United States District Court, D. Montana, Billings Division
FINDINGS AND RECOMMENDATION OF U.S. MAGISTRATE
TIMOTHY J. CAVAN UNITED STATES MAGISTRATE JUDGE
has filed Motions for Entry of Default Judgment against
Defendants Alan Valdez (Doc. 43); Precision Trim Auto, LLC
(“Precision Trim”) (Doc. 44); and Veronica Valdez
(Doc. 45). This is a declaratory judgment and interpleader
action arising from a motor vehicle accident. (Doc. 20.)
Plaintiff seeks a declaration as to the rights and
obligations of the insurers involved, and equitable
distribution of any available insurance proceeds.
addressing the merits of Plaintiff's motions, the Court
must consider whether it has jurisdiction over both the
subject matter and the parties. In re Tuli, 172 F.3d
707, 712 (9th Cir. 1999) (“When entry of judgment is
sought against a party who has failed to plead or otherwise
defend, a district court has an affirmative duty to look into
its jurisdiction over both the subject matter and the
alleges subject matter jurisdiction based on diversity
jurisdiction under 28 U.S.C. § 1332. The Court finds
it has subject matter jurisdiction over this action. The
amount in controversy exceeds the $75, 000 threshold and
complete diversity is present. Plaintiff is an insurance
company organized under the laws of Delaware, and has its
principle place of business in Texas. (Doc. 20 at ¶ 4.)
Defendant Precision Trim is a citizen of Montana with its
principle place of business in Montana. (Id. at
¶ 5.) Defendants Alan Valdez, Veronica Valdez, Jasmine
Flamand, Zachary Wallis, and Shawna Wilder are citizens of
Montana. (Id. at ¶¶ 6-10.) Defendant
Scottsdale Insurance Company is a citizen of Ohio.
(Id. at ¶ 11.) Further, the Court finds
personal jurisdiction exists over Defendants. Defendants
Precision Trim, Alan Valdez and Veronica Valdez are Montana
citizens who were personally served with process in Montana.
(Docs. 11, 12, 23.) Defendants Jasmine Flamand, Zachary
Wallis, Shawna Wilder and Scottsdale Insurance Company have
answered and did not assert lack of personal jurisdiction as
a defense. (Docs. 21, 22, 28.)
Rule of Civil Procedure 55(b)(2) governs applications to the
Court for default judgment. Default judgment is available as
long as the plaintiff establishes the defendant has been
served with the summons and complaint, default was entered
for the defendant's failure to appear, and the defendant
is neither a minor nor an incompetent person. Fed.R.Civ.P.
55(b). Entry of default judgment is within the trial
court's discretion. Aldabe v. Aldabe, 616 F.2d
1089, 1092 (9th Cir. 1980). In making this determination, the
Court considers the following factors: (1) the possibility of
prejudice to the plaintiff, (2) the merits of plaintiff's
substantive claim, (3) the sufficiency of the complaint, (4)
the sum of money at stake in the action, (5) the possibility
of a dispute concerning the material facts, (6) whether the
default was due to excusable neglect, and (7) the strong
policy underlying the Federal Rules of Civil Procedure
favoring decisions on the merits. Eitel v. McCool,
782 F.2d 1470, 1471-72 (9th Cir. 1986).
entry of default, the factual allegations in the complaint,
except those relating to damages, are deemed admitted.
Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915,
917-18 (9th Cir. 1987). Where the amount of damages claimed
is a liquidated sum or capable of mathematical calculation,
the Court may enter a default judgment without a hearing.
Davis v. Fendler, 650 F.2d 1154, 1161 (9th Cir.
1981). When it is necessary for the plaintiff to prove
unliquidated or punitive damages, the Court may require
plaintiff to file declarations or affidavits providing
evidence for damages in lieu of a full evidentiary hearing.
Transportes Aereos De Angola v. Jet Traders Invest.
Corp., 624 F.Supp. 264, 266 (D. Del. 1985).
Plaintiff sufficiently demonstrates that default judgment is
available under Rule 55(b). Plaintiff previously submitted
declarations that Defendants are neither minors nor
incompetent persons. (See Docs. 15 at 5,
¶¶ 7; 25 at 2. ¶ 6; 29 at 2, ¶ 6.)
Furthermore, Defendants have been served with the summons and
complaint. (Docs. 11, 12, 23.) Default was entered for
Defendants' failure to appear. (Docs. 17, 26, 30.) To
date, Defendants have not appeared in this action.
the Court finds the factors enumerated in Eitel
weigh in favor of entering default judgment against
Defendants. First, Plaintiff would suffer prejudice if
default judgment is not entered because the appearing parties
have negotiated a settlement of Plaintiff's coverage and
interpleader claims, including an equitable distribution of
the agreed-upon insurance policy limits, and resolution of
all other related claims. (See Doc. 46.) Plaintiff
would also suffer prejudice because it would be denied the
finality of a judgment protecting it from the risk of
exposure to multiple future claims.
second and third factors also weigh in favor of default
judgment. These two factors, considered together, require
Plaintiff to “state a claim on which [it] may
recover.” Pepsico, Inc. v. Cal. Security Cans,
238 F.Supp.2d 1172, 1175 (C.D. Cal. 2002). Here, because
there are issues regarding the rights and obligation of the
insurers under their policies, and because multiple parties
could be entitled to the insurance proceeds, Plaintiff has
properly stated a claim for declaratory relief and
fourth factor is neutral because the only claim for relief
against Defendants is for declaratory judgment. But the fifth
and sixth factors also weigh in favor of default judgment.
Because default was entered against Defendants pursuant to
Rule 55(a), the facts alleged in the Amended Complaint have
been accepted as true. There is no indication that any
material factual dispute exists. Nor is there any indication
that Defendants' failure to appear was the result of
the seventh factor, the Court must consider the strong policy
favoring decisions on the merits. Here, however, the
appearing parties have negotiated a settlement of this
action. The Ninth Circuit has recognized there is a strong
public policy favoring settlement of cases whenever possible.
See Ahern v. Cent. Pac. Freight Lines, 846 F.2d 47,
48 (9th Cir. 1988). Thus, ...