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D.C. v. Swinney

United States District Court, S.D. Indiana, Indianapolis Division

December 27, 2017

FIREMEN'S INSURANCE COMPANY OF WASHINGTON, D.C., Plaintiff,
v.
STEPHANIE SWINNEY and RUSSELL JACOBS, Defendants.

          ENTRY ON MOTION FOR DEFAULT JUDGMENT AGAINST DEFENDANT STEPHANIE SWINNEY

          TANYA WALTON PRATT, JUDGE UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on Plaintiff Firemen's Insurance Company of Washington, D.C.'s (“FIC”) Motion for Default Judgment as to Defendant Stephanie Swinney (“Swinney”) (Filing No. 17). In this action, FIC seeks a declaratory judgment that it has and had no duty to defend or indemnify Swinney for any judgment or settlement entered in an underlying lawsuit entitled Russell Jacobs v. Stephanie Swinney and Pure Beverage Company, Case No. 55D03-1612-CT001903, currently pending in Morgan County, Indiana Superior Court (the “Morgan County Lawsuit”). (Filing No. 17 at 1.) Swinney has failed to answer or otherwise respond to the Motion for Default Judgment, however, the Defendant Russell Jacobs (“Jacobs”) has filed Responses in Opposition (Filing No. 20; Filing No. 24). For reasons explained below, the Court grants FIC's Motion for Default Judgment against Swinney.

         I. BACKGROUND

         The Morgan County Lawsuit surrounds a collision between Jacobs and Swinney while Swinney was driving a Pure Beverage Company van (the “Pure Beverage van”). (Filing No. 1-1 at 2.) At the time of the accident, Swinney was living with her fiancé, Danny Scott (“Scott”), who was an employee of Pure Beverage. FIC alleges that Swinney did not have Pure Beverage's permission to use the Pure Beverage Van on the date of the collision, that Swinney does not qualify as a “permissive user” of the Pure Beverage Van, and therefore, does not qualify as an “insured” under their insurance agreement. Jacobs filed the Morgan County Lawsuit against Swinney and Pure Beverage Company (“Pure Beverage”) on December 5, 2016, seeking damages for injuries sustained during the collision. FIC is Pure Beverage's insurer and Jacobs contends, by the FIC Policy, it has a duty to defend Pure Beverage (or its interest) against the Morgan County Lawsuit.

         FIC filed a Complaint for Declaratory Judgment in this Court on February 22, 2017. (Filing No. 1.) In its Complaint, FIC alleges that for Swinney to qualify as an insured under the FIC Policy, Swinney must have been using the Pure Beverage Van with “[Pure Beverage Company's] permission.” Id. at 6. FIC asks the Court to determine and adjudicate the rights and liabilities of the parties with respect to the FIC Policy; to find and declare that Swinney does not qualify as an insured under the FIC Policy; and declare that FIC has and had no duty under the FIC Policy to defend Swinney in the Underlying Action, or to indemnify Swinney for any judgment or settlement entered in the Underlying Action. Id. at 7.

         The summons and Complaint were served on Swinney on April 11, 2017, by a process server and on April 19, 2017, by U.S. Mail. Id. at 2. Service was properly effectuated. (Filing No. 17-1). Pursuant to Federal Rule of Civil Procedure 12(a)(1)(A)(i), Swinney's appearance and responsive pleading to FIC's Complaint were due by May 10, 2017. Id. Swinney failed to appear or file a responsive pleading within the twenty-one (21) day time frame allowed. FIC filed a Motion for Clerk's Entry of Default against Swinney and on July 12, 2017, the Clerk of this Court granted FIC's Motion, pursuant to Fed.R.Civ.P. 55(a) (Filing No. 16). On August 18, 2017, FIC filed its Motion for Default Judgment against Swinney. (Filing No. 17.)

         Jacobs filed a Response opposing FIC's Motion and asked the Court to stay ruling on the default judgment for 90 days until he had an opportunity depose Swinney. (Filing No. 20 at 1.) Swinney appeared for deposition on September 20, 2017. Jacobs filed an additional Response in Opposition on October 2, 2017, and attached as an exhibit the 55-page transcript of Swinney's deposition testimony. (Filing No. 24; Filing No. 24-1). Swinney has not filed an Answer or otherwise appeared in this case; however during her deposition she disputed the fact that she did not have permission to use the Pure Beverage Van. (Filing No. 24-1 at 16-18.)

         II. STANDARD OF REVIEW

         Obtaining a default judgment entails two steps. First, the party seeking a default judgment must file a motion for entry of default with the Clerk of Court by demonstrating that the opposing party has failed to answer or otherwise respond to the complaint. Fed.R.Civ.P. 55(a). Second, the moving party must seek entry of a default judgment against the defaulting party. Fed.R.Civ.P. 55(b). Because this action seeks a declaratory judgment, FIC “must apply to the court for a default judgment.” Fed.R.Civ.P. 55(b)(2).

         Rule 55(b) requires FIC to establish the following for the grant of a default judgment: (1) when and against what parties the default was entered, (2) the pleading as to which default was entered, (3) that the defaulting parties are neither infants nor incompetent, (4) that the defendants are not in military services, and (5) that notice has been served on the defaulting party. UMG Recordings, Inc. v. Stewart, 461 F.Supp.2d 837, 841 (S.D. Ill. 2006).

         While the Seventh Circuit generally favors a trial on the merits, it does not disfavor default judgments. J & J Sports Prods., Inc. v. Kotsopoulos, No. 1:13-CV-346-SLC, 2015 WL 5730343, *3 (N.D. Ind. 2015). Typically, courts grant relief from default in the case of “excusable neglect.” Johnson v. Gudmundsson, 35 F.3d 1104, 1117 (7th Cir. 1994). Entry of default judgment is appropriate if the defaulting party has exhibited a “willful refusal to litigate the case properly.” Davis v. Hutchins, 321 F.3d 641, 646 (7th Cir. 2003).

         Relief from the entry of a default prior to a default judgment being entered is evaluated under Rule 55(c). JMB Mfg., Inc. v. Child Craft, LLC, 799 F.3d 780, 792 (7th Cir. 2015). Under this rule, the court exercises discretion under a somewhat more lenient standard than if judgment had actually been entered. Id. “A party seeking to vacate an entry of default prior to the entry of final judgment must show: (1) good cause for the default; (2) quick action to correct it; and (3) a meritorious defense to the complaint.” Cracco v. Vitran Exp., Inc., 559 F.3d 625, 630 (7th Cir. 2009).

         A party establishes good cause by showing that “it did not willfully ignore the pending litigation but, rather, failed to respond to the summons and complaint through inadvertence.” Cracco, 559 F.3d at 631. Good cause does not necessarily require a good excuse for the defendant's lapse. JMB, 799 F.3d at 793. Good cause is found with an honest mistake, not as the result of willful misconduct, carelessness or negligence. C.K.S. Engineers, Inc. v. White Mountain Gypsum Co., 726 F.2d 1202, 1205 (7th Cir. 1984).

         A meritorious defense is supported by a legal and factual basis, raising serious doubt about the appropriateness of entering a default judgment. Richards v. O'Daniel, No. 3:11-CV-63-RLY, 2012 WL 695820, *3 (S.D. Ind. 2012). “A defense is meritorious if it is good at law so as to give the fact finder some determination to make. However, a defendant must allege more than ... bare ...


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