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July 16, 1990;

UNDERWOOD, NEUHAUS & COMPANY INC., a Texas corporation, JAMES WILLHITE and ROBERT KOLODZIEJ, Defendants. ROBERT KOLODZIEJ, Third-Party Plaintiff, v. VILLAGE OF BOLINGBROOK, an Illinois municipal corporation, Third-Party Defendant

George W. Lindberg, United States District Judge.

The opinion of the court was delivered by: LINDBERG


 This matter arises from an alleged fraud in the investment of certain police pension fund money and it is before the court on the motion to dismiss of third party defendant, Village of Bolingbrook (Village).

 Ancillary jurisdiction enables a federal court to adjudicate claims by third parties arising from the same transaction or occurrence as federal question claims and which do not themselves meet federal jurisdiction standards. Blake v. Pallan, 554 F.2d 947, 956 (9th Cir. 1977). The major requirement for ancillary jurisdiction is that the claims be "inextricably tied" to plaintiff's federal question claim. Hartford Acc. & Indemnity Co. v. Sullivan, 846 F.2d 377, 380 (7th Cir. 1988). One must depend upon the other; a common issue of law or fact is not enough. Id. This court has ancillary jurisdiction to hear and decide this state law claim for indemnification and defense because it arises from the same transaction as the federal securities claim, and is inextricably tied to plaintiff's federal question claim.

 The underlying complaint alleges that defendant-third party plaintiff, Robert Kolodziej (Kolodziej), wilfully and with reckless disregard violated Rule 10b-5 promulgated under the Securities Exchange Act of 1934, and wilfully and with reckless disregard breached his fiduciary duty to the Village of Bolingbrook Pension Fund. See 17 CFR sec. 240.10b-5 (1975).

 The Village has filed a motion to strike and dismiss the third party complaint alleging two propositions. First, Ill. Rev. Stat. Ch. 85, sec. 2-302 (1989) does not obligate the Village to indemnify Kolodziej because the statute makes it optional for a municipality to indemnify. Second, while the Bolingbrook Municipal Code does require the Village to provide a defense and indemnify employees under certain circumstances, this is not one of those circumstances because (a) it has not been determined that Kolodziej was acting within the scope of his employment at the time of the alleged conduct and (b) even if Kolodziej was acting within the scope of his employment, there has been no final adjudication of wilful conduct by this court so this cause of action is premature; and (c) any liability or judgment is payable to the Village so the Village is exempt from indemnification. Since the question can be decided on ripeness grounds, the court will not address whether any judgement is payable to the Village.

 Parties may seek a dismissal of a cause of action at the pleading stage. However, as the Seventh Circuit has stated:

Dismissal is proper if it appears beyond a reasonable doubt that the plaintiff could prove no set of facts in support of his claim that would entitle him to the relief requested.

 R.J.R. Services, Inc. v. Aetna Casualty and Surety Co., 895 F.2d 279, 281 (7th Cir. 1989) quoting Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957). All the factual assertions made in the complaint must be accepted as true and the inferences favorable to the plaintiff which may be drawn therefrom, must be drawn. Id. The court must judge the complaint in a light most favorable to the plaintiff and determine whether the allegations enable the plaintiff to prove any set of facts which would entitle him to relief. At the same time, however, parties should not be required to defend against claims for which there is clearly no basis in law. Id. It is against this background that the court views the third party complaint and the third party defendants' motion to dismiss.

 I. Indemnification under Federal Law

 The court will first consider whether Kolodziej is entitled to indemnity under federal law. In King v. Gibbs, 876 F.2d 1275 (7th Cir. 1989), the Seventh Circuit Court of Appeals held that no right to indemnification exists under federal securities laws whether it be from a statute, rule or federal common law. It is beyond dispute that indemnification is not explicitly required by section 10(b) or Rule 10b-5 which contain no express right of indemnification. Id. at 1279; 17 CFR sec. 240.10b-5 (1975). Nor does the extensive legislative history surrounding the 1934 Act indicate that Congress intended that indemnification be available under the statute. Id. at 1281; Ellenberger, J.S. and Ellen P. Mahar, Legislative History of the Securities Act of 1933 and Securities Exchange of 1934 (1973).

 In sum, this court finds that as a matter of law, federal securities laws do not create a right to indemnification. Thus, indemnification is only required if a right exists under state or municipal law.

 II. Indemnification under State Law

 The court next will consider Kolodziej's claim that he is entitled to indemnity under the Illinois Tort Immunity Act, Ill. Rev. Stat. ch. 85, sec. ...

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