United States District Court, N.D. Indiana, South Bend Division
OPINION AND ORDER
MICHAEL G. GOTSCH, SR. UNITED STATES MAGISTRATE JUDGE
18, 2016, Garnishee Defendant, Westfield Insurance Company
(“Westfield”), filed its Motion for Leave to File
Answer and Affirmative Defenses to Plaintiffs'
Proceedings Supplemental to Execution, and
Counterclaim/Cross-Claim for Declaratory Judgment
(“Motion for Pleadings”). On July 27, 2016,
Plaintiffs filed their response in opposition to
Westfield's Motion for Pleadings. Westfield's motion
became ripe on August 3, 2016, when it filed its reply brief.
The Court discussed Westfield's motion with counsel for
Plaintiffs and Westfield at a motion hearing on September 21,
2016. Defendants, VIM Recycling, Inc. (“VIM”),
K.C. Industries, LLC (“KCI”), and Kenneth R.
Will, all remaining unrepresented, neither responded to
Westfield's motion nor appeared at the hearing.
Accordingly, the Court assumes that Defendants do not oppose
any part of Westfield's Motion for Pleadings.
review of the briefs and oral argument, the Court now grants
in part and denies in part Westfield's Motion for
Pleadings for the reasons stated below.
initiated this class action (“the instant
action”) under 42 U.S.C. § 9601, the Comprehensive
Environmental Response, Compensation, and Liability Act
(“CERCLA”), with its original complaint on
October 27, 2009. On April 18, 2011, Westfield filed a
separate complaint for declaratory judgment seeking a
declaration that it owed no duty to defend or indemnify Will,
VIM, and KCI against a state court lawsuit against them.
[Cause No. 3:11-cv-159-JVB (“the ‘159 case”
or “Westfield's 2011 Dec Action”)]. In
Westfield's 2011 Dec Action, this Court found that
Westfield has no duty to defend or indemnify Will, VIM, or
KCI against the state court lawsuit. Doc. No. 31 in the
November 24, 2015, the Court then entered default judgment in
the instant action against VIM and KCI for $50, 568, 750 and
awarded litigation costs in the amount of $273, 399.85
against Will, VIM, and KCI. [Doc. No. 226 & 227]. On May
23, 2016, Plaintiffs filed their Verified Motion for
Proceedings Supplemental to Execution (“Motion for Pro
Supp”) that sought, among other things, to attach four
insurance policies issued by Westfield to VIM, KCI, and Will.
[Doc. No. 235].
the Court set a pro supp hearing for August 30, 2016,
Westfield filed the instant Motion for Pleadings based on its
assertion that it has no duty under its policies to defend
and indemnify VIM, KC, and Will against Plaintiffs'
claims and that it is not liable under its policies to pay
any of the judgments against VIM, KC, and Will. In their
response brief, and later at the motion hearing, Plaintiffs
indicated that they do not oppose Westfield's request to
file an answer and affirmative defenses, but that they do
object to Westfield's request to file the proposed
counterclaim/cross-claim for declaratory judgment.
Ind. Tr. R. 69(E), invoked by Fed.R.Civ.P. 69, a pro supp
hearing or answers to interrogatories from a judgment debtor,
other named parties defendant, or garnishees is typically all
that is required to resolve a motion for proceedings
supplemental. However, the Indiana Supreme Court has held
that “when a new issue arises in a proceeding
supplemental, responsive pleadings are required.”
Rose v. Mercantile Nat'l Bank of Hammond, 868
N.E.2d 772, 775 (Ind. 2007) (quoting Am. Underwriters,
Inc. v. Curtis, 427 N.E.2d 438, 443 (Ind. 1981)).
Responsive pleadings may even be permitted when no new issue
arises. Id. And if a court permits responsive
pleadings, it “must then allow discovery and conduct a
hearing, after which certain property shall be applied
towards the judgment. Id. (quoting Ind. Trial Rule
69(E)). Parties may also move for summary judgment both for
and against the proceeding supplemental based on claims in
those responsive pleadings. See, e.g.,
Rose, 868 N.E.2d at 776-77; Liberty Mut. Ins.
Co. v. Metzler, 586 N.E.2d 897 (Ind.Ct.App. 1992),
trans denied; Am. Family Mut. Ins. Co. v.
Kivela, 408 N.E.2d 805 (Ind.Ct.App. 1980); Greene v.
Am. Underwriters, Inc., 364 N.E.2d 1194 (Ind.Ct.App.
1977). However, “[p]roceedings supplemental are
appropriate only for actions to enforce and collect existing
judgments, not to establish new ones.”
Rose, 868 N.E.2d at 777. (emphasis added).
Westfield seeks the Court's permission to file pleadings,
including a counterclaim/cross-claim for declaratory judgment
(“the counterclaim”) as to whether it must
indemnify Will, VIM, and KCI for the judgment against them in
the instant action. There is no question that Westfield
should be allowed to file an answer and affirmative defenses
because the issue of coverage has not been previously raised
in this action and directly affects Plaintiffs' efforts
to collect on their judgment against Will, VIM, and KCI.
Moreover, neither Plaintiffs nor Will, VIM, or KCI have
objected to Westfield's request to file an answer and
affirmative defenses. However, Westfield's proposed
counterclaim presents a more difficult question.
proposed counterclaim, Westfield alleges eleven coverage
issues that would preclude indemnification. Westfield's
proposed answer and affirmative defenses present at least
fifteen additional coverage issues. Out of fear that the
eleven coverage issues included in its proposed counterclaim
would be waived if not pled as a compulsory counterclaim
under Fed.R.Civ.P. 13(a), Westfield wants to file the
declaratory judgment counterclaim.
oppose allowing the counterclaim contending that it is
repetitious and unnecessary. Westfield, on the other hand,
contends that the allegedly compulsory counterclaim is
properly before the Court because it presents facts and legal
theories not broached in the pending Motion for Pro Supp.
Westfield argues that the Motion for Pro Supp and
counterclaim would have to be mirror images to be
sufficiently redundant to be disallowed here. The Court
may dismiss a declaratory judgment action if it serves no
useful purpose. Cincinnati Specialty, Underwriters Ins.
Co. v. DMH Holdings, LLC, No. 3:11-CV-357, 2013 WL
683493, at *3 (N.D. Ind. Feb. 22, 2013). For instance,
“a court may refuse to entertain a declaratory judgment
action that merely seeks to determine issues already being
litigated.” Lincoln Nat'l Corp. v. Steadfast
Ins. Co., No. 1:06-CV-00058, 2006 WL 1660591, at *2
(N.D. Ind. June 9, 2006). Counterclaims for
declaratory judgment are also redundant and unnecessary if
they “merely restate an affirmative defense, or . . .
seek the opposite effect of the complaint [and] should be
stricken regardless of whether prejudice has been
shown.” Id.; see also DMH
Holdings, 2013 WL 683492, at *3 (citing U.S. v.
Zanfei, 353 F.Supp.2d 962, 965 (N.D. Ill. 2005));
McGrath v. Everest Nat'l Ins. Co., No. 2:07 CV
34, 2009 WL 2508216, at *2 (N.D. Ind. Aug. 13, 2009)
(“a counterclaim which merely raises identical issues
as the complaint or restates an issue already before the
court should be stricken”). Indeed, “where the
substantive suit would resolve the issues raised by the
declaratory judgment action, the declaratory judgment action
serves no useful purpose because the controversy has ripened
and the uncertainty and anticipation of litigation are
alleviated.” McGrath, 2009 WL 2508216, at *2
(internal quotations omitted) (citing Tempco Elec. Heater
Corp. v. Omega Eng'g, Inc., 819 F.2d 746, 749 (7th
Cir. 1987); Amari v. Radio Spirits, Inc., 219
F.Supp.2d 942, 944 (N.D. Ill. 2002))
has interpreted this standard to mean that its counterclaim
here must be identical to Plaintiffs' Motion for Pro Supp
in order to be disallowed. In support, Westfield relies upon
this Court's analysis in DMH Holdings where the
Court struck a counterclaim as redundant. 2013 WL 683493, at
*4. After reaching that conclusion, the Court stated that
“[a] paragraph-by-paragraph comparison of the opposing
declarations is illustrative.” Id. The
Court's analysis then reflects just such a comparison.
Id. at *4-*5. Despite conducting the
paragraph-by-paragraph comparison, the Court relies on the
legal standard that a declaratory judgment claim should be
stricken if it is repetitious. Nowhere does the Court suggest
that the claim has to be identical or that a
paragraph-by-paragraph analysis is required. Rather, the
question of whether to strike the declaratory judgment claim
in DMH Holdings was easily resolved by such a direct