Insurance Coverage Dispute – Summary Judgment – Effect of Default

Keith Company v. Lyndon Southern Insurance Co., [Ms. 1200599, Sept. 24, 2021] __ So. 3d __ (Ala. 2021). The Court (Wise, J.; Shaw, Bryan, and Mitchell, JJ., concur; Bolin, Sellers, Mendheim, and Stewart, JJ., concur in the result; Parker, C.J., dissents) reverses the Tallapoosa Circuit Court’s summary judgment for Lyndon Southern Insurance Company (Lyndon) in an action seeking a declaration that a household exclusion applied. The Court reverses because “Lyndon did not produce substantial evidence to establish that [the driver] Felicia did not have a valid driver’s license at the time of the accident and did not produce substantial evidence to establish that Felicia was under the age of 25 and resided in [the insured] Annette’s household at the time of the accident. Therefore, Lyndon did not shift the burden of proof to BEK. Accordingly, the trial court erred in granting Lyndon’s motion for a summary judgment.” Ms. *15.

The Court rejects Lyndon’s effort to use the defaults of Felicia and Annette to establish facts necessary to support the summary judgment as to tort claimant Ben E. Keith Company, Inc. (“BEK”) which had answered Lyndon’s declaratory judgment complaint and denied the allegations of the complaint,

In Dorcal [Inc. v. Xerox Corp., 398 So. 2d 665 (Ala. 1981)], this Court stated: “The general effect of an entry of default is that of a decree pro confesso or a judgment by nil dicit at common law. 6 Moore’s Federal Practice § 55.03(2) at 55-32 (2nd ed. 1976); 10 C. Wright & A. Miller, Federal Practice and Procedure § 2681 (1971). Under a decree pro confesso, the defaulting party loses his standing in court, cannot appear in any way, cannot adduce any evidence and cannot be heard at the final hearing. Clifton v. Tomb, 21 F.2d 893 (4th Cir. 1927). (Emphasis added.)

Although the holding in Dorcal may apply to Felicia and Annette, there is no indication that that holding would apply to a third party such as BEK. In fact, the application of the Dorcal holding to a party like BEK, which answered and challenged the allegations in the complaint for a declaratory judgment, is counterintuitive and unwarranted. Cf. McDaniel v. Harleysville Mut. Ins. Co., 84 So. 3d 106 (Ala. Civ. App. 2011). Therefore, we conclude that Lyndon could not rely on the allegations that are included in its complaint for a declaratory judgment to establish any undisputed facts with regard to BEK.


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