Allstate Indemnity Company et al v. Albrecht et al

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
ALLSTATE INDEMNITY
COMPANY and ALLSTATE
VEHICLE AND PROPERTY
INSURANCE COMPANY,
Plaintiffs,
vs.
JUSTIN ALBRECHT and EMILY
ALBRECHT,
Defendants.
2:25-CV-10465-TGB-APP
HON. TERRENCE G. BERG
ORDER GRANTING MOTION
FOR DEFAULT JUDGMENT
(ECF NO. 12)
This matter is before the Court on Plaintiffs Allstate Indemnity
Company’s and Allstate Vehicle and Property Insurance Company’s
(collectively, “Allstate’s”) Motion for Entry of Default Judgment Against
Defendants Justin Albrecht and Emily Albrecht and for Dismissal of this
Case with Prejudice. ECF No. 12. In accordance with the notice issued by
the 	Court, 	this 	motion 	will 	be 	determined 	without 	oral 	argument
pursuant to E.D. Mich. LR 7.1(e). ECF No. 13. For the reasons stated
below, the Court will GRANT Allstate’s motion.
I. 	BACKGROUND
According to the Complaint filed in this case, Allstate issued two
insurance policies to Defendants Justin and Emily Albrecht—a House
and Home Policy and a Personal Umbrella Policy (collectively, “the
Policies”). Compl. ¶¶ 11–12, ECF No. 1, citing Policies at ECF Nos. 1-2,
1-3. Under the Policies, Allstate agreed to provide a defense and/or
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indemnification to the Albrechts if the Albrechts were legally obligated
to pay damages because of bodily injury or property damage arising from
an occurrence to which the Policies apply, subject to certain exclusions.
Id.
On or about December 20, 2024, Mike James and Marjanna James
filed a lawsuit against Justin and Emily Albrecht in the Macomb County
Circuit Court, seeking damages and equitable relief due to a series of
allegedly improper behaviors they claim the Albrechts are engaging in,
including, but not limited to repeatedly calling the police and filing
complaints against the Jameses for: (a) their dogs barking; (b) their using
a tent in their backyard; (c) having a shed; (d) playing music too loud;
(e) trespassing onto the Jameses’ property; (f) invading their privacy; (g)
creating a nuisance; (h) assaulting them; 	(i) intentionally inflicting
emotional distress upon them; and (j) defaming them. Id. ¶ 17, citing
State Court Complaint at ECF No. 1-4. The Jameses seek monetary
damages and a restraining order against the Albrechts. Id. ¶ 18.
The Albrechts requested that Allstate provide them a defense in the
underlying state court litigation, and to indemnify them against any
judgment, and Allstate is currently defending the Albrechts in that state
court action under a separate reservation of rights for the two Policies.
Id. ¶¶ 20–21, citing ECF No. 1-5. Allstate stated in the reservation of
rights letter that the allegations against the Albrechts may not be
covered under the Policies as the alleged conduct was not accidental, the
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injuries the Jameses reportedly sustained were intended or expected to
result from the Albrechts’ alleged conduct, and the Jameses’ claimed
injuries may not constitute bodily injury or property damage under the
Policies. ECF No. 1-5, PageID.108–09.
On February 18, 2025, Allstate filed the instant lawsuit against
Mike and Marjanna James and Justin and Emily Albrecht, seeking a
declaration that it has no duty to defend or indemnify the Albrechts in
the 	state 	court 	litigation 	under 	either 	Policy. 	ECF 	No. 	1. 	Allstate
contends in the Complaint that it does not have a duty to defend or
indemnify the Albrechts under the Policies because the alleged conduct
in the state court action does not constitute an “occurrence” under the
Policies, as the Albrechts’ alleged actions are not accidental and did not
result in bodily injury or property damage to the Jameses, and the
Jameses’ claimed injuries and/or damages are barred by the Policies’
expected or intended acts exclusions. Id. Allstate alternatively contends
that if the Jameses’ claimed injuries or damages are covered under either
policy, the Albrechts’ actions are all related to the same or substantially
the same general harmful conditions and thus constitute one occurrence.
Id.
The Complaint in this case was served on the Albrechts on March
8, 2025, ECF Nos. 4, 5, and they have failed to appear or defend this
lawsuit in any way. Allstate asserts that, following their receipt of the
Summons and Complaint in this action, the Albrechts contacted attorney
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Jeffrey Cojocar of the Law Offices of Jeffrey A. Cojocar, P.C., and Mr.
Cojocar advised Allstate’s counsel that the Albrechts did not want to
challenge or otherwise participate in this declaratory action. Cary R.
Berlin Affidavit, ECF No. 12, PageID.154.
Co-defendants Mike and Marjanna James were served with the
Complaint in this action on March 6, 2025, ECF No. 6, and on April 21,
2025, the Court entered a Consent Order of Dismissal as to the Jameses
in which the Jameses agreed “that Allstate does not have a duty to defend
or indemnify the Co-Defendants, Justin Albrecht and Emily Albrecht
under the Albrecht’s” Allstate Policies “in the litigation they brought
against the Albrechts, which is currently pending in the Macomb County
Circuit Court, under case number 2024-005000-CZ.” ECF No. 7. The
James Defendants were then dismissed with prejudice from this case. Id.
Allstate states it sent a proposed stipulated order to Mr. Cojocar
asking that the Albrechts agree that Allstate did not have a duty under
the Policies to defend them in the Macomb County Circuit Court lawsuit
the Jameses filed against them, in which case this instant declaratory
judgment action would be dismissed with prejudice. Berlin Aff., ECF No.
12, PageID.154. Neither the Albrechts nor Mr. Cojocar responded to
Allstate’s 	request 	that 	they 	agree 	to 	the 	proposed 	order, 	and 	the
Albrechts have not otherwise filed anything with this Court.
On May 2, 2025, the Clerk of this Court entered defaults as to
Justin and Emily Albrecht. ECF Nos. 10, 11.
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Allstate then filed the instant Motion for Default Judgment as to
Emily and Justin Albrecht and for Dismissal of this Case with Prejudice.
ECF No. 12. Allstate served a copy of the motion on Justin and Emily
Albrecht 	by 	first 	class mail. 	Id. 	PageID.159. 	No 	response 	or other
pleading has been filed.
II. 	LEGAL STANDARD
Rule 55 of the Federal Rules of Civil Procedure governs entry of
judgment by default. Rule 55 requires that, to obtain judgment by
default, the proponent must first request the Clerk’s entry of default
pursuant to Rule 55(a) when a party fails to defend an action as required.
Once a default has been entered by the Clerk, the plaintiff’s well-pleaded
allegations are deemed admitted. See, e.g., Thomas v. Miller, 489 F.3d
293, 299 (6th Cir. 2007); Allstate Ins. Co. v. Cantrell Funeral Home Inc.,
506 F. Supp. 3d 529, 540 (E.D. Mich. 2020) (Drain, J.). The plaintiff may
then file for default judgment by the Clerk or by the court. Fed. R. Civ.
P. 55(b).
When the plaintiff’s complaint alleges damages for a sum certain,
the Clerk “on 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....” Fed. R. Civ. P. 55(b)(1). “In
all other cases, the party must apply to the court for a default judgment.”
Fed. R. Civ. P. 55(b)(2). A default judgment may be entered without a
hearing unless it is necessary to determine the amount of monetary
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damages, to establish the truth of any allegation by evidence, or to
investigate any other matter. Id. The court must exercise “sound judicial
discretion” when determining whether to enter the default judgment.
10A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, F EDERAL
PRACTICE AND PROCEDURE § 2685 (4th ed. 2022); see also Cantrell Funeral
Home, 506 F. Supp. 3d at 541.
III. 	DISCUSSION
Allstate seeks a declaratory judgment under 28 U.S.C. § 2201 and
Fed. R. Civ. P. 57 that it has no duty to defend or indemnify the Albrechts
under the Policies against the allegations brought against them by the
Jameses in the lawsuit pending in the Macomb County Circuit Court
(Case No. 2024-005000-CZ). The Declaratory Judgment Act, 28 U.S.C.
§ 2201, authorizes the Court to provide the relief that Allstate seeks—
i.e., to “declare the rights and other legal relations of any interested
party.” But the Court is “under no compulsion” to exercise jurisdiction
under the Act. Brillhart v. Excess Ins. of Am., 316 U.S. 491, 494 (1942).
Instead, it must weigh five factors, often called the Grand Trunk factors,
in determining whether to exercise jurisdiction: (1) whether the action
would settle the controversy; (2) whether the action would be useful in
clarifying the legal relations at issue; (3) whether the remedy sought is
being used merely for the purpose of “procedural fencing” or “to provide
an arena for a race to res judicata;” (4) whether the action would
improperly encroach on state jurisdiction; and (5) whether there is a more
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suitable alternative remedy. United Specialty Ins. Co. v. Cole’s Place, 936
F.3d 386, 	396 (6th Cir. 2019) (citing 	Grand 	Trunk W. R.R. Co. v.
Consolidated Rail Corp., 746 F.2d 323, 326 (6th Cir. 1984)). The Sixth
Circuit Court of Appeals further breaks down the fourth factor into three
sub-factors:
(1) [W]hether the underlying factual issues are important to
an informed resolution of the case;
(2) whether the state trial court is in a better position to
evaluate those factual issues than is the federal court; and
(3) whether there is a close nexus between underlying factual
and legal issues and state law and/or public policy, or
whether federal common law or statutory law dictates a
resolution of the declaratory judgment action.
Id. (alteration in original) (quoting Scottsdale Ins. Co. v. Flowers, 513
F.3d 546, 560 (6th Cir. 2008)).
The first two Grand Trunk factors are closely related, Cantrell
Funeral Home, 506 F. Supp. 3d at 544, and weigh in favor of the Court
exercising jurisdiction under the Declaratory Judgment Act. Allstate
here joined the state-court plaintiffs in this declaratory judgment action,
who agree that Allstate does not have a duty to defend or indemnify the
Albrechts with regard to the state-court allegations, and a declaration
that Allstate has no duty to defend or indemnify Justin or Emily Albrecht
in the underlying state court action against them would settle the scope
of insurance coverage and the insurance indemnity obligations and serve
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a useful purpose in clarifying the legal relations at issue. See United
Specialty Ins. Co., 936 F.3d at 397–98 (collecting cases and observing that
several courts agree that declaratory judgment concerning insurance
coverage 	“settle[s] 	the 	controversy” 	and 	clarifies 	legal 	relations,
especially when state-court plaintiffs are joined, because it resolves the
dispute between the insurer and the insured over who will pay for the
state-court litigation).
As to the third factor—whether a party’s request for declaratory
judgment is motivated by “procedural fencing” or is likely to create a race
for res judicata, Grand Trunk, 746 F.2d at 326—the Sixth Circuit has
found evidence of improper “procedural fencing” when a declaratory-
judgment 	plaintiff 	filed 	suit 	in 	apparent 	anticipation 	of 	state-court
litigation. United Specialty Ins. Co., 936 F.3d at 399; see also Bituminous
Cas. Corp. v. J&L Lumber Co., 373 F.3d 807, 814 (6th Cir. 2004). This is
not a concern here as Mike and Marjanna James initiated the state-court
suit against the Albrechts months before Allstate filed this declaratory
judgment action, and Allstate is not a party to the state-court litigation.
The 	Court 	finds 	as 	to 	the 	fourth 	factor—whether 	exercising
jurisdiction over this case would increase friction between federal and
state courts and improperly encroach on state jurisdiction—that this
declaratory judgment action would not “improperly encroach upon state
jurisdiction,” Grand Trunk, 746 F.2d at 326, because the liability issues
being determined in state court are legally and factually distinct from the
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policy interpretation issue in this case, and the state court’s ability to
resolve the pending claims will not be inhibited by granting declaratory
relief in this case. The question of insurance coverage will not be litigated
in the state-court action, and nothing suggests that state court is a more
appropriate 	or 	better-suited 	forum 	for 	resolving 	the 	narrow 	policy
interpretation issue in this case. See Flowers, 513 F.3d at 560 (discussing
subfactors 	to 	consider 	in 	evaluating 	whether 	declaratory 	action
improperly encroaches on state jurisdiction).
Finally, the Court finds that the fifth factor—whether alternative
remedies are available—does not heavily weigh in favor of declining to
exercise jurisdiction. While Allstate could presumably file an action for a
declaratory judgment in state court, nothing indicates that would be a
better or more effective course of action. And “[the Albrechts], in choosing
not to file an answer or otherwise defend this matter, do not argue that
a state court declaratory judgment action would be better or more
effective than a federal court declaratory judgment action.” Cantrell
Funeral Home, 506 F. Supp. 3d at 545–46 (citation omitted).
Accordingly, balancing all five factors together, the Court finds that
Allstate is entitled to the relief it seeks, and that the Grand Trunk factors
weigh in favor of exercising discretion under the Declaratory Judgment
Act in this case. the James Defendants previously agreed that Allstate
does not have a duty to defend or to indemnify the Albrechts under the
Allstate Policies against the allegations brought against them in the
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state-court action, and the Jameses have been dismissed from this action.
Finally, Defendants Emily and Justin Albrecht are deemed to have
admitted all of the well-pleaded allegations in the Complaint by failing
to plead or otherwise respond to Allstate’s Complaint. See Ford Motor Co.
v. Cross, 441 F. Supp. 2d 837, 846 (E.D. Mich. 2006) (Cleland, J.) (citing
Visioneering Constr. v. U.S. Fidelity & Guar., 661 F.2d 119, 124 (6th Cir.
1981)). Allstate pleaded facts that entitle it to declaratory judgment. See
ECF No. 1. Allstate’s motion therefore will be GRANTED.
IV. 	CONCLUSION
For the reasons state above, Allstate’s Motion for Entry of Default
Judgment Against Defendants Justin Albrecht and Emily Albrecht and
for a Dismissal of this Case, ECF No. 12, is GRANTED.
It is FURTHER DECLARED that:
(1) Allstate does not have a duty to defend or to indemnify Justin
Albrecht under his Allstate House and Home Policy or his
Allstate 	Personal 	Umbrella 	Policy 	against 	the 	allegations
brought against him by Michael James and Marjanna James in
the lawsuit that is currently pending the Macomb County Circuit
Court (Case No. 2024-005000-CZ)
(2) Allstate does not have a duty to defend or to indemnify Emily
Albrecht under her Allstate House and Home Policy or her
Allstate 	Personal 	Umbrella 	Policy 	against 	the 	allegations
brought against her by Michael James and Marjanna James in
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the lawsuit that is currently pending the Macomb County Circuit
Court (Case No. 2024-005000-CZ); and
(3) Due to the Claimants, Michael James and Marjanna James,
previously agreeing that Allstate does not have a duty to defend
or to indemnify Justin Albrecht or Emily Albrecht under their
Allstate 	House 	and Home 	Policy or 	their Allstate 	Personal
Umbrella Policy against the allegations brought against them by
Michael James and Marjanna James in the lawsuit that is
currently pending the Macomb County Circuit Court (Case No.
2024-005000-CZ), Allstate’s obligation under the policies have
been resolved, and Allstate does not owe any further duties in
this matter, resulting in this Declaratory Judgment action being
DISMISSED 	WITH 	PREJUDICE, 	precluding 	both 	the
Albrechts and the Jameses from seeking any benefits under the
Albrecht’s House and Home and Personal Umbrella Policies in
connection with the underlying lawsuit.
IT IS SO ORDERED.
This is a final order that closes the case.
Dated: November 3, 2025 	/s/Terrence G. Berg
HON. TERRENCE G. BERG
UNITED STATES DISTRICT JUDGE
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