Essex Insurance Company v. Sheppard & Sons Construction Inc et al

Filing 96

ORDER deferring ruling on re 68 MOTION for Default Judgment as to Roger L. Kneeland d/b/a Timberline Design filed by Essex Insurance Company. Signed by Honorable Timothy D. DeGiusti on 9/26/2013. (mb)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
ESSEX INSURANCE COMPANY,
Plaintiff,
vs.
SHEPPARD & SONS CONSTRUCTION,
INC., et al.,
Defendants.

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NO. CIV-12-1022-D

ORDER
Before the Court is Plaintiff’s motion [Doc. No. 68] for a default judgment against Defendant
Roger L. Kneeland (“Kneeland”), an individual doing business as Timberline Design. As Plaintiff
correctly points out, the record reflects that Kneeland was properly served in this case but has not
answered or entered an appearance, and the Clerk has filed an Entry of Default [Doc. No. 71]
certifying that Kneeland is in default. Plaintiff now asks the Court to enter a default judgment in
its favor and against Kneeland on the claims asserted in Plaintiff’s declaratory judgment action.
For the following reasons, the Court denies the motion at this time, without prejudice to its
reassertion at the conclusion of the proceedings against the other defendants.
Plaintiff brought this action to obtain a declaratory judgment that it is not obligated to defend
or indemnify its insured, Sheppard & Sons Construction, Inc. (“Sheppard”), for any insurance claims
resulting from property damage to a building owned by Defendants The Dental Lodge, PLC and
Gabe Nabors. During the construction of the building, Sheppard was the general contractor.
Plaintiff also names as defendants subcontractors who performed work on the building project, along
with their insurers.

According to Plaintiff’s allegations, Kneeland performed services as an

architect in connection with the building project. Plaintiff seeks a declaratory judgment against all

the defendants, asking that the Court find that the insurance policies issued to Sheppard contain
exclusions which preclude coverage under the circumstances presented here. It also seeks a ruling
that it is not obligated to defend or indemnify Sheppard from any claim that might be asserted by
the other defendants in connection with the property damage.
In seeking a default judgment against Kneeland, Plaintiff asks the Court to enter a judgment
stating that the policies in question do not extend coverage and are not applicable to any claim
pertaining to Kneeland in connection with the construction of the subject building. The Court finds
that the judgment cannot be properly entered at this time because the Court has not yet determined
whether Plaintiff is entitled to the declaratory relief it seeks. Whether it is entitled to that relief will
depend on the construction of the insurance policies in the context of the facts and circumstances
involving the property damage. The proposed judgment against Kneeland presupposes a ruling
favorable to Plaintiff as to the interpretation of the policies, and that ruling is premature at this time.
“‘When a default is entered against one defendant in a multi-defendant case, the preferred
practice is for the court to withhold granting a default judgment until [resolution] of the action on
the merits against the remaining defendants.’” Essex Ins. Co. v. Moore, 2011 WL 3235685, at * 1
(M.D. Fla. July 28, 2011) (unpublished) (quoting Northland Ins. Co. v. Cailu Title Corp., 204 F.R.D.
327, 330 (W.D. Mich.2000) (citing Exquisite Form Ind., Inc. v. Exquisite Fabrics of London, 378
F.Supp. 403, 416 (S.D.N.Y.1974)). “This rule is commonly applied where, as here, an insurer seeks
a declaratory judgment that an insurance policy does not trigger a duty to defend or indemnify both
the defaulting defendant and the other named defendants who may appear and contest the insurer's
allegations.” Essex, 2011 WL 3235685, at *1 (citing

Allstate Prop. and Cas. Ins. Co. v.

Salazar–Castro, 2009 WL 196150, at *1 (D. Kan. Jan.23, 2009) (unpublished); Safeco Ins. Co. of

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Am. v. Stephenson, 2007 WL 2026389, at *1 (W.D. Mo. July 9, 2007); Nautilus Ins. Co. v. I.L.S.
Gen. Contractors, Inc., 369 F.Supp.2d 906, 909 (E.D. Mich. 2005); State Farm Mut. Auto. Ins. Co.
v. Jackson, 736 F.Supp. 958, 961–62 (S.D. Ind. 1990)).
Although it appears that the Tenth Circuit Court of Appeals has not addressed this question,
the Court is satisfied that, in these circumstances, a default judgment against Kneeland should be
deferred until the Court has ruled on the substantive issues which affect both Kneeland and all other
defendants in this action. Because of his default, Kneeland will not be permitted to participate in
the proceedings. See Northland, 204 F.R.D. at 330. However, the non-defaulting parties retain the
right to present their arguments in response to Plaintiff’s contentions. Because interpretation of the
insurance policies at issue and the scope of coverage impacts all of the defendants, the Court will
not consider the appropriateness of a default judgment against Kneeland until it has ruled on those
issues. Id.

If the ruling is favorable to Plaintiff, it may renew its motion at that time.

IT IS SO ORDERED this 26th day of September, 2013.

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