Indiana Lumbermens Mutual Insurance v. Specialty Waste Services, Inc.

774 F. Supp. 525, 1991 U.S. Dist. LEXIS 14357, 1991 WL 199012
CourtDistrict Court, C.D. Illinois
DecidedSeptember 30, 1991
DocketNo. 90-3281
StatusPublished
Cited by2 cases

This text of 774 F. Supp. 525 (Indiana Lumbermens Mutual Insurance v. Specialty Waste Services, Inc.) is published on Counsel Stack Legal Research, covering District Court, C.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Indiana Lumbermens Mutual Insurance v. Specialty Waste Services, Inc., 774 F. Supp. 525, 1991 U.S. Dist. LEXIS 14357, 1991 WL 199012 (C.D. Ill. 1991).

Opinion

OPINION

RICHARD MILLS, District Judge:

“Colorado River Doctrine” and Illinois Code of Civil Procedure § 2-619(a)(3).

Does § 2-619 apply to a federal court hearing a diversity case pursuant to 28 U.S.C. § 1332.

No!

Defendant Specialty Waste Services, Inc.’s motion to dismiss.1

Facts

Indiana Lumbermens Mutual Insurance Company (hereafter, Indiana Lumbermens) was the surety on a project to remove asbestos at the State Farm Insurance headquarters in Bloomington, Illinois. The principal on the surety bond and the party obligated to perform the work was J & S Asbestos, Inc. State Farm terminated J & S Asbestos based on allegedly poor performance and demanded Indiana Lumbermens complete the work. Indiana Lumbermens contracted with Specialty Waste Services, Inc. (hereafter, Specialty Waste) to complete the work.

Both J & S Asbestos and Specialty Waste agreed to indemnify Indiana Lumbermens for any losses incurred on the project attributable to their conduct and both posted letters of credit.

State Farm made a claim against Indiana Lumbermens for damages caused by the late completion of the work. Indiana Lumbermens settled State Farm’s claim and drew down on the letter of credit from J & S Asbestos.

In 1989, Indiana Lumbermens filed suit in the Circuit Court of Cook County seeking money damages from Specialty Waste and J & S Asbestos. Thereafter, Specialty Waste filed suit against Indiana Lumbermens and the Bank of Alton to stay Indiana Lumbermens from drawing on the letter of credit posted by Specialty Waste. Specialty Waste then succeeded in getting the Cook County suit transferred to Madison County. While Indiana Lumbermens was trying to get a hearing on a motion to voluntarily dismiss the case pursuant to § 2-1005 of the Illinois Code of Civil Procedure, Specialty Waste filed an answer and counterclaim. Indiana Lumbermens motion to voluntarily dismiss was originally allowed, but that order was vacated after the Judge was alerted that Specialty Waste had filed a counterclaim before the dismissal order was entered. J & S Asbestos has been voluntarily dismissed from the Madison County case wherein it was a Defendant because Indiana Lumbermens was made whole when it drew down J & S Asbestos’ letter of credit.

Turning to the proceedings in this court, Specialty Waste filed a motion for an extension of time to answer or otherwise plead until January 14, 1991. On January 3, 1991, J & S Asbestos answered the complaint and filed a counterclaim seeking $500,000 in damages. On January 14, 1991, Specialty Waste filed this motion to dismiss. Indiana Lumbermens has filed an answer to the counterclaim on March 12, 1991. Specialty Waste has not yet answered the complaint.

Specialty Waste’s motion to dismiss this case is based on § 2-619(a)(3) of the Illinois Code of Civil Procedure. Indiana Lumbermens contends that § 2-619 should not be applied by a federal court and that if it is applicable in federal court, this case still should not be dismissed pursuant to it.

Analysis

Under § 2-619 of the Illinois Code of Civil Procedure, a case may be dismissed if there is “another action pending between [527]*527the same parties for the same cause.” Defendant states that the federal district courts in this circuit “have uniformly applied the provisions of Section 2-619” and that the Seventh Circuit Court of Appeals noted this practice with apparent approval in Aetna Casualty & Surety Co. v. Kerr-McGee Chemical Corp., 875 F.2d 1252 (7th Cir.1989). Defendant concludes that “Based on the clear decision of the Seventh Circuit Court of Appeal in Aetna ... this Court should dismiss this proceeding....”

Specialty Waste is correct that many district courts have applied § 2-619(a)(3). See e.g., Ball v. Deere & Co., 684 F.Supp. 1455 (C.D.Ill.1988); Schiller v. Packaging Store, Inc., 690 F.Supp. 711 (N.D.Il.1988); General Electric Co. v. Lofton, 675 F.Supp. 1107 (N.D.Ill.1987). Nonetheless, there remains with this Court serious doubt about whether § 2-619 should be applied in federal court.

Initially, we must disagree with Specialty Waste’s characterization of Aetna. The Seventh Circuit stated in Aetna that:

The district courts in this circuit have generally applied section 2-619(a)(3) without extended discussion of the [Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938)] issue, relying on Judge Will’s detailed analysis in Seaboard Finance Co. v. Davis, 276 F.Supp. 507, 512-517 (N.D.Ill.1967). Since Aetna does not challenge the district court’s application of section 2-619(a)(3) in this appeal, we will apply the Illinois statute without deciding whether it is properly controlling in federal diversity litigation.

Aetna, 875 F.2d at 1255 (citations omitted and emphasis our own). Further, the Seventh Circuit’s application of § 2 — 619(a)(3) in a case where the nonmoving party did not contest the choice of law provides no guidance in this case where Plaintiff has strongly objected to the application of § 2-619(a)(3).

The application of § 2-619(a)(3) by federal districts courts was strongly criticized in a recent article. See Hedinger, The Use of 2-619(a)(3) in Federal Courts: An Inappropriate Diversion of Colorado River, 78 Ill.B.J. 5 (1990). In that article, Hedinger notes that two factors weighed heavily in the Seaboard Finance decision. First, the Plaintiff in that case was a California citizen who initially filed his suit in California and only later filed a parallel action in Illinois. Second, the Illinois state courts would almost certainly have refused to hear the action based on § 2-619. Because the Plaintiff had chosen both forums, refusing to hear the case in Illinois would not force the Plaintiff to try its case in an unfriendly forum, which was the historical purpose of the diversity statute. Therefore, the failure to apply § 2-619 in the federal court would have simply encouraged forum shopping.2

Hedinger observed that “although Seaboard Finance may have reached a desirable result, it did so at the expense of the clear mandate of the diversity statute.” And while the Colorado River doctrine, a post Seaboard Finance development, has given the federal courts an independent means to avoid duplicative litigation, many district courts in Illinois have conjoined § 2-619 and the Colorado River doctrine. See Byer Museum of Arts v. North River Ins. Co., 622 F.Supp. 1381 (N.D.Ill.1985).

In Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976), the Supreme Court stated that “Generally, as between state and federal courts, the rule is that ‘the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction....’” Colorado River, 424 U.S. at 817, 96 S.Ct.

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774 F. Supp. 525, 1991 U.S. Dist. LEXIS 14357, 1991 WL 199012, Counsel Stack Legal Research, https://law.counselstack.com/opinion/indiana-lumbermens-mutual-insurance-v-specialty-waste-services-inc-ilcd-1991.