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BYER MUSEUM OF ARTS v. NORTH RIVER INS.

November 22, 1985

BYER MUSEUM OF THE ARTS, STEPHEN BYER & ASSOCIATES, STEPHEN B. BYER, AND BARBARA L. BYER, PLAINTIFFS,
v.
THE NORTH RIVER INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Holderman, District Judge:

MEMORANDUM OPINION AND ORDER

This case is before the Court on defendant's motion to dismiss, or in the alternative, stay this action in light of a nearly identical state action pending between the parties in the Circuit Court of Cook County.

BACKGROUND

This case concerns an insurance policy issued by The North River Insurance Company ("defendant") to the Byer Museum of the Arts and Stephen Byer & Associates ("plaintiffs") insuring a building and its contents. The insured building is located in Evanston, Illinois and is occupied by plaintiffs: the Byer Museum and Stephen Byer & Associates.

On December 31, 1984, approximately three months after the insurance policy was issued, a fire occurred at the building causing extensive damage. In March and April of 1985 the plaintiffs submitted their claims to the defendant for the damage caused by the December fire. The defendant asserted that the claims were grossly inflated and, therefore, sought to have the policy declared null and void due to the plaintiffs' fraud. Plaintiffs asserted that the claim was proper and objected to the delay in payment.

Their differences defined, the parties began some elaborate strategic posturing within the state and federal judicial systems. On May 31, 1985, defendant filed suit in federal court seeking a declaratory judgment annulling its liability under the policy. Five days later, defendant voluntarily dismissed the federal action pursuant to Fed.R.Civ.P. Rule 41(a)(1)(i), and on the same day refiled the complaint for declaratory judgment in the Circuit Court of Cook County, Illinois under docket number 85 CH 5589 ("state action"). Nearly one month later, plaintiffs decided to file their own action in federal court based on the very same insurance policy and involving the same factual questions and parties. The plaintiffs' present federal action seeks the full amount claimed under the policy, attorneys' fees, statutory penalties under Ill.Rev.Stat. ch. 73 § 767, compensatory damages and punitive damages.*fn1 Federal jurisdiction was based on diversity of citizenship under 28 U.S.C. § 1332.

DISCUSSION

Having lost the race to the courthouse, the plaintiffs would like to start another race; a race to judgment between this Court and the Illinois state court. To prevent such a race to judgment and to conserve scarce legal and judicial resources, the defendant has moved to dismiss or stay the federal action based on alternative grounds, namely: § 2-619(a)(3) of the Illinois Code of Civil Procedure; and the Colorado River doctrine which allows federal courts to dismiss or stay federal actions in deference to concurrent state proceedings. For the following reasons defendant's motion to dismiss is granted.

Because jurisdiction in the present litigation is premised on diversity of citizenship, Illinois state law is applicable under the well established principles of Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Guarantee Trust Co. of N.Y. v. New York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945); and Byrd v. Blue Ridge Elec. Coop., Inc., 356 U.S. 525, 78 S.Ct. 893, 2 L.Ed.2d 953 (1958). Directly in issue is whether the Erie doctrine requires the application of an Illinois statutory provision which allows the dismissal of a cause of action involving the same cause and same parties as another pending action.

Section 2-619(a)(3), Ill.Rev.Stat. ch. 110, provides:

  Defendant may, within the time for pleading, file
  a motion for dismissal of the action or for other
  appropriate relief upon any of the following
  grounds.
  (3) That there is another action pending between
  the same parties for the same cause.*fn2

The Illinois Supreme Court has interpreted "same cause" to mean that "actions are `for the same cause,' when relief is requested on substantially the same set of facts." Skolnick v. Martin, 32 Ill.2d 55, 203 N.E.2d 428 (1964), cert. denied, 381 U.S. 926, 85 S.Ct. 1562, 14 L.Ed.2d 684 (1965).

Though it is clear that the state and federal actions fall within the parameters of § 2-619(a)(3), plaintiffs contend that this statutory provision is merely a procedural device for use by the Illinois state courts and has no applicability to federal courts exercising diversity jurisdiction. This argument is contrary to the overwhelming weight of judicial decisions determining the applicability of § 2-619(a)(3) to federal courts sitting in diversity. Simenc v. Holiday Inns, Inc., No. 83 C 5618, slip op. (N.D.Ill. Feb. 10, 1984) (Judge Moran); Brite Industries v. Anderson, No. 81 C 5593, slip op. (N.D.Ill. March 25, 1982) (Judge Kocoras); Holmes v. Chicago Transit Authority, 505 F. Supp. 877 (N.D.Ill. 1981) (Judge Leighton); Carpets International v. Quill Corp., No. 81 C 3489, slip op. (N.D.Ill. Nov. 2, 1981) (Judge Decker); Repp v. F.E.L. Publications, Ltd., No. 80 C 3335, slip op. (N.D.Ill. Oct. 8, 1980) (Judge Leighton); Holston v. The Rockford Surgical Service, No. 80 C 173, slip op. (N.D.Ill. Sept. 22, 1980) (Judge Shadur); General Investment Funds Real Estate Holding Company v. Exchange National Bank of Chicago, No. 79 C 1286, slip op. (N.D.Ill. April 14, 1980) (Judge Aspen); Kaiser v. Raymond Bolzan, Inc., No. 77 C 4122, slip op. (N.D.Ill. Dec. 4, 1978) (Judge Kirkland); ...


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