United States District Court, S.D. West Virginia, Bluefield
MEMORANDUM OPINION AND ORDER
A. Faber Senior United States District Judge
before the court is: (1) plaintiff's renewed motion for
default judgment against K R Enterprises and (2) K R
Enterprises' motion to set aside the Clerk's entry of
default. (ECF Nos. 139 and 145). For the reasons discussed
below, the renewed motion for default judgment is
DENIED and the motion to set aside the
Clerk's entry of default is GRANTED.
background of this case is detailed in the court's
earlier orders. ECF Nos. 54 and 111.
motion for default judgment
denying Ohio Security's first motion for a default
judgment against K R Enterprises, the court noted:
Because K R Enterprises did not answer the Second Amended
Complaint, Ohio Security moved for the entry of default and a
default judgment as to K R Enterprises. However, K R
Enterprises has appeared in this lawsuit, answering both the
original and first amended complaints. Between the filing of
the First and Second Amended Complaints, counsel for K R
Enterprises was permitted to withdraw as counsel of record
due to nonpayment of fees.
series of cases, Judge Goodwin has made a rather compelling
argument about why a court should be reluctant to enter a
default judgment in a declaratory judgment action.
As 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 should
require the plaintiff to present enough evidence to warrant
the granting of declaratory relief”).
My concern about entering declaratory judgment by default is
particularly pronounced in insurance disputes. When a
declaratory judgment action is brought by an insurance
carrier, the suit may influence the way courts later
interpret other identical policies. I do not believe that an
individual insured's failure to respond in a given action
is sufficient justification for a declaration that may later
affect non-party policy holders. For this reason, I generally
decline to enter default judgment in such cases when a party
has appeared to oppose the default judgment. In such cases, I
believe that less drastic sanctions are the more appropriate
Teachers Ins. Co. v. Prather, Civil Action No.
2:11-cv-00397, 2012 WL 90095, at *2 (S.D. W.Va. Jan. 11,
2012); see also State Auto Property and Cas. Ins. Co. v.
Fas Chek Enterprises, Inc., Civil Action No.
2:15-cv-00809, 2015 W: 1894011, *2 (S.D. W.Va. Apr. 27, 2015)
(“Generally, I decline to enter default judgment in
such cases when the nonmoving party has demonstrated
opposition to it in some manner.”).
The instant situation presents an even more compelling reason
why this court should decline to enter a default judgment
against K R Enterprises. K R Enterprises' failure to
answer the second amended complaint is a result of its
failure to pay its attorneys' fees. It is unable to pay
its attorneys' fees because its insurance carrier has
stated that it has no duty to defend.
ECF No. 111 at 9-10.
court has seen nothing in the parties' further briefs on
this issue to convince it that entry of a default judgment
against K R Enterprises is appropriate. K R Enterprises'
failure to answer the second amended complaint is a direct
result of Ohio Security's denial of coverage.
to set aside ...