Design Basics, LLC v. Henderlong Homes LLC et al

Filing 97

OPINION AND ORDER: The Court DENIES the Defendant's Motion for Involuntary Dismissal 92 ; DENIES the Defendant's request to dismiss the parties with prejudice; and DENIES the Plaintiff's Motions for Fees 95 . Signed by Chief Judge Theresa L Springmann on 3/11/2019. (jss)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION
DESIGN BASICS, LLC,
Plaintiff,
v.

CAUSE NO.: 2-16-CV-324-TLS

HENDERLONG HOMES LLC;
HENDERLONG CONSTRUCTION, INC.;
CP PARTNERS, LLC; F & H PROPERTIES
II, INC; and DK HOMES, LLC,
Defendant.
OPINION AND ORDER
This matter is before the Court on the Defendant’s, DK Homes (DK), Motion to Dismiss
Involuntarily [ECF No. 92] pursuant to Federal Rule of Civil Procedure 41(b). For the reasons
stated below, the Court DENIES the Defendant’s Motion.

BACKGROUND
The Plaintiff, Design Basics LLC, filed a Complaint [ECF No. 1] against numerous
Defendants, including DK, on July 9, 2016. The Plaintiff alleges that DK infringed upon its
copyrights to certain house plans. On September 6, 2018, the Plaintiff filed a Joint Motion to
Dismiss [ECF No. 87] its claims against the Defendants and noted that DK objected. DK argued
in its Opposition to the Joint Motion to Dismiss without Prejudice [ECF No. 88] that it did not
agree to a dismissal without prejudice and that it should be dismissed with prejudice. (Def. DK’s
Resp. in Opp. to Mot. to Dismiss at 2.) The Court subsequently granted, in part, the Joint Motion
to Dismiss and dismissed with prejudice Defendants Henderlong Homes LLC, Henderlong

Construction, Inc., CP Partners LLC, and F&H Properties II, Inc., [ECF No. 91]. The Court
noted DK’s objection and withheld ruling. (Id.)
On December 13, 2018, DK filed a Motion to Dismiss Involuntarily pursuant to Federal
Rule of Civil Procedure 41(b) [ECF No. 92]. On January 10, 2019, the Plaintiff filed a response
[ECF No. 95] and on January 15, 2019, DK filed a reply [ECF No. 96]. The matter is now ripe
for review.

LEGAL STANDARD
Rule 41(b) allows a court to dismiss an action, upon motion, “if the plaintiff fails to
prosecute or to comply with these rules or a court order.” Id. Before the district court imposes a
Rule 41(b) dismissal, it must consider five factors: 1) whether the wrongdoer (or her counsel)
received “due warning” that such a sanction was a possibility; 2) the frequency and magnitude of
the wrongdoer's failure to comply with deadlines and other court orders; 3) the efficacy of less
severe sanctions; 4) whether the misconduct prejudiced the other party or other litigants on the
court's docket; and 5) the likely merits of the wrongdoer's case. Graham v. Schomaker, 215 F.3d
1329 (7th Cir. 2000).
In ruling on a Rule 41(b) motion, the court must take an unbiased view of all the
evidence, direct and circumstantial, and accord it such weight as the court believes it is entitled
to receive.” Sanders v. Gen. Servs. Admin., 707 F.2d 969, 971 (7th Cir. 1983) (citing Patterson v.
Gen. Motors Corp., 631 F.2d 476, 487 (7th Cir. 1980), cert. denied, 451 U.S. 914 (1981));
accord, Lee Tool & Mould, Ltd. v. Fort Wayne Pools, Inc., 791 F.2d 605, 610 n.7 (7th Cir.
1986). A Rule 41(b) dismissal is a “drastic remedy,” O'Rourke Bros., Inc. v. Nesbitt Burns, Inc.,
201 F.3d 948, 953 (7th Cir. 2000) and a “harsh sanction” that should “be employed only as a last
resort.” Rice v. City of Chicago., 333 F.3d 780, 786 (7th Cir. 2003).
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ANALYSIS
DK argues that dismissal with prejudice pursuant to Rule 41(b) is appropriate as: (i) the
matter has been pending for over two years and the parties have completed discovery; (ii) the
Plaintiff has excessively delayed the case and demonstrated a lack of diligence; and (iii) the
Plaintiff’s explanation for seeking dismissal without prejudice is insufficient. The Plaintiff
contends that DK’s Motion is procedurally frivolous and that there is no basis to dismiss the case
pursuant to Rule 41(b). The Plaintiff also requests that the Court order the Defendant to pay the
Plaintiff’s fees incurred in responding to its Motion.

A. Warning Sanction was Possibility
The Defendant admits that the Court did not warn the Plaintiff that a dismissal was
imminent. (Def.’s Mot. for Involuntary Dismissal at 2–3.) The Defendant argues that the Plaintiff
had constructive warning that dismissal could occur because it filed a Joint Motion to Dismiss in
regard to the other parties. (Id.) The Defendant is correct that the Court does not need to provide
an explicit warning regarding dismissal. Fischer v. Cingular Wireless, LLC, 446 F.3d 663, 665
(7th Cir. 2006). The Defendant does present a colorable argument that the Plaintiff was warned
that dismissal was imminent. An explicit warning from the Court that a plaintiff’s case may be
dismissed for failure to prosecute is not required, particularly when this notice comes from
another party. See Martinez v. Cty. Of Porter, Indiana, No. 2:15-CV-35, 2016 WL 6996045, at
*2 (N.D. Ind. Nov. 30, 2016). This factor, however, is not solely dispositive and the Court must
consider other relevant factors. Ball v. City of Chicago, 2 F.3d at 759–60 (7th Cir. 1993).

B. Frequency and Magnitude of Failures to Comply with Deadlines

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The Defendant argues that the Plaintiff failed to comply with Court’s orders in its failure
to file Court-ordered joint status reports or dismissals. (Def.’s Mot for Involuntary Dismissal at
4.) The Defendant states that the Court directed the parties to file a Joint Status Report or
dismissal papers on or before September 9, 2018, none of which were filed. (Id.) The Defendant
also states that the Court ordered a telephonic status conference for September 12, 2018 that
would be vacated if a joint status report or dismissal papers were filed before that date. (Id. at 3.)
The Defendant states that no such papers were filed and the Plaintiff instead filed a Joint Motion
to Dismiss that misrepresented the Defendant’s position. (Id.) The Plaintiff argues that the
Defendant only points to a single instance in which the Plaintiff failed to file a Joint Status
Report and notes that the Defendant also failed to file a report. (Pl.’s Resp. in Opp. at 4.) The
Plaintiff contends that this does not constitute sanctionable conduct under Rule 41(b).
A court should consider the frequency and magnitude of the plaintiff’s noncompliance
with deadlines in evaluating a motion pursuant to Rule 41(b). Kasalo v. Harris & Harris, Ltd.,
656 F.3d 557, 561 (7th Cir. 2011). Multiple missed deadlines are sufficient to warrant dismissal.
Malone v. Securitas Sec. Servs. USA, Inc., 669 Fed. App’x. 788, 789 (7th Cir. 2016). There is no
indication here, however, that the Plaintiff has repeatedly missed deadlines. Rather, the
Defendant only points to a singular instance in which a deadline was missed. Therefore, the
Court does not find that the Plaintiff’s actions represent a “clear record of delay” or
“contumacious conduct.” Maynard v. Nygren, 332 F.3d 467 (7th Cir. 2003) overruled on other
grounds by Ramirez v. T&H Lemont, Inc., 845 F.3d 772 (7th Cir. 2016).

C. Misconduct Prejudiced Other Party or Other Litigants
The Defendant states that the Plaintiff prejudiced it because: (i) its failure to comply with
deadlines resulted in delays; (ii) the Plaintiff misrepresented the Defendant’s position regarding
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dismissal; and (iii) that the continuing litigation harms the Defendant. (Def.’s Mot. for
Involuntary Dismissal at 4.) The Defendant argues that the parties reached “some sort
settlement” on April 30, 2018 but it took the Plaintiff over five months to confirm settlement,
and then it mispresented the Defendant’s position regarding dismissal. (Id.) The Plaintiff
contends that it never misrepresented the Defendant’s position in its Joint Motion to Dismiss.
(Pl.’s Resp. at 5.) Additionally, the Plaintiff argues that the continuation of the case does not
prejudice the Defendant. The Plaintiff states that the Defendant prevented the Plaintiff from
dismissing the lawsuit against it and thus the Defendant cannot attribute the continuation of the
case to it. (Id.)
The Court has already addressed the Defendant’s argument regarding the Plaintiff’s
alleged missed deadlines. As stated previously, a single instance in which a plaintiff misses a
deadline does not establish a “record of delay” and is insufficient standing alone to warrant
dismissal pursuant to Rule 41(b). Maynard, 332 F.3d at 467–68. Further, the Plaintiff did not
misrepresent the Defendant’s position in its Joint Motion to Dismiss. The Plaintiff explained that
the Defendant objected to the motion and described the confusing correspondence that occurred
in attempting to come to a solution. (Joint Mot. to Dismiss at 4.)
The Defendant is correct that prejudice may arise from the mere continued existence of
the suit, by tying up a defendant’s time and prolonging uncertainty and anxiety. Martinez, 2016
WL 6996045, at *2. “Unwarranted prejudice to a defendant from keeping a suit alive is an
important consideration in the choice of sanctions for dilatory behavior from the wide menu
available to the district judge.” Ball, 2 F.3d at 759. The Defendant, however, somewhat
undercuts its own argument. The Defendant objected and actively prevented the Plaintiff from
dismissing it from the case. Any continued legal activity is a consequence of the Defendant’s

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own actions. Thus, the Court does not find that the Plaintiff committed misconduct that
prejudiced the Defendant.

D. Merits of the Wrongdoers Case
Finally, the Defendant argues that the case lacks merit. The Defendant states that the
Plaintiff has admitted that it does not have evidence to prove its case. (Def.’s Mot. for
Involuntary Dismissal at 6.) The Defendant also cites to a Seventh Circuit case, Design Basics,
LLC v. Lexington Homes, Inc., 858 F.3d 1093 (7th Cir. 2017), and a case from the Southern
District of Indiana, Design Basics, LLC v. Kerstiens Homes & Designs, Inc., Case No. 1:16-cv00726-TWP-DLP, to support its proposition that the Plaintiff could not prevail in a civil suit
against DK. (Id. at 5.) The Plaintiff argues that the fact other defendants have prevailed on
summary judgment in other cases does not necessarily mean that the Defendant would prevail in
the present case. (Pl.’s Resp. at 6.) Further, the Plaintiff argues that the fact the Defendant claims
to have disposed of relevant documents does not entitle it to judgment with prejudice. (Id.)
It is proper for a judge to consider the merits of a suit prior to dismissal. Beeson v. Smith,
893 F.2d 930, 931(7th Cir. 1990); Caribbean Transp. Sys., Inc. v. Autoridad de las Navieras de
Puerto Rico, 901 F.2d 196, 197 (1st Cir. 1990); Am. Inmate Paralegal Ass’n. v. Cline, 859 F.2d
59, 61 (8th Cir. 1988) (per curiam); Sturgeon v. Airborne Freight Corp., 778 F.2d 1154, 1160
(5th Cir. 1985); Poulis v. State Farm Fire & Cas. Ins. Co., 747 F.2d at 868–69 (3d Cir. 1984). “If
it appears that the suit is unmeritorious, the inference may arise that the lawyer's dilatory and
evasive conduct is designed to force an unjust settlement by imposing cost and uncertainty on the
defendant. Furthermore, the less meritorious the suit, the less likely is it that dismissing it will
impair the deterrent and compensatory objectives of the law under which the plaintiff was
proceeding, by letting a wrongdoer get off scot-free.” Ball, 2 F.3d at 759.
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That other courts have granted summary judgment is not dispositive here. Additionally,
the Defendant’s claims that it has disposed of all relevant documentation does not necessarily
mean that the Plaintiff’s action is meritless. Consequently, the Court does not find that the
Plaintiff’s case is unmeritorious for the purposes of Rule 41(b).
E. Proportionality of Dismissing a Case Pursuant to 41(b)
To evaluate the proportionality of dismissing a case under this rule, a district judge must
assess whether the plaintiff’s “neglect in pursuing his case was sufficiently serious to warrant
dismissal.” McInnis v. Duncan, 697 F.3d 661, 664 (7th Cir. 2012). Dismissal pursuant to Rule
41(b) is a harsh sanction and based upon its analysis of the aforementioned factors, the Court
finds that the Plaintiff’s alleged neglect is insufficient to warrant dismissal. Thus, the Court
DENIES the Defendant’s Motion to Dismiss pursuant to Rule 41(b).

F. Defendant’s Request for Dismissal with Prejudice
The Defendant requests, as an alternative, that the Court grant the Plaintiff’s Motion, but
with prejudice. The Court cannot grant this request as it is procedurally improper. The Plaintiff
originally moved for a motion to dismiss the Defendant without prejudice and without costs.
(Joint Mot. to Dismiss at 1.) Pursuant to Rules 41(a)(1)(A)(ii) and Rule 41(a)(1)(B), the parties
seeking dismissal must file a stipulation of dismissal signed by both parties, stating that the case
should be dismissed with prejudice. No such stipulation exists here. Therefore, the Court
DENIES the Defendant’s request for dismissal with prejudice.

G. Plaintiff’s Motion for Fees
In its response to the Defendant’s Motion, the Plaintiff requests fees incurred in
responding as a sanction because the motion is “procedurally and substantively groundless and
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frivolous and serves only to multiply proceedings and increase costs.” (Pl.’s Resp. at 6.) The
Defendant argues that the Plaintiff’s request does not comply with N.D. L.R. 7-1, which
mandates that motions must be filed separately.
The Defendant is correct that pursuant to N.D. Ind. L.R. 7-1, motions must but filed
separately, but alternative motions may be filed in a single paper if each is named in the title
following the caption. Id. The Plaintiff failed to indicate that it planned to move for sanctions in
its caption. As such, the Court DENIES the Plaintiff’s requests for legal fees as it was improperly
requested. If the Plaintiff wishes to request legal fees for its work in responding to the
Defendant’s Motion, it must do so in a separate motion.

CONCLUSION
Therefore, the Court:
1. DENIES the Defendant’s Motion for Involuntary Dismissal [ECF No. 92];
2. DENIES the Defendant’s request to dismiss the parties with prejudice; and
3. DENIES the Plaintiff’s Motions for Fees [ECF No. 95].

SO ORDERED on March 11, 2019.
s/ Theresa L. Springmann
CHIEF JUDGE THERESA L. SPRINGMANN
UNITED STATES DISTRICT COURT

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