Litigation Law Roundup

SharpThinking

No. 179   Perspectives on Developments in the Law from Sharp-Hundley, P.C.   April 2020

Two E-Mails Sufficient To Invoke Specific Jurisdiction

Two emails sent into Illinois from outside the state were sufficient contacts to force the sender to defend a defamation lawsuit in Illinois, a panel of the Appellate Court’s Third District held recently.

Acting in Wesly v. National Hemophilia Found., 2020 IL App (3d) 170569, the panel by a majority vote affirmed a Circuit Court decision denying a motion to dismiss the defamation complaint brought under Illinois’ Long-Arm Statute, 735 ILCS 5/2-209.

Significantly, the cause of action arose out of the two emails at issue and did not invoke the court’s general jurisdiction.

In Wesly, a Peoria-area doctor won an award from the defendant foundation but a volunteer doctor associated therewith took it upon himself to gather evidence the award was not merited.  He sent to another doctor in Peoria (Tarantino) two emails which discussed the award and (successful) efforts to have it rescinded.  Plaintiff contended those two emails were defamatory, and sued the sending doctor (Kessler), who lived and worked in Washington, D.C.

The majority upheld jurisdiction over Kessler.  “The tort of defamation occurs where the defamatory statements are published,” it said.  “Plaintiff has asserted jurisdiction over Kessler because he sent the statements to Tarantino, who received and read them in Illinois.”

The majority distinguished cases where defendants made defamatory statements in interstate telephone conversations which they did not initiate.  It said that by initiating the emails, Kessler “deliberately and consciously intruded into Illinois and could expect to have to defend his actions in an Illinois court.”

“When a plaintiff has established that the defendant purposely directed his activities at the forum state, the defendant must present a compelling case that litigating the dispute there would be unreasonable. . . . Compelling cases are limited to those rare situations where Illinois’ interests in adjudicating the dispute are clearly outweighed by the burden of subjecting the defendant to litigation in Illinois,” the court said.

Decision Raises Questions Re: Joining New Parties

May a counterclaim join to litigation a new party?  And if so, what is that party called?

Those are among the questions raised by the Illinois Supreme Court decision in Carmichael v. Union Pac. R.R. Co., 2019 IL 123853.

In Carmichael, plaintiff was riding in an employee van operated by a contract carrier when seriously injured in an accident caused by another vehicle which was only minimally insured.  She filed a declaratory action against the contract carrier claiming it was underinsured under an Illinois statute.  The carrier filed affirmative defenses that the relevant statutes were unconstitutional and provided no private cause of action.  It also filed a counterclaim reiterating the grounds of the affirmative defenses and asking for a declaratory judgment against plaintiff and the Secretary of State, hitherto a non-party.

The court noted that the purported counterclaim was improper because a “counterclaim that requests no affirmative relief and only seeks to defeat the plaintiff’s claims is really an affirmative defense.”  It “is superfluous and carries no legal weight as an independent action against plaintiff,” the court said.

Nor was the claim against the Secretary of State a “true counterclaim,” because it was not brought against an “existing party to the action” (court’s emphasis).  Further, it could not be re-characterized as a third-party complaint because it did not seek indemnity or contribution for defendant’s liability to plaintiff, the court said.

Instead, the carrier should have proceeded under Supreme Court Rule 19 if it wished to contest constitutionality of the statutes, the court said.

That, of course, is fine when the entity sought to be joined is a department, subdivision or agency of the state.  However, what if it is not?  Carmichael is silent on this point.

Commonly, counter-plaintiffs characterize the new party which they seek to join as a third-party defendant, but that conflicts with Carmichael’s limitation of that nomenclature to indemnity and contribution claims.  See also 735 ILCS 5/2-406(a) (third-party practice limited to person “who is or may be liable to [defendant] for all or part of the plaintiff’s claim against him or her”).  Carmichael thus raises questions that must be left to another day for resolution.

Court Tells Alternate Basis For Attorney Fees

Attorney fees incurred by a plaintiff in an action with a third party, brought about by the defendant’s misconduct, are a form of damages and recoverable from the defendant, a panel of the Appellate Court’s Third District has ruled.

In Chung v. Pham, 2020 IL App (3d) 190218, the panel outlined a little-known alternative to the usual rule that attorney fees in America are not awarded absent a contractual, statutory or court rule provision.

In Chung, defendant breached a real estate purchase agreement with plaintiff.  Plaintiff sought specific performance.  While plaintiff was attempting to serve defendant in that action, defendant mortgaged the property to a third party.  The third party petitioned to intervene, and she filed a foreclosure action.  The trial court awarded plaintiff $50,000 in attorney fees against defendant, even though no provision of the purchase agreement provided for an award of fees.

The Appellate Court said this was improper, but that it could affirm on any basis supported by the record.  Quoting Ritter v. Ritter, 381 Ill. 549 (1943), the panel said that “where the wrongful acts of a defendant involve the plaintiff in litigation with third parties or place him in such a relation with others as to make it necessary to incur expense to protect his interest, the plaintiff can then recover damages against such wrongdoers, measured by the reasonable expenses of such litigation, including attorney fees.”

The court said the defendant’s conduct “was wrongful under the purchase agreement” and that was sufficient.  However, the lump-sum award of $50,000 was improper.  The panel sent the case back to the trial court for further proceedings to determine the proper amount of fees.

                                                                                                                           – John T. Hundley

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