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Northern Insurance Co. of New York v. Travelers Insurance Co.

United States District Court, S.D. Indiana, Indianapolis Division

February 27, 2017

NORTHERN INSURANCE COMPANY OF NEW YORK as subrogee of Koch Originals, Inc., Plaintiff,



         This matter is before the Court on various motions submitted by both parties. Plaintiff Northern Insurance Company of New York as subrogee of Koch Original, Inc. (“Northern”), has filed a Motion for Reconsideration of Order on Defendants' Motion to Dismiss Plaintiff's Second Amended Complaint (“Motion to Reconsider”) (Dkt. 80), a Motion to Dismiss (Dkt. 89), and a Notice of Dismissal (Dkt 93). Defendants, Travelers Indemnity Company, The Charter Oak Fire Insurance Company, and Travelers Property Casualty Company of America's (collectively “Travelers”), have filed a Motion to Strike Proposed Third Amended Complaint with Prejudice or, in the Alternative Motion to Dismiss Third Amended Complaint with Prejudice (“Motion to Strike”) (Dkt 85), and a Response in Opposition to Plaintiff's Motion to Dismiss Without Prejudice and Brief in Support of Motion for Attorneys' Fees (“Motion for Fees”) (Dkt. 91). The Court will address each of these motions with this order.

         I. BACKGROUND

         On December 14, 2016, this Court granted Travelers' Motion to Dismiss Northern's Second Amended Complaint (“Order”) without prejudice. Dkt. 78. The Court stated that Northern had 28 days to amend its complaint and admonished that failure to do so would result in a dismissal with prejudice. Id.

         On January 11, 2017, the 28th day after entry of the December 14, 2016, Order, Northern filed its Motion to Reconsider. Dkt. 80. In support, Northern argues that each of the four grounds that the Court found for dismissing the Second Amended Complaint were in error. Northern also states that “if the choice of words in the Plaintiff's Second Amended Complaint was not sufficient to present a claim for relief, then Northern's proposed Third Amended Complaint … will overcome that shortcoming.” Dkt. 81 at 8-9. Northern attached its Third Amended Complaint as an exhibit to its Motion to Reconsider. Dkt. 81, Ex. 1. The Third Amended Complaint added George Koch Sons, Inc., [1] and George Koch (a Corporation) (collectively “George Koch Sons”). Id.

         On January 25, 2017, Travelers filed its Motion to Strike. Dkt. 85. Travelers argues that Northern's attachment of the Third Amended Complaint, in lieu of actually filing, did not comply with the Court's order and therefore dismissal with prejudice is warranted. Dkt. 86 at 2-3. Travelers also renews its arguments set forth in its first Motion to Dismiss Plaintiff's Second Amended Complaint (Dkt. 50) to support dismissal of Northern's Third Amended Complaint. Dkt. 86 at 3-8. Travelers further alleges that the Third Amended Complaint fails to assert that George Koch Sons is a joint tortfeasor with Koch Originals.

         On January 27, 2017, Northern filed its Motion to Dismiss pursuant to Federal Rule of Civil Procedure 41(a)(1), requesting that the Court dismiss this cause of action without prejudice. Dkt. 89.

         On February 9, 2017, Travelers filed its Motion for Fees. Dkt. 91. In its Motion for Fees, Travelers renewed its arguments that dismissal with prejudice is warranted for Northern's failure to timely file the Third Amended Complaint. Travelers acknowledges that Rule 41 provides that a “plaintiff may dismiss an action without a court order by filing a notice of dismissal before the opposing party serves either an answer or a motion for summary judgment.” Dkt. 90 at 4-5 (citing Rule 41(a)(1)(A)(i)). Travelers argues, however, that Rule 41(a)(1)(A)(i) is inapplicable as the Court has already ruled on the merits of this case. Id. In the alternative, if the Court dismisses the case without prejudice, Travelers requests reimbursement for attorneys' fees and costs expended in defending this lawsuit. Id. at 7-9; see also, Dkt. 91, ¶¶ 7-13. Counsel for Travelers attached an affidavit that stated Travelers “had incurred $95, 278.97 in attorneys' fees” defending this action. Dkt. 1, Ex. 1, ¶ 8.

         In Northern's response to Travelers' Motion for Fees, Northern concedes that its previous arguments on Northern's Motion to Dimiss as to the Direct Action rule were incorrect. Dkt. 92 at 3 (“Although Northern initially disagreed with Travelers' arguments, as evidence by its Motion to Reconsider, further reflection revealed that Travelers' arguments had some merit.”). It did not address the other arguments for dismissal. Northern states that it seeks to correct its error by withdrawing “its direct action against Travelers and to set the stage for a direct action against Travelers' insured, [George Koch Sons], and an action for Declaratory Judgment against Travelers, wholly consistent with Travelers' arguments.” Id. at 3-4. Northern also claims that its Motion to Dismiss should be treated as a notice of dismissal under Rule 41(a)(1)(A)(i), since Travelers has not filed an answer or a motion for summary judgment. Id. at 4-6. Northern further argues that the $95, 000.00 sought for reimbursement is excessive. Id. at 7-8.

         On February 16, 2017, Northern filed a Notice of Dismissal, pursuant to Rule 41(a)(1)(A)(i).

         II. ANALYSIS

         Travelers requests that the Court dismiss the instant case with prejudice or, in the alternative, issue costs and fees pursuant to Rule 41. Travelers first argues that Northern violated this Court's Order when it attached, rather than filed, the Third Amended Complaint. Because the Third Amended Complaint was not “filed, ” the Court should dismiss this action with prejudice as stated in the Order and based on the “[p]rincipals of fairness and equity[.]” Dkt. 90 at 4.

         The Court may dismiss a case with prejudice “if the plaintiff fails to prosecute or to comply with the [Federal Rules of Civil Procedure].” Rule 41(b). “The court should exercise this right sparingly and should dismiss a case under Rule 41 only ‘when there is a clear record of delay or contumacious conduct, or when other less drastic sanctions have proven unavailing.'” Salata v. Weyerhaeuser Co., 757 F.3d 695, 699 (7th Cir. 2014) (citing Webber v. Eye Corp., 721 F.2d 1067, 1069 (7th Cir. 1983)).

         Travelers does not argue that Northern's failure to file has caused an undue delay or risen to the level of obstinacy to warrant dismissal with prejudice. Moreover, the purpose of a complaint is to provide fair notice of a plaintiff's claim and its basis. See Windy City Metal Fabricators & Supply, Inc. v. CIT Tech. Fin. Servs., Inc., 536 F.3d 663, 667 (7th Cir. 2008). Although Northern attached its Third Amended Complaint to its Motion to Reconsider, rather than filing it, it nonetheless put Travelers on sufficient ...

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