Opinion
CIVIL NO. 2:21cv490
2022-01-14
Bradley LEIGHTON, Plaintiff, v. HOMESITE INSURANCE COMPANY OF THE MIDWEST, and Future Van Lines, LLC, Defendants.
Counsel for Plaintiffs: Steven Blythe Wiley, Wiley Law Offices PLLC, 440 Monticello Avenue, Suite 1817, Norfolk, VA 23510. Counsel for Defendant: Robert Michael Trumble, Bonner Kiernan Trebach & Crociata LLP, 1233 20 Street, NW, Suite 800, Washington, DC 20036.
Counsel for Plaintiffs: Steven Blythe Wiley, Wiley Law Offices PLLC, 440 Monticello Avenue, Suite 1817, Norfolk, VA 23510.
Counsel for Defendant: Robert Michael Trumble, Bonner Kiernan Trebach & Crociata LLP, 1233 20th Street, NW, Suite 800, Washington, DC 20036.
MEMORANDUM ORDER
REBECCA BEACH SMITH, SENIOR UNITED STATES DISTRICT JUDGE
Plaintiff filed a Complaint on August 31, 2021, alleging claims against Homesite Insurance Company of the Midwest ("Homesite") and Future Van Lines, LLC ("Future") (Homesite and Future, collectively, "Defendants"). ECF No. 1. This matter is now before the court on Plaintiff's Motion for Default Judgment ("Motion"), ECF No. 20, and Request for Hearing ("Request"), ECF No. 21, both filed on December 13, 2021. For the reasons explained below, the Motion and Request are DENIED .
I. BACKGROUND
In preparation for his move from Virginia to Washington, Plaintiff engaged Future to pack and transport his belongings. ECF No. 1 ¶ 8. During the course of the move, Plaintiff alleges that Future failed to deliver more than half of his property and damaged many of the items that it did deliver. Id. ¶ 14. He further alleges that Homesite breached the terms of the homeowner's insurance policy Plaintiff maintained with it by failing to compensate Plaintiff for this loss. Id. ¶¶ 6-7, 28. Though Homesite has answered Plaintiff's complaint and defended against his claims, to date, Future has not appeared in this case.
On November 4, 2021, Plaintiff filed a Request for Entry of Default as to Future. ECF No. 13. The next day, the Clerk entered the default pursuant to Fed. R. Civ. P. 55(a). In his Motion, Plaintiff asks the court to enter default judgment against Future. ECF No. 20.
II. LEGAL STANDARD
Plaintiff's Motion implicates the interplay among Rules 54 and 55 of the Federal Rules of Civil Procedure, as well as need to avoid inconsistent judgments. After the Clerk has noted a default, the plaintiff may seek a default judgment under Rule 55(b). However, Rule 54(b) provides that, "when multiple parties are involved, the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay." Fed. R. Civ. P. 54(b) (emphasis added). Ultimately, the court must "exercise sound judicial discretion" when considering whether to enter a default judgment, because "the moving party is not entitled to default judgment as a matter of right." EMI Apr. Music, Inc. v. White, 618 F. Supp. 2d 497, 505 (E.D. Va. 2009) (Davis, J.). This is especially true where multiple defendants are involved.
As recognized by the Supreme Court in Frow v. De La Vega, entering final judgment against a defaulting defendant while another litigates the matter could result in inconsistent judgments "unauthorized by law." 82 U.S. (15 Wall.) 552, 554, 21 L.Ed. 60 (1872). To avoid this result, the Court explained that the "where a bill makes a joint charge against several defendants, and one of them makes a default," the appropriate procedure is to enter a default as to the defendant who failed to answer, and "proceed with the cause upon the answers of the other defendants." Id. Ultimately, "if the suit should be decided against the complainant on the merits, the bill will be dismissed as to all the defendants alike – the defaulter as well as the others." Id.
Though the Frow decision concerned jointly liable defendants, in United States ex rel. Hudson v. Peerless Insurance Company, the Fourth Circuit noted that its reasoning applies "not only to situations of joint liability but to those where the liability is joint and/or several." 374 F.2d 942, 944 (4th Cir. 1967). The court also quoted authority explaining that "[w]here the liability is ... closely interrelated," a defaulting defendant can take advantage of the Frow rule. Id. at 945 (quoting 6 Moore, Federal Practice § 55.06, at 1821 (2d ed. 1965)).
Consequently, in addition to cases where true joint and/or several liability is alleged, courts in this district have held that the Frow rule applies where defendants are "similarly situated," or share "closely interrelated" liability. In each situation, courts risk "logically inconsistent judgments resulting from an answering defendant's success on the merits and another defendant's suffering of a default judgment ...." See Jefferson, 461 F. Supp. 2d at 434.
See Penn-Am. Ins. Co. v. White Pines, Inc., 387 F. Supp. 3d 646, 649-50 (E.D. Va. 2019) (Davis, C.J.) (noting that Frow "preclude[d] a final default judgment" where the defendants were "similarly situated"); Vick v. Wong, 263 F.R.D. 325, 332-33 (E.D. Va. 2009) (Davis, J.) (staying motion for default judgment where defendants were "similarly situated"); Phoenix Renovation Corp. v. Gulf Coast Software, 197 F.R.D. 580, 583-84 (E.D. Va. 2000) (Brinkema, J.) (declining to enter default judgment as to one defendant where the defendants were "similarly situated"); Jefferson v. Briner, Inc., 461 F. Supp. 2d 430, 435 (E.D. Va. 2006) (Dohnal, Mag. J.) (explaining that Frow applies to "closely interrelated" defendants).
The "avoidance of logically inconsistent judgments in the same action and factually meritless default judgments provide ‘just reason for delay’ within the meaning of Rule 54(b)." Id. (citing Phoenix Renovation Corp., 197 F.R.D. at 582 ). Thus, where multiple defendants are jointly and/or severally liable for Plaintiff's alleged damages, or are otherwise similarly situated, courts should refrain from issuing a default judgment until the answering defendant addresses the merits of the plaintiff's claims.
III. ANALYSIS
While Plaintiff has not alleged that Homesite and Future are jointly and/or severally liable for the damages he seeks, he presents each Defendant's liability stemming from the same conduct: Future's alleged mishandling and misdelivery of Plaintiff's property during his move. He claims Future is liable for the loss and damage it allegedly caused, and that Homesite is liable because it had a duty to indemnify Plaintiff pursuant to his home insurance contract. See ECF No. 1. This overlap establishes a "just reason" for delaying entry of default judgment against Future, as granting the Motion would risk the court's issuance of inconsistent judgments. See Fed. R. Civ. P. 54(b).
In its Answer, Homesite stated several affirmative defenses, including that Plaintiff's claims are barred by certain coverage exclusions in the insurance contract, such as those for concealment and fraud. ECF No. 6 at 9-10. Should Homesite present evidence proving Plaintiff's claimed loss was due to his own wrongdoing rather than Future's, the resulting judgment would inure to Future's benefit. See Frow, 82 U.S. at 554.
Moreover, the degree of Future's liability, and Homesite's liability as indemnitor, will both turn largely on the overall extent and amount of Plaintiff's alleged loss and damages. Consequently, should the court grant Plaintiff's Motion, it would have to "make an independent determination regarding damages," and fix a value for the harm Future allegedly caused. Radius Bank v. LarkSimple LLC, No. 4:20-cv-1, 2020 WL 5902165, at *2 (E.D. Va. Oct. 5, 2020) (Jackson, J.); see Fed. R. Civ. P. 55(b)(2) (noting that the court may conduct an evidentiary hearing "when, to enter or effectuate judgment, it needs to ... determine the amount of damages...."). Assuming Plaintiff later establishes Homesite's liability, the court would have to evaluate the same damages a second time when assessing the scope of Homesite's duty to indemnify Plaintiff. See Empire Fire & Marine Ins. Co. v. Pandt-Brown, 322 F. Supp. 3d 694, 696 (E.D. Va. 2018) (Smith, C.J.) ("a non-defaulting defendant is not bound by the facts deemed admitted because of a codefendant's failure to appear") (citing The Mary, 13 U.S. (9 Cranch) 126, 143, 3 L.Ed. 678 (1815) (Marshall, C.J.)). Given the defenses Homesite raises, there is a substantial risk that these two values would be different. See ECF No. 6 at 9-10.
"This Court is loath to enter default judgment when the possibility of logically inconsistent judgments between a co-defendant proceeding to defend on the merits and defaulting co-defendants exists." So. Bank & Trust Co. v. Prosperity Beach, LLC, No. 2:14-cv-270, 2014 WL 4976598, at *2 (Oct. 3, 2014) (Davis, J.). As this risk is present here, the court concludes that a "just reason" for delaying entry of default judgment against Future exists. See Fed. R. Civ. P. 54(b).
IV. CONCLUSION
Plaintiff's Motion for Default Judgment, ECF No. 20, and Request for Hearing, ECF No. 21, are DENIED at this juncture. For the reasons stated above, the court will revisit these matters as appropriate, upon resolution of the facts and defenses relevant to the claims against both Defendants.
A hearing on this Motion is unnecessary because the alleged facts and legal issues are sufficiently before the court for decision on the Motion at this juncture. See Local Civ. R. 7(J).
See supra Part III.