Diamond v. General Telephone Co. of Illinois, 2-90-0624

• Decision Date: 03 April 1991
• Docket Number: No. 2-90-0624,2-90-0624
• Citation: 569 N.E.2d 1263,211 Ill.App.3d 37
• Court: United States Appellate Court of Illinois
• Parties: , 155 Ill.Dec. 652 Edwin Claire DIAMOND, et al., Plaintiffs-Appellants, v. GENERAL TELEPHONE COMPANY OF ILLINOIS, Defendant-Appellee.

Page 1263

569 N.E.2d 1263

211 Ill.App.3d 37, 155 Ill.Dec. 652

Edwin Claire DIAMOND, et al., Plaintiffs-Appellants, v. GENERAL TELEPHONE COMPANY OF ILLINOIS, Defendant-Appellee.

No. 2-90-0624.

Appellate Court of Illinois Second District.

April 3, 1991.

Mark C. Amador (argued), Gallagher & Joslyn, Oakbrook Terrace, for Edwin Claire, Leona Diamond and Rockford Mut. Ins. Co.

David H. Levitt (argued), D. Kendall Griffith, Bruce L. Carmen, Hinshaw, Culbertson, Moelmann, Hoban & Fuller, Chicago, for General Telephone Co.

Justice UNVERZAGT delivered the opinion of the court:

Plaintiffs, Edwin Claire Diamond, Leona Diamond and their insurer, Rockford Mutual Insurance Company (hereinafter collectively referred to as the Diamonds), appeal the dismissal with prejudice of their eight-count complaint against the defendant, General Telephone Company of Illinois, presently known as GTE North, Inc., and hereafter referred to as GTE. (Ill.Rev.Stat.1989, ch. 110, par. 2-615.) The Diamonds contend the court erred in dismissing their complaint in that it stated valid causes of action for implied indemnity, violation of the Illinois Public Utilities Act (Ill.Rev.Stat.1989, ch. 111 2/3, par. 1-101 et seq.) and tortious conduct creating exposure to litigation. They further contend the court erred in dismissing all counts with prejudice without hearing any evidence. We affirm.

Edwin and Leona Diamond owned and farmed a parcel of land in Spring Township of Boone County immediately adjacent to the intersection of Illinois highway I-90 and Garden Prairie Road. GTE sought an easement on this parcel from the Diamonds. Accordingly, a right-of-way permit given in consideration of $1 and signed by the Diamonds on March 22, 1961, gave GTE "the right, privilege, easement and authority to construct, operate, patrol and maintain its communication lines including the necessary underground cables, wires, conduits, splicing boxes, surface terminals, markers and appurtenances upon, over and across the land." Pursuant thereto, GTE placed a telephone pole, supported by a single down guy wire, and other associated telephone equipment on the Diamonds' property.

On the morning of October 11, 1980, Kenneth and Lorelie Smith and two of their children, Karen and Christine, were traveling in their van in a northwesterly direction on I-90 near the intersection of Garden Prairie Road. At the same time, Randy Hatcher, an employee of Signal Delivery Service, Inc., was driving a tractor trailer rig southeasterly on I-90. As the Signal Delivery truck and the Smith van approached each other going in opposite directions, the GTE telephone pole placed on the Diamond property leaned over, presumably as the result of its guy wire failure, and the cable attached thereto which stretched across I-90 to another GTE pole sagged to a height of approximately six to seven feet above the highway. The Signal Delivery truck struck the sagging cable and, after it was pulled taut, the pole placed on the Diamond property broke and was slung across the highway at a high rate of speed. The pole struck the Smith van, killing Kenneth and Lorelie Smith, in the presence and view of their children.

As a result of the October 11 accident, a multicount complaint was filed in the circuit court of Cook County, Illinois, captioned Morton et al. v. GTE et al., Case No. 81-L-2162 (referred to hereafter as Morton v. GTE or the underlying cause). The complaint alleged specific acts of negligence as to GTE, the Diamonds, and Signal Delivery Service. Pertinent here, it was alleged as to the Diamonds that they carelessly and negligently plowed their land adjacent to the telephone pole and supporting guy wire, that they permitted the plow blade to come in contact with the guy wire and that they severed the guy wire connecting the utility pole to the ground. As to GTE, it was alleged that it carelessly and negligently maintained and controlled the pole, failed to provide guy wires of sufficient number and strength to secure the pole, failed to provide reasonable and adequate warnings of the location of the guy wire to persons likely to be plowing the land in proximity to the guy wire, failed to provide a reasonable or adequate guard or protective device for the guy wire to protect it from being severed or damaged, failed to place its equipment underground, allowed the pole to remain at the location in a rotted condition, failed to conduct reasonable inspections of the pole and associated equipment, and failed to use a pole of sufficient size and strength to withstand the eventuality of its guy wire being severed. It was also alleged that the said pole was situated on the property of the defendants, Edwin C. Diamond and Leona Diamond.

In October 1985 an additional two-count complaint for damages caused to Signal Delivery Service's truck was filed against GTE and the Diamonds by Signal Delivery Service and an affiliate corporation under the caption Leaseway Transport Corp. et al. v. GTE et al., No. 85-LM-3665 in Du Page County.

The Diamonds were informed by their liability insurance carrier, Rockford Mutual Insurance Company, that it would not be liable for any damages in excess of the $300,000 policy limit. In view of their potential exposure to liability far in excess of the policy limit, the Diamonds retained their own personal counsel.

Early in 1984, Rockford Mutual began a concerted effort to reduce or eliminate the exposure of its insureds. In response to these overtures, the plaintiffs' attorney in Morton v. GTE offered to provide a complete release to GTE and the Diamonds in return for a payment from GTE of $1 million and a payment on behalf of the Diamonds of $250,000. Although the Diamonds and Rockford Mutual accepted this offer, GTE refused it. After further negotiations, the plaintiffs' attorney in Morton v. GTE agreed to a conditional covenant not to execute judgment in consideration of receipt of the Diamond's $300,000 policy limit. The effect of this agreement was that the Diamonds would remain parties to the litigation, but they would be liable for a judgment therein only if they were the sole parties found guilty at trial. The agreement included a "non-admission of liability" clause. The Diamonds subsequently settled the Signal Delivery Service Du Page County litigation for $500. They paid this amount personally inasmuch as their liability insurance policy limit had been exhausted.

On September 9, 1987, the Morton v. GTE case was resolved in the circuit court of Cook County. The jury returned verdicts in favor of Edwin Claire Diamond, Leona Diamond and Signal Delivery Service. It found against GTE, assessing actual damages of $16 million and punitive damages of $20 million.

Thereafter, on March 14, 1989, the Diamonds filed the instant complaint in the circuit court of Kane County. In addition to recounting the facts of the underlying cause as noted in the preceding paragraphs, it was alleged that by virtue of the execution of the 1961 right-of-way permit a pretort relationship existed between the Diamonds and GTE. The complaint also asserted that, in comparison with the Diamonds, GTE had the greater or primary duty to maintain the subject property, to inspect and test its poles, wires and associated equipment, and to maintain and protect the down guy wire which helped support the pole placed on the Diamond property. The complaint also asserted that by virtue of the doctrines of res judicata and collateral estoppel, the major, active and primary fault of GTE and the lack of fault of the Diamonds had been conclusively established by the Cook County verdicts.

Counts I and II of the complaint sought implied indemnity for the Diamonds from GTE for its negligent repair and maintenance of the easement property and for its wilful and wanton failure to maintain the easement property. Count III sought recovery under section 5-201 of the Illinois Public Utilities Act for GTE's violation of Illinois Commerce Commission General Order 160, and count IV sought recovery for GTE's tortious conduct which exposed them to litigation. The Diamonds sought indemnity for their $500 settlement with Signal Delivery and for the $1,400 which they paid as legal fees in Morton v. GTE. They also sought an award for the embarrassment, mental anguish, humiliation and apprehension they suffered due to their exposure to litigation caused by GTE's tortious conduct. Counts V, VI, VII and VIII alleged the same causes of action against GTE by Rockford Mutual on its own behalf and as subrogee of Edwin and Leona Diamond. Rockford Mutual sought indemnity in the amount of $390,250.70 for its policy limit payment and legal fees in Morton v. GTE. It also sought an award for its exposure to litigation caused by GTE's tortious conduct.

We consider first whether the court's dismissal of the implied indemnity counts (counts I, II, V and VI) was proper. We are mindful that all well-pleaded facts contained in the complaint must be taken as true, and we must draw all reasonable inferences in the Diamonds' favor. (AMF, Inc. v. Victor J. Andrew High School (1988), 172 Ill.App.3d 337, 339, 122 Ill.Dec. 325, 526 N.E.2d 584.) We are mindful also that, in the absence of an indication of the basis for the court's decision, we may affirm the court's dismissal upon any of the issues raised in GTE's motion to dismiss. Martin-Trigona v. Bloomington Federal Savings & Loan Association (1981), 101 Ill.App.3d 943, 57 Ill.Dec. 348, 428 N.E.2d 1028.

In its motion to dismiss the complaint and its memorandum in support thereof, GTE asserted that all counts of the complaint were premised on the theory of active-passive implied indemnity, which was abolished by the Illinois Supreme Court in Allison v. Shell Oil Co. (1986), 113 Ill.2d 26, 99 Ill.Dec. 115, 495 N.E.2d 496. GTE further asserted that, having settled with the plaintiffs in Morton v. GTE, the Diamonds were barred from seeking indemnity by the supreme court's decision in...