Specialty Risk of America v. Collins et al

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
SPECIALTY RISK OF AMERICA 	)
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Plaintiff,
v. 	No. 4:25-cv-01261-MAL
JAMES COLLINS, SARAH CLAES,
WILLIAM LYLES, MCCULLOUGH
PROPERTIES LLC, KORY
MCCULLOUGH, LACEE HURST, and
LYLES AW HOLDINGS LLC d/b/a FOUR
ACES BAR
Defendants.
MEMORANDUM AND ORDER
Before the Court is Specialty Risk of America’s (“SPRISKA”) Motion for Default
Judgment as to Party Sarah Claes, Doc. 30, and Motion for Default Judgment as to Party James
Collins, Doc. 32. For the reasons set forth below, both motions are GRANTED.
I. 	Factual and Procedural Background
The following facts are alleged in the Complaint.1 Plaintiff brings the instant action for
declaratory relief under 28 U.S.C. §§ 2201 and 2202, asking the Court to determine the parties’
rights and obligations under insurance policy number CPP1027333 (the “Policy”), which was
issued by SPRISKA naming “Lyles AW Holdings LLC Four Aces Bar” as the named insured.
Doc. 1 at ¶ 12. 	The policy had effective dates of September 2, 2021, until it was cancelled
effective March 18, 2022. Id.
The Policy provides commercial general liability coverage (“CGL Coverage”) subject to
a Bodily Injury and Property Damage Liability Each Occurrence Limit of $1,000,000; a Personal
and Advertising Injury Liability Limit of $1,000,000; a General Aggregate Limit of $2,000,000;
and liquor liability coverage (“LL Coverage”) subject to a Liquor Liability Each Common Cause
Limit of $500,000 and a Liquor Liability Aggregate Limit of $1,000,000. Id. at ¶ 13–14; Doc. 28
at ¶¶ 9–10. 	The CGL Coverage includes certain principal coverages, including Coverage L –
Bodily Injury Liability Property Damage Liability. 	Doc. 1 at ¶ 15. 	The Policy indicates that
1 On a motion for default judgment, the Court must accept as true the facts alleged in the Complaint.
Murray v. Lene, 595 F.3d 868, 871 (8th Cir. 2010); see also Fed. R. Civ. P. 8(b)(6).
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SPRISKA will pay all sums which an insured is obligated to pay as damages due to bodily injury.
Id. 	The bodily injury “must be caused by an occurrence which takes place in the coverage
territory, and the bodily injury or property damage must occur during the policy period.”
Doc. 1-3 at 27. The Policy also provides for supplemental coverages, which include bodily injury
liability assumed by contracts such as lease of premises. Id. at ¶ 17.
Plaintiffs William Lyles, McCullough Properties, LLC, Kory McCullough, James Collins,
and Sarah Claes were sued in state court on August 22, 2025, by Lacee Hurst (the “Underlying
Lawsuit”). Id. at 38; Doc. 1-4. Hurst was an employee of the Four Aces Lounge. Doc. 1 at ¶ 41.
Hurst alleges that on her first night of work at the Four Aces Lounge, William Lyles, James
Collins, and Sarah Claes subjected her to “non-consensual physical and sexual contact, including
but not limited to, rape, sodomy, and assault.” Doc. 1 at ¶¶ 43-44. The underlying lawsuit alleges
that Sarah Claes and James Collins were customers at the Four Aces Bar when they allegedly
participated in the assault. Id. at ¶ 42.
On August 22, 2025, SPRISKA filed a Complaint for Declaratory Judgment. 	Doc. 1.
Sarah Claes was served on September 11, 2025. Doc. 12. James Collins was served on November
14, 2025. 	Doc. 17. Each defendant was properly served. Docs. 12, 17. Sarah Claes failed to
respond to the complaint by her deadline, October 2, 2025. Docs. 12, 23. James Collins failed
to respond to the complaint by his deadline on December 5, 2025. Docs. 17, 23. As of the date
of this Order, neither Claes nor Collins has filed an answer or otherwise contested the Complaint.
Additionally, they have not responded to the clerk’s entry of default, Doc. 23, or to the motion
for default judgment, Doc. 55.
II. 	Legal Standard
The entry of default by the Clerk of Court pursuant to Federal Rule of Civil Procedure
55(a) is a prerequisite to the grant of a default judgment under Rule 55(b), but whether to grant
default judgment is a separate question within the discretion of the Court. See Weitz Co., LLC v.
MacKenzie House, LLC, 665 F.3d 970, 977 (8th Cir. 2012) (grants of default judgment are
reviewed for abuse of discretion). Under Federal Rule of Civil Procedure 55(a), a court may enter
default judgment for failure “to plead or otherwise defend.” Fed. R. Civ. P. 55(a). “In considering
a motion for default judgment, the Court is mindful that, by defaulting, defendant is deemed to
have admitted for purposes of this action all well-pleaded factual allegations in the complaint.”
Rankin v. Nat’l Credit Works II, LLC, 2011 WL 5222601, at *2 (E.D. Mo. Nov. 2, 2011) (citing
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Taylor v. City of Ballwin, 859 F.2d 1330, 1333 (8th Cir. 1988)). 	The Court therefore accepts
Plaintiff's allegations as true, except for those relating to the amount of damages. See Greater St.
Louis Const. Laborers Welfare Fund v. AbatePro, Inc., 2018 WL 5849980 at *1 (E.D. Mo. Sept.
6, 2018) (quotation omitted) (After default has been entered, “the allegations of the complaint,
except as to the amount of damages are taken as true.”). For purposes of determining the amount
of damages, the Federal Rules provide:
If the plaintiff’s claim is for a sum certain or a sum that can be made certain by
computation, the clerk—on the plaintiff's request, with an affidavit showing the
amount due—must enter judgment for that amount and costs against a
defendant who has been defaulted for not appearing and who is neither a minor
nor an incompetent person.
Fed. R. Civ. P. 55(b)(1).
III. 	Discussion
Insurance companies may seek declaratory judgment relief under 28 U.S.C. § 2201, as
here, for judicial declarations that insurance policies do not afford coverage for underlying
lawsuits against insureds. 	See, e.g., Cent. Bank v. St. Paul Fire & Marine Ins., 929 F.2d 431,
433–434 (8th Cir. 1991) (upholding declaratory judgment as to insurance obligations); see also
28 U.S.C. § 2201. Taking the allegations in the Complaint as true, Plaintiff SPRISKA is entitled
to a declaratory judgment in its favor clarifying that it is not obligated to provide coverage to
Sarah Claes or James Collins for the Underlying Lawsuit.
SPRISKA alleges that Policy No. CPP1027333 does not obligate them to defend or
indemnify Sarah Claes or James Collins because neither “qualify as insured under the Policy
based on the allegations alleged in the Underlying Lawsuit.” Doc. 31 at 7, Doc. 33 at 7.
A. Sarah Claes and James Collins are Not Insured Under the CGL Coverage.
The 	CGL coverage 	applies 	to 	the 	named insured 	and persons 	with 	enumerated
relationships to the named insured. 	Doc. 	1-3 at 24-25. 	These relationships do not include
customer-vendor relationships. Doc. 1-3 at 24–25, 54. The named insured on the GCL policy is
Lyles AW Holdings LLC. Doc. 1-3 at 8. Because the only relationship alleged between Sarah
Claes 	and 	James 	Collins 	and 	Lyles AW 	Holdings 	LLC 	in 	the 	underlying 	lawsuit 	is
customer/business, the GCL coverage does not apply. See Doc. 1 at ¶ 42; Doc. 1-3 at 24–25, 54.
B. Sarah Claes and James Collins are Not Insured Under the LL Coverage.
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Likewise, the LL coverage applies to the named insured, and persons with certain
enumerated relationships to the named insured. Doc. 1-3 at 62–63. These relationships do not
include customer-vendor relationships. Doc. 1-3 at 63-64. The named insured on the LL policy
is Lyles AW Holdings LLC. 	Doc. 1-3 at 8. 	Because Sarah Claes’s and James Collins’s only
relationship with the named insured was customer/business, LL coverage does not apply. 	See
Doc. 1 at ¶ 42.
Accordingly,
IT IS HEREBY ORDERED that Plaintiffs’ Motion for Default Judgment as to Party
Sarah Claes, Doc. 30, is GRANTED.
IT IS FURTHER ORDERED that Plaintiffs’ Motion for Default Judgment as to Party
James Collins, Doc. 32, is GRANTED.
IT IS FURTHER ORDERED that default judgment is hereby entered in favor of
Plaintiff Specialty Risk of America and against Defendants Sarah Claes and James Collins.
IT IS FINALLY ORDERED that Specialty Risk of America has no duty to defend and/or
indemnify Defendant Sarah Claes or James Collins under the Policy in connection with the
Underlying Lawsuit.
Dated this 19th day of May, 2026.
MARIA A. LANAHAN
UNITED STATES DISTRICT JUDGE
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