Cooke v. Jackson National Life Insurance Co.
919 F.3d 1024 (7th Cir. 2019)Words & Phrases
Bad Faith: StatutoryTrial Judge
Ruben CastilloAppellate Judge
EasterbrookHolding
Section 155 (215 ILCS 5/155) does not provide a basis for awarding sanctions for an insurance company’s litigation conduct in federal court, as federal rules apply to penalize any unreasonable conduct in federal litigation.Fact Summary
The district judge understood 155 to allow an award either for pre-litigation conduct or for behavior during the litigation. 243 F. Supp. 3d at 1006. He wrote that “Jackson’s denial of coverage was based on a good-faith dispute regarding the nature of Cooke’s payments” (ibid.) and that the insurer could not properly be penalized for insisting that a judge resolve the parties’ dispute. But, the judge added, “Jackson’s behavior in this litigation has been much less reasonable.” Id. at 1007.
The judge faulted the insurer because it opposed Cooke’s motion for judgment on the pleadings without attaching the full policy to its papers. Jackson observed that Cooke had not supplied the court with all of the pertinent writings (which included an electronic funds transfer agreement as well as the policy) but failed to do so itself, until the summary-judgment stage, and the judge thought this unreasonable. Ibid. The judge summed up (ibid.):
This Court believes that this case could have been resolved on Plaintiff’s motion for judgment on the pleadings one year ago. This is a straightforward insurance policy dispute with essentially undisputed facts, and the primary issue is the interpretation of the policy. Had Jackson provided with its response the full document to be construed, or clearly identified those documents it had already turned over that it contended were necessary to interpret the policy, this case may have been resolved one year ago. By frustrating Plaintiff’s motion solely by pointing to the incomplete policy and then coyly refusing to identify the deficiency for months thereafter, Defendant unnecessarily and unreasonably extended this litigation for no reason related to its good- faith position on the merits.
The district court assumed that §5/155 governs the conduct of litigation in federal court. It did not explain why. Many cases hold that federal, not state, rules apply to procedural matters—such as what ought to be attached to pleadings—in all federal suits, whether they arise under federal or state law. See, e.g., Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., 559 U.S. 393 (2010); Burlington Northern R.R. v. Woods, 480 U.S. 1 (1987); Walker v. Armco Steel Corp., 446 U.S. 740 (1980); Mayer v. Gary Partners & Co., 29 F.3d 330 (7th Cir. 1994). Federal rules and doctrines provide ample means to penalize unreasonable or vexatious conduct in federal litigation. The district court’s decision to rely on state rather than federal law was a mistake.