Allstate Insurance Company v. Cruz

CourtDistrict Court, D. Colorado
DecidedAugust 13, 2025
Docket1:24-cv-00933
StatusUnknown

This text of Allstate Insurance Company v. Cruz (Allstate Insurance Company v. Cruz) is published on Counsel Stack Legal Research, covering District Court, D. Colorado primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Allstate Insurance Company v. Cruz, (D. Colo. 2025).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Judge Nina Y. Wang

Civil Action No. 24-cv-00933-NYW-CYC

ALLSTATE INSURANCE COMPANY,

Plaintiffs,

v.

JOHN CRUZ, and PIP PERSONAL IDENTITY PROTECTION LLC,

Defendants.

ORDER ON MOTION FOR DEFAULT JUDGMENT

This matter comes before the Court on Plaintiff Allstate Insurance Company’s (“Plaintiff” or “Allstate”) Motion for Default Judgment Against Defendant PIP Personal Identity Protection LLC (“Motion”). [Doc. 120, filed January 23, 2025]. Defendant PIP Personal Identity Protection LLC (“PIP”) has not responded to the Motion,1 and the time to do so has elapsed. The Court finds that oral argument would not materially assist in the disposition of the Motion. Upon review of the Motion and the related briefing, the applicable case law, and the entire docket, Plaintiff’s Motion is respectfully GRANTED in part and DENIED in part.

1 Defendant John Cruz filed a motion on PIP’s behalf, seeking additional time to respond to the Motion. [Doc. 121]. But Mr. Cruz is not an attorney, and a limited liability company cannot proceed pro se or appear through a non-attorney corporate officer. Riviera Drilling & Exploration Co. v. Gunnison Energy Corp., 412 F. App’x 89, 92 (10th Cir. 2011); Harrison v. Watahoyas, LLC, 253 F.3d 552, 556 (10th Cir. 2001). The Court advised Mr. Cruz as much, and struck the filing. See [Doc. 122]. BACKGROUND The Court draws the following facts from Allstate’s Complaint, [Doc. 1], and the exhibits attached to the Motion. In deciding the Motion, the Court accepts these facts as undisputed. See Mrs. Condies Salad Co. v. Colo. Blue Ribbon Foods, LLC, 858 F. Supp. 2d 1212, 1217 (D. Colo. 2012). The Court has also previously set out the background of

this case in detail, see [Doc. 29 at 1–10], and reiterates these facts only to the extent necessary to decide the Motion. Defendant John Cruz (“Mr. Cruz”) worked as an Allstate exclusive agent from 2011 to 2020. [Doc. 1 at ¶ 20]. In late 2020, Allstate sued Mr. Cruz for allegedly breaching his exclusive agency agreement and appropriating Allstate customers’ information to support a competing business. See Allstate Ins. Co. v. Cruz (“Cruz I”), No. 20-cv-03139-NYW- MEH (D. Colo.). In September 2023, the Court granted summary judgment in Allstate’s favor on its breach of contract claim and all of Mr. Cruz’s counterclaims. See Allstate Ins. Co. v. Cruz, No. 20-cv-03139-NYW-MEH, 2023 WL 6147077, at *4 (D. Colo. Sept. 20,

2023). Shortly after the summary judgment ruling, PIP was formed as a Colorado limited liability company. [Doc. 120-1]. Allstate alleges that Mr. Cruz and his wife, Denise Cruz, are the only two members of PIP. [Doc. 1 at ¶ 15]. In March 2024, Allstate and Mr. Cruz agreed to dismiss Cruz I with prejudice. Cruz I, Dkt. No. 269. Allstate filed this action a month later. See [Doc. 1, filed April 5, 2024]. Allstate alleges that Mr. Cruz and PIP have launched a “smear campaign” based on “false claims that Allstate is selling its customers’ sensitive information to, among other things, further criminal activity.” [Id. at ¶ 1]. In conjunction with the Motion, Allstate has identified 40 alleged defamatory statements that Defendants have published across two websites; several social media platforms, including Facebook, Instagram, LinkedIn, and YouTube; and advertisements and appearances on local television stations. See [Doc. 120-9 (compiling alleged defamatory statements)]; see also [Doc. 1 at ¶¶ 30–48, Doc. 62-8; Doc. 62-9; Doc. 62-10]. Individual statements vary, but all relate to the same central claim that Allstate sells or shares its customers’ personal information in exchange for gift cards

and, in doing so, facilitates identity theft and human trafficking. See, e.g., [Doc. 1 at ¶¶ 37–38]. According to Allstate, Mr. Cruz is primarily motivated by “spite and vengeance.” [Id. at ¶ 10]. He seeks “vengeance” against Allstate after Allstate obtained a favorable summary judgment ruling in Cruz I. [Id. at ¶ 66]. But Mr. Cruz also stands to benefit financially from tarnishing Allstate’s commercial reputation. [Id. at ¶ 67]. PIP’s websites promote an identity protection service and include links to non-party LegalShield, an identity protection service. [Id. at ¶¶ 34, 67]. Allstate alleges that Mr. Cruz and PIP earn a commission on every LegalShield plan sold through PIP’s websites. [Id.].

Allstate brings two claims: one for defamation and another for deceptive trade practices under the Colorado Consumer Protection Act (“CCPA”), Colo. Rev. Stat. §§ 6- 1-105, -113. [Doc. 1 at ¶¶ 71–89]. Since initiating this lawsuit, Allstate has sought both preliminary and permanent injunctive relief. See [Doc. 8; Doc. 62]. The Court denied both motions. [Doc. 29; Doc. 73]. But although Mr. Cruz has appeared in this lawsuit, see, e.g., [Doc. 60], PIP has failed to appear or otherwise defend through counsel. Accordingly, pursuant to Federal Rule of Civil Procedure 55(a), Allstate moved for and obtained an entry of default as to PIP. See [Doc. 109; Doc. 110]. Allstate now moves for a default judgment against PIP on both of its claims, seeking attorney’s fees, costs, and permanent injunctive relief. [Doc. 120]. LEGAL STANDARD I. Rule 55 Pursuant to Federal Rule of Civil Procedure 55, a party may apply to the Court for a default judgment after a party against whom a judgment for affirmative relief is sought

has failed to plead or otherwise defend against the action. Fed. R. Civ. P. 55(a), (b)(2). But there is no right to a default judgment, and “the entry of a default judgment is committed to the sound discretion of the district court.” Tripodi v. Welch, 810 F.3d 761, 764 (10th Cir. 2016). Determining whether to enter default judgment requires the Court to first resolve whether it has jurisdiction, and if it does, whether the well-pleaded factual allegations in the Complaint and any attendant affidavits or exhibits support judgment on the claims against the defendants. See Bixler v. Foster, 596 F.3d 751, 762 (10th Cir. 2010); Magic Carpet Ski Lifts, Inc. v. S&A Co., Ltd., No. 14-cv-02133-REB-KLM, 2015 WL 4237950, at

*5 (D. Colo. June 8, 2015) (“There must be a sufficient basis in the pleadings for the judgment entered.” (quotation omitted)). If the Court lacks jurisdiction—either subject matter over the action or personal over the defendant—default judgment cannot enter. See Dennis Garberg & Assocs., Inc. v. Pack-Tech Int’l Corp., 115 F.3d 767, 772 (10th Cir. 1997). By its default, PIP admits Plaintiff’s well-pleaded allegations of fact, is precluded from challenging those facts by the judgment, and is barred from contesting on appeal the facts established. CrossFit, Inc. v. Jenkins, 69 F. Supp. 3d 1088, 1093 (D. Colo. 2014); see also 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.”). The facts alleged in the Complaint which are deemed admitted upon default may form the basis for the Court’s entry of a default judgment. See, e.g., Salba Corp. v. X Factor Holdings, LLC, No. 12-cv-01306-REB-KLM, 2015 WL 5676690, at *1 (D. Colo. Sept. 28, 2015).

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