1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

DELAWARE RIVER TOW, LLC, : CIVIL ACTION

: NO. 04-2850

Plaintiff, :

:

v. :

:

VERNELL NELSON, :

ALLSTATE INSURANCE CO., INC., :

:

Defendants. :

M E M O R A N D U M

EDUARDO C. ROBRENO, J. JUNE 3, 2005

This action arises out of a salvage contract and comes

to the Court under 28 U.S.C. § 1333, which grants federal

district courts exclusive jurisdiction in any “civil case of

admiralty or maritime jurisdiction.” On February 7, 2005, the

Court held a bench trial. The Court’s findings of fact and

conclusions of law concerning the case are detailed in a

Memorandum dated February 10, 2005 (doc. no. 29), which is

available at 2005 WL 331706 or 2005 U.S. Dist. LEXIS 2071. Also

on February 10, 2005, the Court issued two Orders: (1) an Order

directing that judgment as to liability only be entered in favor

of plaintiff, Delaware Tow, LLC and against defendant Vernell

Nelson, who had defaulted (doc. no. 28), and (2) an Order

directing that judgment be entered in favor of plaintiff and

against defendant Allstate in the amount of $4,654.50 (doc. no.

Case 2:04-cv-02850-ER Document 46 Filed 06/03/05 Page 1 of 20
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29). 

On February 25, 2005, the Court held a hearing to

consider whether to modify the $4,654.50 judgment against

Allstate to include an award to plaintiff of interest, costs, and

attorneys’ fees. The Court was also to determine the amount of

Vernell Nelson’s liability. At the hearing, however, two

circumstances hindered the Court’s resolution of these issues: 

Counsel were not adequately prepared for the hearing, and Vernell

Nelson appeared in the action for the first time. In light of

these circumstances, the Court continued the hearing and gave

each party an opportunity to file a brief in support of any posttrial relief it requested. 

On May 10, 2005, the Court resumed the February 25,

2005 hearing to permit the parties to orally argue their

respective motions. This Memorandum sets forth the Court’s

rulings on the issues presented at the May 10, 2005 hearing. 

Before the Court are the three outstanding issues: 

1. Should the judgment of $4,654.50 entered against

Defendant Allstate (representing the contract price of

salvaging the yacht) be amended to provide for

interest, costs, and attorneys’ fees?

2. Should the judgment by default as to liability in favor

of plaintiff and against Defendant Vernell Nelson

(proceeding pro se) be set aside, and if not, what is

the appropriate measure of damages against Vernell

Nelson?

3. Should the Court enter a default judgment in favor of

Allstate and against Nelson on Allstate’s cross-claim

against Nelson?

Case 2:04-cv-02850-ER Document 46 Filed 06/03/05 Page 2 of 20
1 Having found that Pennsylvania contract and agency law

does not conflict with established admiralty principles relating

to salvage contracts, the Court considered the merits of this

case by applying Pennsylvania contract and agency law. Del.

River Tow, LLC v. Nelson, Civ.A. No. 04-2850, 2005 U.S. Dist.

LEXIS 2071, at *8-9 (E.D. Pa. Feb. 10, 2005). Cf. also Windsor

Mt. Joy Mut. Ins. Co. v. Pozzi, 832 F. Supp. 138, 140 (E.D. Pa.

1993) ("Where . . . there is an absence of a controlling federal

statute or an established rule of general maritime law, state law

governs the scope and validity of contracts of marine

insurance.").

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These issues will be addressed in turn.

I. Plaintiff v. Allstate--Interest, Costs and Attorneys’ Fees

A. Interest

The general rule in admiralty is that a prevailing

party may recover pre-judgment interest except where equitable

considerations make the award unconscionable. Inland Tugs Co. v.

Ohio River Co., 709 F.2d 1065, 1074-75 (6th Cir. 1983). 

Furthermore, “[p]re-judgment interest in Pennsylvania contract

cases is a matter of right and is calculated from the time the

money becomes due or payable.” Am. Enka Co. v. Wicaco Mach.

Corp., 686 F.2d 1050, 1056 (3d Cir. 1982) (citing Penneys v. Pa.

R.R. Co., 183 A.2d 544 (1962)).1 As to the rate of interest,

“the party to whom the sum is owed may as a matter of right

recover prejudgment interest at the legal rate of six percent

[per annum] running from the date the sum is due.” Pollice v.

Nat’l Tax Funding, L.P., 225 F.3d 379, 395 (3d Cir. 2000) (citing

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Am. Enka Co., 686 F.2d at 1056-57); see also 41 Pa. Cons. Stat.

Ann. § 202 (setting legal rate of interest at six percent per

annum). Plaintiff seeks interest on the $4,654.50 judgment,

accruing from the date of salvage (February 9, 2004) to the date

of judgment (February 10, 2005), or approximately one year:

$4,654.50 * 6% = $279.27. As the prevailing party, plaintiff is

entitled to this amount, and no equitable considerations counsel

against awarding it to plaintiff. Indeed, Defendant Allstate

does not object to an award of pre-judgment interest to

plaintiff. Accordingly, the judgment of $4,654.50 in favor of

plaintiff and against Defendant Allstate will be modified to

include an award of $279.27 in interest.

B. Costs

The federal statute governing costs in admiralty cases

provides:

Except as otherwise provided by Act of

Congress, the allowance and taxation of costs

in admiralty and maritime cases shall be

prescribed by rules promulgated by the Supreme

Court.

28 U.S.C. § 1125. Although the Supreme Court has not exercised

its power to promulgate rules specifically addressing the

allocation of costs in admiralty cases, it has promulgated

Federal Rule of Civil Procedure 54. Rule 54 applies here and

permits an award of costs to a prevailing party: 

Case 2:04-cv-02850-ER Document 46 Filed 06/03/05 Page 4 of 20
2 A party is a "prevailing party" for purposes of awarding

costs when the Court has, after considering the merits of the

case, awarded that party some relief “on any issue that is

fundamental to the action.” Hygienics Direct Co. v. Medline

Indus., 33 Fed. Appx. 621, 625 (3d Cir. 2002) (citing County of

Morris v. Nationalist Movement, 273 F.3d 527, 536 (3d Cir. 2001)

(quoting Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of

Health & Human Res., 532 U.S. 598, 603 (2001)). Delaware River

Tow is clearly a prevailing party because the Court entered

judgment in its favor after a bench trial.

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Except when express provision therefor is made

either in a statute of the United States or in

these rules, costs other than attorneys' fees

shall be allowed as of course to the

prevailing party unless the court otherwise

directs . . . .

Fed. R. Civ. P. 54(d)(1).2 The Third Circuit has clarified that

the costs a district court may award a prevailing party under

Rule 54(d) are limited to the “taxable costs” enumerated in 28

U.S.C. § 1920, the taxable costs statute:

Rule 54(d) provides a standard to be applied

by the district courts in awarding what are

commonly referred to as taxable costs. Those

taxable costs are listed in 28 U.S.C. § 1920.

They do not include such litigation expenses

as attorneys’ fees and expert witness fees in

excess of the standard daily witness fee.

Rule 54(d) requires that such taxable costs be

awarded to the prevailing party unless the

court finds and articulates a reason why that

party does not deserve such an award.

Friedman v. Ganassi, 853 F.2d 207, 209 (3d Cir. 1988). 

The taxable costs statute lists six categories of

litigation costs that a court (or the clerk of a court) may

award:

Case 2:04-cv-02850-ER Document 46 Filed 06/03/05 Page 5 of 20
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 (1) Fees of the clerk and marshal;

 (2) Fees of the court reporter for all or any

part of the stenographic transcript

necessarily obtained for use in the case;

 (3) Fees and disbursements for printing and

witnesses;

 (4) Fees for exemplification and copies of

papers necessarily obtained for use in the

case;

 (5) Docket fees under section 1923 of this

title [28 USCS § 1923];

 (6) Compensation of court appointed experts,

compensation of interpreters, and salaries,

fees, expenses, and costs of special

interpretation services under section 1828 of

this title [28 USCS § 1828]. 

28 U.S.C. § 1920. 

 Delaware Tow has requested that it be awarded the

following costs: (1) fees of the Clerk ($150), (2) printing fees

($44.41) (3) deposition costs ($632.26), and (4) fee of processserving company ($180.00). Under 28 U.S.C. § 1920, however,

plaintiff would be entitled to only (1) fees of the Clerk ($150),

(2) printing fees ($44.41), and (3) deposition costs ($632.26)

because only those three items are listed in the statute. As the

prevailing party, plaintiff is entitled to an award of these

three specific items of costs unless a party opposing an award of

costs shows the award would be inequitable. Smith v. SEPTA, 47

F.3d 97, 99 (3d Cir. 1995). Defendant Allstate does not oppose

an award of costs to plaintiff, and even if it did, no equitable

considerations weigh against an award of costs. Accordingly, the

judgment of $4,654.50 in favor of plaintiff and against Defendant

Case 2:04-cv-02850-ER Document 46 Filed 06/03/05 Page 6 of 20
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Allstate will be modified to include an award of costs taxed in

the amount of $826.67.

C. Attorneys’ Fees

“As a general matter, attorneys' fees are not available

in admiralty cases unless the court determines in its equitable

discretion that one party has acted in bad faith.” Sosebee v.

Rath, 893 F.2d 54, 56 (3d Cir. 1990) (citing F.D. Rich Co. v.

United States ex rel. Indus. Lumber Co., 417 U.S. 116, 129

(1974); Vaughan v. Atkinson, 369 U.S. 527, 530-31 (1962)); see

also Inland Tugs Co., 709 F.2d at 1074 (“Equity principles

applicable in admiralty permit attorney fees where there is a

factual finding of ‘callous disregard and indifference’ of the

party against whom the fees are allowed.”).

Although this case involves a contractual dispute over

a grand total of $4,654.50, plaintiff is requesting an award of

attorneys’ fees in an amount in excess of $7,913.98. Plaintiff

presents three arguments in favor of his request for attorneys’

fees. First, plaintiff requested that this Court “recognize the

law of this District and this Circuit regarding the award of

attorneys’ fees in salvage cases, which clearly allows the award

of salvor’s fees in cases where the salvor prevails at trial.” 

Pl.’s Pretrial Mem. at 11 (doc. no. 23). Remarkably, plaintiff

supported his request with a cite to one case--from 1918--where

Case 2:04-cv-02850-ER Document 46 Filed 06/03/05 Page 7 of 20
3 Indeed, other circuits to have considered the issue have

held that a court may not award attorneys’ fees in an admiralty

case absent a finding that the non-prevailing party acted in bad

faith. See Madeja v. Olympic Packers, 310 F.3d 628, 635 (9th

Cir. 2002) (“The equitable grant of attorneys’ fees is

appropriate in admiralty only when the shipowner acted

arbitrarily, recalcitrantly, or unreasonably.”) (citing Vaughan

v. Atkinson, 369 U.S. 527, 531-32 (1962)); Galveston County

Navigation Dist. No. 1 v. Hopson Towing Co., 92 F.3d 353, 357

(5th Cir. 1996) (“The evolution of this bad faith exception to

the American Rule in the context of admiralty law began with

Vaughan v. Atkinson, 369 U.S. 527 (1962)”); Goodman v. 1973 26

Foot Trojan Vessel, 859 F.2d 71, 74 (8th Cir. 1988)

(“[A]ttorney's fees are not ordinarily awarded in admiralty

cases. An exception is made to this general rule when the losing

party has acted in bad faith.”) (internal citation omitted);

Templeman v. Chris Craft Corp., 770 F.2d 245, 250 (1st Cir. 1985)

(“Under admiralty law, a court has inherent power to assess

attorneys' fees when a party has acted in bad faith, vexatiously,

wantonly, or for oppressive reasons.") (internal quotation marks

omitted); Interpool Ltd. v. Bernuth Agencies, No. 97-750, 51997

U.S. App. LEXIS 32229 (2d Cir. Nov. 17, 1997) (not precendential)

(“The award of fees and expenses in admiralty actions is

discretionary with the district judge upon a showing of bad

faith."). 

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the Third Circuit declined a request to award attorneys’ fees in

an admiralty case and made no statement that its conclusion was

contrary to a general rule in favor of such an award. See The

Johnson Lighterage Co. No. 24, 248 F.74 (3d Cir. 1918). 

Plaintiff’s argument lies in as perilous a water as the sinking

yacht that gave rise to this suit. Unlike the yacht, however,

this argument is not salvageable.3 In light of plaintiff’s lack

of precedential support and Sosebee’s direction contrary to

Case 2:04-cv-02850-ER Document 46 Filed 06/03/05 Page 8 of 20
4 Plaintiff also emphasizes the public policy in favor

encouraging salvor’s to undergo salvage attempts. The Court

previously acknowledged that its judgment in favor of plaintiff

was consistent this policy. See Del. River Tow, LLC, 2005 U.S.

Dist. LEXIS 2071, at *18 n.8. With respect to attorneys’ fees,

however, Sosebee requires a showing of bad faith, which plaintiff

has failed to satisfy, and public policy does not change this

result. See Gore v. Clearwater Shipping Corp., 378 F.2d 584, 588

(3d Cir. 1967) (“It is of course true that Admiralty and other

equity courts have fashioned exceptions to the general rule

against assessing attorneys’ fees and expenses and that these

exceptions 'have been sanctioned by (the Supreme) Court when

overriding considerations of Justice seemed to compel such a

result.' But the cases applying these exceptions invariably

involve wrongfulness or injustice often amounting to bad faith.”)

(internal citation omitted). 

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plaintiff’s position, plaintiff’s first argument must be

jettisoned. 

 Second, notwithstanding the Sosebee court’s

declaration that attorneys’ fees are not available in admiralty

cases absent a showing of bad faith, 893 F.2d at 56, plaintiff

contends that in salvage actions such as this one (a subset of

admiralty cases), a court has discretion to award attorneys’ fees

even absent a showing of bad faith.4 The Court disagrees. None

of plaintiff’s cited authority constitutes valid precedential

support for this argument; in fact, they contradict his argument. 

In particular, plaintiff points to a salvage case, Compania

Galeana, S.A. v. Motor Vessel Caribbean Mara, 565 F.2d 358, 360

(5th Cir. 1978), which summarily stated that the award of

“attorneys’ fees is discretionary in admiralty actions and in

Case 2:04-cv-02850-ER Document 46 Filed 06/03/05 Page 9 of 20
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salvage cases specifically.” (citations omitted). The

precedential value of this case is minimal for two reasons. One,

the case dedicated only two sentences to the question of

attorneys’ fees and ultimately declined to award them. Two, the

Fifth Circuit, in a subsequent salvage case, clarified that

Compania Galeana referred to an exception to the general rule

against an award of attorneys’ fees in admiralty cases:

In admiralty cases, however, it is the general

rule that attorneys' fees are not awarded.

Noritake Co. v. M/V Hellenic Champion, 627

F.2d 724 (5th Cir. 1980). Platoro cites

Compania Galeana, S.A. v. M/V Carribean Mara,

565 F.2d 358 (5th Cir.1978), for the

proposition that such an award lies in the

discretion of the admiralty court. We pointed

out in Noritake, however, that Compania

Galeana clearly referred to an exception to

the rule: that attorneys' fees may be awarded

where the nonprevailing party has acted in bad

faith. Noritake, 627 F.2d at 731 n. 5. 

Platoro Ltd., Inc. v. Unidentified Remains of a Vessel, 695 F.2d

893, 905-06 (5th Cir. 1983) (emphasis added); see also Atlantis

Marine Towing, Inc. v. M/V Elizabeth, 346 F. Supp. 2d 1266, 1276

(S.D. Fla. 2004) (“In Compania Galeana and Cobb Coin Co., relied

upon by both Plaintiff AMT and the district court in Treasure

Salvors, Inc., attorneys' fees were awarded based upon a finding

of bad faith by the nonprevailing party. In admiralty cases,

however, it is the general rule that attorneys' fees are not

awarded . . . . An exception to the rule [is] that attorneys'

fees may be awarded where the nonprevailing party has acted in

Case 2:04-cv-02850-ER Document 46 Filed 06/03/05 Page 10 of 20
5 Moreover, the other cases cited by plaintiff involved bad

faith on the part of the non-prevailing party. See Vaughan v.

Atkinson, 369 U.S. 527, 530-31 (1962) (“In the instant case

respondents were callous in their attitude, making no

investigation of libellant's claim and by their silence neither

admitting nor denying it. As a result of that recalcitrance,

libellant was forced to hire a lawyer and go to court to get what

was plainly owed him under laws that are centuries old. The

default was willful and persistent.”); Southernmost Marine

Servs., Inc. v. One (1) 2000 Fifty Four Foot (54') Sea Ray named

M/V POTENTIAL, 250 F. Supp. 2d 1367, 1381 (S.D. Fla. 2003)

(“Clearly, Plaintiffs were, by the Defendants' own candid

admission from day one forward, entitled to a salvage award. The

only issue was the amount. . . . [I]t became clear that

Defendants had very little, if any, basis in fact for disputing

the salvage award they had agreed to, contracted for, and

paid.”); Cobb Coin Co., Inc. v. Unidentified, Wrecked and

Abandoned Sailing Vessel, 549 F. Supp. 540, 563 (S.D. Fla. 1982)

(finding “bad-faith harassment” engaged in by non-prevailing

party).

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bad faith.") (citing Platoro 695 F.2d at 905-06).5 All the

foregoing authority makes clear that an award of attorneys’ fees

in this case is appropriate only upon a finding that Allstate

acted in bad faith. 

Finally, perhaps realizing the overwhelming authority

contra its first two arguments, plaintiff contends Allstate acted

in bad faith in refusing to pay plaintiff and by filing several

motions at the various stages of this litigation. In response,

defendant argues that it properly defended this case and filed no

frivolous motions. Allstate’s Mem. of Law, doc. no. 37, at (pp.

unavailable).

Attorneys’ fees are not warranted here. It is true

that Allstate refused to pay plaintiff and was ultimately found

Case 2:04-cv-02850-ER Document 46 Filed 06/03/05 Page 11 of 20
6 This relatively uncomplicated case worth less than

$5,000.00 has generated a myriad of motions, legal briefs and

hearings.

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liable for the salvage price. Nevertheless, this case is unlike,

for example, Southernmost Marine Services, 250 F. Supp. 2d at

1381, where an insurance company had virtually no basis in fact

or law for refusing to pay a salvage claim to which it expressly

agreed to pay and to which coverage clearly applied. Here,

Allstate’s liability to pay for the salvage was not so clearly

established that its refusal to pay was frivolous or wholly

unfounded to rise to the level of bad faith. Cf. J.C. Penney

Life Ins. Co. v. Pilosi, 393 F.3d 356, 367 (3d Cir. 2004)

(requiring plaintiff-insured to show, by clear and convincing

evidence, that the insurer (1) had no reasonable basis for

denying benefits under the policy; and (2) knew or recklessly

disregarded its lack of a reasonable basis in denying the claim). 

Nor is this case like Cobb Coin Co., 549 F. Supp. at

562-63, where the defendant in a salvage case unnecessarily

forced plaintiff to “undertake massive litigation” to recover a

salvage award. Rather, in this case, it is the performance of

both counsel that has complicated and unnecessarily extended the

litigation.6 In light of the foregoing, equity does not easily

command the award of attorneys’ fees to plaintiff.

Case 2:04-cv-02850-ER Document 46 Filed 06/03/05 Page 12 of 20
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II. Plaintiff v. Vernell Nelson

Plaintiff and Vernell Nelson were parties to a written

salvage contract. The contract price of the salvage was

$4,654.50. Vernell Nelson allegedly failed to pay the contract

price, prompting plaintiff to bring this lawsuit against him. On

January 18, 2005, the Clerk entered a default against Nelson, and

on February 10, 2005 the Court entered a default judgment in

favor of plaintiff against Nelson as to liability only.

Nelson now asks the Court to set aside the judgment of

default entered against him. Specifically, Nelson stated at the

May 10, 2005 hearing that he “does not recall” being served with

plaintiff’s process. Plaintiff introduced the testimony of the

personal server, William Sampson, who stated that, on July 1,

2004, he served Vernell Nelson at 1432 Summerville Avenue,

Philadelphia, Pennsylvania 19141. Nelson did not dispute that he

resided at this address on July 1, 2004. 

The Court credits the testimony of William Sampson and

discounts plaintiff’s statement that he “does not recall”

receiving service. Because plaintiff properly served Nelson and

Nelson failed to plead or otherwise respond within the time

required by Federal Rule of Civil Procedure 12, judgment as to

liability was properly entered in favor of plaintiff and against

Nelson and will not be set aside. Plaintiff is entitled to

recover from Nelson the written contract price of $4,654.50. 

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Additionally, because no equitable considerations counsel against

an award of interest and costs, plaintiff will also be awarded

interest and costs. Plaintiff has not alleged that Nelson acted

in bad faith. Accordingly, no attorneys’ fees will be awarded to

plaintiff.

III. Allstate v. Nelson: The Cross-Claim

Defendant Allstate filed a cross-claim against

Defendant Nelson. See Allstate’s Answer (doc. no. 16) (filed

Nov. 24, 2004). On February 18, 2005, after the Court entered

judgment in favor of plaintiff and against Allstate, Allstate

filed an application for entry of default against Defendant

Nelson on Allstate’s cross-claim against Nelson. The Clerk

entered a default on February 18, 2005. Before the Court now is

Allstate’s motion for a default judgment against Nelson (doc. no.

31). Defendant Nelson vigorously disputes that Allstate served

him with the cross-claim. See Letter from Vernell Nelson to

Court (undated) (doc. no. 40). The Court has construed this

letter as a motion to set aside the entry of default on

Allstate’s cross-claim. 

Allstate contends that Vernell Nelson was properly

served. In support of that contention, Allstate offers a

certificate of service, stating that it served its cross-claim on

Nelson by “United States First Class Mail” and an affidavit from

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Michael Maguire, Esq. stating that he served Nelson “via regular

mail.” Notably, however, Allstate fails to cite the relevant

rules of civil procedure demonstrating how its service was

proper. 

A reading of the relevant rules shows that Allstate’s

service on Nelson was not proper. Rule 5 regulates service of

“every pleading subsequent to the original complaint,” including

cross-claims. Fed. R. Civ. P. 5(a). With regard to service of

such a pleading on a parties in default, Rule 5 provides:

No service need be made on parties in default

for failure to appear except that pleadings

asserting new or additional claims for relief

against them shall be served upon them in the

manner provided for service of summons in Rule

4. 

Id. (emphasis added). Because Allstate’s cross-claim asserted a

new claim for relief against Nelson, the party in default,

Allstate was required to serve Nelson in the manner provided for

service of summons in Rule 4. See James Wm. Moore et al.,

Moore’s Federal Practice § 5.03 (3d ed. 1999) (“Parties who have

never made an appearance in the proceedings (and are thus in

default for failure to appear) must be served with a copy of any

pleading or similar paper which asserts a new or additional claim

for relief against such absentee party under the provisions of

Rule 4.”). A cross-claim falls within the “pleadings subsequent

to the original complaint” language of Rule 5. Id. § 5.02. 

Case 2:04-cv-02850-ER Document 46 Filed 06/03/05 Page 15 of 20
7 Allstate does not contend it hand-delivered its crossclaim to Nelson. Therefore, Rule 4(e)(2) does not apply.

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Rule 4(e) governs the manner of service of a summons

with which Allstate was required to comply. Under Rule 4(e),

Unless otherwise provided by federal law,

service upon an individual from whom a waiver

has not been obtained and filed, other than an

infant or an incompetent person, may be

effected in any judicial district of the

United States:

 (1) pursuant to the law of the state in

which the district court is located, or in

which service is effected, for the service of

a summons upon the defendant in an action

brought in the courts of general jurisdiction

of the State; or 

(2) by delivering a copy of the summons

and of the complaint to the individual

personally or by leaving copies thereof at the

individual's dwelling house or usual place of

abode with some person of suitable age and

discretion then residing therein or by

delivering a copy of the summons and of the

complaint to an agent authorized by

appointment or by law to receive service of

process.

Fed. R. Civ. P. 4(e) (emphasis added).7 This judicial district

is located in Pennsylvania, and Pennsylvania is where service was

allegedly effected. Pennsylvania’s Rule for service of process

by mail provides as follows:

If a rule of civil procedure authorizes

original process to be served by mail, a copy

of the process shall be mailed to the

defendant by any form of mail requiring a

receipt signed by the defendant or his

authorized agent.

Case 2:04-cv-02850-ER Document 46 Filed 06/03/05 Page 16 of 20
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Pa. R. Civ. P. 403 (emphasis added). Moreover, Pennsylvania Rule

405 provides in relevant part that “proof of service by mail

under Rule 403 shall include a return receipt signed by the

defendant . . . .” Id. 405; Borah v. Monumental Life Ins. Co.,

No. Civ.A. 04-3617, 2005 U.S. Dist. LEXIS 2013, at *5 (E.D. Pa.

Jan. 14, 2005).

Here, Allstate did not serve Nelson in accordance with

the Pennsylvania rules because Allstate did not serve Nelson “by

any form of mail requiring a receipt signed by Nelson.” Pa. R.

Civ. P. 403. Because Allstate failed to properly serve Nelson

with its cross-claim, Allstate’s motion for a default judgment

will be denied and its cross-claim denied without prejudice. 

Defendant Nelson’s motion to set aside entry of default will be

granted. See, e.g., Am. Tel. & Tel. Co. v. Merry, 596 F.2d 118,

120 n.2, 126 (2d Cir. 1979) (dismissing without prejudice crossclaim against party in default where cross-claim was not served

in accordance with Fed. R. Civ. P. 4); D’Angelo v. Potter, 221

F.R.D. 289, 294 (D. Mass. 2004) (setting aside entry of default

against defendant where amended complaint asserted new claims for

relief but was not served in accordance with Fed. R. Civ. P. 4). 

Case 2:04-cv-02850-ER Document 46 Filed 06/03/05 Page 17 of 20
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IV. CONCLUSION

In light of the foregoing discussion, the $4,654.50

judgment in favor of plaintiff and against Allstate will be

modified to include an award of interest and costs, but not

attorneys’ fees. The Court will not set aside the default

judgment as to liability in favor of plaintiff and against

Vernell Nelson. Judgment in the amount of $4,654.50 plus

interest and costs will be entered in favor of plaintiff and

against Vernell Nelson. And Allstate’s motion for default

judgment against Vernell Nelson will be denied. An appropriate

order follows.

Case 2:04-cv-02850-ER Document 46 Filed 06/03/05 Page 18 of 20
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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

DELAWARE RIVER TOW, LLC, : CIVIL ACTION

: NO. 04-2850

Plaintiff, :

:

v. :

:

VERNELL NELSON, :

ALLSTATE INSURANCE CO., INC., :

:

Defendants. :

ORDER

AND NOW, this 3rd day of June, 2005, in accordance with

the Memorandum of today’s date, it is hereby ORDERED as follows:

1. The Motion for Attorneys’ Fees, Costs, and Interest

filed by Plaintiff (doc. no. 38) is GRANTED in part and

DENIED in part in accordance with the Memorandum of

even date;

2. The Court’s Order of February 10, 2005 entering

judgment in favor of Plaintiff and against Defendant

Allstate in the amount of $4,654.50 is MODIFIED to

include an award of pre-judgment interest ($279.27) and

costs ($826.67);

3. The Motion for Default Judgment as to Cross-Defendant

Vernell Nelson filed by Allstate (doc. no. 34) is

DENIED;

4. The Default by Vernell Nelson for Failure to Appear,

Case 2:04-cv-02850-ER Document 46 Filed 06/03/05 Page 19 of 20
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Plead or Otherwise Defend on Allstate’s Cross-Claim is

SET ASIDE;

5. Allstate is granted leave under Federal Rule of Civil

Procedure 4(m) to properly serve Vernell Nelson with

its cross-claim by July 1, 2005 or the case will be

dismissed for lack of prosecution. 

AND IT IS SO ORDERED.

 

EDUARDO C. ROBRENO, J.

Case 2:04-cv-02850-ER Document 46 Filed 06/03/05 Page 20 of 20