United States District Court, W.D. Washington, Seattle
ORDER GRANTING IN PART PLAINTIFF'S MOTION FOR
S. LASNIK, UNITED STATES DISTRICT JUDGE
matter comes before the Court on plaintiff Developers Surety
and Indemnity Company's (“DSIC”) motion for
default judgment. Dkt. #8.
case pertains to the Woodland Park Townhomes project
(“the Townhomes”), which consists of seven
townhome-units located at 4319-4325 Woodland Park Avenue
North in Seattle, Washington. Dkt. #1 (Compl.) at ¶ 4.1.
The Townhomes were built by defendant Woodland Park
Townhomes, LLC (“Woodland Park”). Dkt. #6 at
¶ 1. Woodland Park has been sued in state court for
various construction defects. See Woodland Park Townhomes
Homeowners Association v. Woodland Park Townhomes LLC,
No. 17-2-24978-5 SEA (King Cty. Sup. Ct.) (“the State
March 5, 2015, Hardy Development Company
(“Hardy”) retained Urban Construction Company,
LLC (“Urban”) as the General Contractor for the
Townhomes. See Ex. I, Dkt. #9 at 23-25. Per their
contract, Urban was obligated to add Woodland Park as an
additional insured on its insurance policies. Id. at
24. DSIC issued Commercial General Liability Policy No.
BIS0019539-0 for the policy period of July 28, 2014 to July
28, 2015 to Urban (“the Policy”). See
Ex. Q, Dkt. #9 at 74-169. Woodland Parks asserts that it is
an “additional insured” under the Policy's
Blanket Additional Insured endorsement. Compl. at ¶ 3.2;
see Ex. L, Dkt. #9 at 35; see Ex. Q, Dkt.
#9 at 155 (Blanket Additional Insured endorsement).
seems to have begun in 2015, sometime between April and
August. See Exs. A-H, Dkt. #9 at 6-22. In 2016, the
Woodland Park Townhomes Homeowners Association (“the
HOA”) was incorporated. See Ex. J, Dkt. #9 at
26-27. On September 22, 2017, the City of Seattle approved
the Townhomes for occupancy. See Ex. H, Dkt. #9 at
22. On the same day, the HOA filed a lawsuit against Woodland
Park alleging breach of contract, breach of express warranty,
and breach of implied warranty of habitability. See
Ex. K, Dkt. #9 at 29-33. Counsel for the HOA notified DSIC of
the State Court Case on May 30, 2018. Ex. L, Dkt. #9 at
agreed to defend and indemnify Woodland Park subject to a
full reservation of rights. Ex. M, Dkt. #9 at 42-55. On
August 15, 2018, DSIC filed a complaint seeking declaratory
judgment as to the nature of its obligations. Woodland Park
failed to respond. Default was entered against Woodland Park
on October 3, 2018. Dkt. #7. DSIC now moves for default
judgment. Dkt. #8.
seeks default judgment and declarations that 1) no property
damage occurred during the Policy period, 2) the Townhomes
were Urban's “product, ” 3) the Townhomes
were “new residential construction” and not
covered under the Policy, 4) property damage only occurred
after the Policy period and is not covered, 5) the
Policy's construction management exclusion precludes
coverage, and 6) additional conditions exclude coverage.
Rule of Civil Procedure 55 provides for a two-step procedure
to the entry of a default judgment. See Eitel v.
McCool, 782 F.2d 1470, 1471 (9th Cir. 1986). Once an
entry of default has been made, the Court has discretion
whether to enter a default judgment. Id. When
exercising that discretion, courts may consider:
(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.
Id. at 1471-72.
Sufficiency of the Complaint, Merits of DSIC's
Substantive Claims, and the Possibility of a Dispute
Concerning Material Facts
general rule of law is that upon default the factual
allegations of the complaint, except those relating to the
amount of damages, will be taken as true.” Geddes
v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977)
(citing Pope v. United States, 323 U.S. 1, 12
(1944)); Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir.
1974). The Court will ...