United States District Court, D. Nevada
HOFFMAN, JR. UNITED STATES MAGISTRATE JUDGE
before the court is pro se plaintiff Stacey King's Motion
to Strike Defendant's Answer (ECF No. 5), filed on
October 1, 2018. Defendant Mutual of Omaha Insurance Company
(“Mutual”) filed a response and countermotion to
set aside the default (ECF Nos. 7, 8) on October 11, 2018.
King filed a reply in support of his motion and a response to
the countermotion (ECF Nos. 10, 11) on October 25, 2018.
Mutual filed a reply (ECF No. 12) in support of its
countermotion on November 1, 2018.
an insurance-coverage dispute regarding long-term disability
insurance benefits that Mutual removed from state court based
on diversity jurisdiction. (Pet. for Removal (ECF No. 1).
Mutual represents that shortly before removal, King filed an
application for default in state court that Mutual was unable
to retrieve from the state court docket. (Id. at 3.)
Regardless, Mutual represents that it was not properly served
through the Nevada Department of Insurance. (Id.)
After removal, Mutual filed an answer. (Ans. (ECF No. 4).)
King subsequently filed the notice of default that was
entered in the state court case. (Notice of Default (ECF No.
6).) The amended affidavit of service King filed with the
court indicates Mutual was served by leaving a copy of the
summons and complaint with “Carla Engel” at
“Mutual of Omaha Insurance Company, c/o General
Counsel, Mutual of Omaha Plaza, Omaha, NE 68175.” (Mot.
to Strike (ECF No. 5) at 8-9.)
now moves to strike Mutual's answer, arguing it is
untimely because it was filed after the default was entered
in state court. Mutual responds that it was not properly
served, that its deadline for answering had not passed at the
time it filed its answer, and that the state-court default
was based on the false assertion that Mutual was properly
served and failed to respond. Specifically, Mutual argues
that Nevada statutory law requires foreign insurers to be
served with process through the Insurance Commissioner and
that when service is made in the statutorily mandated manner,
the insurer gets an additional 10 days to answer. Mutual
states that it is formed under the laws of Nebraska and is
thus a foreign insurer that may only be served through the
Insurance Commissioner. (Decl. (ECF No. 7-1).)
further argues it did not engage in culpable conduct that led
to the default, that it has a meritorious defense to the
lawsuit, and that King would not be prejudiced by allowing
the case to be determined on its merits. Regarding its
defense, Mutual provides the court with a declaration from
Greg Richt, one of its disability claims specialists, stating
that Mutual terminated King's claim for long term
disability benefits because he failed to submit information
to support further payment of his claim. (Decl. (ECF No.
7-1).) Mutual requests that the court set aside the default
and allow it to defend the case.
replies that under Nevada Revised Statutes §
680A.250(4), service of process may be made on a domestic
insurer by serving the Insurance Commissioner or in the
manner prescribed under Rule 4(e) of the Nevada Rules of
Civil Procedure. In its reply in support of its
countermotion, Mutual states that service of process on a
foreign insurer must be made through the Insurance
Commissioner and that the exception King references does not
Nevada law, foreign insurers must be served with process
through the Insurance Commissioner. “Before the
Commissioner may authorize it to transact insurance in this
state, each insurer must appoint the Commissioner . . . as
its attorney to receive service of legal process issued
against the insurer in this state.” Nev. Rev. Stat.
§ 680A.250(1). “Service of such process against a
foreign or alien insurer must be made only by service thereof
upon the Commissioner.” Nev. Rev. Stat. §
680A.250(3). Additionally, “[s]ervice of process
against an insurer for whom the Commissioner is attorney must
be made by delivering to and leaving with the Commissioner,
the Commissioner's deputy, or a person in apparent charge
of the office of the Commissioner during the
Commissioner's absence, two copies of the process,
together with the fee.” Nev. Rev. Stat. §
680A.260(1). When service is made in the statutorily mandated
manner, service is only complete when the Commissioner mails
the papers to the insurer and then the insurer gets an
additional 10 days to answer. Nev. Rev. Stat. §
680A.260(2)-(3). “A ‘foreign' insurer is one
. . . [f]ormed under the laws of any jurisdiction other than
[Nevada].” Nev. Rev. Stat. § 679A.090(2)(a).
Mutual's declaration indicates it is a foreign insurer.
King does not dispute that fact. The amended affidavit of
service King filed with the court indicates service was
attempted by leaving the summons and complaint with an
individual at Mutual of Omaha's office, not through the
Insurance Commissioner as required by Nevada law. Regarding
King's argument that he had the option of serving Mutual
under Nevada Revised Statutes § 680A.250(4) and Rule
4(e) of the Nevada Rules of Civil Procedure,  the plain
language of § 680A.250(4) states that it applies to
domestic insurers. Regardless, application of Rule 4.2(c)
also leads to the result that service must be made through
the Insurance Commissioner. Specifically, Rule 4.2(1)(A)
states that an entity registered to do business in Nevada may
be served via its registered agent, by various officers,
partners, members, managers, or trustees that are not
applicable here, or by “any other agent authorize by
appointment or by law to receive service of process.”
To be registered to do business in Nevada, Mutual was
required to “appoint the Commissioner . . . as its
attorney to receive service of legal process issued against
the insurer in [Nevada].” Nev. Rev. Stat. §
680A.250(1). Thus, Rule 4.2(1)(A) also requires service to be
made on the Commissioner. The court therefore finds that
Mutual was not properly served under Nevada law and therefore
will deny King's motion to strike Mutual's answer.
Clerk's entry of default
King had properly served Mutual, the court in its discretion
would set aside the state court clerk's entry of default.
Rule 55 of the Federal Rules of Civil Procedure provides a
mechanism for obtaining a default judgment against a party
who has failed to plead or otherwise respond to claims
brought against it. Where this failure is “shown by
affidavit or otherwise, ” the clerk must enter that
party's default under Fed. R. Civ. Proc. 55(a).
“The court may set aside an entry of default for good
cause.” Id. at 55(c). “Good cause”
is determined through three factors: (a) whether the
defaulting party engaged in culpable conduct that led to the
default, (b) whether there is a meritorious defense, and (c)
whether reopening the case would cause prejudice to the
Plaintiff. Falk v. Allen, 739 F.2d 461, 463 (9th
Cir. 1984). This test is disjunctive, and proof of any of
these three factors may justify setting aside the default.
See Brandt v. American Bankers Insurance Co. of
Florida, 653 F.3d 1108, 1111 (9th Cir. 2011).
these factors is the Ninth Circuit's stated policy
favoring adjudication of disputes on their merits, Eitel
v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986), with
doubts resolved in favor of setting aside the default.
Schwab v. Bullock's, Inc., 508 F.2d 353, 355
(9th Cir. 1974). It is within the court's discretion
whether to set aside a default. O'Connor v. State of
Nev., 27 F.3d 357, 364 (9th Cir. 1994). The court's