Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Ohio Security Insurance Co. v. K R Enterprises, Inc.

United States District Court, S.D. West Virginia, Bluefield

January 10, 2019

OHIO SECURITY INSURANCE COMPANY, Plaintiff,
v.
K R ENTERPRISES, INC., et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          David A. Faber Senior United States District Judge

         Pending 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.

         The background of this case is detailed in the court's earlier orders. ECF Nos. 54 and 111.

         Renewed motion for default judgment

         In 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.

         In a 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 remedy.
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.

         The 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.

         Motion to set aside ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.