Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alsd-1_07-cv-00322/USCOURTS-alsd-1_07-cv-00322-1/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:2201 Declaratory Judgement (Insurance)

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IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

LEXINGTON INSURANCE COMPANY, )

 )

Plaintiff, )

 )

v. ) CIVIL ACTION 07-0322-WS-C

 )

EVAN J. WOLFE, et al., )

 )

Defendants. )

ORDER 

 This matter is before the Court on the plaintiff’s motion for entry of default

judgment against defendant Edmond H. Smith IV. (Doc. 33). After carefully considering

the motion and other relevant material in the file, the Court concludes that the motion is

due to be granted in part and denied in part.

“The defendant, by his default, admits the plaintiff’s well-pleaded allegations of

fact ....” Nishimatsu Construction Co. v. Houston National Bank, 515 F.2d 1200, 1206

(5th Cir. 1975). Thus, if liability is well pleaded, it is established by the entry of default. 

Buchanan v. Bowman, 820 F.2d 359, 361 (11th Cir. 1987). The well-pleaded allegations

of the complaint, admitted by Smith’s default, establish the following salient points: (1)

that Smith, alone or with co-defendant Evan Wolfe, misrepresented in an application for

insurance that Wolfe owned the property; (2) that in fact the property was being

purchased by Smith in Wolfe’s name in order to shield the property from a large

judgment against Smith; (3) that Smith knew or should have known the representation

was false; (4) that Smith intended the plaintiff to rely on the misrepresentation in issuing

a policy; (5) that, but for the misrepresentation, the plaintiff would not have issued the

policy; and (6) that the plaintiff has been damaged by the misrepresentation in that it

issued the policy and thereafter paid for damage allegedly caused by Hurricane Katrina. 

(Doc. 1, ¶¶ 9-10, 16-18, 72, 74, 95-102). These allegations, and their admission by

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Smith’s default, establish his liability for fraud under Alabama law. E.g., Crowne

Investments, Inc. v. Bryant, 638 So. 2d 873, 876-77 (Ala. 1994) (a cause of action for

fraud requires a false representation of a material existing fact, reliance by the plaintiff on

the representation, and resulting damage). 

The affidavit of Sandra Carter confirms the allegation of the complaint, (Doc. 1, ¶

101 and ad damnum clause), that the amount of damage the plaintiff has sustained by

paying benefits on a policy it would not have issued but for Smith’s fraud is

$1,075,940.40. (Doc. 33, Exhibit A). The plaintiff is entitled to judgment against Smith

in this amount.

The motion for entry of default judgment additionally requests the Court to declare

that the policy be rescinded. (Doc. 33 at 1-2). The policy, however, was issued in the

name of Wolfe, and the plaintiff has sought neither entry of default nor entry of default

judgment against this defendant.

For the reasons set forth above, the plaintiff’s motion for entry of default judgment

is granted with respect to its request for a monetary judgment of $1,075,940.40. 

Judgment shall be entered accordingly by separate order. In all other respects, the motion

for entry of default judgment is denied.

DONE and ORDERED this 1st day of November, 2007.

s/ WILLIAM H. STEELE

UNITED STATES DISTRICT JUDGE

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