United States District Court, D. Maryland
L. Hollander United States District Judge
Memorandum resolves competing motions - one seeking to vacate
an order of default and one seeking a default judgment.
Liability & Fire Insurance Company
(“National”), plaintiff, filed suit against
defendant Ronald Rooding on August 31, 2015, seeking a
declaratory judgment as to its obligations under two marine
insurance policies issued to Rooding. ECF 1. In particular,
National seeks a declaration that the marine insurance
policies do not provide coverage for a claim submitted by
Rooding arising out of the loss of the vessel MARGARITAVILLE
(the “Vessel”) (id. ¶ 2), and that
the policies “are null and void ab initio. .
.” Id. Both policies preclude coverage if the
insured “has omitted, concealed, misrepresented, sworn
falsely, or attempted fraud in reference to any matter
relating to this insurance before or after any loss.”
ECF 1 ¶ 33; see also ECF 1-2.
February 4, 2016, after National effected service on Rooding
by alternative means (ECF 20, ECF 21; see ECF 16),
plaintiff filed its “Motion for Entry of Default of
Defendant.” ECF 22. The Clerk entered an order of
default on February 5, 2016. ECF 23. Several weeks later, on
March 16, 2016, defendant filed his “Motion to Vacate
Entry of Default.” ECF 25 (the “Motion to
Vacate”). It does not include a memorandum or exhibits.
The next day, on March 17, 2016, plaintiff filed
“Motion for Entry of Default Judgment, ” (ECF
27), supported by a legal memorandum (ECF 27-1)
(collectively, the “Motion for Default
Judgment”), and lengthy exhibits. Plaintiff
subsequently submitted an opposition to the Motion to Vacate
(ECF 29, the “Opposition”), supported by numerous
exhibits. Rooding did not respond to the Motion for Default
Judgment. Nor did he reply to the opposition to the Motion to
hearing is necessary to resolve the motions. See
Local Rule 105.6. For the reasons that follow, I shall grant
the Motion to Vacate and deny the Motion for Default
Factual and Procedural Background
about August 16, 2014, Rooding purchased the Vessel from Jack
Franklin for the sum of $9, 515.00. ECF 1 ¶ 9. The
Vessel was a 30-foot 1978 Trojan yacht. Id. ¶
4. However, Rooding did not obtain a Certificate of Title to
the vessel from the Maryland Department of Natural Resources
until April 29, 2015. Id. ¶ 9. Rooding
allegedly represented on his Application for Title that he
had paid $3, 500 for the Vessel. Id. Rooding kept
the Vessel in a slip located at River Watch Marina in Middle
River, Maryland, on a tributary of the Chesapeake Bay.
Id. ¶ 10.
endeavored to procure insurance for the Vessel on or about
August 15, 2014, and contacted National's underwriting
agent. Id. ¶ 11. According to plaintiff,
Rooding was told that the Vessel could be insured only for
Rooding's “financial investment” in the
Vessel. Id. However, Rooding allegedly sought
coverage of $25, 000 on the hull. Id. On August 16,
2014, National issued Policy No. 3792430-14 (ECF 1-2, the
“First Policy”), with the effective date of
August 16, 2014 through August 16, 2015. Id. It
provided hull liability coverage of $25, 000. Id.;
see ECF 1-2.
alleges, id. ¶ 12:
The cover letter enclosing the First Policy informed Rooding
that to maintain the coverage, Rooding needed to provide: (1)
an acceptable condition and value marine survey; (2) a copy
of the “sales agreement” for the Vessel; and (3)
a completed and signed Marine Insurance Application. The
Marine Insurance Application provided to Rooding contained
certain pre-filled information, including an entry of
“$25, 000” as the “Boat Purchase
Price.” Rooding never signed or returned the
Application or the Bill of Sale. He also did not send a
survey to the underwriter until many months later.
further submits that a marine survey of the Vessel was
conducted, which indicated that a valve leading to the intake
hoses for the head and “wash down system” was
“missing a required dedicated handle to open and close
the valve.” Id. ¶ 13. And, the
“hull valve (or seacock) with the missing handle was
later determined to have been stuck in the open
position” when the First Policy was issued,
“unknown and unreported” to National.
Id. ¶ 14. As a result, the Vessel was
“defective and unseaworthy” when the First Policy
was issued on August 16, 2014. Id.
December 4, 2014, the First Policy was terminated for
non-payment of the premium. Id. ¶ 16. Rooding
requested another insurance policy from National on January
22, 2015. Id. ¶ 18. On January 26, 2015,
National “determined that the Vessel could be insured
under a no navigation (‘port risk') policy, so long
as Rooding removed a 110 volt electrical outlet from the aft
cockpit compartment. . . .”, because that was
considered “a safety hazard . . . .” Id.
On January 23, 2015, National sent Rooding an insurance
application, which reflected a “Boat Purchase Price of
$25, 000.” Id. ¶ 19. Rooding signed and
submitted the application. Id.
Rooding advised that the outlet had been removed on April 3,
2015, National issued Policy No. 3842216-15 (ECF 1-3, the
“Second Policy”), to run on a “‘no
navigation' basis” from March 31, 2015 to March 31,
2016. ECF 1 ¶ 21.
executed another version of the Marine Insurance Application
form for the Second Policy, dated April 8, 2015. ECF 1 ¶
22. “On this version of the form, Rooding removed the
$25, 000 figure placed on the ‘Boat Purchase Price'
subject line, and left the line blank.” Id.
According to National, it subsequently increased
Rooding's Hull insurance to $26, 500, based on
representations by Rooding as to the installation of
equipment on the Vessel. Id. ¶ 23. It also
provided coverage of $6, 200 for Rooding's personal
1, 2015, in Claim No. 1502226, Rooding notified plaintiff
that the Vessel had sustained “significant water damage
due to a sinking incident of an unknown cause that occurred
on an unknown date.” Id. ¶ 24. However,
Rooding was unable to offer plaintiff an explanation of how
or when the Vessel sank. Id. ¶ 25.
investigation revealed defects in the Vessel that, in its
view, rendered the Vessel defective and unseaworthy before
one or both policies were issued. Id. ¶¶
28-31. It also alleges, id. ¶ 31: “Had
the boat been properly winterized, the failure would not have
occurred.” National asserts, id. at ¶ 34:
After performing the investigation referred to above,
National Liability determined that there was no coverage
available to Rooding under the Policies for the reasons set
forth in the claim denial letter dated August 5, 2015, which
is attached hereto as Exhibit C [ECF 1-4] and incorporated
herein by reference. In sum, coverage was not extended for
Rooding's claim because Rooding could not establish that
the reported sinking occurred during the periods that the
Policies were in force, or on or between August 16, 2014 and
December 4, 2014 or on or between March 31, 2015 and the date
the loss was reported, May 1, 2015.
National states, id. at ¶ 35:
Following further investigation of Rooding's claim, by
letter dated August 27, 2015, incorporated herein by
reference and attached hereto as Exhibit D [ECF 1-5],
National Liability notified Rooding that the Policies were
void ab initio, for the reasons stated in its letter
(which is incorporated herein by reference), including, but
not limited to, breach of the doctrine of uberrimae
fidei, unseaworthiness at the inception of coverage, and
concealment/misrepresentation in violation of the Fraud and
Concealment clauses contained in the Policies.
contends that Rooding “violated his duty to National
Liability by misrepresenting material facts and by omitting
material facts.” Id. ¶ 45. In particular,
plaintiff contends that defendant misrepresented the purchase
price of the vessel as $25, 000 when the actual purchase
price “was $9, 515.00 or $3, 500.” Id.
¶¶ 45a, 45b. Plaintiff also asserts that defendant
failed “to disclose unseaworthy conditions aboard the
Vessel prior to the inception of coverage on August 17, 2014
and again prior to the inception of coverage on March 31,
2015.” Id. ¶ 45g. According to plaintiff,
there is no coverage under the policies because “the
Insured  failed to indicate or rely upon any cause for the
sinking and cannot demonstrate that the claimed loss occurred
during the effective policy dates.” Id. ¶
September 1, 2015, the Clerk issued a summons for service on
the defendant. ECF 5. On November 10, 2015, plaintiff filed
an amended complaint correcting the zip code for defendant.
ECF 11. Thereafter, on November 11, 2015, the Clerk issued a
new summons using the corrected zip code. ECF 14.
maintains that two attempts were made to serve Rooding by
mail under Fed.R.Civ.P. 4(d), and both were unsuccessful. ECF
15 ¶ 4; ECF 15-1 at 14-15. According to National, one
letter was returned to National on November 9, 2016 [sic],
with the word “Unknown” handwritten on the
envelope, and the envelope had been opened. ECF 29 at 3.
See ECF 15-1 at 14. Plaintiff asserts that
“[t]he handwriting appeared to be Mr.
Rooding's.” ECF 29 at 3. The other envelope was
returned on November 17, 2015, with handwriting on the
envelope that said: “Unkown [sic] return to
sender.” ECF 15-1 at 15; see ECF 29 at 4.
December 11, 2015, plaintiff filed a “Motion for Order
Extending Time for Service of Process and to Permit
Alternative/Substituted Service of Process as to Defendant
Ronald Rooding.” ECF 15 (the “Motion for
Alternative Service”). In the Motion for Alternative
Service, plaintiff requested a 120-day extension for service
and permission to use alternative methods of service,
including “posting the Summons and Complaint upon the
door of Defendant's residence” and “sending
the Summons and Complaint by both certified mail, return
receipt requested, and by first class mail, to Defendant . .
. .” Id. ¶¶ 5a, 5b. In support of
the Motion for Alternative Service, plaintiff stated,
id. at ¶ 2:
Plaintiff's counsel initially attempted to serve the
Defendant at 6705 German Hill Road, Dundalk, Maryland on
September 9, 2015 and continued to make multiple attempts to
serve the Defendant at this location as well as the location
of the Defendant's boat the “Margaritaville”