Carter Brothers Manufacturing Company, Inc. v. Lumbermen's Underwriting Alliance

Filing 189

OPINION AND ORDER that defendant Lumbermen's Underwriting Alliance's 167 Motion for a Default Judgment is denied without prejudice as further set out in the opinion and order. Signed by Honorable Judge Myron H. Thompson on 5/10/2012. (Attachments: # 1 Civil Appeals Checklist)(dmn, )

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE
MIDDLE DISTRICT OF ALABAMA, NORTHERN DIVISION

CARTER BROTHERS
MANUFACTURING COMPANY,
INC.,

)
)
)
)
Plaintiff,
)
)
v.
)
)
LUMBERMEN’S UNDERWRITING
)
ALLIANCE, an Inter)
insurance Exchange Company, )
)
Defendant and Third)
Party Plaintiff,
)
)
v.
)
)
GE COMMERCIAL DISTRIBUTION )
FINANCE CORP., et al.,
)
)
Third-Party Defendants.)

CIVIL ACTION NO.
2:11cv251-MHT
(WO)

OPINION AND ORDER
Plaintiff Carter Brothers Manufacturing Company,
Inc. (“the insured”) filed this suit against defendant
Lumbermen’s

Underwriting

Alliance

(“the

insurer”),

asserting state-law claims for breach of contract and bad
faith

resulting

from

the

insurer’s

denial

of

the

insured’s claim under an insurance policy between the
insurer and the insured.

Jurisdiction is proper pursuant

to 28 U.S.C. § 1332 (diversity).

The insurer has also

filed a counterclaim against the insured and a thirdparty complaint against several loss payees under the
insurance policy.

One of these loss payees and third-

party defendants is Wells Fargo Equipment Finance, Inc.
This cause is now before the court on the insurer’s
motion for default judgment on its third-party complaint
against Wells Fargo.

For the reasons that follow, the

motion will be denied.
The record in this case reflects that Wells Fargo was
served with a copy of the summons and complaint; that it
has failed to respond to the summons and complaint within
the time allowed; and that it has failed to respond to an
order

of

this

court

to

show

cause

as

to

judgment should not be entered against it.

why

final

This is

sufficient to warrant the entry of default under Fed. R.
Civ. P. 55(a), which provides for default “When a party

2

against whom a judgment for affirmative relief is sought
See SEC v.

has failed to plead or otherwise defend.”

Smyth, 420 F.3d 1225, 1321 (11th Cir. 2005) (discussing
the

entry

of

default,

which

“‘is

entered

upon

the

insurer’s failure to plead or otherwise defend’” a claim)
(quoting Lowe v. McGraw-Hill Cos., 361 F.3d 335, 339-40
(7th Cir. 2004)).

Accordingly, the clerk of court has

entered default against Wells Fargo.
However,

“a

defendant’s

default

alone

warrant entry of a default judgment.”

does

not

Nyesa Costa Rica

v. Wilson Cap. Group Holdings, LLC, 2012 WL 1492344, at
*3 (S.D. Fla. Apr. 27, 2012) (Seitz, J.) (citing Tyco
Fire & Sec. LLC v. Alcocer, 218 F. App’x 860, 863 (11th
Cir. 2007)).

Instead, a default judgment, including the

specific nature and extent of the relief sought, must be
adequately supported in the record.

See, e.g., Adolph

Coors Co. v. Movement Against Racism and the Klan, 777
F.2d

1538,

default

1534-44

awarding

(11th

cash

Cir.

damages

3

1985)
[may]

(“[J]udgment
not

properly

of
be

entered without a hearing unless the amount claimed is a
liquidated

sum

calculation.

or

one

capable

of

mathematical

Damages may be awarded only if the record

adequately reflects the basis for award via a hearing or
a demonstration by detailed affidavits establishing the
necessary

facts.”

(internal

quotes

and

citations

omitted)); Boswell v. Gumbaytay, 2009 WL 1515912, at *8
(M.D. Ala. June 1, 2009) (Watkins, J.) (in entering a
default judgment, the court’s “core duty is ‘to assure
[itself] that there is a legitimate basis for any damage
award

it

enters’”)

(quoting

Anheuser-Busch,

Inc.

v.

Philpot, 317 F.3d 1264, 1266 (11th Cir. 2003)).
Here, the insurer has failed to specify what sort of
affirmative relief the court should order.

In its third-

party complaint against Wells Fargo, the insurer alleges:
“[The insured’s] failure to fully comply
with information requests hampered [the
insurer]’s ability to investigate and
determine what, if any, amounts may be
owed to the individual Loss Payees.
***

4

“The policy ... directs how [the
insurer] is to handle the Loss Payees’
claims if it denies [the insured’s]
claims because of [the insured’s]
actions and/or failure to comply with
the terms of the policy ....
***
“[The insurer] has asked this Court to
determine
whether
[the
insured’s]
actions and/or failures to comply with
the terms of the policy void coverage.
***
“[The insurer] is asking this Court to
determine when payment is properly due
to the Loss Payees and how much each
Loss Payee should properly receive
pursuant
to
the
full
terms
and
conditions of the policy.
In that
regard, [the insurer] is prepared to
deposit any undisputed funds that may be
owed to the Loss Payees into the
Registry of the Court should the Court
deem such actions proper.”
Third-Party Complaint (Doc. No. 8) at 8.

The insurer’s

third-party complaint then concludes with this prayer for
relief: “A declaration as to what amounts, if any, it
owes the Loss Payee Third-Party Defendants.”

Id. at 9.

Thus, it appears that the insurer does not seek damages

5

from Wells Fargo, but rather seeks a declaration of the
amount it may owe Well Fargo.
However, as the record now stands, there is nothing
from which the court can determine, first, if the insurer
is liable to Wells Fargo and, second, if so, for how
much.

It appears that this is inherent in the nature of

the insurer’s claim against Wells Fargo, for it appears
that the third-party claim is conditional.

The insurer

argues that it does not owe the insured anything under
the insurance policy and that, if this be the case, it
may then need to pay some amount to Wells Fargo as a loss
payee.

In other words, any payment the insurer is

obligated to make to Wells Fargo is contingent upon a
determination that the insured is not entitled to a
payment itself, a dispute that lies at the center of the
merits issues to be resolved in the insured’s complaint
(asserting breach of contract for failure to pay the
insured) and in the insurer’s counterclaim (asserting
that

the

insured

breached

the

6

policy

by

prematurely

filing this lawsuit), both of which are at issue in
pending motions for summary judgment that have not even
been fully briefed.
Order

(Doc.

No.

See Mots. (Doc. Nos. 177 & 178);

181)

(setting

all

summary-judgment

motions for submission on May 25, 2012).
In

this

circumstance,

the

court

cannot

enter

a

judgment, default or otherwise, for affirmative relief.
Because the insurer has not informed the court what the
relief should be on its third-party complaint against
Wells Fargo, the court, obviously, cannot say what that
relief should be either.

***
Accordingly, it is ORDERED that defendant Lumbermen’s
Underwriting Alliance’s motion for a default judgment
(Doc. No. 167) is denied without prejudice.
DONE, this the 10th day of May, 2012.
/s/ Myron H. Thompson
UNITED STATES DISTRICT JUDGE