Arrowood Indemnity Company v. Shipley et al

Filing 15

ORDER ADOPTING REPORT AND RECOMMENDATIONS Entered by Judge Joe Billy McDade on 7/24/14 re 13 Report and Recommendations. For the foregoing reasons, Magistrate Judge Schanzle-Haskin's Report & Recommendation (Doc. 13) is ADOPTED IN PART, and MODIFIED IN PART. This matter is DISMISSED as duplicative of Shipley v. Hall, et. al., No. 14-cv-1175. CASE TERMINATED. (VP, ilcd)

E-FILED

Friday, 25 July, 2014 11:50:15 AM
Clerk, U.S. District Court, ILCD

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
PEORIA DIVISION
ARROWOOD INDEMNITY COMPANY, )
)
Plaintiff/Garnishee,
)
)
v.
)
)
JAMES SHIPLEY, Individually and as )
)
Independent Executor of the Estate of
Janet Shipley, Deceased,
)
)
Defendant/Garnishor, and
)
)
THE C.P. HALL COMPANY,
)
)
Defendant.
)
)

Case No. 11-cv-1220

ORDER
This matter is before the Court on Magistrate Judge Schanzle-Haskins’
Report & Recommendation (“R&R”) recommending dismissal of the action (Doc. 13).
Plaintiff, Arrowood Indemnity Company, filed a Response to the R&R (Doc. 14), and
requests the action be transferred to the Northern District of Illinois. For the
reasons stated below, the disposition recommended in the R&R is accepted, the
R&R is modified as explained herein, and this action is dismissed.
PROCEDURAL HISTORY
In 2010, a judgment was entered against The C.P. Hall Company (“Hall”) in
the Circuit Court of the Eleventh Judicial Circuit, McLean County, Illinois, Case
No. 10-L-38 (the “Shipley Action”) in the amount of $3,000,000, in favor of Janet
Shipley for injuries from her exposure to Hall’s asbestos products. (Doc. 1 at 1).

Arrowood Indemnity Company (“Arrowood”) is the successor by merger to Security
Insurance Company of Hartford and New Amsterdam Casualty Company (Doc. 1 at
2), both of whom had extended Hall insurance coverage through certain general
liability policies.
As the successor to Security Insurance Company of Hartford and New
Amsterdam Casualty Company, Arrowood assumed the afore-mentioned companies’
obligations to Hall arising under their general liability insurance policies, such as
the obligation to indemnify Hall for certain types of judgments like the one obtained
in the Shipley Action. (Doc. 1 at 3-4). Plaintiff, James Shipley, acting individually
and as the independent executor of the estate of the now-deceased Janet Shipley,
filed a garnishment summons in the Shipley Action in May 2011, seeking
garnishment from Arrowood and another of Hall’s insurers, Great American
Insurance Company (“Great American”), pursuant to the judgment against Hall in
the Shipley Action. (Doc. 1 at 2).
Arrowood then removed the entire Shipley Action (the “Original Removal
Action”) to federal court on June 2, 2011 pursuant to 28 U.S.C. §§ 1441 and 1446,
invoking the Court’s diversity jurisdiction provided by 28 U.S.C. § 1332. (No. 11-cv1211, Doc. 1 at 2-4). Seven days later, Arrowood filed this action but leaving out
Great American as a party. This matter is a declaratory action in which Arrowood
seeks to have this Court declare Arrowood is not obligated to indemnify Hall under
its insurance policies for the judgment owed Shipley. This same exact issue is part
and parcel of, and would have to be determined in the Shipley Action/Original

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Removed Action.1 Arrowood apparently foresaw that the Original Removal Action
would be dismissed—and indeed it was dismissed—by this Court and remanded to
state court because complete diversity of citizenship amongst the several parties to
the Original Removal Action was lacking. (No. 11-cv-1211, Doc. 27). However,
because of Hall’s intervening bankruptcy and the effects of an automatic stay put in
place, the remand to the state court did not occur until April 4, 2014. Thirty days
later, Arrowood removed its claim from the Shipley Action back to this Court by
utilizing the removal statute for bankruptcy-related matters found at 28 U.S.C.
§1452. This Court has entered an Order & Opinion concluding that upon the filing
of an appropriate notice of removal, Shipley’s claim against Arrowood, which now
exists as Case No. 14-cv-1175, will be transferred to the Northern District of
Illinois.
In November 2013, Magistrate Judge Cudmore entered a text order ordering
the parties in this case to show cause why the matter should not be dismissed due
to the fact that Judge Cudmore became aware that any proceeds under Arrowood’s
insurance policies with Hall would be property of Hall’s bankruptcy estate, and thus
subject to the jurisdiction of the Bankruptcy Court. (November 18, 2003 Text
Order). The parties did not respond and Magistrate Judge Schanzle-Haskins issued
an R & R recommending the case be dismissed because of their failure to respond.
Arrowood then filed a response to the R & R asking that the case not be dismissed
but transferred to the Northern District of Illinois.
Arrowood even concedes “both cases involve the determination of Arrowood’s
coverage… under any policies issued by Arrowood to The C.P. Hall Company.” (Doc.
14 at 2).
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LEGAL STANDARDS
Duplicative actions are a waste of judicial time and resources and may be
dismissed at the discretion of the court. “As a general rule, a federal suit may be
dismissed for reasons of wise judicial administration ... whenever it is duplicative of
a parallel action already pending in another federal court.” Serlin v. Arthur
Andersen & Co., 3 F.3d 221, 223 (7th Cir. 1993) (internal quotation marks and
citation omitted). District courts have “a great deal of latitude and discretion” in
determining whether one action is duplicative of another, but generally, a suit is
duplicative if the “claims, parties, and available relief do not significantly differ
between the two actions.” Id. Also, it has been held that district courts possess
discretion in determining whether and when to entertain an action under the
Declaratory Judgment Act, even when the suit otherwise satisfies subject matter
jurisdictional prerequisites. Wilton v. Seven Falls Co., 515 U.S. 277, 282 (1995),
(citing Brillhart v. Excess Ins. Co. of America, 316 U.S. 491 (1942)).
DISCUSSION
Under either theory of abstention discussed above, it is clear that this is a
case that should be dismissed outright. Judge Schanzle-Haskin’s conclusion is
correct, but this case should not just be dismissed for the failure of the parties to
respond to Judge Cudmore’s order to show cause; this case should be dismissed
because it was filed improvidently. The central issue in this action is entirely
duplicative of Case No. 11-cv-1211, and its current iteration, Case No. 14-cv-1175.
Arrowood filed this case as a prophylactic measure designed to maintain Shipley’s

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claim against it in federal court. The Original Removal Action was removed to the
Court pursuant to 28 U.S.C. §§ 1441 and 1446, invoking the Court’s diversity
jurisdiction provided by 28 U.S.C. § 1332. (No. 11-cv-1211, Doc. 1 at 2-4). For
removal to be effective under section 1446, all the defendants in multi-defendant
case must consent to removal, McMahon v. Bunn–O–Matic Corp., 150 F.3d 651, 653
(7th Cir. 1998), and Great American does not consent to the removal of the Shipley
Action. (See No. 14-cv-1175, Doc. 6 and 9). Moreover, cases removed on the basis of
diversity jurisdiction obviously require diversity amongst the litigants, and
diversity in the Original Removed Action was found to be lacking. So Arrowood, in
furtherance of its federal forum shopping, filed this action for the sole purpose of
preventing a state court from deciding whether its insurance policies extend to Hall
for the Shipley judgment.
This case is completely unnecessary. As explained in the Order and Opinion
entered in Case No. 14-cv-1175 concurrent with this Order, Shipley’s claim against
Arrowood will be transferred to the Northern District of Illinois.

As Arrowood

concedes, both this case and Case No. 14-cv-1175 involve the determination of
whether Arrowood’s coverage extends to Hall under any policies issued by Arrowood
to Hall. (Doc. 14 at 2). The same parties are in both cases, save for Great American,
whose absence is of Arrowood’s design. There is simply no need for this action to
continue as it is duplicative of Case No. 14-1175 and serves no purpose.

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CONCLUSION
For the foregoing reasons, Magistrate Judge Schanzle-Haskin’s Report &
Recommendation (Doc. 13) is ADOPTED IN PART, and MODIFIED IN PART. This
matter is DISMISSED as duplicative of Shipley v. Hall, et. al., No. 14-cv-1175.
CASE TERMINATED.
SO ORDERED.
Entered this 24th day of July, 2014.

s/ Joe B. McDade
JOE BILLY McDADE
United States Senior District Judge

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