Failure to Respond to Complaint Served on Defendants Requires Judgment in Favor of Plaintiff

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When an insurance company decides it has no coverage for defense and indemnity after a claim is made by individuals seeking defense and indemnity to a third party tort action, it is often wise to seek declaratory judgment from a US District Court rather than take a chance the decision to refuse defense might be wrong.

State Farm did so in State Farm v.  Rika C. Palomares et al Case No. 1:20-cv-00392-BLW, USDC For The District Of Idaho (March 1, 2021). 

ZALMA OPINION

With $300,000 at issue the only reason to allow a default to be entered is if the defendants agreed with the allegations of the complaint for declaratory relief or were judgment proof or without funds to respond or were unwilling to respond pro se. Clearly, if they were not insureds there is no obligation on the part of State Farm to defend and it was simpl being cautious by filing a declaratory relief action where a simple denial of coverage would have sufficed.