Pfaff v. Chrysler Corp.

• Decision Date: 04 December 1992
• Docket Number: 71815,Nos. 71813,s. 71813
• Citation: 610 N.E.2d 51,155 Ill.2d 35,182 Ill.Dec. 627
• Parties: , 182 Ill.Dec. 627 Richard PFAFF v. CHRYSLER CORPORATION et al. (Chrysler Corporation, Appellee; Skyline Industrial Service, Inc., Appellant). The DAIWA BANK, LIMITED, Appellant, v. Monzer HOURANI et al., Appellees.
• Court: Illinois Supreme Court

Page 51

610 N.E.2d 51

155 Ill.2d 35, 182 Ill.Dec. 627

Richard PFAFF v. CHRYSLER CORPORATION et al. (Chrysler Corporation, Appellee;

Skyline Industrial Service, Inc., Appellant).

The DAIWA BANK, LIMITED, Appellant,

v Monzer HOURANI et al., Appellees.

Nos. 71813, 71815.

Supreme Court of Illinois.

Dec. 4, 1992.

Rehearing Denied March 29, 1993.

O'Connor, Schiff & Myers, Chicago (Loretta M. Griffin, Ana Maria Downs and Patrick D. Riley, of counsel), for appellant in No. 71813.

Pappas, Power & Marcus, Chicago (Debra K. Marcus, William R. Power and Stephen J. Tasch, of counsel), for appellee in No. 71813.

Lord, Bissell & Brook, Chicago (Edward C. Fitzpatrick, Hugh C. Griffin, Stephen C. Ascher, Diane I. Jennings and Albert E. Fowerbaugh, Jr., of counsel), for appellant in No. 71815.

McDermott, Will & Emery, Chicago (John T. Schriver and Steven F. Pflaum, of counsel), and Bochte & Kuzniar, St. Charles (William F. Bochte, of counsel), for appellees in No. 71815. Justice FREEMAN delivered the opinion of the court:

For the sake of clarity, we shall present the procedural background and discussion of these two consolidated interlocutory appeals, cause No. 71813 (Skyline) and cause No. 71815 (Daiwa Bank), separately.

PROCEDURAL BACKGROUND

Skyline

Richard Pfaff (Pfaff), plaintiff, filed an action against Chrysler Corporation (Chrysler), a Delaware corporation, in the circuit court of Cook County, alleging a violation of the Structural Work Act (Ill.Rev.Stat.1987, ch. 48, par. 60 et seq.) and common law negligence. Venue was transferred to the circuit court of Boone County, where Chrysler filed a third-party complaint against Skyline Industrial Services, Inc. (Skyline), Pfaff's employer, ostensibly a Michigan corporation. Following a ruling striking and dismissing several counts of the third-party complaint, Chrysler filed an action against Skyline in the circuit court of Wayne County, Michigan. Skyline then successfully moved the Boone County, Illinois, circuit court to permanently enjoin Chrysler from proceeding in the Michigan action. Chrysler appealed the trial court's decision to our appellate court. The appellate court reversed. (208 Ill.App.3d 910, 153 Ill.Dec. 337, 567 N.E.2d 52.) We granted Skyline's petition for leave to appeal (134 Ill.2d R. 315) and consolidated Skyline's appeal with the Daiwa Bank appeal.

Chrysler subsequently filed a motion in this court to dismiss Skyline's appeal, which motion was taken with the case. The motion to dismiss Skyline's appeal is hereby denied.

For reasons which follow, we affirm the decision of the appellate court, which reversed the order of injunction entered by the trial court.

Daiwa Bank

The Daiwa Bank, Limited (Daiwa), filed a mortgage foreclosure action on real property, held in trust, located in Carpentersville, Kane County, Illinois. La Salle National Trust, N.A., as trustee, and Lakes of Dundee Development Venture (the joint venture), as beneficial owner, were named as defendants. The action additionally sought damages for fraud and breach of contract against the joint venture and Monzer Hourani, Parsifal Corporation, Hourani Family Trust and Hourani International Corporation (the Hourani defendants), as guarantors of the mortgage loan. The Hourani defendants then filed a lender liability action in the State district court of Harris County, Texas, against Daiwa Bank and Coventry Development Associates Chicago, Limited (Coventry), a partner in the joint venture.

Daiwa filed a motion in the Kane County circuit court to permanently enjoin the Hourani defendants from proceeding against Daiwa Bank in the Texas action. Daiwa's motion to enjoin was granted by the trial court and the Hourani defendants appealed to our appellate court. The appellate court reversed. (207 Ill.App.3d 1112, 178 Ill.Dec. 328, 604 N.E.2d 584 (order under Supreme Court Rule 23).) We allowed Daiwa's petition for leave to appeal (134 Ill.2d R. 315), ordering consolidation with Skyline's appeal.

The Hourani defendants subsequently filed a motion to dismiss the appeal, which was taken with the case. We now deny the motion to dismiss the appeal. Furthermore, for reasons which follow, we affirm the decision of the appellate court, which reversed the trial court's grant of an injunction.

ISSUES

The two issues we must resolve are: (1) what constitutes the proper standard for enjoining the prosecution of a subsequent action filed in a sister State court; and (2) whether issuance of the permanent injunctions restraining Chrysler and the Hourani defendants from prosecuting actions in other States' courts was a proper exercise of the trial court's discretion.

DISCUSSION

The Standard of Analysis

On appeal, Skyline and Daiwa Bank contend that the appellate court misapprehended the standard of analysis utilized in determining whether to enjoin a party from proceeding with litigation in another State.

Skyline and Daiwa argue that the appellate court recognizes a dual standard. Where the action in the other jurisdiction is instituted before the Illinois action, the court may only enjoin a litigant from instituting or proceeding with a foreign suit which will result in fraud, gross wrong or oppression. (See Block & Co. v. Storm Printing Co. (1976), 40 Ill.App.3d 92, 95, 351 N.E.2d 271; Lowe v. Norfolk & Western Ry. Co. (1981), 96 Ill.App.3d 637, 644, 52 Ill.Dec. 108, 421 N.E.2d 971.) Conversely, where the action in the other jurisdiction is instituted after the Illinois action, Skyline and Daiwa contend, a lesser standard applies and the court may enjoin a litigant merely if the foreign action appears "oppressive, vexatious, annoying, harassing, or unduly interfere with the progress of a prior instituted local action." (See Block & Co., 40 Ill.App.3d at 95-96, 351 N.E.2d 271; Lowe, 96 Ill.App.3d at 645, 52 Ill.Dec. 108, 421 N.E.2d 971; National Hockey League v. Intermart, Inc. (1984), 127 Ill.App.3d 1072, 1077, 83 Ill.Dec. 246, 470 N.E.2d 1; Wells v. Wells (1976), 36 Ill.App.3d 91, 93, 343 N.E.2d 215.) Daiwa further contends that in making the determination of the propriety of injunctive relief in these circumstances, courts are to look to whether complete relief can be obtained in the Illinois action, and if so, the filing of a foreign suit on the same issues will be deemed vexatious and harassing. See National Hockey League, 127 Ill.App.3d at 1078, 83 Ill.Dec. 246, 470 N.E.2d 1; Lowe, 96 Ill.App.3d at 645, 52 Ill.Dec. 108, 421 N.E.2d 971.

Chrysler and the Hourani defendants assert that the appellate court correctly recognized that controlling precedent has established but one standard of analysis, i.e., the issuance of an injunction where the foreign proceeding will result in fraud, gross wrong or oppression, regardless of any priority of filing suit. Royal League v. Kavanagh (1908), 233 Ill. 175, 183, 84 N.E. 178; Illinois Life Insurance Co. v. Prentiss (1917), 277 Ill. 383, 386, 115 N.E. 554; see Chicago & Eastern Illinois R.R. Co. v. Reserve Insurance Co. (1978), 59 Ill.App.3d 206, 209, 17 Ill.Dec. 108, 376 N.E.2d 1; American Re-Insurance Co. v. MGIC Investment Corp. (1979), 73 Ill.App.3d 316, 322, 29 Ill.Dec. 269, 391 N.E.2d 532.

It has long been established in Illinois that a court of equity has the power to restrain a person over whom it has jurisdiction from instituting a suit (Harris v. Pullman (1876), 84 Ill. 20, 28) or proceeding with suit in a foreign State (James v. Grand Trunk Western R.R. Co. (1958), 14 Ill.2d 356, 363, 152 N.E.2d 858; Crawley v. Bauchens (1974), 57 Ill.2d 360, 366, 312 N.E.2d 236). Courts do not, in such cases, pretend to direct or control the foreign court, but the decree acts solely upon the party. The jurisdiction rests on the authority vested in courts of equity over persons within the limits of their jurisdiction and who are amenable to process, to stay acts contrary to equity and good conscience. Royal League v. Kavanagh (1908), 233 Ill. 175, 183, 84 N.E. 178.

The exercise of such power by equity courts in Illinois is considered to be a matter of great delicacy, to be "invoked with great restraint to avoid distressing conflicts and reciprocal interference with jurisdiction." James, 14 Ill.2d at 363, 152 N.E.2d 858; cf. Cole v. Cunningham (1889), 133 U.S. 107, 121, 10 S.Ct. 269, 274, 33 L.Ed. 538, 544-45 (extreme delicacy, however, should not deter the court from controlling the conduct of a party within its jurisdiction to prevent oppression or fraud, as no rule of interstate comity forbids such exercise).

In Royal League, 233 Ill. at 183, 84 N.E. 178, a fraternal insurance society filed a bill for an injunction in the circuit court of Cook County, seeking to restrain a beneficiary from instituting an action in Missouri to recover benefits under the policy. At the time the bill was filed in Illinois, there was no previously filed and pending action in Missouri. This court established a standard of analysis by its statements that courts possessed the undoubted authority to restrain a litigant from prosecuting a foreign action which would result in fraud, gross wrong or oppression, but that a litigant ought not be restrained "unless a clear equity is presented requiring the interposition of the court to prevent a manifest wrong and injustice." (Royal League, 233 Ill. at 183, 84 N.E. 178.) "To justify equitable interposition it must be made to appear that an equitable right will otherwise be denied the party seeking relief." (Royal League, 233 Ill. at 183, 84 N.E. 178.) The Royal League court thus affirmed the denial of injunctive relief on the basis that it was not inequitable for a litigant to pursue an action in a forum which could afford him a better remedy.

In Illinois Life Insurance Co. v. Prentiss (1917), 277 Ill. 383, 115 N.E. 554, the beneficiary of an insurance policy first filed suit in the circuit court of Cook County to recover benefits under the policy. The insurance company then sought to enjoin the beneficiary from filing suit...