Wright v. City of Danville

• Decision Date: 20 October 1994
• Docket Number: No. 4-94-0073,4-94-0073
• Parties: , 204 Ill.Dec. 681 Wendell WRIGHT, Ernie A. Cox, Jerome D. Brown, Raymond T. Randall, and Kevin Scharlau, as Independent Executor of the Estate of Wilbur Scharlau, Deceased, Plaintiffs-Appellants, v. CITY OF DANVILLE, Illinois, a municipal corporation, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 143

642 N.E.2d 143

267 Ill.App.3d 375, 204 Ill.Dec. 681

Wendell WRIGHT, Ernie A. Cox, Jerome D. Brown, Raymond T Randall, and Kevin Scharlau, as Independent Executor of the Estate of Wilbur Scharlau, Deceased Plaintiffs-Appellants, v. CITY OF DANVILLE, Illinois, a municipal corporation Defendant-Appellee.

No. 4-94-0073.

Appellate Court of Illinois Fourth District.

Argued Sept. 20, 1994.

Decided Oct. 20, 1994.

Everett L. Laury and Gregory G. Lietz (argued), Hutton, Laury, Hesser, Lietz & Wilcox, Danville, for appellant.

Craig H. DeArmond (argued), Kurth, Wolgamot & DeArmond, Danville, for appellee.

Justice COOK delivered the opinion of the court:

Plaintiffs, former commissioners and corporation counsel of the City of Danville (City) (referred to herein as the Commissioners), filed a complaint seeking indemnity from the City for attorney fees and litigation expenses incurred in defending a criminal prosecution. The trial court dismissed the complaint under sections 2-615 and 2-619 of the Code of Civil Procedure (Code) (Ill.Rev.Stat.1991, ch. 110, pars. 2-615, 2-619). We reverse and remand.

In January 1987 a class action under the Voting Rights Act of 1965 (Act) ( 42 U.S.C. § 1973b (1982 & Supp. V 1987)) was filed against the City in Federal district court, alleging that the City's nonpartisan, at-large process for electing commissioners excluded African-American representation and diluted African-American voting strength. The City at that time was governed by four elected commissioners, who possessed both legislative and executive powers. A settlement decree was proposed that the form of government be changed from a mayor-commissioner system to a mayor-alderman system, with aldermen elected from seven two-member districts. The settlement also provided that the Commissioners would continue in office for three years as administrators of the various departments which corresponded to their commission duties, at salaries to be set by themselves as current commissioners. These three-year positions were designed to ensure a smooth transition from the old form of government to the new. The positions were also designed for the personal benefit of the Commissioners, to compensate them for the positions they were giving up.

The State's Attorney for Vermilion County, concerned that the Commissioners' conduct violated the conflict-of-interest law (Ill.Rev.Stat.1987, ch. 24, par. 3-14-4(a)), issued subpoenas for the Commissioners to appear before a grand jury. In response, the district court added the State's Attorney to the proceedings before it and enjoined the grand jury proceedings. After a hearing, the district court approved and entered the decree, finding that " 'the proposed decree is fair, adequate, and reasonable and that it does not violate [S]tate or [F]ederal law.' " (See Derrickson v. City of Danville (7th Cir.1988), 845 F.2d 715, 717.) The court dissolved the injunction against the State's Attorney. No one appealed.

The State's Attorney reconvened the grand jury, which returned an eight-count indictment against the Commissioners. The district court again enjoined the prosecution on the basis that it had previously resolved the issue of criminal liability and that an injunction was necessary to protect its prior decree. The court of appeals reversed on the basis that adherence to the prior decree was not required by the principles of res judicata: (1) there was no claim preclusion because the State's Attorney was not required to raise his contentions as a compulsory counterclaim under Federal Rules of Civil Procedure 13(a) (Fed.R.Civ.P. 13(a) (see 28 U.S.C. R. 13(a) (1988)); (2) there was no issue preclusion because the State's Attorney had not been allowed to litigate the issues involved, and the district court had decided only that the City had the power to enter into the decree, not that the Commissioners were the right parties to negotiate on behalf of the City. (Derrickson, 845 F.2d at 721.) The court of appeals was critical of the district court for not resolving "all issues necessary," but concluded that the district court "did not in fact resolve the lawfulness of the negotiating process." (Derrickson, 845 F.2d at 723.) The concurring opinion agreed, but continued: "Under no circumstances should the [F]ederal court approve a consent decree and then stand idly by while those who helped provide the benefits of the decree go to jail." (Derrickson, 845 F.2d at 725 (Cudahy, J., concurring).) Such an approach might be the beginning of the end of effective enforcement of the Act. Derrickson, 845 F.2d at 725 (Cudahy, J., concurring).

The matter returned to State court, where the Commissioners were convicted at a bench trial of official misconduct (Ill.Rev.Stat.1989, ch. 38, par. 33-3(c)) and of violating the prohibition against municipal officials' having pecuniary interests in contracts involving the governmental unit they serve (Ill.Rev.Stat.1989, ch. 24, par. 3-14-4(a); ch. 102, par. 3(a)). The Commissioners were sentenced to two years' conditional discharge and fined $1,000 each. The corporation counsel was sentenced to two years' conditional discharge, 90 days in jail, and a fine of $5,000. This court reversed. People v. Scharlau (1990), 193 Ill.App.3d 280, 282, 140 Ill.Dec. 260, 262, 549 N.E.2d 911, 913, rev'd (1990), 141 Ill.2d 180, 152 Ill.Dec. 401, 565 N.E.2d 1319.

On appeal from our decision, the supreme court reinstated the convictions, concluding that the consent decree was a "contract," that even a "mixed-interests" contract which benefitted both the City and the Commissioners violated the statute, that the Commissioners could and should have removed themselves from the negotiating process, and that conviction under section 33-3 of the Criminal Code of 1961 (Criminal Code) (Ill.Rev.Stat.1989, ch. 38, par. 33-3) required only an intent to obtain a personal advantage and not a knowledge that the action was outside the officer's lawful authority. The supreme court recognized the Commissioners' concern for some sort of transitional government was legitimate, but could conceive of no way to construe the lawful authority of the Commissioners to include the preservation of their jobs. (People v. Scharlau (1990), 141 Ill.2d 180, 197, 152 Ill.Dec. 401, 409, 565 N.E.2d 1319, 1327.) The supreme court rejected the argument that the Commissioners had relied on the Federal decree, because the criminal case issues were not actually litigated in the Federal court and the criminal acts occurred before the decree was entered. Scharlau, 141 Ill.2d at 202-03, 152 Ill.Dec. at 411, 565 N.E.2d at 1329.

The Commissioners sought a writ of habeas corpus in Federal court, alleging the State criminal prosecution violated their first amendment right to petition the court for a redress of their grievances. (Wright v. DeArmond (7th Cir.1992), 977 F.2d 339, 343-44.) The court of appeals held the Commissioners were not prevented from petitioning the government with respect to their own needs; they only were forbidden from doing so while representing official interests. (Wright, 977 F.2d at 346.) The court noted it was not its place to determine the wisdom of Illinois' conflict-of-interest statutes, nor to pass on the wisdom of its prosecutorial officials, only to determine whether the Commissioners had been denied a Federal constitutional right, which it concluded they had not. The chief judge, dissenting, would have accepted the analysis of the district judge who approved the settlement. ("Unless Judge Baker was an unindicted co-conspirator, I would take him at his word." (Wright, 977 F.2d at 350 (Bauer, C.J., dissenting)).) In the view of the chief judge, there was no reason, other than a general distrust of public officials, to believe that the Commissioners knowingly violated a single law--State or Federal. Wright, 977 F.2d at 350 (Bauer, C.J., dissenting).

This appeal arises out of a complaint filed by the Commissioners on September 16, 1992, in the Vermilion County circuit court, seeking indemnity for attorney fees and litigation expenses ($321,311.47) incurred in defending the criminal prosecution. The complaint was based on common law indemnity (count II), and on two Danville indemnity ordinances, No. 7192 (City of Danville, Ill., Ordinance 7192 (July 8, 1986)) and No. 7237 (City of Danville, Ill., Ordinance 7237 (March 10, 1987)) (count I). Ordinance No. 7237 was passed March 10, 1987, soon after the consent decree was entered, and was considered by the supreme court to be evidence which "serves to further impugn defendants' actions in negotiating the terms of the consent decree." (Scharlau, 141 Ill.2d at 200, 152 Ill.Dec. at 410, 565 N.E.2d at 1328.) The trial court granted the City's motion to dismiss on the basis that the ordinances did not afford indemnity in this case, there was no basis for common law indemnity, and the activities of the Commissioners "tainted the circumstances in such a way" that the court was compelled to find indemnity improper.

Under section 2-615 of the Code, a trial court should dismiss a cause of action on the pleadings only if it is clearly apparent that no set of facts can be proved which will entitle a plaintiff to recover. (Illinois Graphics Co. v. Nickum (1994) 159 Ill.2d 469, 488, 203 Ill.Dec. 463, 472, 639 N.E.2d 1282, 1291.) If a cause of action is dismissed on a section 2-619 motion, the question on appeal is whether there is a genuine issue of material fact and whether defendant is entitled to judgment as a matter of law. Illinois Graphics, 159 Ill.2d at 494, 203 Ill.Dec. at 474, 639 N.E.2d at 1293.

Pertinent language from ordinance No. 7192, passed July 8, 1986, is set out below. The emphasized and bracketed language was later added by ordinance No. 7237.

"Under [this] indemnification, the City shall pay all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by [the] person in...