ALLSTATE LIFE INSURANCE COMPANY v. MARKOWITZ (2022)

ORDER GRANTING PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT [ECF No. 62]

Before the Court is the motion of Plaintiff Allstate Life Insurance Company for default judgment against Defendant Kevin Dingman.¹ The Court finds this matter appropriate for resolution without a hearing. See Fed. R. Civ. P. 78; L.R. 7-15. After considering the papers filed in support, and in the absence of any opposition,² the Court orders that the Motion is GRANTED, as set forth herein.

I. BACKGROUND

A. The Complaint in Interpleader

The facts as alleged in the Complaint in Interpleader are as follows:

Around July 21, 1989, Allstate issued a life insurance policy (the “Policy”) in the face amount of $80,000 to Theresa Catherine Dingman (“Insured”).³ The Application for the Policy (the “Application”) listed Insured's grandson, Kevin D. Upperman,⁴ as the “First Class” beneficiary.⁵ The Application also listed Insured's son, John D. Dingman, as the “Second Class” beneficiary.⁶

Over 18 years later—around August 21, 2007—Insured submitted a request for a change of beneficiary (the “2007 Change Form”).⁷ The 2007 Change Form designated Insured's granddaughter, Theresa Markowitz (100%), as the Policy's primary beneficiary.⁸ The 2007 change Form also designated Insured's grandson, Kevin D. Dingman (100%), as the contingent beneficiary.⁹ Allstate approved the changes on August 29, 2007.¹⁰

Over 11 years later—around October 5, 2018—Allstate received a request for a change of beneficiary (the “2018 Change Form”).¹¹ The 2018 Change Form was signed by Donna Eichler as the person with power of attorney for Insured and attached a Power of Attorney form.¹² The 2018 Change Form designated Insured's son and granddaughter, Herbert A. Dingman, Jr. (50%) and Jamie Dingman (50%), as primary beneficiaries.¹³ The 2018 Change Form designated no contingent beneficiaries.¹⁴

Twenty days later, Allstate informed Insured of deficiencies in the 2018 Change Form that prevented Allstate from accommodating the requests.¹⁵ Several months later, in February 2019, Insured submitted another change of beneficiary request (the “2019 Change Form”). The form designated Jamie Dingman (40%), Herbert A. Dingman, Jr. (30%), and John A. Dingman (30%) as the primary beneficiaries.¹⁶ As was the case with the 2018 Change Form, the form listed no contingent beneficiaries.¹⁷ Allstate informed Insured that this form also contained deficiencies that made it unacceptable.¹⁸

One year later, in February 2020, Allstate replied to a request from Insured for a statement of insurance for the Policy.¹⁹ The statement listed Theresa C. Markowitz as the primary beneficiary and Kevin D. Dingman as the contingent beneficiary.²⁰

On July 24, 2020, Allstate learned that Insured had passed away.²¹ Accordingly, Allstate sent a claim letter to Theresa Markowitz.²² In September 2020, Donna Eichler contacted Allstate and raised her concerns regarding the beneficiary designation.²³ Eichler noted that she believed that Insured intended to change her beneficiaries at least twice after her submission of the 2007 Change Form.²⁴ Allstate informed Eichler that it was aware of her concerns, but it could not say more because Eichler was not a party to the contract.²⁵

Jamie Dingman informed Allstate on October 27, 2020, that she challenged the beneficiary designation on the Policy.²⁶ Jamie Dingman felt that the 2007 Change Form did not reflect Insured's intent; she instead felt that Insured's wishes were best expressed through the 2019 Change Form.²⁷

Allstate stands ready to disperse the full $80,764.00 plus accrued interest.²⁸ Allstate filed this Complaint in Interpleader so that defendants Theresa Markowitz, Kevin Dingman, Jamie Dingman, Herbert Dingman, and John Dingman may litigate their respective claims to the Policy proceeds.²⁹

B. The Motion for Default Judgment

Allstate served Kevin Dingman with the Complaint in Interpleader on February 16, 2021.³⁰ Allstate then sent Kevin Dingman a personal letter alerting him that he should reach out to Allstate if he wishes to pursue a claim to the Policy proceeds.³¹ Counsel for Allstate then caused Kevin Dingman to be personally served on June 1, 2021.³² Kevin Dingman failed to file a responsive pleading by the June 22, 2021, deadline or thereafter. The Clerk entered default against Kevin Dingman on June 24, 2021.³³ Allstate now seeks default judgment against Kevin Dingman.³⁴

II. LEGAL STANDARD

Pursuant to Rule 55(b) of the Federal Rules of Civil Procedure, a court may issue a default judgment following the entry of default by the Clerk of the Court. This Court's Local Rules require that an application for default judgment must be accompanied by a declaration that conforms to the requirements of Rule 55(b) and sets forth the following information:

(a) When and against which party the default was entered;

(b) The identification of the pleading to which default was entered;

(c) Whether the defaulting party is an infant or incompetent person, and if so, whether that person is represented by a general guardian, committee, conservator or other representative;

(d) That the Servicemembers Civil Relief Act (50 U.S.C. App. § 521) does not apply; and

(e) That notice of the application has been served on the defaulting party, if required by F. R. Civ. P. 55(b)(2).

L.R. 55–1.

Whether to enter default judgment is a decision committed to the sound discretion of the district court. Aldabe v. Aldabe, 616 F.2d 1089, 1092-93 (9th Cir. 1980). In Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986), the Ninth Circuit set forth the following factors for a court to consider in determining whether to grant default judgment:

(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 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, 782 F.2d at 1471-72. Upon the entry of default, the well-pleaded factual allegations of a complaint are deemed true; however, allegations pertaining to the amount of damages must be proven. TeleVideo Systems Inc. v. Heidenthal, 826 F.2d 915, 917 (9th Cir. 1987). A plaintiff is required to provide evidence of his or her damages, and a court may rely on the declarations submitted by the plaintiff or may order a full evidentiary hearing. Fed. R. Civ. P. 55(b)(2). Further, the damages sought must not “differ in kind from, or exceed in amount, what is demanded in the pleadings.” Fed. R. Civ. P. 54(c).

III. DISCUSSION

Allstate seeks default judgment against Kevin Dingman discharging Allstate from further liability to Kevin Dingman under the Policy. Allstate further asks the Court to restrain Kevin Dingman from instituting or prosecuting any proceeding in any state or federal court against Allstate for the recovery of the Policy's proceeds.³⁵

A. Procedural Requirements

Allstate satisfied the procedural requirements for the entry of default judgment. Pursuant to Rule 55, Allstate did not petition for a default judgment until after the Clerk entered Kevin Dingman's default. Additionally, Allstate's Application and accompanying declaration set forth the information required by the Local Rules.³⁶

B. Eitel Factors

1. Possibility of Prejudice

Allstate and the other defendants will suffer prejudice if the Court does not enter default judgment. The other defendants will suffer prejudice because “[w]ithout entry of default judgment, the competing stakeholders’ claims cannot be finally resolved.” W. Conf. of Teamsters Pension Plan v. Jennings, 2011 WL 2609858, at *3 (N.D. Cal. June 6, 2011). Allstate will suffer prejudice because its “primary purpose is not to compensate, but to protect stakeholders from multiple liability as well as from the expense of multiple litigation.” Aetna Life Ins. Co. v. Bayona, 223 F.3d 1030, 1034 (9th Cir. 2000). This factor weighs heavily in favor of default judgment.

2. Substantive Merits of Allstate's Claims

The second and third Eitel factors concern the merits of Allstate's substantive claims and the sufficiency of its pleading, respectively. Eitel, 782 F.2d at 1471-72. “The Ninth Circuit has suggested that these two factors require that a plaintiff ‘state a claim on which the [plaintiff] may recover.’ ” PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1175 (C.D. Cal. 2002) (internal citation omitted). Here, Allstate's Complaint in Interpleader reveals Defendants’ competing claims. The other defendants do not dispute Allstate's description of the competing claims.³⁷ Kevin Dingman has not challenged Allstate's description of the competing claims. This factor weighs in favor of default judgment.

3. Sum of Money at Stake

The fourth Eitel factor examines the amount of money at stake in the action relative to the gravity of the defendant's conduct. PepsiCo, 238 F. Supp. 2d at 1176. Here, Allstate does not seek monetary judgment from Kevin Dingman. The Court therefore will not consider this factor.

4. Possibility of Dispute Concerning Material Facts

Upon entry of default, all well-pleaded factual allegations are deemed true—except those pertaining to damages. TeleVideo, 826 F.2d at 917; Elektra Entm't Group Inc. v. Crawford, 226 F.R.D. 388, 393 (C.D. Cal. 2005) (“Because all allegations in a well-pleaded complaint are taken as true after the court clerk enters default judgment, there is no likelihood that any genuine issue of material fact exists.”). Because Kevin Dingman has neither appeared in this action nor asserted any defenses, it is unlikely that disputes regarding material facts will arise. Accordingly, this factor favors the entry of a default judgment.

5. Whether Default Was Due to Excusable Neglect

Under the sixth factor, a court must consider whether a defendant's default may have been due to excusable neglect. Eitel, 782 F.2d at 1472. This factor favors the entry of a default judgment when the defendant has been properly served or the plaintiff demonstrates that the defendant is aware of the action. Wecosign, Inc. v. IFG Holdings, Inc., 845 F. Supp. 2d 1072, 1082 (C.D. Cal. 2012). In the instant case, Kevin Dingman failed to respond after receiving notice of the summons, a personal letter from Allstate, and other documents by personal service. Despite being alerted to this action on multiple occasions, Kevin Dingman has not responded. The Court acknowledges that Kevin Dingman was incarcerated both times that he was served ³⁸ and that it may be difficult for him to respond. Nevertheless, it was still Kevin Dingman's responsibility to respond—including by seeking an extension—and to assert any claims to the Policy proceeds. This factor weighs in favor of default.

6. Policy Favoring Decision on the Merits

Generally, default judgments are disfavored because “[c]ases should be decided upon their merits whenever reasonably possible.” Eitel, 782 F.2d at 1472 (citing Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985)). However, when a defendant fails to appear and respond, default judgment is appropriate. Wecosign, 845 F. Supp. 2d at 1083. Here, Kevin Dingman's failure to respond hinders the other defendants’ ability to reach a decision on the merits. This factor weighs in favor of default judgment, as it will allow the other defendants to litigate the case and to have it decided on the merits.

C. Requested Relief

Rule 54(c) provides that “[a] default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.” Fed. R. Civ. P. 54(c). Here, Allstate seeks the same relief that it sought in its Complaint in Interpleader: injunctive and declaratory relief.³⁹ Specifically, Allstate seeks an Order and Injunction pursuant to 28 U.S.C. § 2361 restraining Kevin Dingman from instituting or prosecuting any proceeding in any state or federal court against Allstate for the recovery of the Policy's life insurance proceeds. Allstate further asks the Court to discharge it from any further liability to Kevin Dingman with respect to the Policy.⁴⁰

A party making a claim for injunctive relief must show “irreparable harm and inadequacy of legal remedies.” Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 507, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959). However, injunctive relief in interpleader actions is common: “the whole purpose being to avoid inconsistent results in separate lawsuits.” Aristud-Gonzalez v. Gov't Dev. Bank for Puerto Rico, 501 F.3d 24, 27 (1st Cir. 2007). Here, Allstate has demonstrated the possibility of irreparable harm, and it is not requesting monetary relief against Kevin Dingman. Allstate filed its Complaint in Interpleader to avoid being inundated by conflicting claims. Kevin Dingman has been personally served the Summons, Complaint in Interpleader, and all relevant filings in this action, yet he has failed to answer or otherwise to appear in this action. Therefore, injunctive relief is proper.

IV. CONCLUSION

For the foregoing reasons, the Court hereby ORDERS as follows:

1. Allstate's Motion for Default Judgment is GRANTED.

2. Kevin Dingman is RESTRAINED from instituting or prosecuting any proceeding in any state court or United States court against Allstate for the recovery of the Policy's life insurance proceeds, and Allstate is DISCHARGED from any further liability to Defendant Kevin Dingman with respect to the Policy.

IT IS SO ORDERED.

FOOTNOTES

1.   Pl.’s Mot. for Default J. (the “Motion”) [ECF No. 62].

2.   The Court considered the following papers: (1) the Motion; and (2) Defs. John Dingman and Jamie Dingman's Non Opp'n to Mot. for Default J. [ECF No. 66].

3.   Complaint in Interpleader ¶ 10.

4.   The Court notes that it is unclear whether there is a typo in the Complaint in Interpleader. It is unclear whether “Kevin D. Upperman” refers to “Kevin D. Dingman” since both are described as Insured's grandsons and Upperman does not appear again in the Complaint in Interpleader.

5.   Id. at ¶ 11.

6.   Id.

7.   Id. at ¶ 12.

8.   Id.

9.   Id.

10.   Id.

11.   Id. at ¶ 13.

12.   Id.

13.   Id.

14.   Id.

15.   Id. at ¶ 14.

16.   Id. at ¶ 15. It is again unclear whether Allstate has a typo in its Complaint in Interpleader. John D. Dingman is described in ¶ 11, and John A. Dingman is described in ¶ 15. Both are described as Insured's son. The Complaint in Interpleader only lists one John Dingman as a defendant.

17.   Id.

18.   Id.

19.   Id. at ¶ 16.

20.   Id.

21.   Id. at ¶ 17.

22.   Id.

23.   Id. at ¶ 18.

24.   Id.

25.   Id.

26.   Id. at ¶ 20.

27.   Id.

28.   Id. at ¶ 24.

29.   Id. at ¶ 22.

30.   See Notice and Acknowledgement of Service [ECF No. 19]

31.   Decl. of Sara M. Rogers (the “Rogers Declaration”) [ECF No. 62]

32.   See Proof of Service [ECF No. 21]. See also Rogers Declaration ¶ 6.

33.   See Default by Clerk [ECF No. 57].

34.   See Motion.

35.   Motion 3:3-4.

36.   Counsel for Allstate should be more explicit in her declaration that the Service Members Civil Relief Act (50 U.S.C. App. § 521) does not apply. Merely stating that Kevin Dingman is not in military service, as counsel does in Rogers Declaration ¶ 3, is not as explicit as it ought to be.

37.   See Answer filed by Herbert Dingman [ECF No. 27]; Answer filed by Theresa Markowitz [ECF No. 33]; and Answer filed by Jamie Dingman and John Dingman [ECF No. 38].

38.   Motion 3:26-4:12.

39.   Compare Complaint in Interpleader and Motion 9:2-7.

40.   See, e.g., Motion 9:3-7.

John W. Holcomb, UNITED STATES DISTRICT JUDGE