United States District Court, N.D. Indiana, Hammond Division
OPINION AND ORDER
P. SIMON, CHIEF JUDGE.
matter is before the Court on Plaintiff Property-Owners
Insurance, Co.'s Motion for Entry of Default Judgment
Against Defendants Raymond T. Yagelski, Erica L. Yagelski,
and R&E Midwest Construction Co., Inc. d/b/a/ Midwest
Construction Co. [DE 39.] Because granting the motion for
default judgment would risk the possibility of inconsistent
adjudications with respect to the remaining nondefaulting
parties, Property-Owner's motion is denied at this time.
brought this declaratory judgment action seeking a
declaration that it owed no duty to defend or indemnify
Defendants Raymond T. Yagelski, Eric L. Yagelski, and Midwest
Construction under the terms of their insurance policy with
Property-Owners concerning claims made by Defendants Brandon
Gold and Rebecca Skura against Defendants Raymond T.
Yagelski, Eric L. Yagelski, and Midwest Construction in an
action filed in the Lake County Circuit Court. [DE 1 at 21.]
In that state court action, Gold and Skura allege claims of
negligence and home improvement fraud against the Yagelskis
and Midwest Construction. [Id. at 3-6.] At a status
conference held in this action on October 14, 2016, at which
counsel for Property-Owners and Gold and Skura appeared
telephonically, the parties represented that the state court
action is currently in discovery. [DE 43.]
Yagelskis and Midwest Construction have failed to appear or
otherwise defend in this action. On September 8, 2016 the
Clerk of this Court entered default against them. [DE 38.]
Property-Owners now seeks the entry of default judgment
against them, despite the fact that judgment has not yet been
entered against the Yagelskis and Midwest Construction in the
state court action, so the parties have no idea for how much
Property-Owners would have to indemnify the Yagelskis and
Midwest Construction, if at all. It does not seem appropriate
to grant a default judgment, specifically regarding
Property-Owners' duty to indemnify, when the issues in
the underlying state court action have yet to be resolved.
is an additional wrinkle in this case. Gold and Skura, the
two other defendants in this action, filed an answer to the
complaint and now are in the midst of litigating this action.
In situations where default judgment is sought from fewer
than all defendants, “courts have recognized that if an
entry of a default judgment against a defendant in a
multi-defendant action could result in inconsistent
judgments, entry of default judgment prior to adjudication of
the merits of the case with regard to the nondefaulting
parties may be improper.” State Farm Fire &
Cas. Co. v. Nokes, No. 2:08-CV-312 PPS, 2010 WL 679057,
at *2 (N.D. Ind. Feb. 23, 2010) (quoting State
Farm Mut. Auto Ins. Co. v. Jackson, 736 F.Supp.
958, 961 (S.D. Ind. 1990)); see also Frow v. De la
Vega, 82 U.S. 552, 554 (1872); Marshall &
Ilsley Co. v. Pate, 819 F.2d 806, 811-12 (7th Cir.
1987). Within the Seventh Circuit, this notion is narrowly
construed and applied only where the theory of recovery is of
joint liability, or when “the nature of the relief is
such that [it] is necessary that judgments against the
defendants be consistent.” Nokes, 2010 WL
679057, at *2 (citing Jackson, 736 F.Supp. at 961);
see also Home Ins. Co. of Il. v. ADCO Oil
Co., 154 F.3d 739, 741 (7th Cir. 1998) (“In a suit
against multiple defendants a default judgment should not be
entered against one until the matter has been resolved as to
illustrates this principle. There, seven of eleven defendants
had failed to answer or otherwise defend against the
plaintiff insurance company's complaint seeking
declaratory judgment. Nokes, 2010 WL 679057, at *3.
However, the four remaining nondefaulting defendants were in
the process of resolving the matter on the merits through
litigation. Id. As the Court there explained:
If [the nondefaulting Defendants] are successful, the
judgment will state that [Plaintiff] has a duty to indemnify
the policyholder Donald Nokes and is liable for a judgment
rendered against him. But a default judgment against the
defaulting Defendants would find that [Plaintiff] has no duty
to indemnify Nokes under the same insurance policy. The
possibility of such inconsistency weighs against granting
[Plaintiff]'s default motion, at least at this point.
Id. at *3.
risks in Nokes are present in this case as well. If
I were to grant Property-Owners' motion for default
judgment against the Yagelskis and Midwest Construction and
the nondefaulting defendants end up winning on the merits of
the case that is still ongoing, inconsistent judgments
arising out of the same conduct would result. For these
reasons, Property-Owners' motion must be denied at this
time. Of course, Property-Owners is free to re-raise the
issue after the case against the non-defaulting defendants
has been resolved.
Motion for Default Judgment [DE 39] is DENIED with leave to
re-file after judgment is reached with ...