Liberty Insurance Corporation v. Barnes

Filing 12

MEMORANDUM OPINION AND ORDER Granting 9 Motion for Default Judgment. Signed by Judge Paula Xinis on 4/3/2018. (c/m 4/3/2018 heps, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

LIBERTY INSURANCE CORPORATION

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Plaintiff,

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v.

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TRACEE D. BARNES,
Defendant.

Civil Action No. PX 17-2058

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MEMORANDUM OPINION AND ORDER

This Memorandum Opinion and Order address Plaintiff Liberty Insurance Corporation’s
Motion for Default Judgment, ECF No. 9. Defendant Tracee D. Barnes has not filed a response,
and the time for doing so has passed. See Loc. R. 105.2.a. Pursuant to Local Rule 105.6, a
hearing is not necessary. For the reasons stated herein, Plaintiff’s Motion for Default Judgment
is GRANTED.
I.

BACKGROUND
Plaintiff Liberty Insurance Corporation (“Liberty”) is a corporation organized under the

laws of the State of Illinois, with its principal place of business in the Commonwealth of
Massachusetts. ECF No. 1 at ¶ 1. Defendant Tracee D. Barnes (“Barnes”) is a citizen of the
State of Maryland residing in Prince George’s County, Maryland. Id. at ¶ 2. In 2008, Barnes
purchased a house located at 2807 Lawina Road, Baltimore City, Maryland 21216 (“the
Property”). Id. at ¶ 6.
On or about August 25, 2011, Defendant submitted an application for homeowners’
insurance to Plaintiff. Id. at ¶ 7. Barnes represented on the application that the Property was her
primary residence, and that no home day care or other business was conducted at the Property.

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ECF No. 1 at ¶¶ 8–10. Relying on these representations, Liberty issued Barnes a homeowner’s
insurance policy for the Property (“Contract”) on August 26, 2011. Id. at ¶ 11. Thereafter,
Barnes and Liberty renewed the Contract every year, including August 26, 2016 through August
26, 2017, without any substantive changes regarding the Property’s status as Barnes’ residence.
Id.; see also ECF No. 1-1. At all relevant times, the Contract provided coverage only for the
“[i]nsured location” identified in the application as the Insured’s “residence premises.” Id. at
¶ 17; see also ECF No. 1-2 at 16.
On March 3, 2017, the Property was severely damaged by fire. Id. at ¶¶ 12, 20. Barnes
subsequently submitted an insurance claim to Liberty for property damages. Id. at ¶ 13. While
investigating Barnes’ claims, Liberty learned for the first time that Barnes’ primary residence
was not the Property, but 8643 Johnson Avenue, Glenarden, Prince George’s County, Maryland
20706. Id. at ¶ 15. Liberty also learned that from approximately 2008 and through the date of
the fire, Barnes leased the Property to her business, Kozy Kottage, and used it as an assisted
living facility. Id. at ¶¶ 14–16.
Liberty filed its Complaint to this Court on July 24, 2017, asserting diversity of
citizenship jurisdiction. 28 U.S.C. § 1332. Barnes was timely served on October 5, 2017 at her
home in Prince George’s County. See ECF No. 6. Barnes did not answer the Complaint or
otherwise respond, and on November 13, 2017, the Clerk issued an Order of Default pursuant to
Rule 55 of the Federal Rules of Civil Procedure. ECF No. 8. Plaintiff moved for default
judgment on January 8, 2018. ECF No. 9. Liberty requests a declaration that the Property was
not Barnes’ “[r]esidence premises,” as required by the Contract, and therefore Liberty is not
liable for any claims arising out of the March 3, 2017 fire. See ECF Nos. 1 & 9.

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II.

DISCUSSION
Federal Rule of Civil Procedure 55(b) governs the entry of default judgments, which may

be entered “[i]f the plaintiff’s claim is for a sum certain or a sum that can be made certain by
computation,” and the defendant is in default for failing to appear. Fed. R. Civ. P. 55(b)(1). For
“all other cases,” in which the sum is neither certain nor ascertainable through computation, Rule
55(b)(2) provides. “[T]he party must apply to the court for a default judgment . . . . The court
may conduct hearings or make referrals—preserving any federal statutory right to a jury trial—
when, to enter or effectuate judgment, it needs to: (A) conduct an accounting; (B) determine the
amount of damages; (C) establish the truth of any allegation by evidence; or (D) investigate any
other matter.” The entry of default judgment is a matter within the discretion of the Court. SEC
v. Lawbaugh, 359 F. Supp. 2d 418, 421 (D. Md. 2005) (citing Dow v. Jones, 232 F. Supp. 2d
491, 494 (D. Md. 2002)).
Although “the Fourth Circuit has a ‘strong policy that cases be decided on the merits,’”
Disney Enters. v. Delane, 446 F. Supp. 2d 402, 405 (D. Md. 2006) (quoting United States v.
Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993)), “default judgment is available when the
‘adversary process has been halted because of an essentially unresponsive party.’ ” Id. (quoting
Lawbaugh, 359 F. Supp. 2d at 421). Default judgment is proper when a defendant is
unresponsive. See Park Corp. v. Lexington Ins. Co., 812 F.2d 894, 896 (4th Cir. 1987)
(upholding a default judgment awarded where the defendant lost its summons and did not
respond within the proper period); Disney Enters., 446 F. Supp. 2d at 405–06 (finding
appropriate the entry of default judgment where the defendant had been properly served with the
complaint and did not respond, despite repeated attempts to contact him).

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When considering a motion for default judgment, the Court takes as true all well-pleaded
factual allegations in the complaint, other than those pertaining to damages. Fed. R. Civ. P.
8(b)(6); Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (“The defendant,
by his default, admits the plaintiff's well-pleaded allegations of fact, is concluded on those facts
by the judgment, and is barred from contesting on appeal the facts thus established.” (citation
and internal quotation marks omitted)); see Fed. R. Civ. P. 8(b)(6) (“An allegation—other than
one relating to the amount of damages—is admitted if a responsive pleading is required and the
allegation is not denied.”).
In the Fourth Circuit, district courts analyzing default judgments have applied the
standards articulated by the United States Supreme Court in Ashcroft v. Iqbal, 556 U.S. 662
(2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), to determine whether
allegations within the complaint are “well-pleaded.” See, e.g., Balt. Line Handling Co. v.
Brophy, 771 F. Supp. 2d 531, 544 (D.Md. 2011); Russell v. Railey, No. DKC-08-2468, 2012 WL
1190972 at *2–*3 (D. Md. Apr. 9, 2012); U.S. v. Nazarian, No. DKC-10-2962, 2011 WL
5149832 at *2–*3 (D. Md. Oct. 27, 2011). Where a complaint offers only “labels and
conclusions” or “naked assertion[s] devoid of further factual enhancement,” the allegations
therein are not well-pleaded and, consistent with the Court’s discretion to grant default judgment,
relief should be denied. See, e.g., Balt. Line Handling Co., 771 F. Supp. 2d at 544 (internal
quotation marks omitted) (“The record lacks any specific allegations of fact that ‘show’ why
those conclusions are warranted.”).
III.

ANALYSIS
A federal court sitting in diversity must apply the law of the state in which the court is

located, including the forum state’s choice of law rules. Colgan Air, Inc. v. Raytheon Aircraft

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Co., 507 F.3d 270, 275 (4th Cir.2007). For insurance contract disputes, Maryland follows the
principle of lex loci contractus, which applies the law of where the contract was consummated.
Allstate Ins. Co. v. Hart, 327 Md. 526, 611 (1992). For choice of law purposes, an insurance
contract is made where “the last act is performed which makes the agreement a binding contract.
Typically, this is where the policy is delivered and the premiums are paid.” Perini/Tompkins
Joint Venture v. Ace American Ins. Co., 738 F.3d 95, 100 (4th Cir. 2013) (quoting Sting Sec.,
Inc. v. First Mercury Syndicate, Inc., 791 F. Supp. 555, 558 (D. Md. 1992)). Here, Liberty urges
the Court to apply Maryland law, and all relevant facts in this action took place in Maryland. See
ECF Nos. 1, 1-1, 1-2, 9. The Court will thus apply Maryland law.
Maryland law requires that courts interpreting insurance contracts give its words “their
customary and normal meaning.” See Shepard v. Keystone Ins. Co., 743 F. Supp. 429, 430 (D.
Md. 1990); see also Brotherhood Mut. Ins. Co. v. Carter, 11-cv-1326-AW, 2012 WL 254018, at
*2 (D. Md. Jan. 26, 2012). “It is the obligation of the insured to read and understand the terms of
[her] insurance policy, unless the policy is so constructed that a reasonable man would not
attempt to read it.” Id. (citing Croteau v. John Hancock Ins. Co., 123 N.H. 317 (1983)).
Here, the terms “residence premises” and “reside” are unambiguous as used in the
Contract. The Contract makes clear that the “insured location” is Barnes’ “residence premises,”
defined as the “one family dwelling . . . or [t]hat part of any other building[,] where you reside
and which is shown as the ‘residence premises’ in the Declarations.” See ECF Nos. 1 at ¶ 17, 11 & 1-2. Further, the term “reside,” as used throughout the Contract, clearly refers to a property
used for the insured’s part or full-time personal occupancy. Id. This definition comports with
the common understanding of the word, and courts have similarly interpreted such policy
provisions. See generally ECF No. 1-2; Shepard, 743 F. Supp. at 430–34; Slater v. State Farm

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Fire & Casualty Co., 2011 WL 13176733, at *5–*6 (N.D. Ga. Jan. 28, 2011); accord Allstate
Ins. Co. v. Hancock, No. JFM-15-963, 2016 WL 5339344, at *1 (D. Md. Mar. 18, 2016); see
also Residence, Black’s Law Dictionary (10th ed. 2014) (defining residence as “[t]he place
where one actually lives, as distinguished from a domicile”).
Takings the facts alleged in the Complaint as true, Barnes did not “reside” at the Property
as required for policy coverage under the Contract. ECF No. 1 at ¶¶ 15–16, 19. Accordingly,
the Property was not insured by the Contract, and Liberty cannot be held liable for claims arising
thereunder. See ECF Nos. 1 & 1-2; see also Shepard, 743 F. Supp. at 430–32. Liberty’s motion
for declaratory judgment, therefore, is GRANTED.
IV.

CONCLUSION
Based on the foregoing, it is this 3rd day of April, 2018, by the United States District

Court for the District of Maryland, ORDERED that:
1.

Plaintiff LIBERTY MUTUAL INSURANCE COMPANY’s Motion for Default
Judgment BE, and the same hereby IS, GRANTED;

2.

LIBERTY INSURANCE CORPORATION is not liable for any claims arising
under the Contract with Defendant TRACEE D. BARNES for the Property at
2807 Lawina Road, Baltimore City, Maryland, 21216, because the Property was
not Barnes’ “residence premises” as required by the Contract;

3.

The Clerk SHALL TRANSMIT copies of this Order to the Defendant and counsel
for the Plaintiff and CLOSE this case.

04/03/2018
Date

/s/
Paula Xinis
United States District Judge

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