IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

BERNARD A. SCHLOSSER, ATTORNEY
AT LAW, P.C., on behalf of itself and all
others similarly situated, and as assignee of
EHOME CREDIT CORP.,

Plaintiffs,
Case No. 03 C 8627

vs.

ST. PAUL FIRE AND MARINE
INSURANCE COMPANY,

weeeveerververererwervere

Defendant.
MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

The plaintiff in this case, a law firm, filed suit in Illinois state court against ceHome Credit
Corp. in May 2002 on behalf of a putative class asserting various causes of action. eHome had a
commercial general liability insurance policy with defendant St. Paul Fire & Marine. St. Paul
denied coverage with regard to the suit against eHome, which in turn filed a declaratory
judgment action in New York state court in the fall of 2002.

eHome entered into a settlement of the Illinois class action in September 2003. The
settlement agreement provided for payment by eHome of $20,000 within 45 days of court
approval, and an assignment to the class of its rights under the St. Paul policy. The agreement
contemplated that the plaintiff would pursue, as assignee, a claim against St. Paul for the
amounts provided by the policy. If plaintiff prevailed, eHome would stipulate to certification of
a settlement class in the Illinois case; if plaintiff lost, eHome would get a release of all claims.
The settlement was approved by the Illinois court on October 9, 2003.

There ensued what can fairly be described as fast and furious efforts by plaintiff and St.



(indeed, the letter it sent to eHome declaring a breach of the settlement agreement is dated one
week after the Court’s summary judgment ruling). The record permits an inference that plaintiff
was willing to overlook the mootness issue in the hope of a favorable ruling on the merits from
this Court. But the Court’s ruling went the other way and in fact suggested that St. Paul might be
entitled to prevail. At that point, plaintiff did a volte-face, essentially telling the Court, “never
mind.”

The Court agrees with plaintiff that the case is moot. Plaintiff has declared eHome to be
in breach of the settlement agreement, and it has filed a motion in the Illinois state court case
asking that court to do the same. Because this case was premised on the enforceability of an
agreement which the plaintiff now concedes is unenforceable, it is moot and must be dismissed.

But that is not the end of this story. As indicated above, the record permits a reasonable
inference that plaintiff manipulated the Court by aggressively pursuing in this Court a case that it
knew was already moot as of the date it was removed here, hoping for a victory but knowing that
if the tide of battle turned against it, it could fold its tent and slip away. Plaintiff and plaintiffs
counsel are ordered to show cause why they should not be sanctioned pursuant to 28 U.S.C.
§1927 or otherwise, for vexatiously multiplying the proceedings in this Court. Their
memorandum in response to the rule to show cause is to be filed by 2/27/04. Defendant’s reply
is to be filed by 3/12/04, These are firm dates. The matter is set for argument, 20 minutes per

side, on 3/18/04 at 3:30 p.m. All other motions are terminated.

Date: February 13, 2004



Paul to get the upper hand on where the insurance coverage dispute would be decided. On
October 13, 2003, plaintiff directed cHome to dismiss its New York insurance coverage case, a
step expressly contemplated by the Illinois settlement agreement. On October 15, 2003, plaintiff
filed its own action in Illinois state court against St. Paul seeking a declaration of coverage. St.
Paul then filed its own separate declaratory judgment action in New York state court. St. Paul
removed the Illinois declaratory judgment case to this Court on November 26, 2003. eHome did
not follow plaintiff's direction to dismiss the first-filed New York case, so St. Paul filed a motion
for summary judgment in that case on December 15, 2003. On December 24, 2003, plaintiff
filed a motion for summary judgment in the present case, along with a motion asking this Court
to enjoin St. Paul from pursuing its motion for summary judgment in the New York case.

This Court determined to deal with plaintiffs summary judgment motion promptly and
did so, denying it on January 20, 2004. We have not yet ruled on plaintiff's motion to enjoin St.
Paul.

After losing the motion for summary judgment in this Court, plaintiff filed a motion for
reconsideration, and a document in which it suggested the case was moot. The basis for
plaintiff's suggestion of mootness was that eHome has breached the settlement agreement by
failing to pay the $20,000 owed. See Pltf’s Suggestion of Mootness, Ex. A. But if this is true, it
became true on November 24, 2003, the 46th day after the Illinois state court’s approval of the
settlement. In its reply on the mootness issue, plaintiff notes that eHome also breached the
settlement agreement by failing to dismiss its New York case when directed to do so; but this
was well known to plaintiff by early November at the latest.

In short, if the case is moot now, it was moot as of the time St. Paul removed it to this
Court, Plaintiff, however, remained silent until after it had lost its motion for cummary judgment

2



Wy

‘Minure Order Form (06797)

United States District Court, Northern District of Illinois

UP Aa of assigned sudge Matthew F. Kennelly Sitting Judge if Other
or Magistrate Judge than Assigned Judge
CASE NUMBER 03 C 8627 DATE 2/13/2004
CASE Schlosser vs, St. Paul Fire and Marine Insurance
TITLE

of the motion being presented.]

MOTION:

{In the Following box (a) indicate the party filing the motion, e.g,, plaintiff, defendant, 3rd party plaintifY, and (b) state briefly the nature

DOCKET ENTRY:

OCOFRCP4(m) Local Rule 41.1 OFRCP41(a)(1) CJ FRCP41(a)(2)

argument on 3/18/04 at 3:30 p.m.

(dl) [For further detail see order attached to the original minute order.]

qd) og Filed motion of [ use listing in “Motion” box above.]

(2) o Brief in support of motion due

3 Oo Answer brief to motion due___. Reply to answer brief due___

(4) ia] Ruling/Hearing on __ _setfor at

6 Oa Status hearing[held/continued to] [set for/re-set for]on___ set for__at

(6) Q Pretrial conference[held/continued to] [set for/re-set for]on set for_— at.
(7) oO Trial[set for/re-set for]on at.

(8) Q [Bench/Jury trial] [Hearing] held/continued toa

(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to}

(ao [Other docket entry] For the reasons set forth on the attached Memorandum Opinion and Order,
the case is dismissed as moot. All other pending motions are terminated. Plaintiffand plaintiff's counsel
are ordered to show cause why they should not be sanctioned. Their memorandum is to be filed by
2/27/04; defendant’s reply is to be filed by 3/12/04. These are firm dates. The matter is set for oral

No notices required, advised in open court.

No notices required. snumber of notice

Document
Number

Notices mailed by judge’s staff,

Notified counsel by telephone.

Y | Docketing to mail notices

Mail AO 450 form.

Copy to judge/magistrate judge.

na ygnesia

’ date mailed notice

courtroom
OR deputy's
initials

Date/time received in
central Clerk's Office sriling deputy ina



(indeed, the letter it sent to eHome declaring a breach of the settlement agreement is dated one
week after the Court’s summary judgment ruling). The record permits an inference that plaintiff
was willing to overlook the mootness issue in the hope of a favorable ruling on the merits from
this Court. But the Court’s ruling went the other way and in fact suggested that St. Paul might be
entitled to prevail, At that point, plaintiff did a volte-face, essentially telling the Court, “never
mind.”

The Court agrees with plaintiff that the case is moot. Plaintiff has declared eHome to be
in breach of the settlement agreement, and it has filed a motion in the Illinois state court case
asking that court to do the same. Because this case was premised on the enforceability of an
agreement which the plaintiff now concedes is unenforceable, it is moot and must be dismissed.

But that is not the end of this story. As indicated above, the record permits a reasonable
inference that plaintiff manipulated the Court by aggressively pursuing in this Court a case that it
knew was already moot as of the date it was removed here, hoping for a victory but knowing that
if the tide of battle turned against it, it could fold its tent and slip away. Plaintiff and plaintiff's
counsel are ordered to show cause why they should not be sanctioned pursuant to 28 U.S.C.
§1927 or otherwise, for vexatiously multiplying the proceedings in this Court. Their
memorandum in response to the rule to show cause is to be filed by 2/27/04. Defendant’s reply
is to be filed by 3/12/04. These are firm dates. The matter is set for argument, 20 minutes per

side, on 3/18/04 at 3:30 p.m. All other motions are terminated.

LY
United States District/Judge

Date: February 13, 2004



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

BERNARD A. SCHLOSSER, ATTORNEY
AT LAW, P.C., on behalf of itself and all
others similarly situated, and as assignee of
EHOME CREDIT CORP.,

Plaintiffs,
vs. Case No. 03 C 8627

ST. PAUL FIRE AND MARINE

)
)
)
)
)
)
)
)
)
INSURANCE COMPANY, )
)
)

Defendant.

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

The plaintiff in this case, a law firm, filed suit in Illinois state court against eHome Credit
Corp. in May 2002 on behalf of a putative class asserting various causes of action. eHome had a
commercial general liability insurance policy with defendant St. Paul Fire & Marine. St. Paul
denied coverage with regard to the suit against eHome, which in tum filed a declaratory
judgment action in New York state court in the fall of 2002.

eHome entered into a settlement of the Illinois class action in September 2003. The
settlement agreement provided for payment by eHome of $20,000 within 45 days of court
approval, and an assignment to the class of its rights under the St. Paul policy. The agreement
contemplated that the plaintiff would pursue, as assignee, a claim against St. Paul for the
amounts provided by the policy. If plaintiff prevailed, eHome would stipulate to certification of
a settlement class in the Illinois case; if plaintiff lost, eHome would get a release of all claims.
The settlement was approved by the Illinois court on October 9, 2003. XK

There ensued what can fairly be described as fast and furious efforts by plaintiff and St.



Paul to get the upper hand on where the insurance coverage dispute would be decided. On
October 13, 2003, plaintiff directed eHome to dismiss its New York insurance coverage case, a
step expressly contemplated by the Illinois settlement agreement. On October 15, 2003, plaintiff
filed its own action in Hlinois state court against St. Paul seeking a declaration of coverage. St.
Paul then filed its own separate declaratory judgment action in New York state court. St. Paul
removed the Illinois declaratory judgment case to this Court on November 26, 2003. eHome did
not follow plaintiffs direction to dismiss the first-filed New York case, so St. Paul filed a motion
for summary judgment in that case on December 15, 2003. On December 24, 2003, plaintiff
filed a motion for summary judgment in the present case, along with a motion asking this Court
to enjoin St. Paul from pursuing its motion for summary judgment in the New York case.

This Court determined to deal with plaintiff's summary judgment motion promptly and
did so, denying it on January 20, 2004. We have not yet ruled on plaintiff's motion to enjoin St.
Paul.

After losing the motion for summary judgment in this Court, plaintiff filed a motion for
reconsideration, and a document in which it suggested the case was moot. The basis for
plaintiff's suggestion of mootness was that eHome has breached the settlement agreement by
failing to pay the $20,000 owed. See Pitf’s Suggestion of Mootness, Ex. A. But if this is true, it
became true on November 24, 2003, the 46th day after the Illinois state court’s approval of the
settlement. In its reply on the mootness issue, plaintiff notes that eHome also breached the
settlement agreement by failing to dismiss its New York case when directed to do so; but this
was well known to plaintiff by early November at the latest.

In short, if the case is moot now, it was moot as of the time St. Paul removed it to this
Court. Plaintiff, however, remained silent until after it had lost its motion for summary judgment

2