Last year, Lohan, 21, and her clothing label 6126 had sued the DNAM Apparel Industries for USD 1.1 million, alleging that they did not receive the royalties, reported Ace Showbiz.
The company fought back with a USD 5 million suit, claiming that Lohan's problems with drugs contributed to the poor sale.
Lohan was given reprieve from responding to the lawsuit when she was in rehab last year, but she still did not respond to the suit after she was discharged.
Earlier this month, the 'Mean Girls' star said in court documents that she failed to respond to the lawsuit as she had been overwhelmed since leaving rehab and dealing with her miscarriage.