ARGONAUT GREAT CENTRAL INSURANCE COMPANY v. BEDSOLE ENTERPRISES INC et al

Filing 23

ORDER GRANTING 16 Motion for Default Judgment as to Defendant Bedsole Enterprises. Ordered by U.S. District Judge MARC THOMAS TREADWELL on 7/10/2014. (tlh)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
MACON DIVISION
ARGONAUT GREAT CENTRAL
INSURANCE COMPANY,
Plaintiff,
v.
BEDSOLE ENTERPRISES, INC.,
UNITED BANK CORPORATION, and
UNITED BANK,
Defendants.

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CIVIL ACTION NO. 5:14-CV-146 (MTT)

ORDER
Before the Court is the Plaintiff’s motion for default judgment against Defendant
Bedsole Enterprises, Inc. (Doc. 16).
The Plaintiff issued policy No. RD 9120037-08 to “Bedsole Enterprises Inc. d/b/a
The Lighthouse Restaurant” for the period January 1, 2012 to January 1, 2013.1 (Doc.
1, ¶ 10; Doc. 1-1). On July 10, 2012, Bedsole asserted a claim under the policy for a
fire that occurred that day at The Lighthouse Restaurant. (Doc. 1, ¶ 11). The Plaintiff
alleges Stephen Brehaut, secretary of Bedsole Enterprises and manager of The
Lighthouse Restaurant, set the fire that resulted in Bedsole Enterprises’ insurance
claim. (Doc. 1, ¶¶ 12-13).
In September 2012, Bedsole submitted a sworn Proof of Loss that the fire did not
originate by an act, design or procurement on the part of the insured. (Doc. 1, ¶ 14;

1
The building that housed the Lighthouse Restaurant is owned by Bedsole Investments, L.P.,
and not Bedsole Enterprises. (Doc. 1, ¶ 15).  

Doc. 1-2). During its investigation, the Plaintiff requested information from Bedsole to
support its claim.2 (Doc. 1, ¶ 16; Doc. 1-3). The Plaintiff also took an examination
under oath of Bedsole through its representatives Sherry Wise and Brehaut. (Doc. 1, ¶
17). During Wise’s examination, she said certain documents responsive to the
Plaintiff’s letters were in Bedsole’s possession. (Doc. 1, ¶ 18). The Plaintiff
subsequently requested production of the documents that Bedsole admitted were in its
possession.3 (Doc. 1, ¶ 19; Doc. 1-4). However, Bedsole has not provided these
documents to the Plaintiff. (Doc. 1, ¶ 20).
The policy covers claims for “direct physical loss of or damage to Covered
Property at the premises described in the Declarations caused by or resulting from any
Covered Cause of Loss,” subject to conditions and exclusions. (Doc. 1, ¶ 27). Among
the policy’s exclusions is language that states as follows:
2. We will not pay for loss or damage caused by or resulting from any of
the following:
h. Dishonest or criminal act by your, any of your partners,
members, officers, managers, employees (including leased
employees), directors, trustees, authorized representatives or
anyone to whom you entrust the property for any purpose:
(1) Acting alone or in collusion with others; or
(2) Whether or not occurring during the hours of
employment.
This exclusion does not apply to acts of destruction by your
employees (including leased employees); but theft by employees
(including leased employees) is not covered.

2
These requests were made by letters dated August 10, 2012, October 25, 2012, December 20,
2012, February 12, 2013, and March 28, 2013. (Doc. 1, ¶ 16).
3

These requests were made by letters dated September 30, 2013, November 7, 2013, January
10, 2014, and February 10, 2014. (Doc. 1, ¶ 19). 
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(Doc. 1, ¶ 29). Additionally, the policy contained the following conditions precedent to
coverage that required Bedsole’s compliance:
(5) At our request, give us complete inventories of the damaged and
undamaged property. Include quantities, costs, values and amount of loss
claimed.
(6) As often as may be reasonably required, permit us to inspect the
property proving the loss or damage and examine your books and
records.
...
(8) Cooperate with us in the investigation or settlement of the claim.
(Doc. 1, ¶ 30). Finally, the policy contained a fraud provision:
This Coverage Part is void in any case of fraud by you as it relates to this
Coverage Part at any time. It is also void if you or any other insured, at
any time, intentionally conceal or misrepresent a material fact concerning:
1. This Coverage Part;
2. The Covered Property;
3. Your interest in the Covered Property; or
4. A claim under this Coverage Part.
(Doc. 1, ¶ 31).
In April 2014, the Plaintiff filed suit seeking a declaration that coverage for
Bedsole is void and excluded or, alternatively, a declaration that Bedsole is not entitled
to proceeds under the policy. (Doc. 1, ¶ 41). Bedsole was served with process on April
22, 2014. (Doc. 5). However, Bedsole did not serve a responsive pleading or motion to
the complaint. The Clerk of the Court filed an entry of default against Bedsole on May
20, 2014. Since the lawsuit was filed, Bedsole has failed to appear or otherwise defend
against this action. On June 10, 2014, the Plaintiff moved for default judgment. (Doc.
16). Bedsole has not responded.
At a party’s request, and following the Clerk’s entry of default, the Court may
enter a default judgment against a defendant who has failed to plead or otherwise
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defend. See Fed. R. Civ. P. 55; Solaroll Shade and Shutter Corp., Inc. v. Bio-Energy
Sys, Inc., 803 F.2d 1130, 1134 (11th Cir. 1986). However, default judgment does not
follow automatically from an entry of default. The Court also “must ensure that the wellpleaded allegations in the complaint, which are taken as true due to the default, actually
state a substantive cause of action and that there is a substantive, sufficient basis in the
pleadings for the particular relief sought.” Tyco Fire & Sec., LLC v. Alcocer, 218 F.
App’x 860, 863 (11th Cir. 2007). See also Nishimatsu Constr. Co. Ltd. v. Houston Nat’l
Bank, 515 F.2d 1200, 1206 (5th Cir. 1975).4
In Georgia, “insurance is a matter of contract, and the parties to an insurance
policy are bound by its plain and unambiguous terms.” Hays v. Ga. Farm Bureau Mut.
Ins. Co., 314 Ga. App. 110, 111, 722 S.E.2d 923, 925 (2012) (citation omitted). Here,
based on the facts admitted by Bedsole upon its default, and under the plain and
unambiguous terms of the insurance contract, the Court finds coverage for the fire loss
is excluded and void. Namely, coverage is excluded because Bedsole’s officer,
Brehaut, committed a “dishonest or criminal act” by setting fire to the restaurant.
Moreover, coverage is void because Bedsole intentionally concealed or misrepresented
a material fact by submitting a sworn proof of loss that the fire did not originate by an
act, design or procurement on the part of the insured despite the fact that Brehaut
actually set the fire. Finally, Bedsole breached conditions precedent to coverage by not
providing documents requested by the Plaintiff during its investigation of the fire.

4
The Eleventh Circuit has adopted as binding all decisions of the former Fifth Circuit rendered
prior to October 1, 1981. Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981).
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Consequently, Bedsole is not entitled to any benefits under the insurance policy, and
the Plaintiff is entitled to default judgment against the company.
Accordingly, the Plaintiff’s motion for default judgment as to Defendant Bedsole
Enterprises is GRANTED.
SO ORDERED, this 10th day of July, 2014.

S/ Marc T. Treadwell
MARC T. TREADWELL, JUDGE
UNITED STATES DISTRICT COURT

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