I heard a good part of Michael Reagan's Liddy interview earlier this week. According to Liddy, the judge in the case ruled to either admit some key piece of evidence from Liddy's side, or threw out some key piece of evidence from Dean's (sorry, I'm just having a horrendous brain fart here and cannot remember which was the case!). At any rate, once the judge made his ruling, Dean and his lawyers didn't even bother to show up in court, so the judge tossed the suit.
I think Dean had a history of not showing up - or running and hiding from comments made by Liddy.