Opinion
Civil Action No. 19-cv-02893-PAB-MEH
07-14-2020
PERMANENT GENERAL ASSURANCE CORPORATION OF OHIO, Plaintiff, v. MARCO ANTONIO RODRIGUEZ VANEGAS, Defendant.
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
Michael E. Hegarty, United States Magistrate Judge.
Plaintiff Permanent General Assurance Corporation of Ohio ("Plaintiff") asserts a declaratory judgment claim against Defendant Marco Antonio Rodriguez Vanegas ("Defendant"). See Compl. at 7, ECF 1. Plaintiff filed a Motion for Entry of Default on December 6, 2019 after Defendant failed to answer or otherwise respond, and the Clerk of the Court entered default on December 10, 2019. ECF 14, 16. Plaintiff subsequently filed a Motion for Default Judgment ("Motion"), referred to this Court for a Report and Recommendation. ECF 21. As set forth below, I respectfully recommend that Plaintiff's Motion be granted.
BACKGROUND
I. Factual Background
This case arises out of an altercation between Defendant and Cristian Aguierre-Erives ("Mr. Aguierre-Erives"), a former defendant in this matter. On or about September 16, 2018, Defendant and Mr. Aguierre-Erives were at a nightclub in Aurora, Colorado when Defendant became "violent and combative," leading to an altercation both inside the nightclub and outside in its parking lot. Compl. at ¶¶ 6-7. Mirna Escobar ("Ms. Escobar"), Plaintiff's insured, was also at the club that night. Ms. Escobar left her vehicle running in the nightclub's parking lot while she entered the establishment looking for a friend. Compl. at ¶ 8. While Ms. Escobar was inside, Defendant entered the driver's seat of Ms. Escobar's vehicle (without her permission) and proceeded to drive the vehicle into and over Mr. Aguirre-Erives. Compl. at ¶¶ 9-10. Defendant later admitted to the Aurora Police that he was intoxicated when he ran over Mr. Aguirre-Erives. Compl. at ¶ 11. Because of Defendant's actions, Mr. Aguirre-Erives filed suit ("Underlying Lawsuit") against Defendant in Arapahoe County District Court, Case No. 2019CV31883, asserting claims of negligence and negligence per se. Compl. at ¶¶ 12, 14.
As relevant here, Plaintiff issued to Ms. Escobar personal auto policy number CO3767516 ("Policy"), effective December 27, 2017 to December 27, 2018. Part I of the Policy states, "if you buy Liability Coverage from us on this policy, we will pay compensatory damages, for which an insured person is legally liable to others" due to bodily injury or property damage "that results from a motor vehicle accident." Compl. at ¶ 19. Part I defines an "insured person" as
1. [The policyholder], a family member or an insured driver for the ownership or use of a:
a. Covered auto covered by this Part I;
b. Non-owned auto or temporary substitute auto; or
c. Trailer while being towed by a covered auto, a non-owned auto, or a temporary substitute auto.
2. Any other person who is using a covered auto with your permission but only if such person is not insured by any other motor vehicle liability policy, self-insurance or bond.Compl. at ¶ 20. Moreover, the Policy provides exclusions under Part I, including:
However, if this policy is certified as proof of financial responsibility, then the insured person shall include any other person using a covered auto with your permission. However, that person shall be an insured person only up to the minimum limits.
1. [Plaintiff has] no duty to defend and we do not provide this Part I—Liability Coverage for any person for:
a. Bodily injury or property damage:
(1) Caused intentionally by or at the direction of; or
(2) that is or should be reasonably expected to result from the willful acts by;
That person, even if the bodily injury or property damage that results is not intended or is not the kind that was intended . . . .
f. Use of a vehicle:
(1) Without the permission of is owner to do so; or
(2) If it is a non-owned auto and the use is not within the scope of the permission given for that use . . . .
Compl. at ¶ 21. A "converter" is defined as "a person, other than a named insured or family member, who uses a motor vehicle in a manner that a reasonable person would determine was unauthorized." Compl. at ¶ 22.q. Bodily injury or property damage where the injured person is operating a motor vehicle as a converter without good faith belief that he or she is legally entitled to operate or use such motor vehicle.
II. Procedural History
Plaintiff filed the present action on October 10, 2019, seeking declaratory judgment against both Defendant and Mr. Aguirre-Erives. ECF 1. On November 6, 2019, Plaintiff properly served Defendant. See ECF 13. Subsequently, Defendant filed a motion for appointment of pro bono counsel (ECF 10), which the Court denied (ECF 12). With no answer or other response filed, Plaintiff moved for entry of default (ECF 14) on December 6, 2019. The Clerk of the Court entered default against Defendant on December 10, 2019. The next and last response from Defendant in this case was the filing of a consent form to magistrate judge jurisdiction on January 6, 2020. ECF 18. Plaintiff filed the present Motion on January 21, 2020, seeking default judgment as to its request for a declaration that Defendant is not an "insured" under the Policy, Defendant is a "converter" under the Policy, there is no coverage under the Policy for Defendant's actions, and Plaintiff has no duty to defend in the Underlying Lawsuit. ECF 21.
On June 2, 2020, Plaintiff and Mr. Aguirre-Erives stipulated to his dismissal from this case. ECF 40.
On April 22, 2020, this Court issued an Order to Show Cause as to why the Court should not recommend that this case be dismissed without prejudice for lack of subject matter jurisdiction. ECF 28. The Court was concerned that allegations in the Complaint did not adequately establish the requirements for diversity jurisdiction. The Court held a conference on May 20, 2020 to discuss the order to show cause. See ECF 36. At the conference, Plaintiff indicated that Defendant is a Honduran national who has been deported to Honduras.
LEGAL STANDARDS
Fed. R. Civ. P. 55 governs motions for default judgment. Rule 55(b)(2) provides the authority for the District Court to enter default judgment. After an entry of default, a defendant cannot defend a claim on the merits. See Olcott v. Delaware Flood Co., 327 F.3d 1115, 1125 (10th Cir. 2003) (quoting Jackson v. FIE Corp., 302 F.3d 515, 525 (5th Cir. 2002) ("[D]efendant, by his default, admits the plaintiff's well-pleaded allegations of fact")); see also id. at 1124 ("Defendants do not have a constitutional right to a jury trial following entry of default.").
"Even after entry of default, however, it remains for the court to consider whether the unchallenged facts constitute a legitimate basis for the entry of a judgment." See McCabe v. Campos, No. 05-cv-00846-RPM-BNB, 2008 WL 576245, at *2 (D. Colo. Feb. 28, 2008). In determining whether entry of default judgment is warranted, the court must first consider personal and subject matter jurisdiction. See, e.g., Williams v. Life Sav. & Loan, 802 F.2d 1200, 1203 (10th Cir. 1986) (lack of subject matter jurisdiction constitutes good cause to set aside a default judgment); see also Dennis Garberg & Assoc., Inc. v. Pack-Tech Int'l Corp., 115 F.3d 767, 772 (10th Cir. 1997) (district court erred in failing to determine personal jurisdiction issue before considering entry of default judgment). For purposes of considering whether a claim for relief has been established, the well-pleaded facts of the complaint relating to liability are deemed true. Id. (citing Dundee Cement Co. v. Howard Pipe & Concrete Prods., Inc., 722 F.2d 1319, 1323 (7th Cir. 1983)); see also Personal Indus. Loan Corp. v. Forgay, 240 F.2d 18, 20 (10th Cir. 1956) ("By failing to appear and permitting a default judgment to be entered, [defendant] admitted only facts well pleaded."). In addition, the court accepts the undisputed facts set forth in any affidavits and exhibits. Deery American Corp. v. Artco Equip. Sales, Inc., No. 06-cv-01684-EWN-CBS, 2007 WL 437762, at *3 (D. Colo. Feb. 6, 2007).
"[A] party is not entitled to a default judgment as of right; rather the entry of a default judgment is entrusted to the 'sound judicial discretion' of the court." Satriano v. Countrywide Home Loans, Inc., 14-cv-02216-KLM, 2015 WL 1887260, at *4 (D. Colo. April 23, 2015) (quoting Cablevision of S. Conn., Ltd. P'ship v. Smith, 141 F. Supp. 2d 277, 281 (D. Conn. 2001)). A trial court is vested with broad discretion in deciding whether to enter a default judgment. Grandbouche v. Clancy, 825 F.2d 1463, 1468 (10th Cir. 1987); see also Weft, Inc. v. G.C. Inv. Assocs., 630 F. Supp. 1138, 1143 (E.D.N.C. 1986) ("[U]pon a default, a plaintiff is entitled to a determination of liability unless he has failed to state a legal basis for relief or it is clear from the face of the complaint that the allegations are not susceptible of proof." (citing Nishimatsu Constr. Co. v. Hous. Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975))).
ANALYSIS
Upon review of the record, the Court recommends finding that default judgment be entered in Plaintiff's favor against Defendant pursuant to Fed. R. Civ. P. 55(b)(2) for the reasons that follow.
I. Jurisdiction
A. Subject Matter Jurisdiction
This Court has "original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between—(1) citizens of different States; [or] (2) citizens of a State and citizens or subjects of a foreign state." 28 U.S.C. § 1332(a). "For purposes of diversity jurisdiction, a person is a citizen of a state if the person is domiciled in that state[,] . . . . [a]nd a person acquires domicile in a state when the person resides there and intends to remain there indefinitely." Middleton v. Stephenson, 749 F.3d 1197, 1200 (10th Cir. 2014). Diversity jurisdiction is determined when the complaint is filed. Siloam Springs Hotel, L.L.C. v. Century Sur. Co., 781 F.3d 1233, 1239 (10th Cir. 2015) ("[T]he relevant time period for determining the existence of complete diversity is the time of the filing of the complaint."). The Court "should consider the totality of the circumstances" when determining domicile. Middleton, 749 F.3d at 1200-01. The "party invoking diversity jurisdiction bears the burden of proving its existence by a preponderance of the evidence." Id. at 1200.
For subject matter jurisdiction, Plaintiff must show both the diversity of citizenship and the amount in controversy requirements are met. First, considering citizenship, significant evidence exists demonstrating that Defendant is a Honduran national. Plaintiff submitted Defendant's "Detainer Notice" which has Defendant's alien number (*** *** 112) and a notice that Defendant is "[s]ubject to deportation from the United States." Exh. A at 1-2. Additionally, the "Notice of Action" attached to the "Detainer Notice" sets forth the Department of Homeland Security's ("DHS") "determination that Defendant . . . is a removable alien, noting [DHS] confirmed his identity independently as well as through statements made by the Defendant himself." Resp. at 4-5 (citing Exh. A at 3). Defendant himself submitted to this Court a motion for pro bono counsel in which Defendant identified himself as "a Honduran national" who "will be deported by I.C.E. upon his release from [Cheyenne Mountain Reentry Center]." ECF 10.
Additionally, though, the Court notes there is no evidence to suggest Defendant is a citizen of Ohio or Tennessee. At the time of filing its complaint, Plaintiff "was an Ohio corporation with its principal place of business in Nashville, Tennessee." Resp. at 7. Therefore, complete diversity exists if Defendant is neither a citizen of Ohio nor Tennessee. While the Complaint alleges Defendant is a Colorado resident, there are no allegations that Plaintiff has ever been domiciled in (or even visited) Ohio or Tennessee.
The Court recognizes the above evidence fails to conclusively establish domicile. After all, there is no evidence of Defendant's mental state as to where he intended to remain indefinitely. See Middleton, 749 F.3d at 1200. At the time Plaintiff filed the Complaint, Defendant was a resident of Colorado, but residence alone does not establish domicile. Siloam Springs, 781 F.3d at 1238 ("An individual's residence is not equivalent to his domicile."). Yet, the record shows that Defendant was either domiciled in Honduras or Colorado. Either Defendant intended to remain in Colorado indefinitely (and was a citizen of the state) or he intended to return to Honduras (and is a citizen of that foreign state). In both instances, Defendant is not a domiciliary or citizen of Tennessee or Ohio. Thus, complete diversity under 28 U.S.C. § 1332(a) is satisfied, since this action involves "(1) citizens of different States; [or] (2) citizens of a State and citizens or subjects of a foreign state." 28 U.S.C. § 1332(a).
Second, Plaintiff also must show the amount in controversy requirement is met. "In cases seeking declaratory and injunctive relief, the amount in controversy is measured by the value of the object of the litigation." Lovell v. State Farm Mut. Auto. Ins. Co., 466 F.3d 893, 897 (10th Cir. 2006) (internal quotations omitted). The Tenth Circuit follows the "'either viewpoint rule' which considers either the value to the plaintiff or the cost to defendant of injunctive and declaratory relief as the measure of the amount in controversy for purposes of meeting the jurisdictional minimum." Id. When dealing with an insurer's declaratory judgment action, the Court may consider "all expenses incurred in defending the claim against [the] insured and all costs which may be assessed against [the] insured." Farmers Ins. Co., Inc. v. McClain, 603 F.2d 821, 823 (10th Cir. 1979). If the amount in controversy were to be challenged, "plaintiffs must show that it does not appear to a legal certainty that" the plaintiffs cannot recover the minimum amount. Watson v. Blankinship, 20 F.3d 383, 386 (10th Cir. 1994). However, the Tenth Circuit "has cautioned that '[t]he legal certainty standard is very strict . . . . [I]t is difficult for a dismissal to be premised on the basis that the requisite jurisdictional amount is not satisfied.'" Marcus Food Co. v. DiPanfilo, 671 F.3d 1159, 1171 (10th Cir. 2011) (quoting Woodmen of World Life Ins. Soc. v. Manganaro, 342 F.3d 1213, 1216 (10th Cir. 2003)).
In this case, Plaintiff alleges in its Complaint that "[t]he matter in controversy exceeds, exclusive of interest and costs, the sum specified in 28 U.S.C. § 1332." Compl. at ¶ 4. Finding this allegation alone insufficient to establish the amount in controversy, the Court ordered Plaintiff to provide additional evidence demonstrating that the amount in controversy here exceeds $75,000. See ECF 46. In its response to that order ("Jurisdictional Response"), Plaintiff provided the civil cover sheet for the Underlying Lawsuit which indicates that Mr. Aguirre-Erives seeks monetary damages from Defendant in an amount exceeding $100,000. Id., Exh. 1. Other courts in this District have held that the Court may not rely solely on the civil cover sheet to establish the amount in controversy. See Baker v. Sears Holdings Corp., 557 F. Supp. 2d 1208, 1215 (D. Colo. 2007); KSM Int'l, LLC v. Wickman, 15-cv-02826-WJM-MEH, 2016 WL 8577461, at *2 (D. Colo. May 11, 2016). In this case, the Court does not solely rely on the civil cover sheet but finds sufficient Plaintiff's additional explanation for why the amount in controversy is met.
The Tenth Circuit has held that a Colorado civil cover sheet is adequate notice of the amount in controversy sought by plaintiff for purposes of 28 U.S.C. § 1446. See Paros Props. LLC v. Colo. Casualty Ins. Co., 835 F.3d 1264, 1272 (10th Cir. 2016). However, the question of whether the civil cover sheet is sufficient for purposes of 28 U.S.C. § 1332 appears to be unanswered by the Tenth Circuit. One district court has drawn a distinction between "ambiguous" and "unambiguous" civil covers sheets with regard to the amount in controversy. Carney v. Anthem Life Insurance Company, 19-cv-03075-RM-KMT, 2020 WL 2188779, at *3 n.4 (D. Colo. April 22, 2020) (noting that in Paros the court "determined the civil cover sheets were unambiguous as to the amount in controversy," but deciding that the civil cover sheet at issue was ambiguous). To the extent that distinction applies here, the civil cover sheet is unambiguous as to the amount in controversy exceeding $100,000.
Primarily, Plaintiff asserts that "a determination that [Plaintiff] must provide a defense to [Defendant] in the Underlying Lawsuit will cause [it] to incur significant costs." Jurisdictional Response at 4. After all, "[t]he object of the present litigation is to establish [Plaintiff] is not obligated to provide coverage for [Defendant's] assault and, therefore, pay any judgment won against him in the Underlying Lawsuit." Id. Plaintiff also attached to its Jurisdictional Response photos of Mr. Aguirre-Erives showing "serious and disfiguring" injuries. Id. at 4, Exh. 2. The cost of possibly providing coverage and defending Defendant in the Underlying Lawsuit may very well exceed $75,000 based on "the averments of the Civil Cover Sheet in the Underlying Lawsuit, and the seriousness of Mr. Aguirre-Erives's injuries." Id. at 5. The Court acknowledges that the amount in controversy can include the value to Plaintiff in not having to pay coverage and litigation costs. Farmers, 603 F.2d at 823. Also, there is no basis for the Court to determine with a legal certainty that the value of Plaintiff's claim does not exceed $75,000. Thus, in light of Plaintiff's evidence, the Court finds the amount in controversy requirement satisfied.
Therefore, considering the totality of the circumstances, the Court is satisfied that Plaintiff has met its burden of showing subject matter jurisdiction by a preponderance of the evidence.
B. Personal Jurisdiction
Regarding personal jurisdiction, a movant "need only make a prima facie showing [of personal jurisdiction] if the motion [for default judgment] is decided only on the basis of the parties' affidavits and other written materials." Dennis Garberg, 115 F.3d at 773.
The Court first notes that Plaintiff adequately served Defendant. See Metropolitan Life Insurance Co. v. Johnson, 14-cv-00811-KLM, 2015 WL 1945398, at *2 (D. Colo. April 29, 2015) ("The Court must first address the adequacy of service in deciding whether it has personal jurisdiction over Defendant[]."). An executed summons demonstrates that Defendant was served on November 6, 2019. ECF 13. Also, while Defendant never answered or otherwise responded, he did consent to magistrate judge jurisdiction. ECF 18. Accordingly, the Court finds that Defendant was properly notified of this action and served in compliance with Fed. R. Civ. P. 4. See Metropolitan Life Insurance Co., 2015 WL 1945398, at *2.
The Tenth Circuit has explained, "It is well settled that lack of personal jurisdiction is a privilege defense that can be waived 'by failure to assert it seasonably, by formal submission in a cause, or by submission through conduct." Morreale v. City of Cripple Creek, No. 96-1220, 1997 WL 290976, at *4 (10th Cir. May 27, 1997) (quoting Neirbo Co. v. Bethlehem Corp., 308 U.S. 165, 168 (1939)). Here, Defendant participated in the case by voluntarily filing a motion to appoint pro bono counsel (ECF 10) and executing a consent form (ECF 18). Thus, Defendant submitted himself, through his conduct, to the jurisdiction of this Court.
Moreover, "[t]he Court has personal jurisdiction over residents of the state of Colorado because the District of Colorado encompasses the entire state." Metropolitan Life Insurance Co., 2015 WL 1945398, at *3 (citing Dallas Buyers Club, LLC v. Cordova, 81 F. Supp. 3d 1025, 1032 (D. Colo. 2015) ("As Defendant resides in the District of Colorado, the Court has personal jurisdiction over him." )). As mentioned above, Plaintiff need only make a "prima facie showing" of personal jurisdiction. Dennis Garberg, 115 F.3d at 773. Here, Plaintiff's Complaint alleges Defendant "is a Colorado resident." Compl. at ¶ 2. Although Defendant subsequently has been deported, the Court must take as true Defendant was a Colorado resident at the time this action commenced and also when he submitted his filings to the Court. Plaintiff's allegation is thus "sufficient to satisfy the Court that it may exercise personal jurisdiction over" Defendant. Metropolitan Life Insurance Co., 2015 WL 1945398, at *3.
Considering the above, the Court finds that Plaintiff has met its prima facie burden to demonstrate this Court has subject matter jurisdiction and can exercise personal jurisdiction over Defendant.
II. Default Judgment
Taking the well-pleaded facts of the complaint as true, the Court finds there is a legitimate basis for entry of default judgment. In its Motion, Plaintiff seeks declaratory judgment regarding four things. First, Plaintiff requests a judgment that Defendant is not an "insured" under the Policy. An "insured" is defined, in part, as "[the policyholder], a family member or an insured driver" or "[a]ny other person who is using a covered auto with your permission." Compl. at ¶ 20. It is undisputed that Ms. Escobar is the policyholder; additionally, there is no indication that Defendant is a family member of Ms. Escobar's. Finally, Defendant used Ms. Escobar's vehicle without her permission. Compl. at ¶ 9. Taken together, these facts conclusively establish that Defendant is not an "insured," as that term is defined in the Policy.
Second, Plaintiff seeks a declaration that Defendant is a "converter" as defined by the Policy. As mentioned above, a "converter" under the Policy is "a person, other than a named insured or family member, who uses a motor vehicle in a manner that a reasonable person would determine was unauthorized." Compl. at ¶ 22. Defendant used Ms. Escobar's vehicle to assault Mr. Aguirre-Erives. No reasonable person could determine that Defendant's use of Ms. Escobar's vehicle was authorized. Therefore, pursuant to the Policy, the Court finds Defendant is a "converter."
Third, Plaintiff requests a declaration that "there is no coverage under the Policy for the assault committed by [Defendant] while driving" Ms. Escobar's vehicle. Mot. at 3. The Policy explicitly provides for an exclusion of coverage for "[b]odily injury or property damage where the injured person is operating a motor vehicle as a converter without good faith belief that he or she is legally entitled to operate or use such motor vehicle." Compl. at ¶ 21. Because the Court already found Defendant is a "converter" under the Policy, the Court also finds the Policy excludes coverage for the actions taken by Defendant.
Fourth, Plaintiff prays for a declaration that it "has no duty to defend the Underlying Lawsuit." Mot. at 3. In addition to the Policy providing exclusions to coverage, the Policy also specifically provides that Plaintiff has "no duty to defend" when an exclusion applies. Compl. at ¶ 21. Because the Court found there is no coverage under the Policy for Defendant's actions, the Court must also find Plaintiff has no duty to defend Defendant in the Underlying Lawsuit.
CONCLUSION
Being satisfied that the Court has jurisdiction, and having found that the well-pleaded facts of the Complaint establish a legitimate basis for entry of default judgment, the Court respectfully RECOMMENDS that Chief Judge Philip A. Brimmer GRANT Plaintiff Permanent General Assurance Corporation of Ohio's Motion for Default Judgment [filed January 21, 2020; ECF 21].
Be advised that all parties shall have fourteen (14) days after service hereof to serve and file any written objections in order to obtain reconsideration by the District Judge to whom this case is assigned. Fed. R. Civ. P. 72. The party filing objections must specifically identify those findings or recommendations to which the objections are being made. The District Court need not consider frivolous, conclusive or general objections. A party's failure to file such written objections to proposed findings and recommendations contained in this report may bar the party from a de novo determination by the District Judge of the proposed findings and recommendations. United States v. Raddatz, 447 U.S. 667, 676-83 (1980); 28 U.S.C. § 636(b)(1). Additionally, the failure to file written objections to the proposed findings and recommendations within fourteen (14) days after being served with a copy may bar the aggrieved party from appealing the factual findings and legal conclusions of the Magistrate Judge that are accepted or adopted by the District Court. Duffield v. Jackson, 545 F.3d 1234, 1237 (10th Cir. 2008) (quoting Moore v. United States, 950 F.2d 656, 659 (10th Cir. 1991)).
Respectfully submitted this 14th day of July, 2020, at Denver, Colorado.
BY THE COURT:
/s/
Michael E. Hegarty
United States Magistrate Judge