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Neal v. Target Corp.

United States District Court, N.D. Illinois, Eastern Division

August 24, 2016

ANGELA NEAL, individually and as Mother and next friend of KEON REEVES, a minor, Plaintiff,
v.
TARGET CORPORATION, et al., Defendants.

          ORDER

          Jeffrey T. Gilbert, United States Magistrate Judge.

         Defendant/Cross-Plaintiff Target Corporation's Petition to Enter Judgment [ECF No. 220] is granted in part and denied in part. See Statement below for further details.

         STATEMENT

         On July 1, 2015, the then-presiding District Judge in this case granted partial summary judgment in favor of Defendant/Cross-Plaintiff Target Corporation ("Target"). [ECF No. 150.] Specifically, the Court granted summary judgment on Target's express indemnification and breach of contract claims against Defendants/Cross-Claim Defendants Home Niches, Inc., ("Niches") and Walsay, Inc. ("Walsay") - Counts II, III, V, and VI of Target's Crossclaim. [ECF No. 32, ¶¶ 17-22, 23-28, 34-40, 41-46; ECF No. 150, at 8-11, 11-12.] Then, on July 20, 2015, the Court directed entry of final judgment pursuant to Federal Rule of Civil Procedure 54(b) as to the partial summary judgment entered in favor of Target. [ECF No. 156.] Neither Niches nor Walsay appealed that judgment.

         On November 13, 2015, the parties settled the remainder of the case. [ECF No. 176.] On that same day, all parties consented to this Magistrate Judge pursuant to 28 U.S.C. § 636(c). [ECF No. 178.] But the case did not come to a peaceful close. Instead, a lengthy dispute arose about one particular aspect of settlement, which the Court resolved on June 15, 2016. [ECF No. 217.]

         Shortly thereafter, Target filed a Petition to Enter Judgment ("the Petition"), accompanied by supporting documentation. [ECF Nos. 220, 221.] Walsay responded to the Petition. [ECF No. 229.] Niches never filed a response.

         Target requests that the Court enter judgment against Walsay and Niches in the amount of $494, 127.96. That amount includes legal fees and costs and a portion of the settlement payment. [ECF No. 220, at 1.] Walsay does not contest much of this. For instance, Walsay does not argue that judgment should not be entered and it does not dispute most of the amounts that Target claims. Walsay also does not contend that Target's attorneys' billing rates or the amount of time spent on particular tasks are unreasonable. Walsay raises only two objections.

         Walsay first points out that a small amount of the legal expenses Target included in its Petition was incurred for work unrelated to the present dispute. [ECF No. 229, at 3.] These expenses total $253.00. Id. Target concedes these expenses were "inadvertently included in Target's petition, " and that the judgment should be reduced by $253.00. [ECF No. 231, at 2 n.l, 4.] That lowers Target's requested amount to $493, 874.96. Id. at 4 n.4. That is easy.

         Walsay's other objection requires some additional background information before it can be addressed on the merits. After Angela Neal filed the present lawsuit, Northern Insurance Company ("Northern"), Walsay's insurer, filed a declaratory judgment action in Michigan against Walsay, Niches, and Target ("the Michigan Coverage Action"). [ECF No. 217, at 3.] Late last year, Niches and Walsay were dismissed with prejudice from the Michigan Coverage Action. Id. That left only Target and Northern fighting about, in essence, whether Northern must reimburse Target for amounts that Target paid to defend and settle the instant case. Id. at 3, 7-8.

         Walsay argues that Target improperly is attempting to collect $45, 678.00 in expenses incurred by Target's attorneys for work "related to [the] Northern Dispute" ("the Northern Dispute expenses"). [ECF No. 229-2.] The bulk of expenses are for time billed by Target's attorneys in this case for communicating with Target's attorneys in the Michigan Coverage Action, analyzing how issues in that case would impact this case and vice versa, and resolving a dispute about the settlement of this case. According to Walsay, the Northern Dispute expenses should not be included in the judgment entered in this case because the indemnification agreement between Target and Walsay and Niches ("the Agreement") applies "to the claims of Angela Neal in this lawsuit" and "does not apply to the litigation between Target and Northern .. . ." Id. at 2. Walsay's interpretation of the Agreement, however, does not take account of the broad language to which Walsay and Target agreed when they entered into the Agreement.

         The Agreement provides that Walsay "shall defend, indemnify and hold harmless" Target "from and against any and all . . . expenses, including costs and attorney fees, relating to or arising out of any claim or demand of any kind or nature, which any buyer or user of the Goods, or any other person . .. may make against [Target], based upon or arising out of the manufacture, delivery, ticketing, labeling, packaging, placement, promotion, sale or use of the Goods, or [Walsay's] performance of or failure to perform in accordance with the terms of this Contract. .. ." [ECF No. 123-3, at 17.] The "any claim or demand . . ." portion of the Agreement clearly encompasses the claim advanced by Neal in this case ("Neal's claim") because her claim could be (and was) brought against Target and arose out of the defective production of "the Goods." No party contends otherwise. It is the "relating to or arising out of any claim or demand" language that is at issue.

         The Court disagrees with Walsay's overly narrow interpretation of the Agreement. Essentially, Walsay reads the Agreement to apply only to the expenses that Target incurred in defending against Neal's personal injury claim. But the text of the Agreement is broader. It entitles Target to any and all expenses "relating to or arising out" of Neal's claim against Target. There is nothing about this language that indicates it is as limited as Walsay contends. Walsay's interpretation is not consistent with the plain meaning of the phrase "relating to or arising out of which is broad language of inclusion. In the Court's view, the Northern Dispute expenses are encompassed within that language.

         Target is not attempting to recover from Walsay or Niches its costs in defending the Michigan Coverage Action and it would not be able to do so; the language in the Agreement does not go that far. But the Michigan Coverage Action is not completely unrelated to this case and time that Target's attorneys in this case spent monitoring that case or taking account of it in defending against Neal's claim in this case relates to or arises out of Neal's claim against Target within the meaning of the Agreement. Moreover, Northern sent its Michigan Coverage Action attorney and a corporate representative to two settlement conferences in this court. Id. at 7. Northern paid some portion of the settlement in this case. Id. at 12. The settlement term sheet that the parties signed in this case explicitly discussed the Michigan Coverage Action. Id. at 9.[1] And it was a fight over whether and how the settlement of this case affected the Michigan Coverage Action that led to the previously referenced post-settlement motion practice in this case.

         With this background, the Court can address whether the specific categories of expenses to which Walsay objects "relate to or arise out of Neal's claim ...


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