Illinois Federal Court Rejects Dismissal Based on Abstention Doctrine

In its recent decision in Hartford Cas. Ins. Co. v. Construction Builders In Motion, Inc., 2012 U.S. Dist. LEXIS 25240 (E.D. Ill. Feb. 28, 2012), the United States District Court for the Northern District of Illinois, applying Illinois law, considered whether a declaratory judgment action should be dismissed on the basis of the Wilton/Brillhart abstention doctrine.

The Construction Builders case involved coverage litigation arising out of allegedly defective construction of a single home in Chicago.  In the underlying action, the homeowner sued the general contractor, Kaiser, which in turn asserted third-party claims against several subcontractors, including Construction Builders. Hartford, as the insurer of Construction Builders, brought suit in the Northern District of Illinois, seeking a declaration that it had no duty to defend its own insured or Kaiser.  Hartford also named as defendants a number of other insurers under which Kaiser qualified as an insured or as an additional insured.  Hartford sought a declaration that if it did owe a defense obligation to Kaiser, then this obligation should be shared equally with each of the other insurers.

Among the insurers sued by Hartford were Rockford Mutual and Pekin Insurance, both of which were insurers of Kaiser’s subcontractors.  Kaiser claimed to be an additional insured under the policies issued by these insurers.  Rockford Mutual and Pekin had each brought separate lawsuits in Illinois state court seeking declarations that they owed no coverage obligations with respect to their own insureds or to Kaiser.  Rockford Mutual and Pekin Insurance, therefore, moved to dismiss Hartford’s lawsuit on the basis of the Wilton/Brillhart abstention doctrine, arguing that the court should abstain from hearing Hartford’s claims in light of their already filed state court actions.

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