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Thursday, June 05, 2014

Courts - Ill. Sup. Ct. rules federal district court decisions, in and of themselves, cannot establish a conflict between the law of different states, since a “predictive” judgment is not, in fact, state law.

That is the May 22, 2014 Illinois Supreme Court ruling in Bridgeview Health Care Center, Ltd. v. State Farm Fire and Casualty Company - 2013 IL App (1st) 121920:

This appeal presents the following question: When a federal district court sitting in a sister state makes a prediction under Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938), that the supreme court of that state would resolve a legal issue in a way that is at odds with Illinois law, does that prediction, in itself, establish an actual conflict between the two states’ laws for purposes of a choice-of-law analysis? For the reasons that follow, we answer that question in the negative. * * *

No Indiana state court has addressed the question of whether the sending of unsolicited faxes falls within a comprehensive liability policy’s provisions, either as an advertising injury or as property damage. However, two unreported federal district court decisions, Ace Mortgage Funding, Inc. v. Travelers Indemnity Co. of America, No. 1:05-cv-1631-DFH-TAB, 2008 WL 686953 (S.D. Ind. Mar. 10, 2008), and Erie Insurance Exchange v. Kevin T. Watts, Inc., No. 1:05-cv-867-JDT-TAB, 2006 WL 1547109 (S.D. Ind. May 30, 2006), have predicted Indiana law. These decisions predicted that the Indiana Supreme Court would hold there is no coverage for claims such as Bridgeview’s under comprehensive general liability policies. In so holding, the district courts relied on American States Insurance Co. v. Capital Associates of Jackson County, Inc., 392 F.3d 939 (7th Cir. 2004). In that decision, the Circuit looked at Illinois law and predicted that this court would hold that coverage was unavailable under a comprehensive general liability policy. That position was subsequently rejected by this court in Valley Forge Insurance Co. v. Swiderski Electronics, Inc., 223 Ill. 2d 352 (2006). The question before us in this case is whether the federal district court decisions can be the source of an outcome determinative conflict so as to trigger a choice-of-law analysis. State Farm contends they can. State Farm maintains that the federal district court decisions, in and of themselves, establish a conflict between Illinois and Indiana law. We disagree. * * *

Because a federal district court’s Erie prediction is not state law, such a prediction cannot, by itself, establish a conflict between state laws. Thus, the fact that the federal district court decisions cited by State Farm in this case predicted that the Supreme Court of Indiana would reach a result at odds with Illinois law is not, standing alone, sufficient to establish a conflict between the law of Illinois and Indiana. This is not to say, however, that when a circuit court in Illinois is confronted with a motion alleging a conflict of laws it may not consider what the federal district court has to say about our sister state’s law.

See also this story in Legal Newsline.

Posted by Marcia Oddi on June 5, 2014 09:44 AM
Posted to Indiana Courts