CIVIL PROCEDURE
United States District Court, District of Alaska (2022)
Anighya Crocker
In Aspen American Insurance Co. v. Morrow, 2022 WL 17337913 (D. Alaska 2022), the district
court applied the Ninth Circuit’s seven–factor test to partially grant a motion for default judgment
against a non–participating party. (Id. at *1). The Lyons were a couple who sold a ship to defendant
Morrow, who entered a promissory note to pay $116,000 for the vessel. (Id.). Morrow also entered
a mortgage agreement which included a lay–up provision, requiring the ship to stay in port from
October 2021 through May 2022. (Id.). Even so, Morrow took the ship out commercial fishing in
November 2021, and the boat sank. (Id.). Morrow’s insurance company, Aspen, filed suit against
him and the Lyons (as assureds) in the district court for a judgment decreeing that there was no
coverage under the insurance policy. (Id.). The Lyons cross–claimed against Morrow, who had
stopped payments on the sunken vessel, for breach of the promissory note. (Id. at *2). However,
despite being served with the pleadings and summons, Morrow refused to answer or otherwise
participate in the action; both the Lyons and Aspen moved for default judgement. (Id.). Upon their
motion, the district court noted that it retained discretion to determine whether or not to grant the
motion. (Id.). The district court then stated that it must also consider seven factors identified by
the Ninth Circuit upon consideration of a motion for default judgment: (1) the possibility of
prejudice to the plaintiff; (2) the merits of the plaintiff’s substantive claim; (3) the sufficiency of
the complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute
concerning material facts; (6) whether the default was due to excusable neglect; and (7) the strong
policy of favoring decisions on the merits. (Id.). After considering these factors, the district court
chose to grant the Lyons’s motion but to deny the motion made by Aspen without prejudice. (Id.
*3–12). With that, the district court applied the seven factors identified by the Ninth Circuit to
partially grant a motion for default judgment against a non–participating party. (Id. at *1).
