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Douglas C. Ramsey v. Allstate Insurance Company

November 14, 2011

DOUGLAS C. RAMSEY, PLAINTIFF,
v.
ALLSTATE INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Sandra S. Beckwith Senior United States District Judge

ORDER

This matter is before the Court on Defendant Allstate Insurance Company's Second Motion for Summary Judgment (Doc. No. 44) and Plaintiff Douglas C. Ramsey's Motion to Grant Judgment on Count Five (Doc. No. 45). For the reasons that follow, Defendant's motion for summary judgment is well-taken and is GRANTED; Plaintiff's motion to grant judgment on Count Five is not well-taken and is DENIED.

I. Background

The material facts of this case are not in dispute and can be briefly summarized.

Plaintiff Douglas C. Ramsey lived with his father, Ralph Ramsey, in a house owned by his father. The house was insured against loss by fire under a policy Ralph purchased from Defendant Allstate Insurance Company ("Allstate"). Ralph was the name insured under the policy and paid the premiums to Allstate through Bank of America, who held a mortgage on the house. Since he lived in the house, Plaintiff was also considered an insured under the terms of the policy, but only through the end of the premium period following the death of the named insured.

Ralph passed away in August 2002. It is not disputed that Plaintiff did not notify Allstate of Ralph's death and that Allstate did not otherwise receive actual notice of Ralph's death. Plaintiff assumed the mortgage on the house and continued to make premium payments on Ralph's policy through Bank of America. Allstate, however, never issued a new policy in Plaintiff's name. A fire damaged the house in July 2008. Allstate took possession of the home, put Plaintiff's undamaged property in storage, and paid him $500 initially to cover expenses. See Ramsey v. Allstate Ins. Co., 416 Fed. Appx. 516, 518-19 (6th Cir. 2011). In the course of investigating Plaintiff's claim, Allstate learned for the first time of Ralph's death in 2002. Allstate, therefore, denied Plaintiff's claim for coverage on the grounds that he was not an insured under the terms of the policy.

Plaintiff originally sued Allstate for breach of the insurance contract, bad faith processing of his claim, and subrogation. After the close of discovery, the Court granted Allstate's motion for summary judgment on each of Plaintiff's claims. The Court ruled that Plaintiff ceased being an insured under Ralph's policy at the end of the premium period following Ralph's death. The Court also found that Allstate did not have actual notice of Ralph's death and that under Ohio law, Plaintiff could not establish coverage under the policy through estoppel. Because his breach of contract claim failed, Plaintiff's bad faith claim failed as well. Finally, the Court ruled that Plaintiff failed to state a claim for subrogation since he had not paid Allstate for any loss that Bank of America may have sustained in the fire. Id. at 11-15. The Court, therefore, entered judgment in Allstate's favor on each of Plaintiff's claims.

On appeal by Plaintiff, the Sixth Circuit sustained this Court's conclusion that there was no express contract for insurance between Plaintiff and Allstate. Ramsey, 416 Fed. Appx. at 519. The Court of Appeals, however, found that this Court had failed to consider whether Allstate had constructive notice of Ralph's death. The Court of Appeals also found that the Court failed to consider whether there was an implied-in-fact contract for insurance between Plaintiff and Allstate. The Court thought that Allstate might have had constructive notice of Ralph's death since his estate went through probate and title to the house was transferred to Plaintiff. Id. at 520. The Court noted that Allstate's actions after the fire, such as accepting premiums, taking possession of the home and paying an advance in expenses to Plaintiff, might have created an implied-in-fact contract.

Id. at 521. The Court, therefore, remanded the case for this Court "to consider in the first instance whether Allstate received constructive notice of Ralph's death estopping it from denying coverage, and whether there is an implied-in-fact contract to provide insurance coverage between the parties." Id. at 522.

II. Plaintiff's Motion for Default Judgment

On remand from the Court of Appeals, the Court held a scheduling conference with the parties and established July 8, 2011 as the date for filing amended pleadings. Doc. No. 39. On July 7, 2011, Plaintiff filed an amended complaint which reasserted his original claims and added a fifth cause of action for constructive knowledge and implied-in-fact contract. Doc. No. 40. This was obviously done to bring the pleadings into conformity with the rulings of the Court of Appeals.

On July 14, 2011, Allstate moved to strike Counts One through Four of the amended complaint on the grounds that they were redundant and immaterial in light of the Court of Appeals' decision in Ramsey. The Court agreed and on August 23, 2011, granted Allstate's motion. Doc. No. 43. Allstate did not file an answer as to Count Five of the amended complaint but did file the instant motion for summary judgment on Count Five on September 7, 2011.

Plaintiff now moves for default judgment on Count Five on the grounds that Allstate failed to file a timely answer to that count of the complaint. Allstate argues that Plaintiff has not been prejudiced by this omission and moves the Court for leave to file an answer out of time.

Assuming without deciding that Plaintiff would be entitled to default judgment under these facts, the Court would nevertheless excuse Allstate from the default. In United Coin Meter v. Seaboard Coastline R.R., 705 F.2d 839 (6th Cir. 1983), the Court set forth the factors that the trial court should consider in deciding whether to set aside a default judgment: 1) whether the plaintiff will be prejudiced; 2) whether the defendant has a meritorious defense; and 3) whether culpable conduct of the defendant led to the default. Id. at 845. To the extent there was a default, all of these factors favor setting it aside.

Plaintiff is not prejudiced by Allstate's failure to answer the amended complaint. All of the issues to be considered by the Court and parties on remand were clearly framed by the Court of Appeals. Plaintiff's amended complaint, therefore, was more or less superfluous. Allstate has vigorously defended the case from the outset and it should have been fairly self-evident that Allstate would continue to deny liability under the new theories advanced by the amended complaint. Allstate promptly moved for summary judgment on Count Five, even before Plaintiff moved for ...


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