Illinois Mun. League Risk Management Ass'n v. Siebert
| Decision Date | 16 January 1992 |
| Docket Number | No. 4-91-0367,4-91-0367 |
| Citation | 166 Ill.Dec. 108,585 N.E.2d 1130,223 Ill.App.3d 864 |
| Parties | , 166 Ill.Dec. 108 ILLINOIS MUNICIPAL LEAGUE RISK MANAGEMENT ASSOCIATION, Plaintiff-Appellee, v. Terry SEIBERT, Defendant-Appellant. |
| Court | United States Appellate Court of Illinois |
H. Kent Heller & Associates, P.C., Naperville (H. Kent Heller, of counsel), for defendant-appellant.
Stanley L. Morris, Long, Morris, Myers & Rabin, P.C., Springfield, for plaintiff-appellee.
Defendant, a Mattoon police officer, Terry Seibert, appeals from a summary judgment order entered in a declaratory judgment action in favor of plaintiff, the Illinois Municipal League Risk Management Association (the Association). On April 24, 1991, the Sangamon County circuit court granted the Association's motion and denied a similar motion by Seibert. The controversy arose out of litigation filed in the Federal district court against Officer Seibert, other Mattoon officers, and the City of Mattoon. The litigation alleged violations under section 1983 of the Civil Rights Act (see 42 U.S.C. § 1983 (1988)) of Edward Keith Hubbartt's constitutional rights during his arrest. The court found because the Association's interest in the pending litigation did not conflict with Seibert's, and the Association was not obligated to surrender control of the defense or to pay outside counsel which Officer Seibert might personally hire.
Seibert argues the court erred in finding no conflict existed between the parties. He also argues the court erred in finding that because evidence needed to disprove a constitutional violation and a punitive damages claim is similar in nature and quantity, the Association could defend both claims without a conflict arising between the parties' interests. We agree and reverse the trial court's summary judgment order in favor of the Association and remand to the court with instructions to enter summary judgment in favor of Seibert.
The Association is a nonprofit association which provides self-insurance programs to municipalities. The City of Mattoon is a member of the Association. As a member, municipal employees are represented in, and indemnified against, civil rights claims arising out of the performance of their jobs. Indemnification is not provided for malicious conduct or punitive damages.
Hubbartt filed two suits against Seibert, other Mattoon officers, and the City of Mattoon. Both suits arose from the same incident. The initial complaint, case No. 89-2319, was filed October 24, 1989. There, Hubbartt sought $10 million in compensatory damages from Seibert, a number of other Mattoon police officers, and the City of Mattoon. On February 5, 1990, Hubbartt filed an amended complaint, naming Seibert as an individual defendant. The second suit, case No. 90-2122, was filed April 20, 1991, wherein Hubbartt sought, from Seibert, $10 million in compensatory damages and $5 million as punitive damages; it also sought compensatory and punitive damages from other Mattoon police officers, and compensatory damages from the City of Mattoon. The suits alleged Seibert and other officers violated Hubbartt's fifth, fourth, and fourteenth amendment protections during his arrest. Seibert's actions were allegedly intentional, malicious, wilful, wanton, and in reckless disregard of Hubbartt's constitutional rights.
As the Association's authorized agent, Martin Boyer Company, Inc., appointed counsel to represent Seibert in the pending litigation. In a November 13, 1989, letter, James Hays, Martin Boyer Company's representative, informed Seibert that the Association would not indemnify a claim for punitive damages, and incorrectly noted the complaint included such a claim. Because Seibert might incur personal liability as a result of a punitive damages award, Hays suggested Seibert may want to retain independent counsel at his own expense.
In a letter dated November 21, 1989, Hays conceded the complaint did not currently seek punitive damages. He explained, however, that because it alleged Seibert's conduct was intentional, malicious, wilful, wanton, and in reckless disregard of Hubbartt's constitutional rights, the complaint might later be amended to include punitive damages. Hays stated: He also informed Seibert that because of unresolved policy coverage questions, the company would proceed with Seibert's representation under a reservation of rights.
On December 13, 1989, Hays informed Seibert the Association would honor his request to be defended by counsel separate from counsel representing other defendants in the litigation, and that an attorney had been authorized and assigned to represent him. In late December, however, Seibert sought, and hired, private counsel. On December 28, 1989, Seibert's private counsel wrote to counsel appointed by Martin Boyer Company and demanded the Association settle the litigation against Seibert by offering Hubbartt the maximum payable under the policy. He contended that if the Association was not willing to do this to protect Seibert from a potential punitive damages claim, it was putting its interests ahead of those of Seibert. Seibert's counsel provided no evidence why this offer was reasonable.
Seibert's retained counsel again wrote to Hays of Martin Boyer Company on March 7, 1990. Counsel informed Hays that Seibert retained him to represent him in the pending civil rights litigation because of advice provided to him by Hays in the November 13 and 21 letters. Counsel also stated, "[s]ince the nature of this case involves an agency relationship which may require the presentation of diametrically opposed defenses for the respective defendants, we are well aware of the conflict of interest which has arisen."
Although Hubbartt amended his complaint to include a request for attorney fees, he was not--at that stage--seeking punitive damages against Seibert. The Association refused to relinquish control of Seibert's representation. Hays contended in an April 4, 1990, letter, that no conflict existed between the Association and Seibert. He stated that, unlike in cases which Seibert's counsel asserted were similar, the Association was not asserting a policy defense, and compensatory damages were provided for in the pending litigation. The letter also stated this position might be reconsidered if the "complaint [was] amended or facts change[d] in any way."
After Seibert's assigned counsel rejected Hubbartt's written demand for $3 million, Hubbartt filed the second complaint, i.e., case No. 90-2122 in which, among the other allegations and remedies, he alleged claims against Seibert similar to those made in his first action and, as previously mentioned, sought $10 million in compensatory damages and $5 million as punitive damages against Seibert.
In a letter dated April 27, 1990, Seibert's privately retained counsel advised the Association it must do the following: (1) immediately tender its $3 million policy limit to Hubbartt; (2) agree to indemnify Seibert for a punitive damages award; or (3) hire him as counsel to represent Seibert and pay the defense costs. The letter stated Seibert would proceed with his privately retained counsel and expect reimbursement for his costs if another option was not accepted.
On July 24, 1990, the Association sought declaratory relief in the Sangamon County circuit court. The Association asked the court to find because no conflict existed between its interest in the pending litigation and that of Seibert, it was solely authorized to appoint counsel and to represent Seibert in the civil rights litigation. In addition, it asked the court to declare the Association not liable for expenses Seibert could incur by retaining private counsel.
Because no material facts were in dispute, both parties moved for summary judgment and filed a memorandum in support of their respective motions. Seibert also filed a response to the Association's motion. The court heard arguments on the motions on January 25, 1991, and issued its opinion on February 28, 1991. The court denied Seibert's motion for summary judgment and granted the Association's. It found that in the pending civil rights litigation in which Seibert was a named party no conflict existed between Seibert's interests as a party being represented and indemnified, and those of the Association, which had the obligation to represent and indemnify the city's employees for such claims arising out of the performance of their duties. It ruled Seibert could not control his own defense or receive reimbursement from the Association for attorney fees incurred for privately retained counsel. The order was entered April 24, 1991. Seibert has appealed, seeking reversal of the court's order.
Summary judgment is proper "if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (Ill.Rev.Stat.1989, ch. 110, par. 2- 1005(c); Suhadolnik v. City of Springfield (1989), 184 Ill.App.3d 155, 164, 133 Ill.Dec. 29, 33-34, 540 N.E.2d 895, 899-900.) As this court recently noted, the proper standard of review for evaluating the propriety of a trial court's entry of summary judgment is de novo. (See, Shull v. Harristown Township (1992), 223 Ill.App.3d 819, 166 Ill.Dec. 142, 585 N.E.2d 1164.) The parties agree no genuine issue of material fact remains. The issues raised in this appeal address whether, as a matter of law, a conflict exists between the Association, as plaintiff in its capacity to represent and indemnify Seibert as against these claims, and defendant ...
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