Opinion
16-CV-4641 (LDH) (RER)
10-24-2017
U.S. UNDERWRITERS INSURANCE COMPANY, Plaintiff, v. ORION PLUMBING & HEATING CORP., Arkadiy Bangiyev, Joseph Pomilla, J Bayot Home Design and Arnulfo Bayot, Defendants.
ORDER ADOPTING REPORT AND RECOMMENDATION
:
On July 25, 2017, United States Magistrate Judge Ramon E. Reyes, Jr. issued a report and recommendation (the "Report and Recommendation"), wherein he recommended that this Court deny Plaintiff's motion for default judgment as to Defendant Orion Plumbing & Heating Corp. (See R. & R., ECF No. 31.) Plaintiff timely filed an objection. (Pl.'s Obj., ECF No. 33.) When a timely objection has been made to any portion of a report and recommendation on a dispositive matter, the District Court reviews the report and recommendation de novo . 28 U.S.C. § 636(b)(1)(C) ; Fed. R. Civ. P. 72(b)(3).
In his Report and Recommendation, Judge Reyes sets forth a thoughtful discussion concerning the wisdom of entry of default judgment in a multi-defendant case against a defaulting defendant alone. (See R. & R. at 2.) Judge Reyes concluded that, consistent with the general practice in this regard, entry of judgment against Orion would be premature as it could result in the issuance of inconsistent declarations. (See id. ) In its objection, Plaintiff does not identify legal authority that runs contrary to the cases relied upon by Judge Reyes. Plaintiff also makes no effort to show that any exception to the general practice applies here. Similarly, Plaintiff fails to identify any factual basis upon which to distinguish this case from those that, like Judge Reyes, decline to enter default judgment against the defaulting defendant.
Plaintiff's only argument in objection is that this Court directed Plaintiff to move for default judgment. (See Pl.'s Obj. at 1.) Indeed, it did. That fact alone, however, is insufficient to provide a basis for this Court to disregard Judge Reyes' Report and Recommendation. Upon review, the Court finds no basis in law or fact that would lead it to conclude differently than Judge Reyes.
Accordingly, the Court hereby adopts Magistrate Judge Reyes's Report and Recommendation to deny Plaintiff's motion for default judgment as to Defendant Orion Plumbing & Heating Corp. as the opinion of this Court.
SO ORDERED.
REPORT & RECOMMENDATION
Ramon E. Reyes, Jr., U.S.M.J.:
U.S. Underwriters Insurance Company ("Plaintiff") commenced this action against Orion Plumbing & Heating Corp. ("Orion") on August 19, 2016, seeking a declaration that it has no duty to defend or indemnify Orion in a pending state court action (the "Underlying Action"). (Dkt. No. 1). Plaintiff also named J Bayot Home Design ("Bayot Home"), Arkadiy Bangiyev ("Bangiyev"), Joseph Pomilla ("Pomilla"), and Arnulfo Bayot ("Bayot") (collectively the "Additional Defendants") as defendants. (Dkt. No. 1). Orion failed to appear, but the Additional Defendants have all filed Answers. (Dkt. Nos. 12, 19, 21). On December 22, 2016, the Clerk of the Court entered default against Orion, and Plaintiff now moves for default judgment pursuant to Fed. R. Civ. P. 55. (Dkt. No. 28). Your Honor has referred this motion to me for a report and recommendation. (Order Dated 3/2/17). For the reasons set forth below, I respectfully recommend that Plaintiff's request for declaratory judgment be denied.
Plaintiff, an insurance provider, extended coverage to Orion in 2012 (the "Policy"). (Dkt. No. 1 ("Complaint") at ¶ 16). That same year Pomilla was allegedly injured while responding to a fire at 112-44 68th Ave in Rego Park Queens (the "Property"). (Dkt. No. 1-1 ("Underlying Complaint") at ¶ 3). In 2015, Pomilla commenced the Underlying Action against the Property's owner, Bangiyev, and several other defendants not party to the instant action. (Underlying Complaint). Bangiyev then filed a third party complaint against Orion, seeking indemnification and contribution based on work performed by Orion prior to the fire. (Complaint at ¶ 14).
Plaintiff has refused to defend or indemnify Orion, instead commencing this action for declaratory judgment against Orion on the grounds that the Policy is void or alternatively that it does not provide coverage under the facts of the Underlying Action. (Complaint).
A plaintiff seeking default judgment must first comply with Rule 55's procedural requirements. When a defendant fails to file a timely response to the complaint the plaintiff must request entry of default. Priestley v. Headminder, Inc. , 647 F.3d 497, 504 (2d Cir. 2011). (citing Fed. R. Civ. P. 55(a) ). Once the clerk of the court has entered default, the plaintiff "must apply to the court for a default judgment." Fed. R. Civ. P. 55(b)(2). Plaintiff has satisfied these procedural requirements with regard to Orion, but not with regard to the Additional Defendants.
Courts have regularly held that "when one defendant defaults in a multi-defendant case, the district court should not enter ‘a final decree on the merits against the defaulting defendant alone[.]’ " Peralta v. Roros 940, Inc. , No. 11-cv-6242 (NG)(CLP), 2016 WL 1389597, at *1 (E.D.N.Y. Apr 6, 2016) (quoting Frow v. De La Vega , 82 U.S. 552, 554, 15 Wall. 552, 21 L.Ed. 60 (1872) ). While this is not a blanket rule, and certain exceptions exist, default judgment should not be entered where doing so might result in the issuance of inconsistent declarations. Id. at *1-2. Plaintiff's motion presents such a case. If the Additional Defendants prevail in the Underlying Action, they will be entitled to damages from Orion, and in turn from Orion's insurer. In response to a prior order to show cause, Plaintiff stated this action sought "a declaration...not only as to the interpretation of the [Policy], but also a determination as to recission of that policy so that it may...no longer serve as a basis for recovery as to any and all claims...asserted in the underlying state court action[.]" (Dkt. No. 22 at 1). Plaintiff readily acknowledged that "[t]he impact of the relief sought...will impact the rights of the defendants named in this action", including the Additional Defendants. Id.
The Additional Defendants have not defaulted and as such have the right to contest Plaintiff's claims. Their rights, including the right to recovery in the Underlying Action, has not yet been determined. A declaration that Plaintiff has no duty to defend or indemnify Orion would be inconsistent with any subsequent finding that the Additional Defendants are entitled to relief from Plaintiff, through Orion, under the terms of the Policy.
I therefore respectfully recommend that Plaintiff's motion be denied and any ruling as to Orion be withheld until a final disposition is reached regarding the Additional Defendants. The Plaintiff is hereby directed to serve copies of this Report and Recommendation upon Orion by regular and certified mail, and file proof of service with the Clerk of the Court by July 28, 2017.
Any objections to the recommendations set forth above must be filed with the Clerk of the Court and the Honorable DeArcy Hall within fourteen days of receipt hereof. Failure to file timely objections waives the right to appeal the District Court's Order. See 28 U.S.C. § 636(b)(1) ; Fed. R. Civ. P. 72 ; Small v. Sec'y of Health & Human Servs. , 892 F.2d 15, 16 (2d Cir. 1989).
SO ORDERED.
Dated: July 25, 2017
Brooklyn, NY