Combined Ins. Co. v. Certain Underwriters

• Decision Date: 31 March 2005
• Docket Number: No. 1-04-0344.,1-04-0344.
• Citation: 292 Ill.Dec. 653,826 N.E.2d 1089,356 Ill. App.3d 749
• Parties: COMBINED INSURANCE COMPANY OF AMERICA, Plaintiff-Appellant, v. CERTAIN UNDERWRITERS AT LLOYD'S LONDON, subscribing to Reinsurance Contract No. BK0030050 for the 12-month period incepting on April 30, 2001, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

826 N.E.2d 1089

356 Ill. App.3d 749

292 Ill.Dec. 653

COMBINED INSURANCE COMPANY OF AMERICA, Plaintiff-Appellant, v. CERTAIN UNDERWRITERS AT LLOYD'S LONDON, subscribing to Reinsurance Contract No. BK00-month period incepting on April 30, 2001, Defendant-Appellee.

No. 1-04-0344.

Appellate Court of Illinois, First District, Fourth Division.

March 31, 2005.

Rehearing Denied April 29, 2005.

Sidley Austin Brown & Wood LLP, Chicago (Constantine L. Trela, Holly A. Harrison, Lori L. Roeser and Ryan M. Sandrock, of counsel), for Appellant.

Lord, Bissell & Brook LLP, Chicago (Nick J. DiGiovanni, Molly McGinnis Stine and Hugh S. Balsam, of counsel), for Appellee.

Presiding Justice REID delivered the opinion of the court:

The plaintiff, Combined Insurance Company of America (Combined), appeals the trial court's decision to grant the motion under section 2-619(a)(3) of the Code of Civil Procedure (735 ILCS 5/2-619(a)(3) (West 2002)) motion to dismiss of the defendant, Certain Underwriters at Lloyd's, London, subscribing to reinsurance contract No. BK0030050 for the 12-month period incepting on April 30, 2001 (Under-writers). On appeal, Combined argues that the trial court erred when it granted Underwriters' motion to dismiss because it did not follow the standards enunciated in A.E. Staley Manufacturing Co. v. Swift & Co., 84 Ill.2d 245, 50 Ill.Dec. 156, 419 N.E.2d 23 (1981). For the foregoing reasons, we reverse the decision of the trial court and remand this matter.

BACKGROUND

Combined issued to its parent corporation, Aon Corporation (Aon), an insurance policy that was effective April 30, 2000. The policy provided accidental-death-and-dismemberment coverage to Aon employees. The Aon policy was drafted, negotiated, and executed in Illinois and expressly provides that it is governed by the laws of the State of Illinois.

On April 14, 2000, Combined and Underwriters entered into a reinsurance contract with respect to the Aon policy. This reinsurance contract was issued for the period of April 30, 2000, to April 30, 2001. Thereafter, it was extended through April 30, 2003. On September 11, 2001, 176 Aon employees died at Aon's offices at the World Trade Center, during the terrorist attacks on the United States. Combined paid approximately $95 million to the families or beneficiaries of the victims of the events of that day.

On October 31, 2001, Underwriters consented to the payment of the Aon claims by Combined, but specifically reserved its right to consent to coverage under the reinsurance contract. On November 9, 2001, Underwriters filed a civil action in commercial court in London, England, seeking declaratory relief based on the language of the reinsurance contract. Underwriters sought a declaration that it was not liable to indemnify Combined with respect to any liability that it might have arising out of the deaths of any eligible persons who were not engaged in business travel at the time that they perished on September 11, 2001.

On November 13, 2001, Combined filed a competing action in the United States District Court for the Southern District of New York in reliance on section 408(b)(3) of the then recently enacted Air Transportation Safety and System Stabilization Act (Pub.L. No. 107-42, 115 Stat. 230 (2001)(codified at 49 U.S.C. §§ 40101)). While this New York action was pending, Combine applied to stay the London action, on December 10, 2001.

Thereafter, the parties agreed to enjoin the London action until there was a resolution of the New York case. At this time, Combined also informed the court in London that if it lost the New York action, it would consider filing an action in Illinois. In response, the London court informed Combined that, "It is a most unattractive position because it is just another way of postponing things."

With regard to the New York action, Underwriters responded to Combined's complaint by filing a motion to dismiss for lack of subject matter jurisdiction. On September 10, 2002, the New York district court dismissed Combine's action for lack of subject-matter jurisdiction. Combined appealed the matter, and on August 22, 2003, the United States Court of Appeals for the Second Circuit affirmed the district court's ruling in a nonpublished summary order.

Thereafter, on September 11, 2003, Combined filed a complaint in the circuit court of Cook County, Illinois. Combined sought a declaration of the parties' rights and obligations under the reinsurance contract and to recover damages as a result of Underwriters' alleged breach of the reinsurance contract. Subsequently, on October 13, 2003, Combined requested that the London court stay further proceedings in favor of the Illinois action. However, the London court refused to do so.

On November 20, 2003, Underwriters filed a "motion to dismiss or stay this action pursuant to section 2-619(a)(3) or, in the alternative, to dismiss on the grounds of forum non conveniens." On January 16, 2004, after hearing extensive arguments from both parties, the trial court granted Underwriters' motion, dismissing the case on section 2-619(a)(3) grounds in favor of the London action. The trial court's specific ruling on Underwriters' section 2-619(a)(3) motion to dismiss follows:

"But as to the first part of this motion today, the motion that this case should be dismissed for the reason that there is another action pending in a competent court in which this exact cause of action is proceeding, the Court is most impressed with the oral argument that was made by the movant here today. Counsel has succinctly set out the basis for his motion and has succinctly and accurately set out the reasons courts dismiss cases when another case is pending in another jurisdiction and has accurately and well set out the principles involved. That therefore excuses me from having to repeat those at this point. I will adopt those arguments as my reasons here. As the London Underwriters argue, there is, in fact, another action pending in a credible court sitting I note in the very nation from which our own law and chancery jurisprudence derives. The principles of comity are at work here.

Although Combined sees some higher right on their part to persist in the suit here in Illinois, based on what it has characterized as the, quote, devious behavior on Underwriters' part, namely negotiating and at the same time filing a declaratory judgment action in London, the Court rejects this argument. It is well established that an insurer who contests its liability to an insured under its policy should file a declaratory judgment action to have that issue resolved by a court of competent jurisdiction.

In addition, Combined casts itself here as a plaintiff, and certainly in this case it is nominated as a plaintiff because it was the party that brought suit here. But it is not just Combined that has a right to bring we will call it a claim, but it's not really a claim, but has a right to bring an action seeking a declaratory judgment as to the rights of the parties on an insurance contract. Each party to that policy, that contract, has a right. It belongs equally to London Underwriters as it does to Combined Insurance.

Combined has relied very strongly, among other cases, but very strongly on the A.E. Staley Manufacturing case, arguing that in some instances a forum [non conveniens] consideration should be brought to bear when a motion is brought on the grounds that another action is pending. I do not believe that the situation or anything like the situation that was present in A.E. Staley case is present here.

In the A.E. Staley case, there was a concern that there would be a bar of a cross-complaint. Here we have a coverage issue, two issues, two coverage issues being brought to a court. Once the declaratory relief is issued, the payment, if that's what the issue is, if that's the way it goes, would follow, or nonpayment if that's the way the decision would go would follow. There is no need for a cross-claim here in this case. The issues will be decided in the declaratory judgment part of the case.

Also in the Staley analysis is the argument that the choice of law factor should come into play. In the case before me and the case before the London judge, either court would face the prospect of having to apply English law for one of the coverage issues and Illinois law to the other. So I don't find the outweighing of the balancing that Combined argues to be here.

This court certainly has confidence in the ability of the London court to do justice between the parties and sees no reason why Combined should be given preference to having its action proceed here in its home state.

So I'm going to grant the motion on the grounds that there is another action pending in a competent jurisdiction involving these parties and comprising of the same cause of action."

Thereafter, on February 5, 2004, Combined timely filed its notice of appeal.

ANALYSIS

Combined argues that the trial court erred when it granted Underwriters' motion to dismiss pursuant to section 2-619(a)(3). Generally, motions to dismiss do not require the trial court to weigh facts or determine credibility, and, as a result, our review is de novo. Overnite Transportation Co. v. International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America, 332 Ill.App.3d 69, 73, 265 Ill.Dec. 664, 773 N.E.2d 26 (2002); Miller v. Thomas, 275 Ill.App.3d 779, 786, 211 Ill.Dec. 897, 656 N.E.2d 89 (1995). However, a section 2-619(a)(3) motion seeking dismissal is inherently procedural and urges the trial court to weigh several factors to determine whether it is appropriate for the action to proceed. Overnite Transportation Co.,332 Ill.App.3d at 73,265 Ill.Dec. 664,773 N.E.2d 26; Miller, 275 Ill.App.3d at 786,211 Ill.Dec. 897,656 N.E.2d 89. Thus, we apply an abuse of discretion standard of review to a trial court's decision to dismiss a case pursuant to section 2-619(a)(3). Overnite Transportation Co.,332 Ill.App.3d at...