Chicago & E. Ill. R. Co. v. Reserve Ins. Co., 77-1479

• Citation: 376 N.E.2d 1,17 Ill.Dec. 108,59 Ill.App.3d 206
• Decision Date: 31 March 1978
• Docket Number: No. 77-1479,77-1479
• Parties: , 17 Ill.Dec. 108 CHICAGO & EASTERN ILLINOIS RAILROAD COMPANY et al., Plaintiffs-Appellees, v. RESERVE INSURANCE COMPANY et al., Defendants-Appellants.
• Court: United States Appellate Court of Illinois

Page 1

376 N.E.2d 1

59 Ill.App.3d 206, 17 Ill.Dec. 108

CHICAGO & EASTERN ILLINOIS RAILROAD COMPANY et al Plaintiffs-Appellees, v. RESERVE INSURANCE COMPANY et al., Defendants-Appellants.

No. 77-1479.

Appellate Court of Illinois, First District, Fifth Division.

March 31, 1978.

Rehearing Denied May 17, 1978.

Jay A. Canel and Donald E. Glickman, Chicago (Rudnick & Wolfe, Chicago, of counsel), for defendants-appellants.

Leonard M. Ring and Karla Wright, Chicago (Leonard M. Ring & Associates, Chicago, of counsel), for plaintiffs-appellees.

MEJDA, Justice:

This case involves an interlocutory appeal from the granting of an injunction. (Ill.Rev.Stat.1975, ch. 110A, par. 307.) The underlying controversy concerns a dispute between the plaintiff-insured, Chicago & Eastern Illinois R.R. (C&EI), and 13 defendant-insurers arising from the settling of a lawsuit against C&EI. Most of the defendant insurance companies paid their proportionate share of the settlement; however, they did so under a full reservation of rights. C&EI then filed an action against its insurers seeking a declaratory judgment that it had not breached its various insurance agreements in settling the suit. Thus, C&EI would not be liable to reimburse those insurers who had contributed to the settlement, while those insurers who had refused to contribute would be liable to C&EI for their proportionate share of the settlement. At the same time C&EI requested injunctive relief to prevent defendants from filing suit on this matter in any other court in any other jurisdiction. The injunction was granted. The sole issue before this court on appeal is whether the trial court erred in granting said injunction. We reverse and remand. The pertinent facts follow.

C&EI has its principal place of business in St. Louis, Missouri. It operates trains, depots, and does business in 12 states. In October of 1976 the C&EI merged into the Missouri Pacific Railroad Company (MoPac). The defendant insurers also operate in multiple states and are incorporated in some eight different states.

At the hearing on the injunction counsel for the insurers represented to the court that defendants were indeed contemplating filing suit against C&EI in this matter; however, all the insurers had agreed that only one action would be filed.

Thomas F. Tobin, an attorney with the law firm of Baker & McKenzie, testified that he had represented C&EI in the underlying tort action which had been settled. He knew that certain insurers had contributed to the settlement under a reservation of rights while others had not contributed at all. Tobin stated that he expected the insurers to file a number of lawsuits on this matter. Based on his years of experience and other factors Tobin feared that the insurers could not, or would not, agree to a unified strategy. For example, he feared that one or more of the defendants would file suit in a forum they would deem more favorable to insurance companies for construction of the coverage questions involved in this case. Similarly, he felt that counsel for the insurers could not guarantee unified action by his clients. Thus, he expected multiple suits. However, Tobin admitted that counsel for the insurers never represented to him that multiple suits would be filed.

Alvin E. Domash, an attorney with the law firm of Lord, Bissell & Brook, testified that he had represented all the defendant insurance companies who had contributed to the settlement in this case. He stated that one lawsuit in this case had been prepared on behalf of the insurers. Pursuant to an offer of proof, Domash stated that this single lawsuit was to be filed in the United States District Court for the Northern District of Illinois.

In the course of argument, counsel for insurers stated that, while not conceding the court's power to do so, he would not object to an injunction which prohibited any lawsuits to be filed except for a single action in the United States District Court for the Northern District of Illinois. The trial court refused to so limit its injunction. The order entered by the court reads in pertinent part as follows:

"That an injunction is necessary to protect the plaintiff * * * against a multiplicity of vexatious suits;

IT IS THEREFORE ORDERED, ADJUDGED AND DECREED:

That a peoples Writ of Injunction be issued by the Clerk and under the seal of this Court, enjoining the defendants, * * * ; from instituting or maintaining in any other court or in any other jurisdiction, any suit or other proceeding against the plaintiffs * * * on any issue relating to the liability of the named defendants for indemnity to the named plaintiffs under insurance agreements issued by the defendants, and in force on the 11th day of January, 1975, in connection with, and relating to an occurrence of that day involving an injury to one, WILLIAM C. JORDAN, when he was struck by a CHICAGO & EASTERN ILLINOIS train in Chicago, Illinois; the defendants are not enjoined or prohibited from asserting any defenses, counter-claims or set-offs they may have."

OPINION

The law is settled that a state court may not enjoin a party from filing or proceeding with a federal court action. As the United States Supreme Court recently stated:

"(T)he rights conferred by Congress to bring in personam actions in federal courts are not subject to abridgment by state-court injunctions, regardless of whether the federal litigation is pending or prospective." (General Atomic Co. v. Felter (1977), 434 U.S. 1, 17, 98 S.Ct. 76, 78, 54 L.Ed.2d 199, 203; see also Donovan v. City of Dallas (1964), 377 U.S. 408, 84 S.Ct. 1579, 12 L.Ed.2d 409.)

Nor can this rule be varied on the theory that the prospective suits would be vexatious and harassing, and thus enjoinable. (See General Atomic Co. v. Felter (1977), 434 U.S. at 17, 98 S.Ct. 78-79, 54 L.Ed.2d at 203-04.) The "right to litigate in federal court is granted by Congress and, consequently, 'cannot be taken away by the State.' " (General Atomic Co. v. Felter (1977), 434 U.S. at 16, 98 S.Ct. at 78, 54 L.Ed.2d at 203, citing, Donovan v. City of Dallas (1964), 377 U.S. at 413, 84 S.Ct. at 1583, 12 L.Ed.2d at 414.) Thus, it is clear that in the instant case the trial court erred at least insofar as its order purported to enjoin defendants from filing their own actions in any federal court in which jurisdiction would lie.

In addition, however, we believe the court erred in granting any of the requested injunctive relief in the instant case. While an injunction may be granted against the bringing of a lawsuit in other States, this...