# Voyager Indemnity Insurance Company v. Gifford

> District Court, W.D. North Carolina · October 3, 2022

URL: https://www.frixlaw.com/law-library/cases/10259100

## Case

- **Court:** District Court, W.D. North Carolina
- **Decided:** October 3, 2022
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10259100

## How later opinions describe it (automated extraction)

- holding that the insurer is bound to defend “groundless, false or fraudulent” lawsuits if the facts as alleged in the complaint are arguably covered by the policy

## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
CIVIL CASE NO. 1:21-cv-00242-MR

VOYAGER INDEMNITY INSURANCE )
COMPANY, )
Plaintiff, )
) MEMORANDUM OF
vs. ) DECISION AND ORDER
)
DAKOTA GIFFORD and AMAZIAH )
DONDERO, )
)
Defendants. )
________________________________ )

THIS MATTER is before the Court on the Plaintiff’s Motion for Default
Judgment [Doc. 13].
I. PROCEDURAL BACKGROUND
The Plaintiff, Voyager Indemnity Insurance Company (“Plaintiff”), filed
a Complaint for Declaratory Judgment against Defendants Dakota Gifford
(“Gifford”) and Amaziah Dondero (“Dondero”) on September 10, 2021 [Doc.
1], and a First Amended Complaint for Declaratory Judgment against Gifford
and Dondero on November 29, 2021 [Doc. 6]. The Plaintiff’s First Amended
Complaint seeks a declaration that the Plaintiff owes no duty to defend or
indemnify Gifford under an insurance policy issued by the Plaintiff to
DoorDash, Inc. (“DoorDash”), for the claims asserted against Gifford by
Dondero in an underlying tort lawsuit, Amaziah Dondero v. Dakota Gifford,
20-CVS-1464, which is pending in the North Carolina General Court of

Justice in Henderson County. [Doc. 6 at 1-2]. The Amended Complaint
asserts that the allegations in the underlying action fail to raise the possibility
of liability under the policy the Plaintiff issued to DoorDash, and thus the

Plaintiff may withdraw its defense of Gifford. [Id. at 1, 11].
On October 12, 2021, the Plaintiff filed a proof of service indicating that
Dondero was served on September 13, 2021, and Gifford was served on
October 2, 2021. [Doc. 4]. On December 17, 2021, the Plaintiff filed a proof

of service indicating that the First Amended Complaint was served on
Dondero on December 2, 2021, and on Gifford on December 6, 2021. [Doc.
7, Doc. 8]. Dondero and Gifford did not make an appearance or otherwise

defend the action. On February 8, 2022, the Plaintiff filed a Motion for Entry
of Default against Dondero and Gifford. [Doc. 10]. On February 11, 2022, the
Clerk entered a default against Dondero and Gifford. [Doc. 11].
On April 21, 2022, this Court entered an Order directing the Plaintiff to

file an appropriate motion or otherwise take further action with respect to
Dondero and Gifford. [Doc. 12]. On April 22, 2022, the Plaintiff filed the
present Motion for Default Judgment. [Doc. 13].
II. STANDARD OF REVIEW
Rule 55 of the Federal Rules of Civil Procedure provides for the entry

of a default when “a party against whom a judgment for affirmative relief is
sought has failed to plead or otherwise defend.” Fed. R. Civ. P. 55(a). Once
a defendant has been defaulted, the plaintiff may then seek a default

judgment. If the plaintiff’s claim is for a sum certain or can be made certain
by computation, the Clerk of Court may enter the default judgment. Fed. R.
Civ. P. 55(b)(1). “In all other cases, the [plaintiff] must apply to the court for
a default judgment.” Fed. R. Civ. P. 55(b)(2).

“The defendant, by his default, admits the plaintiff’s well-pleaded
allegations of fact . . . .” Ryan v. Homecomings Fin. Network, 253 F.3d 778,
780 (4th Cir. 2001) (quoting Nishimatsu Constr. Co. v. Houston Nat’l Bank,

515 F.2d 1200, 1206 (5th Cir. 1975)). A defendant, however, “is not held . . .
to admit conclusions of law.” Id. (alteration in original) (quoting Nishimatsu,
515 F.2d at 1206). The Court therefore must determine whether the alleged
facts state a claim for relief. GlobalSantaFe Corp. v. Globalsantafe.com, 250

F. Supp. 2d 610, 612 n.3 (E.D. Va. 2003).
III. FACTUAL BACKGROUND
The well-pleaded factual allegations of the Plaintiff’s Amended

Complaint are deemed admitted by virtue of the Defendants’ default. Ryan,
253 F.3d at 780. The following is a summary of the relevant and admitted
facts.

The Plaintiff is a corporation organized and existing under the laws of
the State of Georgia with its principal place of business located in the State
of Georgia. [Doc. 6 ¶ 2]. Gifford is a resident and citizen of Greenville, South

Carolina. [Id. ¶ 3]. Dondero is a resident and citizen of Asheville, North
Carolina. [Id. ¶ 4].
A. The Voyager Policy
The Plaintiff issued Commercial Auto Insurance policy number

FAR1300006 to DoorDash, for the policy period of September 1, 2019, to
September 1, 2020 (“Policy”). [Id. ¶ 10]. The Policy contains various
coverages related to commercial automobile exposures, including liability

coverage. [Id.]. The Policy contains the following relevant language in its
Liability insuring agreement:
We will pay all sums an insured legally must pay as
damages because of bodily injury or property
damage to which this insurance applies, caused by
an accident and resulting from the ownership,
maintenance or use of a covered auto within the term
of coverage . . . .

We have the right and duty to defend any insured
against a suit asking for such damages or a covered
pollution cost or expense. However, we have no duty
to defend any insured against a suit seeking
damages for bodily injury or property damage or a
covered pollution cost or expense to which this
insurance does not apply. We may investigate and
settle any claim or suit as we consider appropriate.

[Id. ¶ 12]. The Policy also contains the condition that Voyager “cover[s]
accidents and losses during the term of coverage and within the coverage
territory. The coverage territory is the United States of America, its territories
and possessions and Canada.” [Id. ¶ 13].
The Policy includes an endorsement that extends limited coverage to
contractors operating on behalf of DoorDash as delivery drivers. [Id. ¶ 13].
The Delivery Endorsement provides the following definition of delivery

operators:
Delivery operator means:

1. A person or entity who has entered into a contract
with the named insured to operate a covered auto to
provide delivery to customer(s) through the named
insured’s delivery application; or

2. A person who has been hired, retained, or
contracted by an entity where such entity has a
contract with the named insured to operate a covered
auto or to provide delivery to customer(s) through the
named insured’s delivery application.

[Id. ¶ 15]. The Policy further provides that:
For any delivery operator the term of coverage
begins at the time the delivery operator accepts a
delivery request made through a delivery application
and begins operating a covered auto for delivery. The
term of coverage ends when the delivery operator
has completed the delivery request(s) made through
the delivery application.

[Id.]. Thus, pursuant to the Policy, an independent contractor performing
deliveries for DoorDash qualifies for coverage under the Policy only after he
or she accepts an order and begins to use his or her automobile for delivery,
and coverage terminates upon completion of the delivery. [Id. ¶ 16].
B. The Underlying State Tort Action
Dondero commenced suit against Gifford on or about September 17,

2020, in a lawsuit captioned Amaziah Dondero v. Dakota Gifford, 20-CVS
1464, in the General Court of Justice, Superior Court Division, Henderson
County, North Carolina (the “Underlying Action”). [Id. ¶ 17]. Dondero’s

complaint asserts a single cause of action for negligence against Gifford. [Id.
¶ 18]. In the Underlying Action, Dondero alleges that on August 4, 2020, he
was a pedestrian legally in a crosswalk along Haywood Road in Asheville,
North Carolina. [Id. ¶ 20]. Dondero alleges that at 7:00 p.m., as he crossed

the crosswalk, Gifford negligently operated his vehicle while turning left from
Haywood Road. [Id. ¶ 21]. As a result of Gifford’s alleged negligence,
Dondero claims Gifford crashed his vehicle into Dondero. [Id. ¶ 22]. Dondero

alleges that this incident resulted in his sustained permanent injury, physical
pain and mental suffering, scarring and disfigurement, and medical costs in
excess of $25,000. [Id. ¶ 23].
In his original complaint, Dondero alleged that Gifford was operating
his vehicle “in the course of making a food delivery for Door Dash at the time

of the [accident].” [Id. ¶ 24]. Based on the allegations in the original
complaint, the Plaintiff concluded it had a duty to defend Gifford against the
suit pursuant to the complaint, the Policy, and North Carolina law. [Id. ¶ 25].

Accordingly, the Plaintiff agreed to defend Gifford against the suit subject to
a complete reservation of its rights. [Id. ¶ 26]. However, at the time that the
Plaintiff agreed to defend Gifford, the Plaintiff possessed information
indicating that Gifford was not within the term of coverage at the time of the

accident. [Id. ¶ 28]. Specifically, the Plaintiff’s named insurer, DoorDash,
provided the Plaintiff with a copy of Gifford’s activity log on August 4, 2020,
showing that Gifford had completed his last delivery before the time of the

accident and had not accepted a new delivery. [Id. ¶¶ 29-31].
On November 2, 2020, Dondero filed an amended complaint in the
Underlying Action. [Id. ¶ 42]. The amended complaint removed the original
allegation that Gifford was making a DoorDash delivery at the time of the

accident but was otherwise identical to the original complaint. [Id. ¶ 44]. The
amended complaint included no reference to DoorDash, and DoorDash is
not, and has never been, a party to the Underlying Action. [Id. ¶ 44-45].
Counsel for Dondero deposed Gifford in the Underlying Action on May
3, 2021. [Id. ¶ 35]. During that deposition, Gifford admitted he had completed

an order shortly before the collision, had not accepted a new order, and thus
was not in the course of making a delivery for DoorDash at the time of the
accident. [Id. ¶¶ 38-39].

IV. DISCUSSION
A. Basis for Exercising Jurisdiction
The Plaintiff’s Amended Complaint seeks a declaratory judgment to
determine the rights, obligations, and liabilities of the parties under the

Policy. [Id. ¶ 49]. The Federal Declaratory Judgment Act provides that a
federal district court “may declare the rights and other legal relations of any
interested party seeking such declaration, whether or not further relief is or

could be sought.” 28 U.S.C. § 2201(a). The Supreme Court has “repeatedly
characterized the Declaratory Judgment Act as ‘an enabling act, which
confers a discretion on the courts rather than an absolute right upon the
litigant.’” Wilton v. Seven Falls Co., 515 U.S. 277, 284 (1995) (quoting Pub.

Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 241 (1952)). As such,
the decision to entertain a declaratory judgment action is left to the sound
discretion of the Court. Id. at 287.
The Fourth Circuit has explained that a “declaratory judgment action is
appropriate ‘when the judgment will serve a useful purpose in clarifying and

settling the legal relations in issue, and . . . when it will terminate and afford
relief from the uncertainty, insecurity, and controversy giving rise to the
proceeding.’” Centennial Life Ins. Co. v. Poston, 88 F.3d 255, 256 (4th Cir.

1996) (quoting Aetna Cas. & Sur. Co. v. Quarles, 92 F.2d 321, 324 (4th Cir.
1937)).
Here, a declaratory judgment will settle what, if any, legal obligation
exists regarding the Plaintiff’s continued defense of Gifford in the Underlying

Action. Adjudication of the Plaintiff’s obligations under the Policy will clarify
whether there is any potential for Gifford to sustain liability on a claim covered
by the Policy and afford relief from uncertainty to all parties. Accordingly, a

declaratory judgment is appropriate.
However, “the Declaratory Judgment Act does not enlarge the
jurisdiction of the federal courts; it is ‘procedural only.’” Vaden v. Discover
Bank, 556 U.S. 49, 70 n.9 (2009) (quoting Aetna Life Ins. Co. v. Haworth,

300 U.S. 227 (1937)). Therefore, the Court must possess “an independent
basis for jurisdiction over the parties.” Volvo Constr. Equip. N. Am., Inc. v.
CLM Equip. Co., 386 F.3d 581, 592 (4th Cir. 2004). Here, the Plaintiff is a

citizen of the State of Georgia and Gifford and Dondero are citizens of South
Carolina and North Carolina, respectively. [Doc. 6 ¶¶ 3-4]. The amount in
controversy in this case exceeds $75,000. [Id. ¶ 5]. As such, the Court has

diversity jurisdiction over the Plaintiff’s claims. See 28 U.S.C. § 1332.
The Court must also have personal jurisdiction over Gifford and
Dondero to render a valid default judgment. The Court has personal

jurisdiction over Dondero because he is domiciled in North Carolina. See,
e.g., Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 924
(2011). For the Court to have personal jurisdiction over Gifford, the Plaintiff
must prove, by a preponderance of the evidence, that exercising jurisdiction

will (1) comply with the forum state’s long-arm statute and (2) comport with
the due process requirements of the Fourteenth Amendment. See Carefirst
of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir.

2003) (citation omitted). Because North Carolina’s long-arm statute has been
construed to extend as far as due process allows, Christian Sci. Bd. of Dirs.
of First Church of Christ, Scientist v. Nolan, 259 F.3d 209, 215 (4th Cir.
2001), this two-pronged test is collapsed into the single inquiry of whether

the exercise of personal jurisdiction over the defendant comports with due
process. Universal Leather, LLC v. Koro AR, S.A., 773 F.3d 553, 559 (4th
Cir. 2014).
The Plaintiff’s Amended Complaint contains jurisdictional facts
sufficient to support the exercise of personal jurisdiction over Gifford by

stating that the acts and omissions that gave rise to the Underlying Action
occurred within North Carolina and that the Underlying Action is pending in
North Carolina state court. [Doc. 6 ¶¶ 17-23]. Given those contacts with the

forum, Gifford should have reasonably anticipated being haled into this court.
The Plaintiff has also complied with its obligations to effectuate service
of process by serving Gifford and Dondero with a summons and a copy of
the Complaint pursuant to Federal Rule of Civil Procedure 4. [Doc. 7, Doc.

8]. Finally, the venue is proper under 28 U.S.C. § 1391(b). Accordingly, this
Court has jurisdiction over this matter and will proceed to address the merits
of the Plaintiff’s Motion for Default Judgment.

B. Voyager’s Duty to Defend
The Plaintiff’s Amended Complaint seeks a declaration that it has no
duty to defend Gifford in the Underlying Action. [Doc. 6 ¶ 49]. In a diversity
case such as this, the Court applies the conflict of laws rules of the forum

state. Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941). North
Carolina law specifies that all contracts insuring interests within the state
“shall be deemed to be made therein” and “are subject to the laws thereof.”
N.C. Gen. Stat. § 58-3-1. Thus, North Carolina insurance law principles apply
to the present matter.

North Carolina applies the “comparison test” to determine whether an
insurer has a duty to defend. Harleysville Mut. Ins. Co. v. Buzz Off Insect
Shield, LLC, 364 N.C. 1, 6, 692 S.E.2d 605, 610 (2010). Under this test,

courts read the insurance policy and the complaint side-by-side to determine
whether the facts, as alleged in the pleadings, are covered by the language
of the policy. Id.
In the present case, the Plaintiff argues that the Court should apply the

comparison test to the amended complaint in the Underlying Action, as
opposed to the original complaint which alleged Gifford was driving for
DoorDash at the time of the accident. [Doc. 13-1 at 7]. While it appears there

is no North Carolina decision specifically holding that courts should apply the
comparison test to the operative version of a pleading in an underlying
action, North Carolina law provides that an amended complaint “has the
effect of superseding the original complaint,” Hyder v. Dergance, 76 N.C.

App. 317, 319-20, 332 S.E.2d 713, 714 (1985), and North Carolina courts
have referenced amended complaints when applying the comparison test,
see, e.g., Eubanks v. State Farm Fire & Cas. Co., 126 N.C. App. 483, 488-

89, 485 S.E.2d 870, 873 (1997); Buzz Off, 364 N.C. at 9, 692 S.E.2d at 612.
Accordingly, the Court concludes that the amended complaint controls for
the purposes of determining whether the Plaintiff has a duty to defend.1

The relevant policy language here provides that, for DoorDash delivery
operators, “the term of coverage begins at the time the delivery operator
accepts a delivery request made through a delivery application and begins

operating a covered auto for delivery. The term of coverage ends when the
delivery operator has completed the delivery request(s) made through the
delivery application.” [Doc. 6 ¶ 15]. The operative version of the complaint
does not mention DoorDash or otherwise allege that Gifford was engaged in

a delivery at the time of the accident. [See Doc. 6 at Ex. 7]. Thus, the
pleadings do not allege facts that are covered under the Plaintiff’s policy.
However, “where the insurer knows or could reasonably ascertain facts

that, if proven, would be covered by its policy, the duty to defend is not
dismissed because the facts alleged in a third-party complaint appear to be
outside coverage.” Waste Mgmt. of Carolinas, Inc. v. Peerless Ins. Co., 315
N.C. 688, 691, 340 S.E.2d 374, 377 (1986). In other words, “[t]he duty to

1 Numerous other courts have approached this issue similarly. See, e.g., Primrose
Operating Co. v. Nat’l Am. Ins. Co., 382 F.3d 546, 552 (5th Cir. 2004) (“As ‘an amended
pleading completely supersedes prior pleadings, . . . the duty to defend rests on the most
recent pleading.’” (quoting Guaranty Nat’l Ins. Co. v. Vic Mfg. Co., 143 F.3d 192, 194 (5th
Cir. 1998)) (applying Texas law); State Farm Fire & Cas. Co. v. Higgins, 788 So.2d 992,
995 (Fla. Dist. Ct. App. 2001) (“When an amended complaint supersedes an earlier one,
the allegations of the amended complaint control the duty to defend.”).
defend is ‘excused only if the facts alleged in the complaint do not even
arguably fall within the policy coverage and an independent investigation

reveals no extrinsic facts demonstrating coverage.’” Auto-Owners Ins. Co. v.
Potter, 242 F. App’x 94, 100 (4th Cir. 2007) (emphasis added) (quoting St.
Paul Fire & Marine Ins. Co. v. Vigilant Ins. Co., 724 F. Supp. 1173, 1177

(M.D.N.C. 1989)).
In the present case, in accordance with North Carolina law, the Plaintiff
investigated whether extrinsic facts demonstrated coverage. Rather than
demonstrating that the underlying facts fell within the Policy’s coverage, this

investigation revealed that the underlying facts were definitively not within
the scope of coverage. Authenticated DoorDash records and Gifford’s own
deposition testimony established that, at the time of the accident, Gifford had

completed a delivery and had not accepted another. [Doc. 6 ¶¶ 29-31, 38].
Although this investigation indicated that the facts of the Underlying
Action were not covered by the Policy, the Plaintiff was not relieved of its
duty to defend while the operative version of the complaint in the Underlying

Action included the allegation that Gifford was engaged in a DoorDash
delivery at the time of the accident. See Waste Mgmt., 315 N.C. at 692, 340
S.E.2d at 378 (holding that the insurer is bound to defend “groundless, false

or fraudulent” lawsuits if the facts as alleged in the complaint are arguably
covered by the policy). However, now that the operative complaint does not
allege facts arguably covered by the Policy and no facts demonstrating

coverage have been revealed through the Plaintiff’s investigation, the
Plaintiff does not have a duty to defend Gifford.
C. Voyager’s Duty to Settle

The Plaintiff’s Amended Complaint seeks a declaration that it has no
duty to settle the claim in the Underlying Action. [Doc. 6 ¶ 49]. While no North
Carolina court has directly addressed whether an insurer has a duty to settle
where no duty to defend exists, numerous courts who have confronted this

question have held that there is no duty to settle noncovered actions. See,
e.g., Rocor Intern, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 77
S.W.3d 253, 261 (Tex. 2002) (“[A]n insurer generally has no obligation to

settle a third-party claim against its insured unless the claim is covered under
the policy.”); Peerless Lighting Corp. v. Am. Motorist Ins. Co., 98 Cal. Rptr.
2d 753, 766 (Cal. Ct. App. 2000) (“[S]ince [the insurer] had no duty to defend
the underlying action, it had no duty to settle it.”); Trotter v. State Farm Mut.

Ins. Co., 297 S.C. 465, 475, 377 S.E.2d 343, 349 (1988) (“[T]he rule [that a
liability insurer owes its insured a duty to settle a personal injury claim
covered by the policy if settlement is the reasonable thing to do] does not

apply if [the claim] is not covered by the policy.”); see also Restatement of
Liability Insurance § 25 cmt. a (Am. L. Inst. 2019) (“An insurer has no duty to
settle noncovered legal actions.”).

Further, to hold that the Plaintiff has a duty to settle a claim that falls
outside of the scope of coverage of the Policy runs counter to the plain
language of the Policy, which states that Voyager will pay “all sums . . . to

which this insurance applies.” [Doc. 6 at Ex. 1]. Thus, it has no obligation to
pay damages in noncovered actions. Accordingly, based on the language of
the policy and the conclusions of other courts who have confronted this
issue, the Court concludes that the Plaintiff has no duty to settle the

Underlying Claim.
D. Voyager’s Duty to Indemnify
The Plaintiff’s Amended Complaint seeks a declaration that it has no

duty to indemnify Gifford in the Underlying Action. [Doc. 6 ¶ 49]. The duty to
defend is broader in scope than the duty to indemnify; an “insurer’s duty to
defend is ordinarily measured by the facts as alleged in the pleadings; its
duty to pay is measured by the facts ultimately determined at trial.” Buzz Off,

364 N.C. at 7, 692 S.E.2d at 610 (internal quotations omitted) (quoting Waste
Mgmt., 315 N.C. at 691, 340 S.E.2d at 377).
Here, because the operative complaint in the Underlying Action does

not allege facts that fall within the Policy’s coverage, there is no possibility
that the facts as ultimately determined at trial would be covered by the Policy.
Thus, as the Plaintiff has no duty to defend Gifford in the Underlying Claim,

it does not have a duty to indemnify him.
E. Voyager’s Request to Withdraw Its Defense of Gifford
The Plaintiff’s Amended Complaint seeks a declaration that it is

permitted to withdraw its defense of Gifford in the Underlying Action. [Doc. 6
¶ 49]. However, this request by the Plaintiff falls outside of the Court’s
authority pursuant to the Declaratory Judgment Act. While the Plaintiff cites
to an unpublished Fourth Circuit case that held that an insurer is “entitled to

rely” upon a district court’s declaratory judgment that it has no duty to defend
in deciding to withdraw its defense, Auto-Owners Ins. Co., 242 F. App’x at
102 (emphasis added), the Plaintiff cites no authority supporting the

argument that a declaration of permission to withdraw is within the Court’s
authority pursuant to the Declaratory Judgment Act.2 Accordingly, the Court
limits its declarations to the legal obligations of the Plaintiff—specifically, that
the Plaintiff has no duty to defend or indemnify Gifford in the Underlying

Action, and that the Plaintiff has no duty to settle the Underlying Action.

2 To the extent the Plaintiff requests that counsel be allowed to withdraw from the matter,
that is a determination left to the state court. See N.C. Gen. Stat. § 15A-144.
IT IS, THEREFORE, ORDERED that the Plaintiff's Motion for Default
Judgment [Doc. 13] is GRANTED, and the Court hereby declares that the
Plaintiff does not have a duty to defend, settle, or indemnify with respect to
the Underlying Action.

The Clerk of Court is respectfully instructed to enter a default judgment
consistent with this Order against the Defendants Dakota Gifford and
Amaziah Dondero.

IT IS SO ORDERED.

Signed: October 1, 2022

Martifi Reidinger Ls,
Chief United States District Judge lll

18

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10259100. Public record. Not legal advice.