Opinion
22-CV-33-JPS
06-27-2022
AUTO-OWNERS INSURANCE COMPANY, Plaintiff, v. ALLIANZ GLOBAL RISKS U.S. INSURANCE COMPANY, GD MIDEA AIR CONDITIONING EQUIPMENT LTD., MIDEA AMERICA CORP., GRAND APPLIANCE, INC., and NATIONWIDE MUTUAL INSURANCE COMPANY, Defendants.
ORDER
J. P. STADTMUELLER, DISTRICT JUDGE
On January 12, 2022, Plaintiff filed a complaint in the abovecaptioned matter. ECF No. 1. On February 28, 2022, Plaintiff requested entry of default as to Defendant Allianz Global Risks U.S. Insurance Company (“Allianz US”) because Allianz U.S. had not filed an answer or other responsive pleading. ECF No. 13. The Clerk of Court entered default on April 5, 2022. On April 11, 2022, Plaintiff filed a motion for default as to Allianz US. ECF No. 15. On April 26, 2022, Allianz U.S. filed a motion to set aside default. ECF No. 20.
The Court has discretion to set aside an entry of default for good cause. Fed.R.Civ.P. 55(c). In order to set aside a default, a defendant must show “(1) good cause for [the] default (2) quick action to correct it and (3) a meritorious defense to plaintiff's complaint.” Pretzel & Stouffer v. Imperial
Adjusters, Inc., 28 F.3d 42, 45 (7th Cir. 1994). So long as the defendant “did not willfully ignore the pending litigation, but, rather, failed to respond to the summons and complaint through inadvertence,” good cause exists. Cracco v. Vitran Exp., Inc., 559 F.3d 625, 631 (7th Cir. 2009) (citing Passarella v. Hilton Int'l Co., 810 F.3d 674, 677 (7th Cir. 1987)). Additionally, “[t]his Circuit has a well established policy favoring a trial on the merits over a default judgment.” Sun v. Bd. of Trs. of Univ. of Ill., 473 F.3d 799, 811 (7th Cir. 2007) (citation omitted). Allianz U.S. argues that it satisfies the required elements to have the default against it set aside.
Allianz U.S. represents that it was served with Plaintiff's complaint on January 21, 2022 via Allianz US's registered agent. ECF No. 20 at 3. Allianz U.S. agrees that its answer was due twenty-one days later, i.e., on February 11, 2022. Id. As reason for not submitting an answer or response to Plaintiff's complaint, Allianz U.S. states that
[it] did not file an answer as [it] was under the impression that Plaintiff was aware that Allianz U.S. was not the proper party for suit but that Allianz U.S. was acting on behalf of Allianz China, the properly named entity. To that end, Allianz U.S. had, to its disadvantage, understood that Plaintiff would not pursue a claim against Allianz U.S. but would proceed against Allianz China.
Id. According to Allianz US, on January 22, 2022 (the day after it was served), Allianz U.S. notified counsel for Plaintiff that it had been assigned to handle this case on behalf of Allianz China, as well as Midea. Through Allianz US's notice to Plaintiff that Allianz U.S. would handle the claim on behalf of Allianz China, Allianz U.S. had “presumed” that Plaintiff would dismiss its claims against Allianz U.S. voluntarily. ECF No. 28 at 2.
Unfortunately, when it comes to defending legal matters in federal court, presumptions constitute poor strategy. If Allianz U.S. believed that it was not the correct party to this lawsuit, it should have (1) filed a motion to dismiss or (2) better ensured that Plaintiff filed the required dismissal notice or stipulation under Federal Rule of Civil Procedure 41(a)(1). The Court also agrees with Plaintiff that the emails on which Allianz U.S. formed its presumption should not have caused Allianz U.S. to believe that it would be dismissed from the lawsuit. See ECF No. 21-1. The email, written by a claims adjuster for Allianz U.S. to counsel for Plaintiff, states only that “We have been assigned to handle the above referenced matter on behalf of Allianz China and Midea.” Id. There is nothing in the email or Plaintiff's counsel's response that would remotely suggest that the lawsuit would be dropped as to Allianz US.
Allianz U.S. tries to argue that it should be forgiven for its actions because Plaintiff did not warn Allianz U.S. that it would move for default. In the same breath, Allianz U.S. acknowledges that Plaintiff had no duty to do so. The Court further adds that Federal Rule of Civil Procedure 55(a) provided Allianz U.S. with as much warning as it needed to know that a properly served defendant must respond to a lawsuit. Further, not only does Allianz U.S. not have good cause for its default, it was not quick to correct its failure to respond. Allianz U.S. waited three weeks after the Clerk's entry of default to file its motion to vacate. Given that Allianz U.S. knew about this lawsuit since January 21, 2022, it should have been keeping a watchful eye. The Court will deny Allianz US's motion to vacate, and the default will stand. The Court will now address Plaintiff's motion for default judgment, ECF No. 15.
After the entry of default, a plaintiff may move for default judgment under Federal Rule of Civil Procedure 55(b). Fed.R.Civ.P. 55(b). When the Court determines that a defendant is in default, the Court accepts as true the well-pleaded allegations in the complaint. e360 Insight v. The Spamhaus Project, 500 F.3d 594, 602 (7th Cir. 2007). “A default judgment establishes, as a matter of law, that defendants are liable to plaintiff on each cause of action in the complaint.” Id. However, “[e]ven when a default judgment is warranted based on a party's failure to defend, the allegations in the complaint with respect to the amount of damages are not deemed true.” Id. (quoting In re Catt, 38 F.3d 789, 793 (7th Cir. 2004)). A district court “must . . . conduct an inquiry in order to ascertain the amount of damages with reasonable certainty.” Id. Rule 55(b)(2) allows the district court to conduct this inquiry through hearings or referrals, if necessary, to determine the amount of damages. Fed.R.Civ.P. 55(b). On the other hand, the Court does not need to conduct a hearing or referrals if the “amount claimed is liquidated or capable of ascertainment from definite figures contained in the documentary evidence or in detailed affidavits.” e360 Insight, 500 F.3d at 602 (quoting Dundee Cement Co. v. Howard Pipe & Concrete Prod., Inc., 722 F.2d 1319, 1323 (7th Cir. 1983)).
Here, Plaintiff asks for $328,456.26 in damages. ECF No. 15. To support this request, Plaintiff submitted an affidavit by Plaintiff's counsel, which includes copies of the insurance policy at issue, proof of payment of $328,456.26 to the insured party, and itemized breakdowns of that payment. ECF Nos. 16, 16-1, 16-2, 16-3, 16-4, 16-5. Plaintiff's claimed damages are reasonably certain and well-supported. The Court will grant Plaintiff's motion for a default judgment against Allianz U.S. and award Plaintiff $328,456.26 in damages.
The Court will soon issue its pretrial order in this case to move the litigation of the claims remaining against the Defendants forward.
Accordingly, IT IS ORDERED that Defendant Allianz Global Risks U.S. Insurance Company's motion to set aside entry of default, ECF No. 20, be and the same is hereby DENIED; and
IT IS FURTHER ORDERED that Plaintiff's motion for default judgment, ECF No. 15, be and the same is hereby GRANTED; Plaintiff shall recover $328,456.26 from Defendant Allianz Global Risks U.S. Insurance Company.