United Fin. Cas. Co. v. Morales
Decision Date | 12 April 2021 |
Docket Number | Civ. No. 20-867 JAP/CG |
Parties | UNITED FINANCIAL CASUALTY COMPANY, Plaintiff, v. DIANA MORALES d/b/a ROBERG TRUCKING et al., Defendants. |
Court | U.S. District Court — District of New Mexico |
Before the Court is a case for declaratory judgment. Plaintiff initiated this action on August 27, 2020, when it filed a COMPLAINT FOR DECLARATORY JUDGMENT RELIEF ("Complaint") (Doc. 1), seeking a declaration of no coverage under a Commercial Auto Policy, Compl., Ex. A ("Policy") that it issued to Diana Morales d/b/a Roberg Trucking ("Morales"). Plaintiff's request for relief stems from two ongoing lawsuits filed in New Mexico state court: (1) wrongful death brought by Defendants Lopez, Fernandez-Renteria, and Grado-Sanchez ("Estate Defendants") against Morales, as well as others, and (2) negligence brought by Defendant Patrick Smith against Morales, among others. Plaintiff is currently defending Morales under a reservation of rights in both causes of action.
In response to the Complaint, Estate Defendants filed a MOTION TO DISMISS (Doc. 6) requesting that this Court decline to exercise its discretionary jurisdiction over this matter because they believed that the underlying New Mexico state court litigation controlled whether certain Policy exclusions abrogate Plaintiff's duty to defend and indemnify Morales. But the Court declined Estate Defendants' request and retained jurisdiction. See MEMORANDUM OPINION AND ORDER (Doc. 32). In doing so, the Court noted "the extraordinary posture" of their motion, which they brought "in part to argue that Plaintiff must continue defending non-movant Defendant Morales in the two underlying New Mexico state court lawsuits." Doc. 32 n.1 (emphasis added). That is, Estate Defendants, as non-insured state court plaintiffs currently suing Morales, asserted that Plaintiff has a duty to defend Morales against them under the Policy, even though Morales has not made that argument herself.
This leads to the instant issue: Morales has yet to appear or file a responsive pleading in this action. Accordingly, on January 27, 2021, Plaintiff filed a REQUEST FOR CLERK'S ENTRY OF DEFAULT (Doc. 36), which was promptly followed by the CLERK'S ENTRY ON DEFAULT (Doc. 37). Then, on January 29, 2021, Plaintiff filed a MOTION FOR DEFAULT JUDGMENT PURSUANT TO FED. R. CIV. P. 55 (Doc.38), requesting default judgment against Morales on both issues central to this litigation, i.e., that it owes no duty to defend her in the underlying state court actions nor to indemnify her from any resulting liability. For his part, Defendant Smith maintains that default judgment is inappropriate because there are multiple defendants, all of which are similarly situated, and, therefore, granting Plaintiff's request creates a risk of inconsistent judgments. Doc. 39 ("Smith Response"). Or put another way, Defendant Smith notes that, if the Motion is granted, the Court would be entering default judgment against her on the indemnification issue but then could later find coverage under the Policy on summary judgment.
Rather than focus on Defendant Smith's argument, Estate Defendants once again advocate on Morales' behalf, this time asserting that the Court does not have personal jurisdiction over Morales, which is required under Rule 55, see e.g., Marcus Food Co. v. DiPanfilo, 671 F.3d 1159, 1166 (10th Cir. 2011) ( ), because processwas not properly effectuated in accordance with New Mexico law. See Estate Defs.' Resp., passim.1 The Court agrees that several infirmities exist with Plaintiff's service of Morales.
1. ANALYSIS
A. Federal Rule of Civil Procedure 55
Federal Rule of Civil Procedure 55 mandates the process for default judgment. Upon a showing by affidavit or otherwise, the clerk of the court must enter default against a party who has failed to plead or otherwise defend. Fed. R. Civ. P. 55(a). After the clerk enters default, the party must either request the clerk to enter default judgment when the claim is for "a sum certain or a sum that can be made certain by computation," Fed. R. Civ. P. 55(b)(1), or "[i]n all other cases, the party must apply to the court for a default judgment," Fed. R. Civ. P. 55(b)(2). Here, Plaintiff has already obtained a clerk's entry of default against Morales, see Docs. 36 (request), 37 (entry of default), and applied to the Court for a default judgment via the instant Motion.
However, the Court must follow two steps before granting default judgment in favor of Plaintiff. First, the Court must ensure that it has subject matter and personal jurisdiction. Williams v. Life Sav. & Loan, 802 F.2d 1200, 1203 (10th Cir. 1986); Marcus Food Co. v. DiPanfilo, 671 F.3d 1159, 1166 (10th Cir. 2011) ( ). Second, the Court must consider whether the well-pleaded allegations of fact—which a defendant admits upon default—support a judgment on the claims against the defaulting defendant. See Tripodi v. Welch, 810 F.3d 761, 764 (10th Cir. 2016) ( ).
1) Jurisdiction
Because the Declaratory Judgment Act is not an independent source of jurisdiction, Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 672 (1950), Cardtoons, L.C. v. Major League Baseball Players Ass'n, 95 F.3d 959, 964 (10th Cir. 1996), subject matter jurisdiction exists only if the potential suit meets the strictures of either 28 U.S.C. §§ 1331 (federal question) or 1332 (diversity).
Diversity jurisdiction is present here under § 1332. Plaintiff is incorporated under the laws of and its principle place of business is located within the state of Ohio. No defendant—entity or individual—in this action is domiciled, incorporated, nor maintains its principle place of business within the state of Ohio. Thus, there is complete diversity between the parties. Additionally, based on the allegations of Complaint, which clearly illustrate Plaintiff's potential liability under a one-million-dollar commercial automobile Policy in two underlying state court actions, the $75,000amount in controversy threshold is easily satisfied. The Court has subject matter jurisdiction over this cause of action.
The Court does not reach the same conclusion with respect to personal jurisdiction, which requires service of process that complies with Federal Rule of Civil Procedure 4. See Venable v. Haislip, 721 F.2d 297, 300 (10th Cir.1983) (per curiam) () .
The Federal Rules of Civil Procedure state that "an individual . . . may be served . . . by . . . following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made." Fed. R. Civ. P. 4(e)(1) (emphasis added). Here, Plaintiff's Certificate of Service, Doc. 23-2, indicates that the summons and complaint were delivered to an "individual" at an address in Texas, therefore, Plaintiff's service (or attempted service) of Morales must comply with either New Mexico or Texas law. In New Mexico, "[p]rocess shall be served in a manner reasonably calculated, under all the circumstances, to apprise the defendant of the existence and pendency of the action and to afford a reasonable opportunity to appear and defend." NMRA, Rule 1-004(E)(1). "Personal service of process shall be made . . . to the individual personally; or if the individual refuses to accept service, by leaving the process at the location where the individual has been found; and if the individual refuses to receive such copies or permit them to be left, such action shall constitute valid service." Id. Rule 1-004(F)(1)(a). Personal service can also be accomplished "by mail or commercialcourier service . . . to the defendant at the defendant's last known mailing address." Id. Rule 1-004(F)(1)(b), 1-004(F)(1)(3).
In Texas, "the citation must be served by: (1) delivering to the defendant, in person, a copy of the citation, showing the delivery date, and of the petition; or (2) mailing to the defendant by registered or certified mail, return receipt requested, a copy of the citation and of the petition." Tex. R. Civ. P. 106(a)(1)-(2). In addition, Texas allows service—if traditional methods of in-person and mail service fail—"by leaving a copy of the citation and of the petition with anyone older than sixteen at the location specified in the statement; or in any other manner, including electronically by social media, email, or other technology, that the statement or other evidence shows will be reasonably effective to give the defendant notice of the suit." Tex. R. Civ. P. 106(b)(1)-(2).
Plaintiff's process server made the following attempts to serve Morales:
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