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Auto Owners Insurance Co. v. Rippy

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

August 8, 2019

Auto Owners Insurance Company, Plaintiff,
Jessie Thomas Rippy and Joseph Rippy, Defendants.


          R. Bryan Harwell Chief United States District Judge.

         Plaintiff Auto Owners Insurance Company (“Auto Owners”) is in the business of providing different types of insurance coverage to its customers. Defendant Jessie Thomas Rippy and Hilda Rippy are the named insureds of a homeowners policy of insurance coverage (the “Policy”) provided by Auto Owners for the premises located at 635 Mt. Calvary Road, Dillon, South Carolina, 29536 (the “Property”). [ECF No. 1-1]. On September 28, 2017, Joseph Rippy, the son of Jessie Thomas Rippy, filed a state court action in Dillon County for injuries sustained on the insured premises. [ECF No. 1-2]. On October 3, 2018, Auto Owners filed a Complaint pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, et seq. seeking a declaration that no coverage exists under the Policy for the alleged injuries sustained as set forth in the underlying lawsuit. On November 7, 2018, Auto Owners requested an entry of default for both Jessie Thomas Rippy and Joseph Rippy. [ECF No. 7 and 8]. On November 9, 2018, the Clerk entered default as to both defendants. [ECF No. 9]. On December 10, 2018, Auto Owners filed a motion requesting summary judgment, which was construed as a motion requesting default judgment. [ECF No. 10]. On January 7, 2019, the Court entered an order granting default judgment as to both defendants, and default judgment was entered the same day. [ECF No. 11; No 12]. Approximately two months later, on March 1, 2019, Defendant Joseph Rippy filed a Motion to Set Aside Default Judgment and Entry of Default. [ECF No. 13]. Auto Owners filed a response on March 15, 2019. [ECF No. 14]. This matter is now before the Court for review.

         Statement of Facts and Procedural History

         Auto Owners filed this lawsuit seeking to determine whether insurance coverage exists under the Policy for injuries sustained by Joseph Rippy. On or about September 28, 2017, Joseph Rippy filed a lawsuit against Jessie Thomas Rippy for injuries he suffered as a result of a barn door falling on him while he was on the insured Property on May 25, 2016. [ECF No. 1-2]. Joseph Rippy, the son and employee of Jessie Rippy, alleges that at the time he was injured, he lived in a mobile home that was located on “Lot B” of the Property. In the state court action, the parties engaged in discovery and on April 18, 2018, Joseph Rippy filed a motion for summary judgment. However, on the eve of the scheduled motions hearing, the action was continued in order to provide the parties additional time for discovery. According to Joseph Rippy, the parties were expected to attend a mandatory mediation; thus, during this time period, the state court action was not put on a trial roster. Approximately two months after the hearing was continued in the state court action, counsel for Auto Owners filed this action for declaratory judgment in federal court arguing that it had no duty under the Policy to provide coverage to Jessie Rippy or Joseph Rippy for injuries arising out of the incident on the Property.

         According to the Affidavit of Service filed by Auto Owners in this case, an individual named Ray Jones attempted to serve Joseph Rippy twice at the Property before finally serving him on October 15, 2018 at 12:16 p.m. [ECF No. 6-1]. According to Joseph Rippy, he was never served with the Summons and Complaint in this action. In his own affidavit, Joseph Rippy questions why the Affidavit of Service was signed by Mr. Jones and notarized ten (10) days after the alleged service occurred. Further, according to Joseph Rippy, during each alleged attempt at service, he was working at Dillon Upholstery, a shop that belongs to his father, the other named defendant in the declaratory judgment action. [ECF No. 13-5]. Within his Affidavit, Joseph Rippy further states that he does not usually leave Dillon Upholstery during the work day. [ECF No. 13-5, ¶ 2]. He further states that he does not leave his employment to return home during the lunch hour. [ECF No. 13-5, ¶ 2]. In other words, Joseph Rippy contests the validity of the Affidavit of Service.

         Upon learning of the order of default in this case, Joseph Rippy's attorney attempted to discuss the matter with Auto Owner's counsel, who he initially thought to be someone else, but who he later found out to be Morgan Templeton. In the meantime, on February 13, 2019, Joseph Rippy's counsel received a letter dated February 6, 2019 from Auto Owner's counsel, attempting to notify him of the default against Joseph Rippy. The letter was sent to the former law partner of Joseph Rippy's counsel, rather than to counsel himself. After several unsuccessful attempts to reach Auto Owner's counsel, Joseph Rippy's counsel learned that Mr. Templeton had not received his messages. Joseph Rippy filed this motion approximately one month later.

         Standard of Review

         Federal Rule of Civil Procedure 55 authorizes the entry of a default judgment against a defendant who fails to “plead or otherwise defend” an action in accordance with the Rules. Rule 55(c) allows the court to set aside an entry of default for good cause, and it may set aside a final default judgment pursuant to Rule 60(b). Relief from judgment under Rule 60(b) requires a showing that the motion was timely, the movant has a meritorious defense, exceptional circumstances exist, and the opposing party would not be unfairly prejudiced by having the motion set aside. Park Corp. v. Lexington Ins. Co., 12 F.2d 894');">812 F.2d 894, 896 (4th Cir. 1987); see generally Dowell v. State Farm Fire & Cas. Auto. Ins. Co., 993 F.2d 46, 48 (4th Cir. 1993) (in seeking relief under Rule 60(b), a party must show “timeliness, a meritorious defense, a lack of unfair prejudice to the opposing party, and exceptional circumstances.”). Further, relief from a judgment of default should be granted when the defaulting party is diligent in seeking to set aside the default judgment, as well as when he has a meritorious defense. U.S. v. Moradi, 673 F.2d 725, 727 (4th Cir. 1982).

         The Fourth Circuit has thus identified several factors to consider, including whether the party has a meritorious defense, whether the party acts with reasonable promptness or instead is dilatory, the personal responsibility of the defaulting party, the prejudice to the other party, and the availability of less drastic sanctions. Payne ex rel. Estate of Calzada v. Brake, 198');">439 F.3d 198, 204-05 (4th Cir. 2006). If a movant is able to make the above showing, the movant must also satisfy one of more of the following grounds set forth in Rule 60(b): (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence . . .; (3) fraud, misrepresentation, or misconduct by the opposing party . . .; (4) the judgment is void; (5) the judgment has been satisfied, release or discharged . . .; or (6) any other reason that justifies relief. Fed.R.Civ.P. 60(b). Motions made pursuant to Rule 60(b) are within the sound discretion of district courts and should not be disturbed absent an abuse of discretion. Augusta Fiberglass Coatings, Inc. v. Fodor Contracting Corp., 843 F.2d 808, 810 (4th Cir. 1988). Here, Defendant Joseph Rippy argues he was never properly served. A judgment entered against a party over whom a court lacks jurisdiction is void, thereby furnishing at least one ground for relief under Rule 60(b). Federal Deposit. Ins. Corp. v. Schaffer, 731 F.2d 1134, 1135-36 (4th Cir. 1984). When a party files a Rule 55(c) and Rule 60(b) motion asking to set aside a default judgment, the judicial preference is for a trial on the merits. See Augusta Fiberglass Coatings, Inc., 843 F.2d at 811-12; Moradi, 673 F.2d at 728.


         A. Meritorious Defense

         Joseph Rippy argues there was insufficient service in this case, because he alleges he was never served in this action and thus was not aware of the default judgment in this case. He also argues that he has a meritorious defense against the allegations within the Complaint because he argues there is coverage under the Policy. Auto Owners argues the Affidavit of Service is prima facie evidence of service. Auto Owners further argues that even if Joseph Rippy somehow has a meritorious defense, the other defendant, by virtue of his own default, as admitted to the facts in the Complaint, thereby foreclosing any defense for Joseph Rippy in this action.

         Proper service is a prerequisite for an entry of default and default judgment. Hodges v. Wash. Met. Area Transit Auth., No. CBD-14-0891, 2014 WL 5797754, at *3 (D. Md. Nov. 5, 2014). Under South Carolina law, a defaulting party must provide more than a general denial of service to rebut the presumption of service that arises with a return of process. See Richardson Const. Co., Inc. v. Meek Engr'r & Constr., Inc., 274 S.C. 307, 262 S.E.2d 913, 916 (S.C. 1980). Auto Owners argues that service was properly made in this case, as evidenced by the Affidavit of Service. Here, in response to the proof of service filed in this case, Defendant Joseph Rippy has executed his own affidavit attesting to the fact that: (1) he was never served with anything at that address, including this lawsuit; (2) he does not come home during the lunch hour but is instead at his place of business during that time, including the time the return of service indicates he was served; and (3) that he believes the proof service is fraudulent, in part because it was not signed and notarized until a week after service was allegedly perfected. [ECF No. 13-5, Aff. of Joseph Rippy, ¶¶ 2-3].

         Joseph Rippy asserts that he lives on “Lot B” of the 635 Mt. Calvary Road address, which he argues is distinct from the place where service was allegedly perfected (though on the same tract of land).[ECF No. 13-5, Aff. of Joseph Rippy, ¶ 1]. In his deposition, he explained that while his father owns the property at 635 Mount Calvary Road, he has a trailer on his father's property where he resides. [ECF No. 13-1, p. 5]. Joseph Rippy also provides the court index from previous cases to show that his father, Jessie Rippy, listed his son's address as “635 Southern Acres Loop, Lot B, Dillon SC” in a previous attempt to evict Joseph Rippy ...

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