 14 Motion for Summary Judgment, ECF No. 35. PGAC sued for declaratory judgment 15 that it owes no obligation to provide coverage to Defendants under an automobile 16 insurance policy that PGAC issued to Diego Villanueva for any claims arising out 17 of a May 7, 2019 automobile accident, in which Frances Northover was driving a 18 2007 Dodge Durango. Despite being properly served, neither Diego Villanueva nor 19 the Estate of Frances Northover (collectively, Defendants) have answered the 20 Complaint nor responded to PGAC’s motion. As result, and in view of the ongoing ORDER GRANTING MOTION FOR DEFAULT JUDGMENT – 1 Dockets.Justia.com Case 1:20-cv-03022-SMJ ECF No. 41 filed 11/18/20 PageID.350 Page 2 of 8 1 prejudice to PGAC on the issue of coverage, the Court finds default judgment 2 appropriate and grants PGAC’s motion. 3 BACKGROUND 4 PGAC filed the complaint on February 21, 2020. According to the complaint, 5 on or about May 7, 2019, an automobile accident occurred on Larue Road at the 6 center of State Route 97 near Yakima, Washington. ECF No. 1. The accident 7 occurred when Northover, while driving a 2007 Dodge Durango, failed to yield at 8 a stop sign and struck a semi-truck, which was towing a trailer. Id. The truck and 9 trailer were owned by H.R. Spinner Corporation and insured by Zurich. Id. It was 10 reported that four people died in the accident, including Northover and three 11 passengers. Id. Two other passengers apparently survived the accident yet sustained 12 injuries. Id. Villanueva allegedly owned the Durango at the time of the accident. Id. 13 On October 15, 2019, Allied Interstate, on behalf of Zurich, issued to PGAC a 14 subrogation demand letter, seeking to recover $15,560.00 Zurich ostensibly 15 incurred funding repairs for damage to the trailer attached to the semi. Id. 16 PGAC served a Summons and Complaint on Defendants Villanueva and the 17 Estate of Frances Northover on March 4, 2020 and February 27, 2020, respectively. 18 ECF Nos. 5, 6. Defendants have failed to appear or otherwise respond to the 19 Complaint in this lawsuit. The Clerk of the Court entered an Order of Default on 20 June 4, 2020. ECF No. 13. PGAC served the First Amended Complaint on ORDER GRANTING MOTION FOR DEFAULT JUDGMENT – 2 Case 1:20-cv-03022-SMJ ECF No. 41 filed 11/18/20 PageID.351 Page 3 of 8 1 Defendants Villanueva and the Estate of Frances Northover on July 31, 2020 and 2 July 30, 2020, respectively. ECF Nos. 26, 27. Defendants have failed to appear or 3 otherwise respond to the First Amended Complaint in this lawsuit. The Clerk of the 4 Court entered a second Order of Default on September 8, 2020. ECF No. 30. 5 PGAC filed its Motion for Default Judgment, or Alternatively, Motion for 6 Summary Judgment on September 25, 2020. ECF No. 35. PGAC served Villanueva 7 and the Northover Estate with the motion briefing on September 28, 2020. ECF 8 Nos. 37, 38. The deadline for Defendants to respond to the motion was October 26, 9 2020. LEGAL STANDARD 10 11 Entry of default judgment is discretionary. Aldabe v. Aldabe, 616 F.2d 1089, 12 1092 (9th Cir. 1980). When possible, cases should be resolved on their merits, and 13 the entry of default judgment is an extreme measure reserved for unusual 14 circumstances. Westchester Fire Ins. Co. v. Mendez, 585 F.3d 1183, 1189 (9th 15 Cir. 2009) (citing Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 814 (9th 16 Cir. 1985)). In evaluating the propriety of default judgment, the court is guided by 17 seven non-exclusive factors: 18 19 20 (1) [T]he possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action[,] (5) the possibility of a dispute concerning material facts[,] (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. ORDER GRANTING MOTION FOR DEFAULT JUDGMENT – 3 Case 1:20-cv-03022-SMJ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 ECF No. 41 filed 11/18/20 PageID.352 Page 4 of 8 Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). The court assumes the facts alleged in the complaint are true. Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). DISCUSSION Having reviewed the motion and the record in this matter considering the Eitel factors, the Court is fully informed and finds that entry of default judgment is appropriate in this case. First, the Court considers the possible prejudice to PGAC. See Eitel, 782 F.2d at 1471–72. PGAC’s claim for declaratory relief cannot move forward if default judgment is not entered. Elektra Entm’t Grp., Inc. v. Crawford, 226 F.R.D. 388, 391 (C.D. Cal. 2005) (finding the prejudice factor when Plaintiff would be denied the right to judicial resolution of the claims presented). Moreover, this lawsuit is the only means by which PGAC can establish that it owes no coverage for the accident. Am. Commerce Ins. Co. v. Schierman, No. C12-0195JLR, 2012 WL 13018750, at *3 (W.D. Wash. June 25, 2012) (finding that declaratory judgment is the only means that an insurer can establish it has no duty to defend or indemnify an insured). This factor weighs in favor of default judgment. Second, the Court considers the merits of PGAC’s substantive claim. See Eitel, 782 F.2d at 1471–72. Coverage under the policy is restricted to “the ownership or use of” a “covered auto” or a “non-owned auto.” The Durango does ORDER GRANTING MOTION FOR DEFAULT JUDGMENT – 4 Case 1:20-cv-03022-SMJ ECF No. 41 filed 11/18/20 PageID.353 Page 5 of 8 1 not qualify as either because: (1) the policy declarations page does not list the 2 Durango; (2) there is no evidence that Villanueva acquired the Durango to replace 3 the insured vehicle that appears in the policy declarations; and (3) Villanueva 4 owned the Durango as early as November 28, 2017—over 18 months before the 5 accident. This factor therefore weighs in favor of default judgment. See Eitel, 782 6 F.2d at 1471–72. 7 Third, the Court considers the sufficiency of the complaint. See Eitel, 782 8 F.2d at 1471–72. The Court assumes the facts alleged in the complaint are true. 9 Geddes, 559 F.2d at 560. The First Amended Complaint alleges facts sufficient to 10 establish that there is no coverage for any claim arising from the accident. See 11 generally ECF No. 25. The Court finds this factor also weighs in favor of default 12 judgment. 13 Fourth, the Court considers the sum of money at stake in the action. See 14 Eitel, 782 F.2d at 1471–72. While PGAC seeks only declaratory judgment in this 15 matter—and thus entry of default judgment would not directly result in a monetary 16 award—the Court is cognizant that default judgment will almost certainly result in 17 PGAC denying coverage in the underlying insurance dispute. This outcome could 18 result in costs to Defendants associated with both the continued defense of that 19 matter and any eventual judgment or settlement. So, while PGAC claims no 20 monetary damages are involved in this suit—money is nevertheless at stake. The ORDER GRANTING MOTION FOR DEFAULT JUDGMENT – 5 Case 1:20-cv-03022-SMJ 1 ECF No. 41 filed 11/18/20 PageID.354 Page 6 of 8 Court thus finds this factor weighs against default judgment. 2 Fifth, the Court considers the possibility of disputed material facts. See Eitel, 3 782 F.2d at 1471–72. On the record before the Court, the issue of coverage for the 4 underlying dispute seems clear-cut. See generally ECF Nos. 25, 35. That said, the 5 Court notes that record is provided entirely by PGAC and thus, there is some 6 possibility that discovery would produce evidence to muddy the waters concerning 7 coverage, and this factor weighs somewhat against entry of default judgment. 8 Sixth, the Court considers the possibility that Defendants defaulted due to 9 excusable neglect. See Eitel, 782 F.2d at 1471–72. There is no excusable neglect 10 when a defendant is “properly served with the complaint, the notice of entry of 11 default, [and] the papers in support of the [default judgment] motion.” Shanghai 12 Automation Instrument Co. v. Kuei, 194 F. Supp. 2d 995, 1005 (N.D. Cal 2001). 13 PGAC effected service of process several times throughout this suit. See, e.g., ECF 14 Nos. 5, 6, 14, 15, 16, 19, 20, 22, 23, 26, 27, 31–34, 37, 38 & 40. As a result, the 15 Court finds there is no excusable neglect for Defendants’ failure to respond, and 16 thus this factor weighs in favor of default judgment. 17 Finally, the Court considers the strong preference, expressed in the Federal 18 Rules of Civil Procedure, for resolution of claims on the merits. See Eitel, 782 F.2d 19 at 1471–72; Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985). 20 Although this factor “almost always disfavors the entry of default judgment,” it is ORDER GRANTING MOTION FOR DEFAULT JUDGMENT – 6 Case 1:20-cv-03022-SMJ ECF No. 41 filed 11/18/20 PageID.355 Page 7 of 8 1 not dispositive. Vawter v. Quality Loan Serv. Corp. of Wash., No. C009-1585JLR, 2 2011 WL 1584434, at *6 (W.D. Wash. Apr. 27, 2011). Despite that strong 3 preference, the Court finds this is an appropriate case for entry of default judgment. 4 This matter has been pending since February 2020; Defendants have had ample 5 opportunity to appear and defend against the merits of PGAC’s claims. Because 6 further delaying judgment would result in continuing prejudice to PGAC—whose 7 only recourse under Washington law for relief from its duty to defend is obtaining 8 judgment in a case such as this one—and because the merits of PGAC’s claim 9 appear strong, the Court finds entry of default judgment appropriate. Because the 10 Court finds entry of default judgment warranted, it declines to evaluate the merits 11 of PGAC’s alternative motion for summary judgment. See ECF No. 35. 12 Accordingly, IT IS HEREBY ORDERED: 13 1. Plaintiff Permanent General Assurance Corporation’s motion for default judgment, ECF No. 35, is GRANTED. 14 2. 15 The Clerk’s Office is directed to ENTER DEFAULT JUDGMENT in favor of Plaintiff. 16 3. 17 18 // 19 // 20 // All hearings and other deadlines are STRICKEN. ORDER GRANTING MOTION FOR DEFAULT JUDGMENT – 7 Case 1:20-cv-03022-SMJ ECF No. 41 filed 11/18/20 PageID.356 Page 8 of 8 The Clerk’s Office is directed to CLOSE this file. 1 4. 2 IT IS SO ORDERED. The Clerk’s Office is directed to enter this Order and 3 4 provide copies to all counsel and to Defendants at their last known addresses. DATED this 18th day of November 2020. 5 6 7 ____________________________ SALVADOR MENDOZA, JR. United States District Judge 8 9 10 11 12 13 14 15 16 17 18 19 20 ORDER GRANTING MOTION FOR DEFAULT JUDGMENT – 8
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