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MOLEX INCORPORATED v. WYLER

MOLEX INCORPORATED, a Delaware Corporation, Plaintiff,
v.
GREGORY T. WYLER, Defendant.



The opinion of the court was delivered by: RUBEN CASTILLO, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Molex Incorporated's ("Molex") motion to reconsider our May 10, 2004 Order granting Defendant Gregory T. Wyler's motion to dismiss Molex's Complaint pursuant to Federal Rules of Civil Procedures 12(b)(1) and 12(b)(6) is before the Court. (R. 8-1.) Because our initial dismissal was closely linked to the facts alleged in the Complaint, a brief review of those allegations is appropriate here.*fn1

The Complaint arises from a 1998 stock purchase agreement ("Purchase Agreement") in which Molex agreed to purchase all of the outstanding and issued shares in Silent Systems, Inc. ("Silent"), a privately-held Massachusetts corporation of which Wyler was the majority shareholder. (R. 1, Compl. ¶¶ 7-9.) Wyler and Silent represented and warranted that the Purchase Agreement disclosed the identities of all of the stockholders owning capital stock in Silent. (Id. ¶ 10.) Wyler also agreed to indemnify and defend Molex for any loss or expenses relating to any claim made by persons not disclosed in the Purchase Agreement who might claim any right to Silent's stock. (Id. ¶ 12.)

  At the time that Molex became obligated under the Purchase Agreement to purchase Wyler's shares, a dispute arose regarding the proper calculation of the purchase price for those shares. (Id. ¶ 17.) On February 29, 2000, Molex, Wyler, and Silent entered into an agreement ("Settlement Agreement") that settled the price controversy. (Id.) Wyler represented and warranted in the Settlement Agreement that he owned his shares free and clear of any liens or restrictions. (Id. ¶ 20.)

  After Molex purchased Wyler's shares, it received notice that Wyler's father, Geoffrey Wyler ("Geoffrey"), claimed that he was the co-owner of the Silent shares that Molex purchased from Wyler. (Id. ¶ 21.) In 2001, Geoffrey filed suit against Wyler, Silent, and Molex in Massachusetts state court seeking, among other things, rescission of the purchase transaction. (Id. ¶ 23.) After making several unmet demands upon Wyler for indemnification with respect to the Massachusetts action, Molex filed the current action on March 4, 2004. (Id. ¶ 24.)

  On May 5, 2004, Wyler filed a motion to dismiss Molex's Complaint, claiming a lack of subject-matter jurisdiction under Rule 12(b)(1) and failure to state a claim under Rule 12(b)(6). We granted the motion without taking full briefing from the parties. (R. 7.) Molex then filed the present motion for reconsideration. For the reasons set forth below, we grant Molex's motion in part and deny it in part.

  LEGAL STANDARDS

  Whether to grant a motion to reconsider is a matter squarely within the Court's discretion. Caisse Nationale de Credit Agricole v. CBI Indus., Inc., 90 F.3d 1264, 1270 (7th Cir. 1996). Typically, we will reconsider a prior judgment only where we have "patently misunderstood a party," "made a decision outside the adversarial issues presented," or "made an error not of reasoning but of apprehension." Bank of Waunakee v. Rochester Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Cir. 1990). However, because we granted Wyler's motion to dismiss without allowing Molex the opportunity to brief the issues, we will not apply these standards strictly here. See, e.g., Flanagan v. Methodist Hosp. of Chi., No. 95 C 7287, 1996 WL 374131, at *1, n. 1 (N.D. Ill. Jun. 28, 1996).

  ANALYSIS

  I. Count One: Declaratory Judgment

  Count I of Molex's Complaint requests a declaratory judgment finding that Wyler is obligated under the Purchase Agreement to defend and indemnify Molex in the Massachusetts action and the Settlement Agreement does not relieve Wyler of those duties. (R. 1, Compl. ¶ 27.) Molex contends that this request for declaratory judgment is ripe even though the Massachusetts action — in which the court will decide whether Geoffrey has any claim in the Silent shares Molex purchased from Wyler — is on-going. For the reasons set forth below, we agree with Molex's arguments only as they pertain to the question of Wyler's duty to defend Molex in the Massachusetts action.

  A. Ripeness

  The Declaratory Judgment Act allows any federal court to "declare the rights and other legal relations of any interested party seeking such declaration" and that declaration has the full force of a final judgment. 28 U.S.C. § 2201. Before the Court can decide whether a declaratory judgment is appropriate in this matter, we "must first determine whether the court has subject matter jurisdiction, i.e., whether the case presents an `actual controversy' between the parties." Basic v. Fitzroy Eng'g, Ltd., 949 F.Supp. 1333, 1337 (N.D. Ill. 1996); Tobin v. City of Peoria, Ill., 939 F.Supp. 628, 634 (C.D. Ill. 1996) (stating that in a declaratory judgment action, the Court "should be `particularly vigilant' to make certain the case is ripe"). Whether an actual controversy exists under the Declaratory Judgment Act turns on whether "there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941).

  There certainly exists a "substantial controversy" regarding Wyler's duties to defend and indemnify Molex; the parties disagree as to whether Wyler must pay Molex's defense costs in the Massachusetts litigation and as to whether Wyler must indemnify Molex for any liability it eventually sustains in that action. The adversity of their legal interests is equally obvious. The more difficult question for both issues is whether they are sufficiently immediate to justify issuance of a declaratory ...


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