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Indiana Insurance Company v. Matrix Ls

June 27, 2012


The opinion of the court was delivered by: Hon. Harry D. Leinenweber


Before the Court is Defendant CE Design Ltd.'s ("CE Design") Motion to Dismiss, it Motion to Transfer and Plaintiff Indiana Insurance Company's ("Indiana") Motion for Summary Judgment. For the reasons stated herein, the Court grants Defendant CE Design's Motion to Dismiss and accordingly does not reach the Motion to Transfer or Plaintiff's Motion for Summary Judgment.


This case has a somewhat convoluted history. CE Design filed a class action lawsuit against Michigan Defendant Matrix LS, Inc. ("Matrix") in state court in Lake County, Illinois on March 22, 2005, alleging violations of the Telephone Consumer Protection Act (the "TCPA") and other laws by sending unsolicited junk faxes. That action remains pending in Lake County.

On March 14, 2006, CE Design filed this declaratory judgment action in Lake County seeking a declaration that Matrix's insurer, Indiana, had a duty to defend and indemnify Matrix in the underlying suit. (Matrix was administratively dissolved by the State of Michigan in 2008 and, by all indications, is judgment proof.) Indiana removed the declaratory judgment action to this Court on April 14, 2006 and countersued for its own declaratory judgment relief, seeking a ruling that it had no duty to defend or indemnify Matrix.

On March 6, 2007, the parties and this Court decided in open court that CE Design would voluntarily dismiss its action without prejudice, Indiana would become the plaintiff and Matrix would be the defendant, with CE Design joined as a necessary defendant to Indiana's declaratory judgment action. The parties agreed CE Design would reinstate its declaratory judgment action as a counterclaim against Indiana. Although Indiana agreed that CE Design was a necessary party to its declaratory judgment action against Matrix, it disputed that CE Design had standing under Illinois law to bring its own counterclaim. The parties agreed to resolve CE Design's standing issue through summary judgment before litigating Indiana's declaratory judgment action. While Indiana's Motion for Summary Judgment on CE Design's Counterclaim was pending, Indiana twice unsuccessfully sought to obtain default judgment against Matrix, which had not responded to Indiana's Amended Complaint.

On December 11, 2007, the Court ruled in favor of Indiana on the issue of CE Design's Counterclaim, dismissing it. Although Indiana's declaratory judgment action remained pending, the Court's clerk erroneously entered a "Judgment in a Civil Case" form. ECF No. 96. For the next 47 months, neither party filed a motion, status report, or summary judgment motion. In fact, no activity whatsoever occurred until November 17, 2011 when Indiana filed a new attorney appearance form on its way to asking for summary judgment on its duty to defend, which was filed March 23, 2012. The renewed interest in this case by Indiana came shortly after CE Design filed an action in Wisconsin state court on November 3, 2011, again seeking judgment on the duty to defend issue. CE Design subsequently voluntarily dismissed that action and refiled in Massachusetts state court.

Indiana does not claim that it mistakenly thought the erroneous "Judgment in a Civil Case" entry terminated the proceedings. Instead, it claims the lack of activity in this case was deliberate abstention while the underlying suit proceeded.


CE Design argues for dismissal on three grounds. First, that the summary judgment order entered by this Court on December 11, 2007 was a final judgment and therefore this Court has no jurisdiction; second, it moves for dismissal under Federal Rule of Civil Procedure 41(b), arguing Indiana failed to prosecute the case for nearly four years; and third, it argues the Court should abstain in favor of the action pending in Massachusetts state court.

A. The Erroneous Entry of Judgment Form Did Not Terminate This Court's Jurisdiction The Court agrees with Indiana that the order of December 11, 2007 was not intended by the Court to be a final judgment. CE Design is correct that there are entries in the record indicating a final judgment was entered. The first is the entry of the docket clerk describing the Court's minute order [ECF No. 94]. That docket entry reads "Civil case terminated." However, the underlying minute order of the Court itself does not contain that language.

Docket entry No. 96, a judgment form prepared by the clerk, also erroneously indicates that a judgment had been reached.

Incidentally, the erroneous of entry of judgment was likely not the clerk's fault. The imprecise wording of the minute order used two sentences to say the same thing:

"The Motion for Summary Judgment of Indiana Insurance Company is Granted. The Counterclaim of CE ...

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