DeRosa v. Aetna Insurance Company

Decision Date06 July 1965
Docket NumberNo. 14757.,14757.
Citation346 F.2d 245
PartiesFrancis DeROSA, Counter-Plaintiff, Appellee, v. AETNA INSURANCE COMPANY, Counter-Defendant, Appellant.
CourtU.S. Court of Appeals — Seventh Circuit

Peter Fitzpatrick, Chicago, Ill., for appellant.

Vincent M. Clark, John G. Phillips, Chicago, Ill., for Francis DeRosa, counter-plaintiff appellee, Jones & Clark, Chicago, Ill., of counsel.

Before SCHNACKENBERG, KILEY and SWYGERT, Circuit Judges.

SWYGERT, Circuit Judge.

This is an appeal from a judgment in favor of counter-plaintiff Francis DeRosa against counter-defendant Aetna Insurance Company for $25,000. In a prior state court action DeRosa had recovered a judgment for this amount against Dan Serafine, the insured under a policy of casualty insurance issued by The Century Indemnity Company. In his suit against Serafine, DeRosa claimed that his back had been injured on November 20, 1957, while riding a horse owned by Serafine.

Although the accident occurred in 1957, Serafine did not inform Century until 1959 that DeRosa was asserting a claim against him. After the state court action was instituted in March, 1959, Century filed an action in the federal district court for a declaratory judgment that it need not defend Serafine, its insured, because of his untimely notice of the claim asserted against him. The district court found against Century and this court affirmed. Century Indem. Co. v. Serafine, 311 F.2d 676 (7th Cir. 1963).

Following the termination of the federal court declaratory action, Aetna, successor to Century, undertook Serafine's defense in DeRosa's case against him in the Superior Court of Cook County, Illinois. In that proceeding, after a jury trial, DeRosa recovered a judgment against Serafine for $25,000. Thereafter, Aetna filed the present declaratory judgment action in the federal district court, requesting that it be absolved from liability under its policy because of Serafine's failure to cooperate in the trial in the state court. DeRosa moved to dismiss the complaint on the ground that the issue was res judicata and on the further ground that the issue could be resolved in a garnishment action against Aetna by DeRosa. The motion to dismiss was granted. At the same time DeRosa filed a counterclaim under three separate theories: garnishment, recovery under the Insurance Code of Illinois, and recovery under the terms of the policy. Following a trial on the counterclaim, the district court entered judgment ordering that DeRosa recover from Aetna the full amount of the judgment which he had obtained against Serafine in the state court.

Aetna appeals on two bases: (1) that the evidence before the court proved that Serafine did not cooperate with counsel in defending the DeRosa suit, thus breaching a condition of the policy which required him to assist in the conduct of the defense and (2) that the district court erred in refusing to allow Aetna to present certain evidence which would have constituted further proof of DeRosa's failure to cooperate.

The evidence before the district court showed that on May 27, 1963, the law firm representing Serafine under the policy with Aetna telephoned him that the case in the Superior Court of Cook County was going to trial and asked him to attend. Serafine said that he was leaving town and could not be present. He suggested that if the law firm wanted to pursue the matter further, it should contact his personal attorney. A phone call to Serafine's attorney did not produce the cooperation of the insured or his attendance at the trial. Aetna offered to prove that Serafine's personal attorney said that he would look into it. Aetna also made an offer of proof that when reminded of Serafine's duty of cooperation and attendance at trial, the attorney replied, "We have gone into that issue before." The judge refused both offers.

DeRosa's case against Serafine was assigned for trial on May 28, 1963, and evidence began on May 29. Serafine did not communicate with the lawyers furnished by Aetna to defend him until ...

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