Opinion
Attorneys for Plaintiffs: Not Present.
Attorneys for Defendants: Not Present.
MEMORANDUM
DALE S. FISCHER, United States District Judge.
Proceedings: (In Chambers) Order GRANTING Plaintiff's Motion for Default Judgment (Docket No. 20)
American General Life Insurance Company (American) requests default judgment against Defendant Johny Johnson. Specifically, American seeks a declaration that a $240,000 life insurance policy issued by American on behalf of Johnson is " null, void, and rescinded ab initio ." (Compl. at 5.)
American styles its request as one for a declaratory judgment under 28 U.S.C. § 2201. Notwithstanding this characterization, American actually appears to seek rescission of the subject life insurance policy pursuant to California state law. This distinction does not appear material; California law supports American's request and this Court has diversity jurisdiction under 28 U.S.C. § 1332. (Compl. ¶ ¶ 4-7.)
I. BACKGROUND
According to American, " Johnson made misrepresentations of material fact, concealed material facts, and/or otherwise failed to accurately, honestly, and/or truthfully answer and disclose material information in response to the questions presented on the Application regarding his health and medical history." (Id. ¶ 16.) Pursuant to this Court's February 5, 2015 order, American supplemented these allegations with under seal submissions that disclosed the particular misrepresentations alleged in American's Complaint. (w Dkt. No. 26.) These submissions support American's claim that Johnson made multiple material misrepresentations on his life insurance policy application. Based on Johnson's material misrepresentations, American requests that the Court rescind the resulting life insurance policy ab initio.
Johnson has not responded to the Complaint or otherwise appeared or participated in this litigation. The Clerk properly entered default against Johnson on December 2, 2014. (Dkt. No. 18.)
II. LEGAL STANDARD
Rule 55(b)(2) permits the Court to enter a default judgment. The Court need not make detailed findings of fact in the event of default. See Adriana Int'l Corp. v. Thoeren, 913 F.2d 1406, 1414 (9th Cir. 1990). On entry of a default, well-pled allegations in the complaint regarding liability are generally deemed to be admitted. See DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 851 (9th Cir. 2007). Allegations as to damages, however, must be proven. See TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917 (9th Cir. 1987).
The Court may consider several factors " in exercising discretion as to the entry of a default judgment includ[ing]: (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits." Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).
III. ANALYSIS
A. The Eitel Factors Weigh in Favor of Granting Default Judgment
The Eitel factors weigh in favor of granting default judgment against Johnson. American would be prejudiced by a denial of its motion for default judgment. Johnson cannot escape liability by refusing to participate in the judicial process and American has incurred expenses in prosecuting this action.
With respect to the second and third Eitel factors, American's allegations -- assumed to be true -- establish that American is entitled to rescind the subject life insurance policy. See W. Coast Life Ins. Co. v. Ward, 132 Cal.App.4th 181, 186-87, 33 Cal.Rptr.3d 319 (2005); Cal. Ins. Code § § 331 and 334. American has established that Johnson made multiple material misrepresentations on his life insurance policy application. " The rule in insurance cases is that a material misrepresentation or concealment in an insurance application, whether intentional or unintentional, entitles the insurer to rescind the insurance policy ab initio ." Ward, 132 Cal.App.4th at 186-87.
The fourth Eitel factor weighs in favor of granting default judgment. American seeks no monetary damages, but requests only that the Court rescind the subject life insurance policy. Based on American's factual allegations, the possibility of a dispute concerning material facts is slight. There is no evidence that Johnson's default is due to excusable neglect. Pursuant to this Court's order, American served Johnson by publication once a week over four consecutive weeks beginning on October 9, 2014 and ending October 30, 2014. (See Dkt. Nos. 12, 20-1 ¶ 3.) American also attempted to inform Johnson of service by contacting his nephew, Nick Brown. (Dkt. No. 24-1 ¶ ¶ 4-6.) Johnson has yet to respond. The policy of favoring decisions on the merits does not weigh against entry of default judgment; Johnson has failed to appear, making a decision on the merits impossible.
The Court notes that the amount at stake is arguably $240,000 given that American seeks rescission of a $240,000 life insurance policy. Even characterizing the amount at stake in this way, this factor would favor American; Johnson would not have been able to attain the subject policy absent his multiple material misrepresentations.
IV. CONCLUSION
American's motion for default judgment is GRANTED. The Court enters default judgment against Johnson. American's life insurance policy number 212571659 is null, void, and rescinded ab initio.
IT IS SO ORDERED.
JUDGMENT
The Clerk having entered default against Defendant Johnson, and the Court having granted Plaintiff's motion for default judgment in favor of Plaintiff and against Defendant,
IT IS ORDERED AND ADJUDGED that American General's life insurance Policy Number 212571659 (the Policy) is null, void, and rescinded ab initio. American General is further ORDERED to refund or otherwise make payment to Johnson of all or any portion of the premiums or other payments made on the Policy.