Hampton v. Praetorian Insurance Company et al

Filing 24

ORDER: IT IS HEREBY ORDERED that Praetorian's 19 motion for default judgment is DENIED WITHOUT PREJUDICE. If Hampton fails to move to set aside the default within 14 days of this order, Praetorian is granted leave to refile a motion seeking a default judgment. Signed by Chief Judge Nannette Jolivette Brown on 1/7/2019. (mmv)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
GLENN HAMPTON

CIVIL ACTION

VERSUS

NO. 18-3528

PRAETORIAN INSURANCE COMPANY, et al.

SECTION: “G”(2)

ORDER
Presently pending before the Court is Defendant and Counterclaimant Praetorian Insurance
Company’s (“Praetorian”) Motion for Entry of Default Judgment.1 Praetorian seeks entry of a
default judgment on its counterclaim against Plaintiff and Counter-defendant Glenn Hampton
(“Hampton”).2 Having reviewed the motion, the memorandum in support, the record, and the
applicable law, the Court will deny the motion.
I. Background
On January 30, 2018, Hampton filed a Petition for Damages against Praetorian and the
Jefferson Parish Sheriff’s Office (“JPSO”) in the 24th Judicial District Court for the Parish of
Jefferson, State of Louisiana.3 In the petition, Hampton alleges that he owned a property that was
destroyed in a fire on January 30, 2016. 4 According to the petition, Praetorian insured the

1

Rec. Doc. 19.

2

Id.

3

Rec. Doc. 1-1 at 3.

4

Rec. Doc. 1-1 at 3.

property.5 Hampton further alleges that JPSO’s investigation of the fire remains open.6 Hampton
brought a claim against Praetorian for bad faith processing of the insurance claim in violation of
Louisiana Revised Statute § 22:1892 and Louisiana Revised Statute § 22:1973.7 Hampton also
brought a claim against JPSO for negligent handling of the investigation.8
On April 3, 2018, Praetorian removed the case to this Court, asserting diversity jurisdiction
pursuant to 28 U.S.C. § 1332.9 Specifically, Praetorian asserted that the parties are diverse because
Hampton is a citizen of Louisiana and Praetorian is an insurance company incorporated in
Pennsylvania with its principal place of business in New York.10 Praetorian alleged that the JPSO
is not diverse from Hampton because they are both citizens of Louisiana.11 However, Praetorian
asserted that the citizenship of JPSO should not be considered for purposes of establishing
diversity jurisdiction because JPSO is improperly joined as a defendant as Hampton does not allege
any breach of a duty JPSO owed to Hampton.12 Finally, Praetorian alleged that the amount in
controversy is clearly established because Hampton asserts that he is entitled to recover
$176,000.00 for damage to the building at issue in this case and $177,100.00 for damage to the

5

Id.

6

Id. at 4.

7

Id.

8

Id.

9

Rec. Doc. 1 at 3.

10

Id.

11

Id.

12

Id. at 4.

2

contents of the property and additional living expenses incurred as a result of the fire.13
On April 9, 2018, Praetorian filed a “Rule 12(b)(6) Motion to Dismiss.”14 The motion was
set for submission on April 25, 2018.15 Hampton did not file any opposition to the motion. On
September 5, 2018, the Court granted the unopposed motion to dismiss, and dismissed Hampton’s
claims against Praetorian.16
On April 10, 2018, Praetorian filed a counterclaim against Hampton.17 Praetorian brings a
claim against Hampton for fraud and misrepresentations regarding additional living expenses.18
Praetorian also seeks to recover the money it paid to Wells Fargo Bank NA, the mortgagee of the
property, due to Hampton’s breach of contract.19
The record reflects that Hampton was served with a summons and a copy of the
counterclaim on June 13, 2018.20 Hampton did not file a responsive pleading to the counterclaim
before the July 5, 2018 deadline. On July 12, 2018, Praetorian filed a Motion for Entry of Default
against Hampton.21 On July 16, 2018, the Clerk of the Court entered default against Hampton.22
On July 17, 2018, Hampton filed an answer to the counterclaim, but did not move to set aside the

13

Id. at 4.

14

Rec. Doc. 5.

15

Id.

16

Rec. Doc. 18.

17

Rec. Doc. 7.

18

Id. at 11–12.

19

Id. at 13–14.

20

Rec. Doc. 11.

21

Rec. Doc. 12.

22

Rec. Doc. 14.

3

entry of default.23
On September 12, 2018, Praetorian filed the instant Motion for Default Judgment against
Hampton.24 To date, Hampton has not filed an opposition to the motion.
On September 25, 2018, the Court conducted a status conference with the parties at the
request of Praetorian.25 Praetorian informed the Court that it requested the status conference to
discuss: (1) the status of discovery with respect to the claim and counterclaim, (2) amendment of
the Complaint to assert a claim against JPSO or dismiss JPSO, and (3) entry of a Default Judgment
in favor of Praetorian on its counterclaim.26 Praetorian informed the Court that they were waiting
to proceed with discovery until Plaintiff amended the complaint regarding his potential Section
1983 claims against JPSO, as discussed in the previous scheduling conference held by the Court’s
case manager.27 Plaintiff’s counsel informed the court that he delayed in amending the complaint
and proceeding with discovery because he intends to withdraw as counsel of record.28 The Court
advised Plaintiff’s counsel that if he intended to withdraw, he should do so by October 25, 2018
so as not to further delay these proceedings.29 To date, Plaintiff’s counsel has not moved to amend
the complaint or moved to withdraw from the case.

23

Rec. Doc. 16.

24

Rec. Doc. 19.

25

Rec. Doc. 22.

26

Id. at 1.

27

Id.

28

Id.

29

Id.

4

II. Plaintiff’s Arguments
In the motion for default judgment, Praetorian argues that the Court should enter a default
judgment against Hampton on Praetorian’s counterclaim because Hampton did not file a
responsive pleading within 21 days of the date of service. 30 Praetorian notes that Hampton
answered the counterclaim on July 17, 2018, but Praetorian asserts that the answer is insufficient
to nullify the entry of default because Federal Rule of Civil Procedure 55(c) requires a party in
default to file a motion to set aside the default before filing an answer.31 Praetorian asserts that it
meets the procedural requirements for entry of a default judgment because: (1) Hampton is not a
minor or incompetent person; (2) Hampton is not known to be currently serving in the military;
and (3) Praetorian’s claim is for a sum certain or can be made certain by computation.32
In support, Praetorian submits an affidavit of Shannon Grunst, Vice President and Senior
Claims Manager for QBE Americas, Inc, a third-party claims administrator of the insurance claim
at issue in this litigation.33 Ms. Grunst attests that Praetorian paid Wells Fargo Bank NA, the
mortgagee of the property, a total of $169,584.09 on February 2, 2018, and paid Hampton
$19,510.88 for additional living expenses Hampton claimed he incurred.34 Praetorian also submits
an affidavit of Christopher Teske, Praetorian’s counsel of record in this litigation, which states that
Praetorian incurred court costs in the amount of $581.00 in this litigation.35 Therefore, Praetorian

30

Rec. Doc. 19 at 2–3.

31

Id. at 3.

32

Id.

33

Id. (citing Rec. Doc. 19-3 at 1).

34

Rec. Doc. 19-3 at 1–2.

35

Rec. Doc. 19-2 at 2.

5

seeks entry of a default judgment on the counterclaim in the amount of $189,094.97, costs in the
amount of $581.00, and judicial interest.36
III. Law and Analysis
A.

Legal Standard on a Motion for Default Judgment
As the Fifth Circuit has explained, Federal Rule of Civil Procedure 55 establishes three

steps for obtaining a default judgment: (1) default; (2) entry of default; and (3) default judgment.37
A default occurs when “a defendant has failed to plead or otherwise respond to the complaint
within the time required by the Federal Rules.”38 The clerk will then enter an entry of default
“when the default is established by affidavit or otherwise.”39 After the clerk’s entry of default, “a
plaintiff may apply for a judgment based on such default. This is a default judgment.”40 Before
granting a motion for default judgment, this Court “has the duty to assure that it has the power to
enter a valid judgment,” and must “look into its jurisdiction both over the subject matter and the
parties.”41 The Fifth Circuit has held that “[a] judgment entered without personal jurisdiction is
void.”42
The Fifth Circuit emphasizes that “[d]efault judgments are a drastic remedy not favored by

36

Rec. Doc. 19 at 4.

37

New York Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996).

38

Id.

39

Id.

40

Id. (emphasis in original).

41

Sys. Pipe & Supply, Inc. v. M/V Viktor Kurnatovskiy, 242 F.3d 322, 324 (5th Cir. 2001).

42

Id.

6

the Federal Rules and resorted to by courts only in extreme situations.”43 “A party is not entitled
to a default judgment as a matter of right, even where the defendant is technically in default.”44 In
cases over which the Court has subject matter jurisdiction and personal jurisdiction over the
parties, the Court may only issue a default judgment when circumstances support doing so. If the
procedural prerequisites for default are met, the Court must then decide whether the plaintiff’s
requests for relief are appropriate. 45 The Court considers the following factors in deciding a
motion for default judgment:
[1]

whether material issues of fact are at issue,

[2]

whether there has been substantial prejudice,

[3]

whether the grounds for default are clearly established,

[4]

whether the default was caused by a good faith mistake or excusable
neglect,

[5]

the harshness of a default judgment, and

[6]

whether the court would think itself obliged to set aside the default on the
defendant’s motion.46

On a motion for default judgment, the Court accepts as true the plaintiff’s allegations of
fact, but remains obligated to determine whether those allegations state a claim for relief.47 The

43

Sun Bank of Ocala v. Pelican Homestead & Sav. Ass’n, 874 F.2d 274, 276 (5th Cir. 1989).

44

Ganther v. Ingle, 75 F.3d 207, 212 (5th Cir. 1996).

45

Fagan v. Lawrence Nathan Assocs., Inc., 957 F. Supp. 2d. 784, 796 (E.D. La. 2013) (Brown, J.) (citations

omitted).
46

Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998).

47

Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001).

7

pleadings must provide a sufficient basis to support the entry of a default judgment.48
When a party seeks a default judgment for damages, the Fifth Circuit instructs that
“damages should not [be] awarded without a hearing or a demonstration by detailed affidavits
establishing the necessary facts.”49 However, “where the amount of damages and/or costs can be
determined with certainty by reference to the pleadings and supporting documents and where a
hearing would not be beneficial, a hearing is unnecessary.”50
V. Analysis
As a preliminary matter, although Praetorian has not provided any briefing on this issue, it
appears that the Court has subject matter jurisdiction over the counterclaim pursuant to 28 U.S.C.
§ 1332 because the parties are diverse and the amount in controversy clearly exceeds $75,000.
Furthermore, it appears that the Court has personal jurisdiction over Hampton because he is a
citizen of Louisiana. It also appears that service of process on Hampton was proper as he was
personally served with the counterclaim on June 13, 2018.51
The Court must next decide whether Plaintiff’s request for entry of default judgment is
appropriate. 52 As noted above, the Court considers the following factors when determining
whether to grant a default judgment:
[1]

whether material issues of fact are at issue,

48

Wooten v. McDonald Transit Assocs., Inc., 788 F.3d 490, 498 (5th Cir. 2015) (citations omitted).

49

United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979).

50

Fagan, 957 F. Supp. 2d at 802 (quoting Columbia Pictures Indus., Inc. v. Whitting, No. 06-CA-0133, 2006
WL 1851338, at *1 (W.D. Tex. June 1, 2006)).
51

Rec. Doc. 11.

52

Fagan, 957 F. Supp. 2d at 796.

8

[2]

whether there has been substantial prejudice,

[3]

whether the grounds for default are clearly established,

[4]

whether the default was caused by a good faith mistake or excusable
neglect,

[5]

the harshness of a default judgment, and

[6]

whether the court would think itself obliged to set aside the default on the
defendant’s motion.128

Here, Hampton attempted to respond to the counterclaim by filing an answer on July 17,
2018, twelve days after the answer was due and one day after the Clerk of Court granted
Praetorian’s motion for entry of default. Federal Rule of Civil Procedure 55(c) requires that a party
in default file a motion to set aside the default before it can answer or otherwise proceed to defend.
Hampton failed to move to set aside the default. Nevertheless, Hampton has taken some steps to
attempt to defend the counterclaim, by filing an answer. Hampton’s confusion may have arisen
because of a difference between the Federal Rules of Civil Procedure, which control in this case,
and the Louisiana Code of Civil Procedure, which provides that the filing of an answer
automatically nullifies the entry of a preliminary default.53 Therefore, the entry of default may
have been caused by a good faith mistake or excusable neglect.
Furthermore, the motion for default judgment was filed before the September 25, 2018
status conference. At this status conference Hampton’s counsel informed the Court that he
intended to withdraw as counsel of record.54 The Court gave Hampton’s counsel until October 25,

128

Lindsey, 161 F.3d at 893.

53

Ganther, 75 F.3d at 212.

54

Rec. Doc. 22 at 2.

9

2018 to withdraw, stating that the parties could begin filing dispositive motions after this date.55
For these reasons, the Court finds that entry of a default judgment at this time would be unduly
harsh to Hampton.
“A party is not entitled to a default judgment as a matter of right, even where the defendant
is technically in default.”56 “Entering a judgment based on the default is at the discretion of the
court.”57 Considering all the circumstances at issue in this case, the Court will decline to exercise
its discretion to enter a default judgment at this time. However, Hampton is cautioned that he
cannot continue to delay these proceedings. If Hampton fails to move to set aside the default within
14 days of this order, Praetorian is granted leave to refile a motion seeking a default judgment.
IV. Conclusion
For the foregoing reasons, the Court denies Praetorian’s motion for entry of default
judgment. Accordingly,

55

Id.

56

See Martin v. Martin, 680 So.2d 759 (La. App. 1 Cir. 1996) (citing La. Code Civ. P. art. 1002).

57

Jefferson v. La. Dept. of Pub. Safety and Corrections, 401 F. App’x 927

10

IT IS HEREBY ORDERED that Praetorian’s motion for default judgment58 is DENIED
WITHOUT PREJUDICE. If Hampton fails to move to set aside the default within 14 days of
this order, Praetorian is granted leave to refile a motion seeking a default judgment.

7th
NEW ORLEANS, LOUISIANA, this ________ day of January, 2019.

_________________________________________
NANNETTE JOLIVETTE BROWN
CHIEF JUDGE
UNITED STATES DISTRICT COURT

58

Rec. Doc. 19.

11