Harris v. Durham Enters.

TOMMY HARRIS, Plaintiff/Counterdefendant, v. DURHAM ENTERPRISES, INC., and DON DURHAM, Defendants/Crossclaim Defendants,andLIBERTY MUTUAL INSURANCE, Defendant,andOHIO SECURITY, Defendant/Counterplaintiff/Crossclaim Plaintiff.

Case No. 20-cv-72-JPG

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ILLINOIS

June 15, 2020

MEMORANDUM AND ORDER

This matter is a procedural mess. Today, the Court will try to bring some clarity by addressing the motions pending before the Court and getting this case on track for a scheduling and discovery conference. The following motions are pending:

• Defendant Liberty Mutual Insurance Company's ("LMIC") motion to dismiss (Doc. 9);

• Plaintiff Tommy Harris's motion to remand (Doc. 13), with which defendants Durham Enterprise Inc. and Don Durham (collectively, "the Durham defendants") have joined (Doc. 23), and to which defendant Ohio Security Insurance Company ("OSIC") has responded (Doc. 24);

• Harris's motion for an extension of time to respond to LMIC's motion to dismiss and to respond to OSIC's counterclaim for declaratory judgment (Doc. 14); and

• The Durham defendants' motion for an extension of time to respond to OSIC's crossclaim for declaratory judgment and to file crossclaims against OSIC and LMIC (Doc. 30).

I. Procedural History

This case began in the Circuit Court for the Twentieth Judicial Circuit, St. Clair County, Illinois, as Case No. 17-L-7. Harris filed the case in January 2017 against Renal Life Link, Inc. d/b/a Metro East Dialysis and various other defendants seeking compensation for injuries he suffered that stemmed from infections he claimed to have acquired during dialysis in Belleville, Illinois. Harris added the Durham defendants, who were connected with the commercial cleaning of the dialysis facility, in amended pleadings filed in October 2017 and August 2018, respectively. In March 2019, Harris asked the Circuit Court to sever his claims against the Durham defendants. On April 1, 2019, the Circuit Court granted the motion, severed the claims, and assigned the severed claims a new case number, Case No. 19-L-0234.

The same day the severance was granted and the new case opened, Harris filed a new complaint against only the Durham defendants alleging they were negligent in failing to properly clean and sanitize the dialysis facility. That case was tried in a bench trial on July 30, 2019 (Doc. 1-1 at 18-24). At trial, the Durham defendants informed the court that they had agreed with Harris that they would not mount a defense to the case and that, in turn, Harris would limit its recovery and would not seek to execute any judgment against Harris but would instead pursue the judgment only against "Liberty Mutual," which the Durham defendants had represented as their insurer, and any other relevant insurer that may exist. On October 9, 2019, the Circuit Court entered judgment in Harris's favor in the amount of approximately $2 million (Doc. 1-1 at 26-41). That order further found facts and drew legal conclusions adverse to "Ohio Security/Liberty Mutual Insurance Company," even though they were not parties to the case.

On December 7, 2019, nearly two months after entry of judgment in the severed statecourt action against the Durham defendants, Harris amended his complaint in that case realleging the claims already decided in the bench trial and adding new declaratory judgment claims for insurance coverage against Liberty Mutual Insurance and OSIC (Doc. 1-1 at 8-15). Those claims are based on an insurance policy (Doc. 1-1 at 44-201) that bears the mark "Liberty Mutual Insurance" and the phrases "Liberty Mutual Insurance" and "Liberty Mutual Insurance Company" in multiple places. The declarations pages and various other pages of the policy also state, "Coverage Is Provided In Ohio Security Insurance Company." Harris served a summons and the amended complaint on LMIC and OSIC on December 17, 2019.

Believing that all plaintiffs were diverse from all defendants and that more than $75,000 was in issue, on January 16, 2020, OSIC removed the case to federal court based on the Court's original diversity jurisdiction. See 28 U.S.C. § 1441(a); 28 U.S.C. § 1332(a) (Doc. 1). The notice of removal was not accompanied by the consent of all defendants. See 28 U.S.C. § 1446(b)(2)(A); McMahon v. Bunn-O-Matic Corp., 150 F.3d 651, 653 (7th Cir. 1998). OSIC explained that "Liberty Mutual Insurance" did not join in or consent to the removal not because it disagreed with removal but because it is not a cognizable legal entity that would have the ability to express consent and is not connected with the insurance policy at issue in this case. OSIC further explains that the Durham defendants' consent is not required because they are aligned with Harris and are nominal parties. OSIC then filed a counterclaim and crossclaims for a declaratory judgment of no coverage.

For its part, LMIC sought to be dismissed from the case under Federal Rule of Civil Procedure 12(b)(6) on the grounds that "Liberty Mutual Insurance" is neither a legally cognizable entity nor a proper defendant since it has no relationship whatsoever to this dispute (Doc. 9). It argues that the insurance policy in issue was written solely by OSIC, a distinctcorporate entity.

Before its response to LMIC's motion to dismiss was due, Harris asked the Court to remand this case to the St. Clair County Circuit Court (Doc. 13). He argues that the notice of removal was untimely under 28 U.S.C. § 1446(c)(1) since OSIC filed it more than a year after he filed his original action in January 2017. Harris further argues that the removal is procedurally defective because it is not consented to by all defendants. Harris also asks for an extension of time to respond to LMIC's motion to dismiss and to OSIC's counterclaim until after the Court has ruled on Harris's motion to remand (Doc. 14). It has since responded to OSIC's counterclaim (Doc. 34).

About a month later, the Court set a hearing on the motions to try to bring some clarity to this procedurally mystifying situation. For example, it was wondering how judgment can be entered in a case by a state court purporting to decide issues against parties not before the Court, and then the complaint amended post-judgment to add new claims against defendants not involved in the original case. The Court was further wondering why the naming of "Liberty Mutual Insurance," the service of LMIC, and the appearance and filing of a motion by LMIC does not simply indicate a misnomer of LMIC that should be excused, just as the misnomer of OSIC as "Ohio Security" has essentially been accepted. Rather than getting clarity, the Court was hit with the consequences of the COVID-19 pandemic and has not been able to discuss its questions with the parties. And in the meantime, the Durham defendants have asked for an extension of time to respond to OSIC's crossclaims and to file their own crossclaims (Doc. 30).

Rather than waiting for a face-to-face give-and-take with the parties, to speed this case along, the Court tackles some of the motions now.

II. Analysis

A. LMIC's Motion to Dismiss (Doc. 9)

The Court will deny this motion. First, the naming of "Liberty Mutual Insurance" rather than "Liberty Mutual Insurance Company" is simply a misnomer. Under Illinois law, which applied when Harris filed his amended complaint, "[m]isnomer of a party is not a ground for dismissal but the name of any party may be corrected at any time, before or after judgment, on motion, upon any terms and proof that the court requires." 735 ILCS § 5/2-401(b). Misnomer is distinguishable from a mistake in identity:

A misnomer occurs where the plaintiff brings an action and serves summons upon the party intended to be made the defendant, thus giving actual notice of the lawsuit to the real party in interest, but the process and complaint do not refer to the person by his correct name. Mistaken identity, on the other hand, occurs when the wrong person is named and served.

Shaifer v. Folino, 650 N.E.2d 594, 597 (Ill. App. Ct. 1995) (citations omitted; emphasis added); accord Arendt v. Vetta Sports, Inc., 99 F.3d 231, 234 (7th Cir. 1996). "In other words, the misnomer provision applies only when the right defendant has been sued by the wrong name, not when the wrong defendant has been sued." Arendt, 99 F.3d at 234.

Here, it is clear that Harris intended to sue LMIC but it simply called it the wrong name. He served LMIC in a timely manner, so it is clear that LMIC actually knew of the declaratory judgment claim against "Liberty Mutual Insurance" and will not be surprised or prejudiced by having to defendant against it now. To the extent the Illinois misnomer law does not technically apply in this federal forum, the Court would apply it anyway in the interest of justice and using its judicial discretion under Federal Rule of Civil Procedure 15. For these reasons, the Court declines to dismiss Harris's claim against "Liberty Mutual Insurance" on the grounds that no such entity exists. The Court will further allow Harris to amend his pleading pursuant to Rule15(a)(2) to reflect the correct name of LMIC, the party he intended to sue.

Second, the Court finds that Harris has stated a claim against LMIC, misnamed as "Liberty Mutual Insurance." When considering a Rule 12(b)(6) motion to dismiss, the Court accepts as true all allegations in the complaint. Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To avoid dismissal under Rule 12(b)(6) for failure to state a claim, a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). This requirement is satisfied if the complaint (1) describes the claim in sufficient detail to give the defendant fair notice of what the claim is and the grounds upon which it rests and (2) plausibly suggests that the plaintiff has a right to relief above a speculative level. Bell Atl., ...