Summary
The United States District Court for the Eastern District of Pennsylvania grants Selective Insurance Company of South Carolina’s motion for default judgment against KS Automotive, LLC, James Colson, and Alexia Stipa. The court holds that the insurance policy did not cover a vehicle involved in an underlying automobile accident because the vehicle was not scheduled, hired, or timely reported as an acquired vehicle. Selective therefore had no duty to defend or indemnify the defendants in the underlying state-court action and could withdraw its defense.
Topics
Practice areas
Questions Presented
- Whether default judgment should be entered against defendants who were properly served but failed to appear or defend.
- Whether the insurance policy covered the Dodge Dakota involved in the underlying accident.
- Whether Selective had a duty to defend or indemnify the defendants in the underlying state-court action.
Holdings
- Default judgment was warranted because defendants were properly served, failed to respond, caused prejudice to Selective by requiring it to continue funding a defense under a reservation of rights, had not shown a litigable defense, and appeared to have engaged in culpable and willful nonresponse.
- Selective had no duty to defend or indemnify the defendants in the underlying state-court action because the policy did not cover the Dodge Dakota.
Key quotations
“the duty to defend is broader than the insurer’s duty to indemnify.” (Section III.A)
“Selective has no duty to defend or indemnify the Defendants in the underlying state action and may withdraw their defense.” (Section IV)
Factual background
Selective issued KS Automotive a commercial automobile insurance policy effective from September 27, 2023, through September 27, 2024. James Colson purchased a 2004 Dodge Dakota for use as a shop truck, but KS Automotive did not notify Selective of the acquisition within the policy's required 30-day period or list the vehicle on the policy. After the Dakota collided with David Haley's vehicle, Haley and his wife sued Colson, KS Automotive, and Alexia Stipa in Pennsylvania state court. Selective initially provided a defense under a full reservation of rights and then sought a declaration that it had no duty to defend or indemnify.
Procedural history
Selective filed this action on June 11, 2025, and filed affidavits showing service on each defendant on June 25, 2025. After the court ordered Selective to seek entry of default, the clerk entered default on July 25, 2025. Selective moved for default judgment on August 15, 2025, and no defendant responded. The district court granted default judgment and declared that Selective had no duty to defend or indemnify defendants in the underlying state action.