United States District Court, C.D. Illinois, Springfield Division
TOKIO MARINE SPECIALTY INSURANCE CO. Plaintiff,
SPRINGFIELD SHOOTING CENTER, INC., and STEVEN SWARTZ, Defendants, STEVEN SWARTZ Counter Claimant,
TOKIO MARINE SPECIALITY INSURANCE CO., Counter Defendant.
SCHANZLE-HASKINS, U.S. MAGISTRATE JUDGE.
matter comes before the Court on Plaintiff Tokio Marine
Specialty Insurance Co.'s (Tokio) Motion for Default
Judgment (d/e 49) (Motion). For the reasons set forth below,
the Court denies the Motion with leave to refile after the
other remaining claims and counterclaim are resolved.
Springfield Shooting Center, Inc. (Springfield Shooting)
operated a business at 4885 Industrial Drive, Springfield,
Illinois (Premises). Defendant/Counter Plaintiff Steven
Swartz was selling the Premises to Springfield Shooting's
principals John and Kathryn Jackson on an installment land
sales contract. On August 10, 2019, Tokio issued a commercial
insurance policy (Policy) to Springfield Shooting that
covered the Premises.
September 6, 2018, the Premises was damaged by a fire. Tokio
alleges that Springfield Shooting's owner John Jackson
intentionally set the fire and filed a fraudulent claim on
the Policy. Tokio seeks a declaratory judgment that all
coverage under the Policy is voided as a result of the
intentional fraudulent conduct. Amended Complaint (d/e
30), Counts I, II, and III. Tokio also seeks a
declaratory judgment that any loss by Swartz is not covered
by the Policy. Amended Complaint, Counts IV and V.
filed a counterclaim asking for a declaratory judgment that
he is entitled to coverage under the terms of the Policy.
Defendant Steven Swartz's Answer to First Amended
Complaint for Declaratory Judgment and Counterclaim Against
Tokio Marine Specialty Insurance Co. (d/e 41)
Shooting initially appeared and defended this case. On
February 28, 2019, Springfield Shooting's counsel moved
to withdraw from this case. On March 1, 2019, this Court
allowed counsel to withdraw. The Court also informed
Springfield Shooting that, as a corporation, it had to appear
by counsel in this case. Text Order entered March 1,
2019; see Scandia Down Corporation v. Euroquilt,
Inc., 772 F.2d 1423, 1427 (7th Cir., 1985).
The Court gave Springfield Shooting repeated extensions of
time to find counsel. Text Order entered April 8,
2019; Text Order entered April 22, 2019;
Text Order entered April 30, 2019. Springfield
Shooting has failed to secure counsel.
has now moved for a default judgment against Springfield
Shooting. Tokio has further asked for a finding that there is
no just reason for delay under Federal Rule of Civil
Procedure 54(b) and for entry of a separate final judgment
against Springfield Shooting. See Motion, attached
Proposed Default Judgment ¶ 5.
objects to the entry of a final judgment against Springfield
Shooting because it might prejudice his rights. Swartz's
counterclaim depends on the terms of the Policy and his
alleged rights under the Policy. Swartz argues that entry of
a final default judgment against Springfield Shooting would
constitute a final determination that Tokio is not obligated
to provide coverage under the Policy. Such a finding could
prejudice Swartz's counterclaim.
requested default judgment would pose the prospect of
inconsistent judgments in this case. The default judgment
would declare that Tokio is not obligated under the Policy.
Should Swartz prevail on his counterclaim, the Court would
necessarily need to find that Tokio was obligated to provide
coverage under the Policy to Swartz. Such inconsistent
judgment should be avoided. Courts, therefore, generally
delay entry of default judgments against a defendant insured
in these types of declaratory judgment cases and allow
co-defendants to litigate their claims on the merits. See
American Standard Ins. Co. of Wisconsin v. Rogers, 123
F.Supp.2d 461, 466-47 (S.D. Ind. 2000).
even if the Court entered a default judgment, the Court would
not provide a finding under Rule 54(b) that no just reason
exists to delay entry of a final judgment against Springfield
Shooting. Tokio's claims against Springfield Shooting are
interrelated to its claims against Swartz and Swartz's
counterclaim against Tokio. All depend on the terms and
conditions of the Policy and the alleged actions of
Springfield Shooting's principle John Jackson with
respect to the Fire and the subsequent claim of loss
Springfield Shooting filed on the Policy. Multiple final
judgments could require the appeals court to hear multiple
appeals involving the same issues and same facts. In such
circumstances, a single judgment authorizing a single appeal
is appropriate. See e.g., Peerless Network Inc.
v. MCI Communications Services, Inc., 917 F.3d 538, 543
(7th Cir. 2019). The Court, therefore, would not
enter a Rule 54(b) finding that no just reason exists for
delay in any event. Any default judgment would be
interlocutory and subject to change by this Court.
See Fed.R.Civ.P. 54(b); 55(c).
IT IS ORDERED that Plaintiff Tokio Marine Specialty Insurance
Co.'s Motion for Default Judgment (d/e 49) is DENIED with
leave to refile after the other claims ...