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Philadelphia Indemnity Insurance Co. v. Asperi

United States District Court, D. Colorado

February 13, 2019




         This matter is before the Court upon Plaintiff Philadelphia Indemnity Insurance Company's Motion for Default Judgment as Against William Asperi. (Doc. # 15.) For the reasons that follow, default judgment shall be entered against Defendant William Asperi.

         I. BACKGROUND

         On November 14, 2014, Defendant completed a Professional Liability Insurance Application and submitted it to Plaintiff. (Doc. # 1 at 2.) As part of the application, Plaintiff made a number of false representations, including that he had never been convicted of a misdemeanor or a felony. Based on the information in the application, Plaintiff issued an Allied Healthcare Providers Professional and Supplemental Liability Insurance Policy (the “Policy”), which was effective from November 14, 2014, to November 14, 2015. The terms of the Policy provide, inter alia:

We will pay on your behalf those sums that you become legally obligated to pay as damages because of a professional incident that takes place in the coverage territory and occurs during the policy period. The professional incident must result from the practice of the profession shown in the Declarations.

(Doc. # 1-2 at 3.) The Declarations list Defendant's profession as a “Master Level Psychologist.” The Policy ended on November 14, 2015, and did not renew.

         On June 20, 2017, Tabatha Goodrich filed a complaint against Defendant in Denver County District Court, case number 2017CV32255 (the “underlying lawsuit”). In the underlying lawsuit, Ms. Goodrich indicated that beginning in January 2015, she had been treated by Defendant, who claimed to be a “Registered Psychotherapist in the State of Colorado [and] held himself out as having knowledge and skill in the field of neuropsychology and psychology.” (Doc. # 15-2 at 2.) However, Defendant's registration was based on Defendant's submission of “false, misleading, incomplete and fraudulent information in his Application for Registration with the Colorado State Board, specifically with regard to his physical and mental condition and his criminal record, which the Board relied on when it approved the Application on October 3, 2014.” (Doc. # 1 at 7.) Defendant made similar representations when he submitted his insurance application to Plaintiff the next month. Defendant was suspended from the practice of psychotherapy on September 22, 2015.

         Defendant's fraudulently obtained credentials allowed him to provide mental health services to Ms. Goodrich. During the course of their treatment relationship, Defendant began a romantic relationship with Ms. Goodrich. Defendant “promised [Ms. Goodrich] that if she stayed with him, she would be able to live a normal life.” (Doc. # 1 at 5.) Additionally, Defendant spent substantial time psychoanalyzing Ms. Goodrich, “telling her that he was trying to find out what was wrong with her, ” and he eventually diagnosed Ms. Goodrich with Borderline Personality Disorder. Ms. Goodrich subsequently became pregnant as a result of her relationship with Defendant. Defendant's conduct gave rise to the underlying lawsuit in which Ms. Goodrich sued Defendant for multiple claims including negligence.

         Plaintiff was provided notice of the underlying lawsuit on August 11, 2017, and Plaintiff is currently providing a defense to Defendant pursuant to a reservation of rights. Plaintiff initiated the instant action seeking declaratory relief with respect to the validity of the Policy and argues that the Policy should be declared void because Defendant made material misrepresentations in the application on which the Policy was based.

         Plaintiff personally served Defendant with a summons and copy of the Complaint on November 16, 2018. (Doc. # 9.) Defendant did not answer or otherwise appear. The clerk then entered default on December 11, 2018, and Plaintiff filed this motion for default judgment on January 4, 2019. (Doc. ## 11, 15.)


         Pursuant to the Federal Rules of Civil Procedure, the court shall enter a default judgment against a party that has failed to plead or otherwise defend an action brought against it. Fed.R.Civ.P. 55(b)(2). Default judgment may be entered by the clerk of court if the claim is for “a sum certain, ” Fed.R.Civ.P. 55(b)(1), in all other cases, as here, “the party must apply to the court for a default judgment.” Fed.R.Civ.P. 55(b)(2). “[D]efault judgment must normally be viewed as available only when the adversary process has been halted because of an essentially unresponsive party. In that instance, the diligent party must be protected lest he be faced with interminable delay and continued uncertainty as to his rights. The default judgment remedy serves as such a protection.” In re Rains, 946 F.2d 731, 732-33 (10th Cir. 1991) (internal quotation marks and citation omitted).

         A default amounts to an admission of liability, and all well-pleaded allegations in the complaint pertaining to liability are deemed true. See Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992) (internal citation omitted); Lyons P'ship, L.P. v. D&L Amusement & Entm't, Inc., 702 F.Supp.2d 104, 109 (E.D.N.Y. 2010). It “remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit conclusions of law.” Leider v. Ralfe, No. 01 Civ. 3137 (HB) (FM), 2004 WL 1773330, at *7 (S.D.N.Y. July 30, 2004) (quoting In re Indus. Diamonds Antitrust Litig., 119 F.Supp.2d 418, 420 (S.D.N.Y. 2000)).

         In addition to, or in lieu of, damages and costs, courts are empowered to grant declaratory relief following default. Continental Ins. Co. v. Huff Enters. Inc., No. 07-cv-3821 (NGG), 2009 WL 3756630, at *3 (E.D.N.Y. Nov. 6, 2009). Under the Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202, the Court may enter a judgment declaring “the rights and other legal relations of any interested party seeking such declaration . . . .” 28 U.S.C. § 2201. Declaratory relief is appropriate “(i) where the judgment will serve a useful purpose in clarifying and settling the legal relations in issue, or (ii) when it will terminate and afford relief from the uncertainty, insecurity and controversy giving rise to the proceedings.” Universal Acupuncture Pain Servs., P.C. v. State Farm Mut. Auto. Ins. Co., 196 F.Supp.2d 378, 384 (S.D.N.Y. 2002) (quoting Md. Cas. Co. v. Rosen, 445 F.2d 1012, 1014 (2d Cir. 1971)). In the context of a default judgment, a plaintiff “must . . . establish that on the law it is entitled to the relief it requests, given the facts as established by the default.” PHL Variable Ins. Co. v. Bimbo, No. 17-CV-1290 (FB) (ST), 2018 WL 4691222, at *2 ...

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