Stay Of Insurance Declaratory Judgment Action Is Like An Injunction And Invokes Interlocutory Appellate Jurisdiction

WW Westwood Center sued Canel & Associates for legal malpractice. Canel tendered the defense of the lawsuit to it malpractice insurer, TIG Insurance Company. The tender inspired cross-claims by TIG and Canel for a declaratory judgment – TIG asked for a ruling that it did not have to defend or indemnify Canel; Canel asserted just the opposite.

TIG brought Westwood into the lawsuit, and proceeded to serve discovery on Westwood. Westwood responded by asking the trial court to stay the declaratory judgment lawsuits pending a determination of its malpractice case against Canel.

Canel opposed Westwood’s request for a stay. Because TIG was not paying Canel’s defense costs in the malpractice case, Canel wanted the trial court to rule quickly (and in Canel’s favor) in the declaratory judgment case.

But the trial court granted Westwood’s request for the stay of the declaratory judgment actions. Not wanting to wait until final resolution of all the cases, Canel immediately appealed the order granting the stay. The initial question for the First District Illinois Appellate Court was whether it had jurisdiction to hear the appeal.

Canel appealed under Illinois Supreme Court Rule 307(a), which allows interlocutory (immediate) appeals from orders in connection with injunctions. So the question was whether staying the declaratory judgment actions was enough like an injunction order to invoke the appellate court’s jurisdiction.

The appellate court ruled that it did have jurisdiction because the “substance of the order, which prohibited the parties from proceeding with litigation …of TIG’s declaratory judgment action against Canel Associates, was, in effect, injunctive in nature so as to render it reviewable under Rule 307(a)(1).”

The appellate court also affirmed the stay. Read the whole case, TIG Insurance v. Canel, No. 1-08-1251 (3/24/09), by clicking here.