Homesite Insurance Company of New York v. Greene

• Court: District Court, N.D. New York
• Decided: February 16, 2023
• Docket: 1:21-cv-00772
• Status: Unknown

Opinion

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK

HOMESITE INSURANCE COMPANY OF NEW YORK,

Plaintiff,

v. 1:21-CV-772 (FJS/DJS) DEQUAN GREENE and LATRISHA GREENE, Individually and d/b/a HARMONY AND FRIENDS DAYCARE; and ESTATE OF CARLOS J. FIGUEROA, formerly known as CARLOS FIGUEROA,

Defendants.

APPEARANCES OF COUNSEL

WADE CLARK MULCAHY LLP ROBERT J. COSGROVE, ESQ. 180 Maiden Lane Suite 901 New York, New York 10038 Attorneys for Plaintiff

DEQUAN GREENE and NO APPEARANCES LATRISHA GREENE, Individually and d/b/a HARMONY AND FRIENDS DAYCARE Defendants

IANNIELLO ANDERSON, P.C. JEANNE M. GONSALVES LLOYD, ESQ. 805 Route 146 Northway Nine Plaza Clifton Park, New York 12065 Attorneys for Defendant Estate of Carlos J. Figueroa

SCULLIN, Senior Judge ORDER

Pending before the Court is Plaintiff's motion for entry of a default judgment against its insureds, Defendants Dequan Greene and Latrisha Greene, individually and doing business as Harmony and Friends Daycare, pursuant to Rule 55(b)(2) of the Federal Rules of Civil Procedure. See Dkt. No. 23. Plaintiff argues that it is entitled to a default judgment and ultimately a declaration that the Greenes' homeowners' insurance policy does not provide coverage for the daycare or injuries connected to that business; and, thus, it is not required to defend or indemnify the Greenes. See Dkt. No. 23-8 at 3-8. Ordinarily, "[o]nce a plaintiff has obtained an entry of default pursuant to Rule 55(a), to obtain a default judgment the plaintiff must follow the provisions of Rule 55(b)." Peterson v. Syracuse Police Dep't, 467 F. App'x 31, 34 (2d Cir. 2012) (summary order) (citing Green, 420 F.3d at 104). "[T]o determine whether to grant a motion for default judgment, a court should consider: '(i) whether the defendant's default was willful; (ii) whether the defendant has a meritorious defense; and (iii) the level of prejudice to the non-defaulting party if the motion is

denied.'" Phila. Indem. Ins. Co. v. Pro. Sec. Assocs., Inc., No. 16-CV-6674 (SIL), 2018 U.S. Dist. LEXIS 54741, *8 (E.D.N.Y. Mar. 30, 2018) (quoting Fed. Ins. Co. v. CAC of NY, Inc., No. 14-CV-4132, 2015 U.S. Dist. LEXIS 32098, 2015 WL 1198603, at *3 (E.D.N.Y. Feb. 5, 2015), report and recommendation adopted, No. 14-CV-4132, 2015 U.S. Dist. LEXIS 31923, 2015 WL 1198423 (E.D.N.Y. Mar. 16, 2015)). The Greenes have not appeared in this action. However, Defendant Carlos Figueroa's estate ("Figueroa") opposes Plaintiff's pending motion. See Dkt. No. 24. Figueroa, the individual injured on the Greenes' property and seeking to recover for his losses in a separate state-court action, appears to argue the following before this Court: (1) questions of fact exist that preclude granting a default judgment in Plaintiff's favor; (2) there are issues with the timeliness of Plaintiff's disclaimer of liability; and (3) the business exclusion in the Greenes' homeowners' insurance policy does not apply. See generally Dkt. No. 24-18. Initially, the Court finds that Figueroa has standing "'independent of that of the insured[s]'" to defend himself

in the declaratory judgment proceeding. Phila. Indem. Ins. Co., 2018 U.S. Dist. LEXIS 54741, at *11 (quoting Penn Am. Ins. Co. v. Valade, 28 F. App'x 253, 257 (4th Cir. 2002) [(summary order)]). "That is not to say, however, that [Figueroa] may answer for or otherwise represent [the Greenes'] interests in the litigation[.]" Id. at *11-*12. Figueroa "can oppose Plaintiff's motion only insofar as he seeks to reserve his rights to defend this case on the merits." Id. at *12 (footnote omitted). When an injured third-party such as Figueroa appears and opposes the motion, courts in the Second Circuit have generally denied the plaintiff's motion for default judgment against the non-appearing parties without prejudice. See id. at *12-*13; Empire Fire & Marine Ins. Co. v. Image Rent a Car, Inc., No. 13-CV-5122 (JMA), 2015 U.S. Dist. LEXIS 24916, *1-*2

(E.D.N.Y. Mar. 2, 2015); Nat'l Cas. Co. v. Gateway Acoustics Corp., No. 12-CV-5920 (CBA) (JO), 2014 U.S. Dist. LEXIS 45794, at *13 (E.D.N.Y. Mar. 6, 2014), adopted by 2014 U.S. Dist. LEXIS 43983 (E.D.N.Y. Mar. 31, 2014); cf. Acceptance Ins. Co. v. Home Med. of Am., Inc., No. 04 Civ. 9338 (WHP), 2005 U.S. Dist. LEXIS 33755, *12 (S.D.N.Y. Dec. 20, 2005) (noting that "[o]ther courts have refused to enter a default judgment against a defaulting insured in declaratory judgment actions such as this where the injured parties have appeared." (collecting cases)). Specifically, those courts have concluded that "the conventional three- factor default judgment test is not suitable for declaratory judgment cases such as this one in which the insured is in default but the injured party has in fact appeared." Phila. Indem. Ins. Co., 2018 U.S. Dist. LEXIS 54741, at *12. Instead, in those situations, courts have denied a plaintiffs motion for a default judgment "without prejudice to its right to reinstate the motion if and when it successfully overcomes the [injured party's] proffered defense[.]'" /d. (quoting Nat'l Cas. Co. v. Gateway Acoustics Corp., No. 12-CV-5920, 2014 U.S. Dist. LEXIS 45794, 2014 WL 1330851, at *5 (E.D.N.Y. Mar. 31, 2014)). "[T]his approach, which has been widely adopted," "allow[s] the validity of [the plaintiff's] claim for declaratory relief to be determined on the merits through adversarial testing without unduly prejudicing [the injured party's] interest in such relief should [he] prevail on the merits." /d. at *12-*13 (quoting [Nat'l Cas. Co., 2014 U.S. Dist. LEXIS 45794 at *13]) (other citations omitted). Following the examples of various courts in this Circuit, the Court finds that Figueroa has standing to protect his interests and may fully litigate his defenses to the timeliness of Plaintiff's disclosure, the applicability of the business exclusion, and raise any other questions of fact that he believes would preclude judgment in Plaintiff's favor. Accordingly, the Court hereby ORDERS that Plaintiff's motion for entry of a default judgment against Defendants Dequan Greene and Latrisha Greene, individually and doing business as Harmony and Friends Daycare, see Dkt. No. 23, is DENIED without prejudice; and the Court further ORDERS that that this matter is referred to Magistrate Judge Stewart for all further pretrial matters.

IT IS SO ORDERED.

Dated: February 16, 2023 Freder€ J oulkin Jr. Syracuse, New York Senior United States District Judge

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