Farmers New World Life Insurance v. Burton et al, No. 2:2018cv00030 - Document 98 (E.D. Wash. 2019)
Court Description: ORDER GRANTING DEFAULT JUDGMENT, granting 85 Motion for Default Judgment. Signed by Judge Rosanna Malouf Peterson. (LR, Case Administrator)
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Farmers New World Life Insurance v. Burton et al Doc. 98 1 FI LED I N THE U.S. DI STRI CT COURT EASTERN DI STRI CT OF WASHI NGTON 2 Mar 08, 2019 3 SEAN F. MCAVOY, CLERK 4 UNITED STATES DISTRICT COURT 5 EASTERN DISTRICT OF WASHINGTON 6 7 8 FARMERS NEW WORLD LIFE INSURANCE, a Washington corporation, Plaintiff, 9 10 11 12 13 14 15 16 17 18 NO: 2:18-CV-30-RMP ORDER GRANTING DEFAULT JUDGMENT v. BRIDGETTE BURTON, an individual; MARIANNA BURTON, an individual; JACOB BURTON, an individual; ANTHONY BURTON, an individual; GABRIEL BURTON, an individual; CATHERINE BURTON, an individual; JOSEPH BURTON, an individual; MICHAEL BURTON, an individual; MARISSA BURTON, an individual; DANIEL BURTON, an individual; PATRICK BURTON, an individual; MATTHEW BURTON, an individual; ANDREA BURTON SANDBERG, an individual; and JEREMY BURTON, an individual, 19 Defendants. 20 21 ORDER GRANTING DEFAULT JUDGMENT ~ 1 Dockets.Justia.com 1 BEFORE THE COURT is Plaintiff Farmers New Life Insurance’s Motion for 2 Default Judgment, ECF No. 85. Farmers moves for default judgment against 3 Defendants Marissa Burton, Daniel Burton, Patrick Burton, Matthew Burton, 4 Andrea Burton Sandberg, and Jeremy Burton (collectively, “Default Defendants”). 5 The Clerk of Court for the Eastern District of Washington entered an order of default 6 against the Default Defendants on December 27, 2018. ECF No. 78. The Court has 7 reviewed Farmers’ motion and the record, and is fully informed. 8 BACKGROUND 9 Farmers filed this interpleader action on January 24, 2018. ECF No. 1. In the 10 complaint, Farmers claimed that all Defendants had a possible claim to the $100,000 11 proceeds of a life insurance policy issued to Wallace Burton in 1989. Id. at 6–8. 12 The dispute arose when Marianna Burton, one of Wallace’s children, and Bridgette 13 Zielke Burton, Wallace’s wife at the time of his death, both claimed ownership of 14 the proceeds. Id. at 8. None of the Default Defendants ever made claims for the 15 proceeds. Id. at 8–9. 16 Farmers had difficulty locating and completing service of process on the 17 Default Defendants. Farmers personally served Patrick Burton and sub-served 18 Andrea Burton Sandberg, Jeremy Burton, and Daniel Burton by leaving the service 19 documents with someone at each’s residence. See ECF Nos. 16, 19, 30, and 33. 20 Being unable to serve Marissa and Matthew Burton, Farmers moved for permission 21 to serve Marissa and Matthew by publication, arguing that Marissa and Matthew’s ORDER GRANTING DEFAULT JUDGMENT ~ 2 1 states of residence, California and Tennessee, permitted service by publication if 2 personal service could not be effectuated. ECF No. 21. The Court granted Farmers’ 3 request. ECF No. 30. Farmers filed proof of service by publication on Marissa and 4 Matthew on June 15, 2018. ECF Nos. 34 and 35. 5 As the other Burton children and Ms. Zielke Burton litigated the dispute over 6 the proceeds, the Default Defendants failed to respond or appear in this matter. 7 Having not heard from the Default Defendants, Farmers moved for entry of default 8 on December 26, 2018. ECF No. 75. The next day, the District Court Clerk for the 9 Eastern District of Washington entered an order of default as to the Default 10 Defendants. ECF No. 76. Farmers now moves for default judgment against the 11 Default Defendants, asking the Court to enjoin the Default Defendants from 12 instituting or prosecuting any court action against Farmers for the recovery of the 13 proceeds at issue in this case. ECF No. 85. 14 15 LEGAL STANDARD A court may exercise its discretion to order default judgment following the 16 entry of default by the Clerk of the Court. Fed. R. Civ. P. 55(b). Once the Clerk of 17 Court enters an order of default, the well-pleaded allegations of the complaint, 18 except those concerning damages, are deemed true. Fed. R. Civ. P. 8(b)(6); see 19 TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–18 (9th Cir. 1987). In 20 conjunction with moving for default judgment, Plaintiff must provide evidence of 21 ORDER GRANTING DEFAULT JUDGMENT ~ 3 1 all damages sought in the complaint, and the damages sought must not be different 2 in kind or exceed the amount demanded in the pleadings. Fed. R. Civ. P. 54(c). 3 Before granting default judgment, a district court should ensure the adequacy 4 of the service of process on the party against whom default judgment is requested. 5 Calista Enters. Ltd. v. Tenza Trading Ltd., No. 3:13-cv-01045-SI, 2014 WL 6 3670856, at *2 (D. Or. July 23, 2014). This is because “[a] federal court does not 7 have jurisdiction over a defendant unless the defendant has been served properly.” 8 Direct Mail Specialists, Inc. v. Eclat Computerized Techs., Inc., 840 F.2d 685 (9th 9 Cir. 1988). Improper service of process is an adequate ground to set aside a clerk’s 10 entry of default. See Mason v. Genisco Tech. Corp., 960 F.2d 849, 851 (9th Cir. 11 1992). 12 13 14 DISCUSSION Service of Process The Court must determine whether proper service of process was completed 15 on the Default Defendants before assessing whether default judgment is appropriate. 16 Calista Enters., 2014 WL 3670856, at *2. 17 Service of process is completed by following the guidelines of Federal Rule of 18 Civil Procedure 4 or state law for serving summons in the state in which the action is 19 brought or the state in which service is made. Fed. R. Civ. P. 4(e)(1). Under the 20 federal rules, service is completed by personally serving the defendant; serving the 21 summons and complaint on a person of suitable age and discretion at the ORDER GRANTING DEFAULT JUDGMENT ~ 4 1 individual’s usual place of abode; or serving an agent authorized to receive service 2 of process on behalf of the defendant. Fed. R. Civ. P. 4(e)(2). In California and 3 Tennessee, service may be made by publication if the party being served cannot be 4 served with reasonable diligence and the serving party receives permission from a 5 court. Cal. Civ. P. Code § 415.50; Tenn. Code § 21-1-204. In both states, service is 6 effective after four consecutive weeks of publication. Cal. Civ. P. Code § 415.50(c) 7 (stating that service of summons is completed as provided in section 6064 of the 8 Government Code); Cal. Gov. Code § 6064 (“Publication of notice pursuant to this 9 section shall be once a week for four successive weeks. . . . The period of notice . . . 10 terminates at the end of the twenty-eighth day.”); Tenn. Code § 21-1-2014(b). 11 Farmers personally served Patrick Burton at his residence in Redding, 12 California. ECF No. 33. The Court finds that service of process on Patrick Burton 13 was proper. Fed. R. Civ. P. 4(e)(2)(A). 14 Farmers sub-served Daniel Burton, Andrea Burton Sandberg, and Jeremy 15 Burton. Daniel Burton was served by leaving the summons and complaint at his 16 residence in Redding, California with Patrick Burton, a person of suitable age and 17 discretion. ECF No. 32. Andrea Burton Sandberg was served by leaving the 18 summons and complaint with her husband, Jason Sandberg, at her residence in 19 Baker City, Oregon. ECF No. 16. Jeremy Burton was served at his residence in 20 Compton, California by leaving the summons and complaint with another resident of 21 the home who was of suitable age and discretion to receive service. ECF No. 19. ORDER GRANTING DEFAULT JUDGMENT ~ 5 1 The Court finds that Daniel, Andrea, and Jeremy were properly served. Fed. R. Civ. 2 P. 4(e)(2)(B). 3 Being unable to personally serve or sub-serve Marissa Burton or Matthew 4 Burton, Farmers served them by publication after receiving permission from the 5 Court to do so. ECF No. 30. Marissa’s service was published in the Red Bluff 6 Daily News in Red Bluff, California for four weeks in May and June of 2018. ECF 7 No. 34. Matthew’s service was published in the Williamson Herald in Williamson 8 County, Tennessee for four weeks in May and June of 2018. ECF No. 35. After 9 four weeks of publication, the service of process was effectuated. See Cal. Civ. P. 10 Code § 415.50(c); Tenn. Code § 21-1-2014(b). The Court finds that Marissa and 11 Matthew Burton were properly served. Fed. R. Civ. P. 4(e)(1). 12 Farmers properly completed service of process on all six of the Default 13 Defendants. Therefore, the Court will analyze whether default judgment is 14 appropriate. 15 Default Judgment 16 The Ninth Circuit has prescribed the following factors to guide the district 17 court’s decision regarding the entry of a default judgment: “(1) the possibility of 18 prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the 19 sufficiency of the complaint, (4) the sum of money at stake in the action, (5) the 20 possibility of a dispute concerning material facts, (6) whether the default was due to 21 excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil ORDER GRANTING DEFAULT JUDGMENT ~ 6 1 Procedure favoring decisions on the merits.” Eitel v. McCool, 782 F.2d 1470, 1471– 2 72 (9th Cir. 1986). 3 The first factor, the possibility of prejudice to Farmers, favors granting default 4 judgment. Farmers has gone to great lengths to locate and serve the Default 5 Defendants, resorting to service by publication after being unable to personally serve 6 two of them. See ECF No. 86. Despite properly serving them, Default Defendants 7 failed to appear, file an answer to the interpleader complaint, or indicate whether 8 they were interested in claiming the life insurance proceeds. Farmers appears to lack 9 an alternative to default judgment to ensure that Default Defendants will not claim 10 the proceeds in the future. Therefore, the Court finds that Farmers would be 11 prejudiced if they were not granted default judgment against the Default Defendants. 12 The second and third Eitel factors are assessed by analyzing whether the 13 allegations in the complaint are sufficient to state a claim on which Farmers may 14 recover. See Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978). An insurer’s 15 good faith belief that it faced the possibility of multiple colorable competing claims 16 to the amount in controversy satisfies the pleading requirement in an interpleader 17 action. Michelman v. Lincoln Nat. Life Ins. Co., 685 F.3d 887, 894 (9th Cir. 2012). 18 Here, Farmers had that good faith belief because there were two outstanding claims 19 for the proceeds of Wallace’s life insurance at the time Farmers filed this action. 20 ECF No. 1 at 8. Therefore, Farmers’ complaint was sufficient to state a claim, and 21 the second and third Eitel factors favor granting the default judgment. ORDER GRANTING DEFAULT JUDGMENT ~ 7 1 The fourth Eitel factor is the sum of money at stake in the action. Eitel, 782 2 F.2d at 1471–72. Farmers is seeking an order enjoining the Default Defendants 3 from disputing the ownership of the policy proceeds. ECF No. 85 at 6. They are not 4 seeking any monetary damages. Id. When the plaintiff does not seek monetary 5 damages, this factor favors granting default judgment. See PepsiCo, Inc. v. Cal. Sec. 6 Cans, 238 F. Supp. 2d 1172, 1176–77 (C.D. Cal. 2002). Because Farmers is not 7 seeking monetary damages, the fourth Eitel factor favors granting the default 8 judgment. 9 The fifth Eitel factor is the possibility of a dispute concerning the material 10 facts. Eitel, 782 F.2d at 1471–72. As shown through the previous fourteen months 11 of litigation and competing motions for summary judgment, the material facts of this 12 case are disputed. If the Default Defendants joined the dispute in this case, it is 13 possible that they would have disputed the facts offered by the other Burton children 14 and Ms. Zielke Burton. Therefore, the fifth factor weighs against granting default 15 judgment. 16 The sixth Eitel factor is whether the entry of default was due to excusable 17 neglect. Eitel, 782 F.2d at 1471–72. In Eitel, the Ninth Circuit found excusable 18 neglect when a party did not answer a complaint because it thought that it had 19 reached a settlement with the plaintiff. Id. at 1472. Any neglect in this case is not 20 excusable. Farmers personally served one of the Default Defendants, sub-served 21 three of them, and resorted to service by publication when they could not complete ORDER GRANTING DEFAULT JUDGMENT ~ 8 1 service on the other two. See ECF No. 86. Because the Default Defendants are all 2 siblings, they also likely are aware of the ongoing dispute for Wallace’s life 3 insurance policy proceeds. Default Defendants’ failure to appear or otherwise 4 answer in this case is not due to excusable neglect. Therefore, the sixth Eitel factor 5 weighs in favor of granting default judgment. 6 The seventh Eitel factor is the strong policy favoring decisions on the merits 7 in the Federal Rules of Civil Procedure. Eitel, 782 F.2d at 1471–72. “Whenever it 8 is reasonably possible, cases should be decided upon their merits.” Pena v. Seguros 9 La Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985). But a defendant’s failure to 10 appear “makes a decision on the merits impractical, if not impossible.” PepsiCo, 11 238 F. Supp. 2d at 1177. The Default Defendants’ failure to appear makes an 12 adjudication on the merits of their potential claims to the policy proceeds 13 impossible. Therefore, the seventh Eitel factor weighs in favor of granting default 14 judgment. 15 16 Six of the seven Eitel factors weigh in favor of granting default judgment. Based on these factors, the Court finds that granting default judgment is appropriate. 17 Accordingly, IT IS HEREBY ORDERED: 18 1. Plaintiff’s Motion for Default Judgment, ECF No. 85, is GRANTED. 19 2. Judgment shall be entered in favor of Plaintiff against Defendants 20 Marissa Burton, Daniel Burton, Patrick Burton, Matthew Burton, Andrea Burton 21 Sandberg, and Jeremy Burton, enjoining them from: ORDER GRANTING DEFAULT JUDGMENT ~ 9 1 a. 2 States court against Farmers New World Life Insurance Company for 3 the recovery of life insurance benefits regarding the Nonparticipating 4 Flexible Premium Universal Life insurance policy issued to Wallace 5 Burton on May 17, 1989, for the principal sum of One Hundred 6 Thousand Dollars, policy number 004496399U; and 7 b. 8 States court against Farmers New World Life Insurance regarding any 9 policy benefits involved in this interpleader actions pursuant to 28 10 11 Instituting or prosecuting any proceeding in any state or United Instituting or prosecuting any proceeding in any state or United U.S.C. § 2361. 3. Marissa Burton, Daniel Burton, Patrick Burton, Matthew Burton, 12 Andrea Burton Sandberg, and Jeremy Burton shall be terminated as Defendants in 13 this case. 14 IT IS SO ORDERED. The District Court Clerk is directed to enter this 15 Order, enter judgment as directed, terminate defendants as directed, and provide 16 copies of this Order to counsel. 17 DATED March 8, 2019. 18 19 s/ Rosanna Malouf Peterson ROSANNA MALOUF PETERSON United States District Judge 20 21 ORDER GRANTING DEFAULT JUDGMENT ~ 10
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