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United States Fire Insurance Co. v. Siu's Electric Corp.

United States District Court, D. Hawaii

December 31, 2018

UNITED STATES FIRE INSURANCE COMPANY, a foreign corporation, Plaintiff,
v.
SIU'S ELECTRIC CORP., ROMEO RAMIRO and DOES 1-10, Defendants.

          FUKUNAGA MATAYOSHI CHING & KON-HERRERA, LLP WESLEY H. H. CHING 2896 SHEREE KON-HERRERA 6927 JENNIFER C. CLARK 4497 ATTORNEYS FOR PLAINTIFF UNITED STATES FIRE INSURANCE COMPANY

          FINDINGS AND RECOMMENDATION GRANTING PLAINTIFF UNITED STATES FIRE INSURANCE COMPANY'S MOTION FOR DEFAULT JUDGMENT ONLY AS TO ROMEO RAMIRO

          KENNETH J. MANSFIELD UNITED STATES MAGISTRATE JUDGE.

         Before this Court is Plaintiff UNITED STATES FIRE INSURANCE COMPANY'S (“U.S. Fire”) Motion for Default Judgment. Said Motion came on for hearing on November 29, 2018 at 10:00 a.m., with Jennifer C. Clark appearing on behalf of Plaintiff U.S. Fire and Bradford F.K. Bliss appearing on behalf of Defendant Siu's Electric Corp (“Siu's Electric”). Upon calling the case, Defendant Romeo Ramiro (“Ramiro”) did not appear nor did any counsel appear on his behalf. Upon careful consideration of the Motion, the supporting memoranda, and the arguments of counsel the Court hereby finds and recommends that U.S. Fire's Motion be GRANTED only as to Ramiro.

         I. BACKGROUND

         The instant declaratory judgment action was brought by U.S. Fire in order to obtain a judicial determination as to its defense and indemnity obligations, if any, to Ramiro under the U.S. Fire Policy issued to Siu's Electric for the claims brought against Ramiro in the civil action Renee Malacas, et al, v. Siu's Electric Corp., et al., in the Circuit Court of the First Circuit, State of Hawaii, Civil No. 17-1-1967-12 GWBC, (the “Underlying Lawsuit”). See ECF No. 1-1.

         A. The Underlying Lawsuit

         On December 1, 2017, Plaintiffs Renee Malacas and Carolina Lau (collectively “Malacas” or “Underlying Plaintiffs”) filed the Underlying Lawsuit against Defendants Siu's Electric and Romy Romero (sic), alleging that on or about December 18, 2015, the Malacas and their son were invited guests to Siu's Electric's Christmas party located on Siu's Electric's property. ECF No. 1-1. Toward the end of the Christmas Party, Ramiro mixed some acetylene from an unsecured storage area with some gasoline in a trash bag. At the same time, the Malacas and their son were assisting in the cleanup in close proximity to Ramiro. The Malacas were unaware that Ramiro was holding the trash bag with the mixture of acetylene and gasoline. The trash bag held by Ramiro exploded (“the explosion”) without warning with a loud sound. Id.

         The Underlying Lawsuit alleges that prior to the explosion, Siu's Electric knew or should have known that Ramiro was mixing gasoline and acetylene. The Underlying Lawsuit also alleges that prior to the explosion, Siu's Electric knew or should have known that Ramiro needed to be strictly supervised because Ramiro had previously acted inappropriately and/or negligently. The Underlying Lawsuit also alleges that prior to the explosion, Siu's Electric had the ability and opportunity to supervise, restrict, and control Defendant Ramiro's conduct at the Christmas Party so as not to cause an unreasonable risk of harm to guests such as the Malacas. The Underlying Lawsuit also alleges that prior to the explosion, Ramiro was warned several times by other Siu's Electric supervisors and employees not to mix gasoline and acetylene as he had previously done. Id.

         The Underlying Lawsuit alleges that the explosion was the proximate cause of Underlying Plaintiffs' bodily injuries, severe emotional distress, medical and other expenses and other damages. The Underlying Lawsuit contains five counts against Underlying Defendants Siu's Electric and Ramiro including negligence, gross negligence, strict liability, and liability of Siu's Electric based on the doctrine of respondeat superior. The Underlying Lawsuit prays for general and special damages, punitive damages, pre-judgment interest, attorneys' fees and costs, and for such other and further relief as the Court may deem just and proper. Id.

         Siu's Electric tendered the defense of Siu's Electric and Ramiro for the Underlying Lawsuit to U.S. Fire, which is providing a defense to both Defendants subject to a reservation of its rights. See ECF No. 1.

         B. Procedural History of the Declaratory Judgment Lawsuit

         On June 15, 2018, U.S. Fire filed its Complaint for Declaratory Judgment against Defendants Siu's Electric and Ramiro. Id. On July 18, 2018, the Summons and Complaint were personally served on Ramiro at his residence. ECF No. 8. On July 26, 2018, the Summons and Complaint were personally served on Gary Siu, Vice President and Agent of Siu's Electric at Siu's Electric Corp's address. ECF No. 9.

         On August 31, 2018, U.S. Fire filed its Request for Entry of Default against Siu's Electric and Ramiro on the basis that the time had expired within which Siu's Electric and Ramiro could have answered, moved, defended or responded to U.S. Fire's Complaint, as provided in Fed.R.Civ.P. 12(a)(1)(A). Fed.R.Civ.P. 12 provides in relevant part:

(a) Time to Serve a Responsive Pleading.
(1) In General. Unless another time is specified by this rule or a federal statute, the time for serving a responsive pleading is as follows:
(A) A defendant must serve an answer:
(i) within 21 days after being served with the summons and complaint;
(b) How to Present Defenses. Every defense to a claim for relief in any pleading must be asserted in the responsive pleading if one is required. But a party may assert the following defenses by motion:
(1) lack of subject-matter jurisdiction;
(2) lack of personal jurisdiction;
(3) improper venue;
(4) insufficient process;
(5) insufficient service of process;
(6) failure to state a claim upon which relief can be granted; and
(7) failure to join a party under Rule 19.
A motion asserting any of these defenses must be made before pleading if a responsive pleading is allowed. ***

         Under Rule 12(a) or (b), above, an answer or a motion must have been filed, respectively, by Siu's Electric Corp. and Ramiro within 21 days after the Summons and Complaint were served. For Ramiro, the time to file an answer or to file a Rule 12(b) motion to dismiss the Complaint was 21 days after service on July 18, 2018, or August 2, 2018. For Siu's Electric, the time to file an answer or to file a Rule 12(b) motion to dismiss the Complaint was 21 days after service on July 26, 2018, or August 16, 2018. No answer, responsive pleading, other defense or response was filed by either Siu's Electric or Ramiro by those dates. In addition, neither Siu's Electric nor Ramiro had requested any extension to the Federal Rules of Civil Procedure's deadlines.

         On August 31, 2018, the Clerk filed the Entry of Default as to Siu's Electric and Ramiro, pursuant to Fed.R.Civ.P. 55(a). ECF No. 14. After U.S. Fire filed its Motion for Default Judgment against Siu's Electric and Ramiro, [1] counsel for Siu's Electric Corp. contacted counsel for U.S. Fire. ECF No. 25, 25-1. In a spirit of cooperation, U.S. Fire and its named insured on the Policy, [2] Siu's Electric, agreed to stipulate to set aside the Entry of Default as to Siu's Electric in this case. Id. The Stipulation to Set Aside Entry of Default as to Siu's Electric. (“Stipulation”) was approved by the Court on November 13, 2018. ECF No. 24.

         As a result of the Stipulation, U.S. Fire no longer seeks a Default Judgment against Defendant Siu's Electric Corp. However, U.S. Fire still seeks a Default Judgment against Defendant Ramiro and a Declaratory Judgment that, under the Policy, U.S. Fire owes no duty to defend or indemnify Defendant Ramiro in the Underlying Lawsuit.

         On November 8, 2018, Siu's Electric filed a “Statement of Position as to Plaintiff United States Fire Insurance Company's Motion for Default Judgment filed October 15, 2018” (“Statement”). ECF No. 23. In that Statement, Siu's Electric articulates that it “takes no position” with respect to U.S. Fire's Motion for Default Judgment “to the extent that U.S. Fire's motion is strictly limited to a determination of [U.S. Fire's] duty to defend and indemnify Defendant Ramiro, and does not seek any ruling from this Court concerning U.S. Fire's duty under its policy to defend or indemnify Siu's for the claims alleged in the Underlying Lawsuit[.]” As a result, no opposition has been filed to U.S. Fire's Motion for Default Judgment as to Defendant Ramiro or the requested Declaratory Judgment that, under the Policy, U.S. Fire has no duty to defend or indemnify Ramiro in the Underlying Lawsuit.

         2. THE U.S. FIRE POLICY

         Siu's Electric was issued U.S. Fire Policy No. 503826528 for the policy period 2/27/15 to 2/27/16 (the “Policy”). ECF No. 1-2. The Policy's Commercial General Liability Coverage Part (“CGL Part”) provides a General Aggregate Limit of $2, 000, 000, a $1, 000, 000 Each Occurrence Limit for Bodily Injury and Property Damage and a $500.00 deductible per occurrence. The CGL ...


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