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Selective Insurance Company of America v. Wacha

United States District Court, D. South Carolina, Florence Division

June 4, 2019

Selective Insurance Company of America, Plaintiff,
v.
Raymond Wacha and Alphonso Dudley; Defendants.

          ORDER

          R. Bryan Harwell United States District Judge.

         Plaintiff Selective Insurance Company of America (“Selective”) is in the business of providing commercial insurance coverage to its customers. On February 19, 2');">2018, Selective filed a Complaint pursuant to the Declaratory Judgment Act, 2');">28 U.S.C. § 2');">22');">201, et seq. and Rule 57 of the Federal Rules of Civil Procedure. Selective seeks a declaration from this Court that Selective's liability exposure in an underlying state court lawsuit is limited to $2');">25, 000.00, the statutory minimum limits for automobile bodily injury liability under S.C. Code Ann. § 38-77-140. Jurisdiction in this matter is premised upon 2');">28 U.S.C. § 1332');">2. Defendants in this case were served with the Summons and Complaint. [ECF #5; ECF #14-1]. Defendant Wacha did not file a responsive pleading within the time allowed for under the Federal Rules of Civil Procedure.[1]

         Presently before this Court is Selective's Motion for Default Judgment against Raymond Wacha [ECF #2');">24], as well as Selective's Motion for Summary Judgment. [ECF #2');">25]. Defendant Wacha did not file an Answer, and an Entry of Default as to Wacha was entered in this case. [ECF #2');">21]. Neither Wacha nor Dudley have filed a response to Selective's Motion for Default Judgment as to Raymond Wacha or to the Motion for Summary Judgment. Selective's Motion for Summary Judgment incorporates facts supported by the affidavits of Melinda Sinclair, a claims management specialist with Selective, and Jennifer Baker, the paralegal/office manager with the law firm representing Selective in this matter.

         Uncontested Facts and Procedural History

         According to the allegations in the Complaint, and as admitted by Defendant Dudley in his Answer, on May 2');">23, 2');">2015, Raymond Wacha and Alphonso Dudley were involved in a motor vehicle collision. [ECF #1; ECF #6]. At that time, Wacha was driving a 2');">2004 GMC truck that was a scheduled automobile under a commercial insurance policy (“Policy”) issued by Selective and naming Founders National Golf, LLC[2');">2" name="FN2');">2" id="FN2');">2">2');">2] as the insured. [ECF # 1; ECF # 6]. The Policy has been made a part of the record and attached to the Affidavit of Ms. Sinclair as Exhibit “A.” [ECF #2');">25-2');">2, Ex. A]. The Policy period in question was from April 2');">22');">2, 2');">2015 through April 2');">22');">2, 2');">2016. [ECF # 1; ECF # 6]. On March 14, 2');">2016, Defendant Dudley filed a Complaint in the Horry County Court of Common Pleas, Civil Action Number 2');">2016-CP-2');">26-1796 (hereinafter, the “State Court Lawsuit”). Defendant Wacha was personally serviced with the Summons and Complaint in the underlying litigation. [ECF #1; ECF #6]. Thereafter, on August 10, 2');">2016, the circuit judge issued an order for default judgment against Wacha, awarding $169, 967.52');">2 in damages and $830, 032');">2.48 in punitive damages to Dudley. [ECF #1; ECF #6].

         On that same day, counsel for Dudley sent Selective a letter via e-mail and U.S. mail provided Selective with a copy of the Order for Default Judgment and requesting that Selective immediately satisfy the judgment. [ECF #2');">25-2');">2, p. 36]. After receiving this letter, counsel hired to represent Wacha filed a motion requesting reconsideration of the order for default judgment. [ECF #1; ECF #6; ECF #2');">25-2');">2, p. 62');">2]. On February 7, 2');">2018, the circuit judge modified his order by vacating the award of punitive damages. [ECF #1; ECF #6]. On February 19, 2');">2018, Selective filed this declaratory judgment action in this Court seeking a judgment declaring that the liability of Selective for the default judgment entered in the Horry County Court of Common Pleas is limited to the statutory minimum limits of $2');">25, 000.00, rather than the $169, 967.52');">2 judgment.

         Within its Complaint, Selective alleges that the Policy contains a provision captioned “Duties in the Event of Accident, Claim, Suit or Loss” which provides that the insured must “[i]mmediately send copies of any request, demand, order, notice, summons, or legal paper received concerning the claim or ‘suit'” as well as “[c]ooperate with us in the investigation or settlement of the claim or defense of the ‘suit.'” [ECF #1]. Selective contends that Wacha breached this provision of the Policy by failing to forward the suit papers to Selective or otherwise notify Selective that he received the suit papers, and by failing to cooperate with the efforts undertaken to obtain relief from the default judgment filed in the underlying case. [ECF #1, ¶ 2');">20]. Selective further contends Wacha's breach was material and resulted in substantial prejudice to Selective, and that as a result of this breach, Selective is entitled to a declaratory judgment declaring its liability in the State Court Lawsuit to be limited to $2');">25, 000.00, the statutory minimum insurance limits under state law. [ECF #1]. Wacha has not filed an answer in this case or otherwise appeared in this litigation. On December 2');">21, 2');">2018, Selective filed a Motion for Default Judgment against Defendant Wacha. That same day, Selective filed a Motion for Summary Judgment. No. response has been filed to the motions by either Defendant; however, Dudley filed an Answer to the Complaint.

         Discussion

         I. Motion for Default Judgment

         Selective seeks a default judgment against Defendant Wacha for his failure to file a responsive pleading in the time provided under the Federal Rules of Civil Procedure. Under Federal Rule of Civil Procedure 12');">2, a defendant must file his answer within twenty-one days after being served with the summons and complaint. Fed.R.Civ.P. 4(a)(1)(A)(i). In support of its Motion, Selective states that Wacha has not responded to the Complaint, more than twenty-one (2');">21) days has elapsed after service of the Summons and Complaint, and Wacha has failed to file any other responsive pleading in this case. In reviewing the pleadings, the Summons sent to Wacha provided notice to him that the failure to respond would result in judgment by default against him. [ECF #4]. Federal Rule of Civil Procedure 55(b) allows for entry of a default judgment when a defendant fails to plead or otherwise defend in accordance with the Rules. See United States v. Moradi, 673 F.2');">2d 72');">25, 72');">27 (4th Cir. 1982');">2).

         The Clerk of Court has previously entered default against Wacha. [ECF #1]. As it appears on the docket that he has filed to file an answer or otherwise provide a responsive pleading, the allegations within Selective's Complaint as to Wacha are deemed admitted. Ryan v. Homecomings Fin. Network, 2');">253 F.3d 778');">2');">253 F.3d 778, 780 (4th Cir. 2');">2001). Accordingly, this Court finds that Selective is entitled to default judgment against Wacha. He is therefore deemed to have admitted the factual allegations within the Complaint, namely that he failed to forward the suit papers he was served within the State Court Lawsuit as required by the Policy, failed to cooperate with efforts undertaken to obtain relief from the default judgment that was entered in the State Court Lawsuit, and materially breached the applicable Policy provisions in this case, thereby causing Selective damages.

         II. Summary Judgment Motion

         Selective has also filed a Motion for Summary Judgement against Defendants, requesting relief in the form of an order declaring that “the liability of Selective Insurance Company of America for the default judgment entered in the Horry County Court of Common Pleas in favor of the Defendant Alphonso Dudley and against the Defendant Raymond Wacha bearing Judgment Roll Number 2');">2016-CP-2');">26-1796 is limited to the statutory minimum limits of $2');">25, 000.00.” [ECF #1]. The Declaratory Judgment Act is an enabling Act, conferring discretion upon the courts rather than an absolute right upon litigants. Wilton v. Seven Falls Co., 2');">277');">515 U.S. 2');">277, 2');">287 (1995).

         Summary judgment “shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). The moving party has the burden of proving that summary judgment is appropriate. Once the moving party makes the showing, however, the opposing party must respond to the motion with “specific facts showing there is a genuine issue for trial.” Fed.R.Civ.P. 56(e). When no genuine issue of any material fact exists, summary judgment is appropriate. Shealy v. Winston, 2');">29 F.2');">2d 1009');">92');">29 F.2');">2d 1009, 1011 (4th Cir. 1991). The facts and inferences to be drawn from the evidence must be viewed in the light most favorable to the non-moving party. Id. However, “the mere existence of some alleged factual dispute between the parties ...


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