WILLIAM H. STEELE, Chief District Judge.
This matter comes before the Court on plaintiff's Motion for Default Judgment (doc. 33) as to defendant Treasure Coast Contracting Services, LLC. On April 13, 2012, the undersigned entered an Order (doc. 34) that directed the other defendants to respond to the Motion on or before April 27, 2012. No defendants having responded, they have waived the opportunity to be heard on this Motion, which is now ripe for disposition.
Plaintiff, Pennsylvania National Mutual Insurance Company ("Penn National"), brought this insurance declaratory judgment action against five named defendants, among them its named insured, Treasure Coast Contracting Services, LLC ("Treasure Coast").
According to the well-pleaded allegations of the Complaint in the case at bar, the roots of the Underlying Litigation extend back to February 2004, when Treasure Coast (along with another entity called Two-Way Communications, Inc.) jointly submitted a bid to Baldwin County (the "County") for "a project involving the underground installation of approximately 39 miles of fiber optic cable." (Doc. 1, ¶ 14.) Treasure Coast and Two-Way were awarded the bid in March 2004, entered into a contract with the County at that time, and completed the project in November 2005. (Id., ¶¶ 15, 18.) The Kings' dissatisfaction stems from alleged misplacement of the fiber optic cable by Treasure Coast and/or Two-Way. Penn National's Complaint reflects that, after the Kings' allegations came to light, the County hired surveyors to investigate their claims, and "determined that the cable was indeed outside of the right-of-way by approximately 18 inches likely because the surveying company hired by Treasure Coast had used outdated maps drawn before the main road had been widened." (Id., ¶ 19.) When the error was identified, "Treasure Coast initially informed the County that it would remedy the misplaced cable at its own cost but the remedial work was never performed." (Id.) As a result, in the Underlying Litigation, Treasure Coast is facing claims brought by the Kings for trespass, by Two-Way for indemnity, and by the County for indemnity, breach of contract, negligence, specific performance and fraud. (Id., ¶ 20.) The Kings are apparently proceeding not only on their own behalf, but also as representatives for a class of all similarly situated landowners whose property rights were purportedly infringed upon by Treasure Coast's improper installation of fiber optic cable outside the designated right-of-way.
To date, Penn National has been furnishing a defense to Treasure Coast in the Underlying Litigation pursuant to a reservation of rights. (Id. ¶ 21.) Penn National's request to intervene in the Underlying Litigation was denied, so it brought this Complaint for Declaratory Judgment against the Kings, Treasure Coast, Two-Way and the County. Penn National maintains that it owes no duty to defend Treasure Coast under a commercial general liability insurance policy (the "Policy") issued for the period of April 2003 to April 2004, for the following reasons: (i) the Policy did not extend coverage to any joint venture such as that between Treasure Coast and Two-Way; (ii) the Kings' claims in the Underlying Litigation are not for "property damage" or "bodily injury" as defined by the Policy, and therefore are not covered; (iii) the Kings' claims are excluded by virtue of various "your work" or "your product" exclusions to the Policy; (iv) the Kings' claims do not constitute an "occurrence" within the meaning of the Policy; and (v) claims for breach of contract, breach of warranty, or for purely economic damages are not covered by the terms and conditions of the Policy. (Id., ¶¶ 28-33.) On these and other theories, the Complaint states that Penn National seeks a declaratory judgment that "all claims against Treasure Coast do not come within the scope of coverage provided by the Policy or are excluded from coverage" and that "Penn National has no duty to defend or indemnify Treasure Coast . . . in the Underlying Litigation." (Id. at 17.)
The court file reflects that Penn National perfected service of process on Treasure Coast not once, but twice, during the last seven months. In particular, Penn National served process on Treasure Coast, by and through its registered agent and sole member, William R. Jewett, Jr., via certified mail on or about October 18, 2011 and by personal service on March 8, 2012. (Docs. 7, 33 Exh. 6.)
In this Circuit, "there is a strong policy of determining cases on their merits and we therefore view defaults with disfavor." In re Worldwide Web Systems, Inc., 328 F.3d 1291, 1295 (11
Where, as here, a defendant has failed to appear or otherwise acknowledge the pendency of a lawsuit for more than six months after first being served, entry of default judgment is appropriate. Indeed, Rule 55 itself provides for entry of default and default judgment where a defendant "has failed to plead or otherwise defend." Rule 55(a), Fed.R.Civ.P. In a variety of contexts, courts have entered default judgments against defendants who have failed to appear and defend in a timely manner following proper service of process.
The law is clear, however, that Treasure Coast's failure to appear and the Clerk's Entry of Default do not automatically entitle Penn National to a default judgment. A default is not "an absolute confession by the defendant of his liability and of the plaintiff's right to recover," but is instead merely "an admission of the facts cited in the Complaint, which by themselves may or may not be sufficient to establish a defendant's liability." Pitts ex rel. Pitts v. Seneca Sports, Inc., 321 F.Supp.2d 1353, 1357 (S.D. Ga. 2004); see also Nishimatsu Const. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1204 (5
In light of these principles, the Court has reviewed the Complaint, and is satisfied that Penn National has established a viable claim to be relieved of the duty to defend Treasure Coast in the Underlying Litigation. Several of the recited Policy provisions on which Penn National relies would appear on their face — when coupled with the factual allegations presented in the Complaint which Treasure Coast has in no way controverted or contested — to foreclose any insurance coverage for Treasure Coast in the Underlying Litigation. As such, the Court finds that Penn National is entitled to a default judgment on its claim seeking a declaration that it has no duty to defend Treasure Coast in the Underlying Litigation. And the entry of default judgment against Treasure Coast as to the duty to defend inexorably warrants entry of default judgment against Treasure Coast as to the duty to indemnify. See Trailer Bridge, Inc. v. Illinois Nat'l Ins. Co., 657 F.3d 1135, 1146 (11
For all of the foregoing reasons, Penn National's Motion for Default Judgment (doc. 33) is
This action will proceed as between Penn National and the remaining defendants (Calvin and Allie King, Two-Way Communications, Inc., and Baldwin County, Alabama), in accordance with the applicable Rule 16(b) Scheduling Order.
DONE and ORDERED.