United Financial Casualty Company v. Knock Out Transportation LLC et al
ORDER ON MOTION FOR DEFAULT JUDGMENT, granting in part and denying without prejudice in part 19 Motion for Default Judgment. Plaintiffs requested relief is granted insofar as it seeks a declaratory judgment that it has no obligation to defen d or indemnify any person or entity against any liability for damages arising from the Accident or the Underlying Action. As to a declaratory judgment regarding the MCS-90 endorsement, I deny plaintiff's request without prejudice. If plaintif f wishes to supplement the record and renew its request for a default judgment as to the MCS-90 endorsement, it must do so by 12/7/2017. If plaintiff fails to do so, then its motion for a default judgment as to the MCS-90 endorsement will be denied. Ordered by Judge Nina Gershon on 11/15/2017. C/M (Barrett, C)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------- - ------------------ -
UNITED FINANCIAL CASUALTY CO.,
ORDER ON MOTION FOR
16-cv-5579 (NG) (SJB)
- against KNOCK OUT TRANSPORTATION LLC, et al.,
GERSHON, United States District Judge:
IN CLERKS OFFICE
U.S. DISTRICT COURT E.P.N.y
* NOV 162017 *
Plaintiff United Financial Casualty Company ("United") has moved for the entry of a
default judgment against all defendants—Knock Out Transportation LLC ("Knock Out");
Terrance Davis ("Davis"); Randy Milligan ("Milligan"); H&H Logistics LLC ("H&H"); and
Jermaine Walls ("Walls").! Plaintiff seeks a declaratory judgment that it has no obligation to
defend or indemnify defendants as to any liability for damages arising from a car accident that
occurred on January 14, 2016 (the "Accident"). The Clerk of Court issued a certificate of default
on March 28, 2017, and plaintiff moved for entry of default judgment on May 26, 2017. I have
reviewed the complaint, the motion for a default judgment, the declaration of Laurence
Rabinovich, and the accompanying exhibits to the declaration. Defendants have not opposed the
entry of default judgment despite having been served with the complaint and plaintiffs motion
papers. For the reasons set forth below, plaintiffs motion is granted in part and denied in part.
Plaintiff is incorporated in Ohio. Knock Out, Davis, Milligan, H&H, and Walls are
citizens of/incorporated in either New York or New Jersey. Accordingly, complete diversity of
citizenship exists and the amount in controversy exceeds $75,000.
Plaintiffs complaint alleges that the Accident occurred in Brooklyn, New York on January
14, 2016 at 1:26 p.m. when a motor vehicle operated by Walls collided with a tractor-trailer
operated by Milligan. Plaintiff had issued a commercial automobile insurance policy to Knock
Out, which was in effect at all times relevant to the present action. The tractor-trailer was not on
this policy. At 1:46 p.m. on January 14 (approximately 20 minutes after the Accident), Davis, a
principal of Knock Out, called plaintiff to add the tractor-trailer to the insurance policy, which
plaintiff did. Subsequent to the Accident, Walls commenced an action in New York state court
against Knock Out, Davis, Milligan, and H&H (the "Underlying Action").
Plaintiff seeks two declaratory judgments. First, that it is not obligated to defend or
indemnify any person against any liability arising from the Accident. Second, that the "MCS-90
endorsement attached to the Progressive policy has no applicability to the loss, and could not be
triggered by any judgment arising out of the Accident." Compi. at ¶ 22. It also seeks its costs and
attorneys' fees in bringing this suit.
Generally, in evaluating a motion for a default judgment, a court considers whether a party
has established liability by accepting all factual allegations in the complaint as true and drawing
all reasonable inferences in favor of the non-defaulting party. See Finkel v. Romanowicz, 577 F.3d
79, 84 (2d Cir. 2009). Then, as to damages, the court must conduct an inquiry sufficient to
establish damages to a "reasonable certainty." Jacobson v. Empire Elec. Contractors, Inc., 339
Fed. Appx. 51, 53 (2d Cir. 2009).
However, the issues of liability and relief are intertwined in insurance cases where a
plaintiff-is seeking a declaratory judgment. See Continental Ins. Co. v. Huff Enter. Inc., 2009 WL
3756630, at *5 (E.D.N.Y. Nov. 6, 2009). Courts have discretion to afford declaratory relief
following a default. Id. at *3. However, to enter a declaratory judgment, there must be "a case of
actual controversy within [the court's] jurisdiction." 28 U.S.C. § 2201 (a). To determine whether
such a controversy exists, the Second Circuit has "instructed district courts to ask: (1) whether the
judgment will serve a useful purpose in clarifying or settling the legal issues involved; and (2)
whether a judgment would finalize the controversy and offer relief from uncertainty."
Reade, Inc. v. St. Paul Fire & Marine Ins. Co., 411 F.3d 384, 389 (2d Cir. 2005). In this case, "a
declaration that Plaintiff has no duty to defend or indemnify the Defendants will settle an
outstanding legal issue, the question of existing duty." Narragansett Bay Ins. Co. v. Battaglia,
2016 WL 7322518, at *3 (E.D.N.Y. Nov. 28, 2016), adopted by 2016 WL 7324083 (E.D.N.Y.
Dec. 15, 2016). See Maryland Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270 (1941) (holding that
a controversy exists when an insurer seeks a declaratory judgment that it need not defend or
indemnify an insured).
Evaluation of whether an insurance company is entitled to a judgment declaring that it need
not indemnify a claim usually requires the court to consider the insurance contract at issue because
"before an insurance company is permitted to avoid policy coverage, it must satisfy the burden
which it bears of establishing that the exclusions or exemptions apply in the particular case, and
that they are subject to no other reasonable interpretation." Scottsdale Ins. Co. v. LCB. Const. LLC,
2012 WL 1038829, at *3 (E.D.N.Y. Feb. 14, 2012) (internal quotation omitted), adopted by 2012
WL 1041455 (E.D.N.Y. Mar. 28, 2012).
In this case, though plaintiff does not provide the contract at issue, the Rabinovich
declaration is sufficient to establish that plaintiff is entitled to the declaratory relief it seeks.
Plaintiff is not claiming that a certain contractual provision operates to exempt the claim at issue
from coverage such that I need to interpret the contract. Rather, plaintiff claims that the automobile
at issue was not covered at the time of the Accident. The allegations in the complaint and in
Rabinovich' s declaration to that effect are sufficient to establish that plaintiff is not liable for any
claim arising from the Accident or the Underlying Action. Accordingly, a default judgment in
favor of plaintiff is warranted insofar as plaintiff seeks a declaratory judgment that it has no
obligation to defend or indemnify any person or entity against any liability arising from the
Accident or Underlying Action.
However, as to plaintiffs "second count for declaratory judgment," Compl. at ¶IJ 21, 22,
plaintiff provides insufficient information for me to evaluate whether that relief is warranted.
Plaintiff seeks a declaration that "the MCS-90 endorsement attached to the Progressive policy has
no applicability to the loss, and could not be triggered by any judgment arising out of the
Accident." Id. Plaintiff does not explain or otherwise refer to this "MCS-90 endorsement"
elsewhere in the complaint or the Rabinovich declaration. Without any understanding of what this
document is, I cannot grant plaintiff a declaratory judgment as to whether the Accident can trigger
any obligations pursuant to this document.
As to plaintiffs request in its complaint for costs and attorneys' fees, the Rabinovich
declaration provides no information as to plaintiffs expenditures. Moreover, plaintiff provides no
legal basis for "circumventing the traditional American Rule against awarding attorney's fees."
Narragansett Bay Ins. Co., 2016 WL 7322518, at * 4 (E.D.N.Y. Nov. 28, 2016). Therefore,
plaintiff is not entitled to this relief.
Plaintiffs requested relief is granted insofar as it seeks a declaratory judgment that it has
no obligation to defend or indemnify any person or entity against any liability for damages arising
from the Accident or the Underlying Action. As to a declaratory judgment regarding the MCS-90
endorsement, I deny plaintiff's request without prejudice. If plaintiff wishes to supplement the
record and renew its request for a default judgment as to the MCS-90 endorsement, it must do so
by December 7, 2017. If plaintiff fails to do so, then its motion for a default judgment as to the
MCS-90 endorsement will be denied.
United States District Judge
Dated: November 15, 2017
Brooklyn, New York
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