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Erie Insurance Property & Casualty Co. v. Wellford

United States District Court, S.D. West Virginia, Charleston Division

July 31, 2018

ERIE INSURANCE PROPERTY & CASUALTY COMPANY, Plaintiff,
v.
JOHN H. WELLFORD, III, Defendant.

          MEMORANDUM OPINION AND ORDER

          Joseph R. Goodwin Judge.

         I. Introduction

         Pending before the court is the plaintiff's Motion for Summary Judgment [ECF No. 10]. The defendant has not responded. The Motion [ECF No. 10], which the court is construing as a motion for default judgment, is GRANTED.

         II. Background

         On March 12, 2015, an engineered material arresting system (“EMAS”) collapsed at Yeager Airport in Charleston, West Virginia. Pet. for Declaratory J. Ex. 1, at ¶¶ 19, 21 [ECF No. 1-1] (“Underlying Compl.”). At the time, Theodore and Rebecca Carter lived near Yeager Airport. “Notwithstanding the fact that the [Carters'] home remained intact and undamaged . . . [Yeager] Airport, [John] Wellford and Corotoman demolished the [Carters'] home on March 13, 2015, stating some days or weeks later that an ‘emergency' necessitated the demolition.” Id. ¶ 48. The Carters allege that Mr. Wellford, “was on the [Carters'] property and ordered the demolition of the [Carters'] home.” Id. ¶ 16. The Carters allege that Mr. Wellford ordered that their home be demolished either on “the mistaken belief that [Yeager] Airport had purchased the Carters' home, ” id. ¶ 73, or in his role as agent for Corotoman with the intent that Corotoman purchase the property after demolition and condemnation, id. ¶ 82.

         On January 30, 2017, the Carters filed an amended complaint against the Central Regional West Virginia Airport Authority (“Yeager Airport”), Corotoman, Inc., and John H. Wellford, III in the Circuit Court of Kanawha County, West Virginia. Id. ¶¶ 2-4. In the Complaint, the Carters seek to recover damages from the demolition of their home. See Id. ¶ 16.

         On March 13, 2015, the date that Mr. Wellford directed the demolition of the Carters' home, he was insured under two insurance policies provided by Erie Insurance Property & Casualty Company (“Erie”): (1) an Erie ExtraCover HomeProtector Insurance Policy, Policy No. Q26-5550008 (“HomeProtector Policy”) [ECF No. 1-2], and (2) an Erie Personal Catastrophe Liability Insurance Policy, Policy No. Q50-5500234 (“PCL Policy”) [ECF No. 1-3]. On or about February 22, 2017, Mr. Wellford provided Erie notice of the underlying lawsuit through written communication with his insurance agent. Aff. Erie Ins. Prop. & Cas. Co. 1-2 [ECF No. 13]. Erie investigated Mr. Wellford's claim, determined no coverage existed for the underlying lawsuit under either policy, and issued a denial dated April 27, 2017. Id. at 4-12.

         On May 18, 2017, Erie filed this declaratory judgment action against Mr. Wellford pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. § 2201. Pet. Declaratory J. Erie seeks four declarations: (1) the HomeProtector Policy does not provide coverage for the Underlying Lawsuit, (2) Erie has no duty to defend or indemnify Mr. Wellford under the HomeProtector Policy in the Underlying Lawsuit, (3) the PCL Policy does not provide coverage for the Underlying Lawsuit, (4) Erie has no duty to defend or indemnify Mr. Wellford under the PCL Policy in the Underlying Lawsuit. Id. at 13-14.

         Mr. Wellford was personally served the summons on June 10, 2017. Summons [ECF No. 4]. He has not made an appearance in this action. On July 7, 2017, the Clerk entered default. Clerk's Entry Default [ECF No. 7]. On December 29, 2017, Erie filed a Motion for Summary Judgment [ECF No. 10].

         III. Legal Standard

         Because the Clerk has entered default, the court's authority to enter judgment against the defendant is properly characterized as the power to enter default judgment. See United Fin. Cas. Co. v. Milton Hardware, LLC, No. 3:17-2002, 2018 WL 2207130, at *1 (S.D. W.Va. May 14, 2018). Therefore, the court will construe the motion as one for default judgment, not summary judgment.

         After default is entered by the clerk, a party may move the court for default judgment under Rule 55(b). Indeed, applying to the court for default judgment is necessary where, as here, the plaintiff's claim is not for a sum certain or made certain by computation. Fed.R.Civ.P. 55(b). Upon default, all of the well-pleaded facts alleged in the complaint as to liability may be taken as true. See Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (quoting Nishimatsu Constr. Co. v. Hous. Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)). “Although the clear policy of the Rules is to encourage dispositions of claims on their merits, trial judges are vested with discretion, which must be liberally exercised, in entering [default] judgments . . . .” United States v. Moradi, 673 F.2d 725, 727 (4th Cir. 1982) (citations omitted). The court, however, must not enter default judgment that “differ[s] in kind from, or exceed in amount, what is demanded in the pleadings.” Fed.R.Civ.P. 54(c).

         I have previously explained that:

[a]s a general principle, this court is wary of entering default judgment in a suit for declaratory relief. By nature, a declaratory judgment action is jurisdictionally unique. I am uncomfortable with the idea of providing declaratory relief where the merits of a case have not been fully litigated. See Restatement 2d Judgment § 33 (stating that a court “should not make a declaration upon default on the basis of the pleadings alone but ...

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