## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it

N o. 10

- 3825 E DWARD F. B R EN NAN, P laint if f-A ppell ant, v. J AM ES S. C O NN O RS, D efend a nt-A pp ellee.

A pp eal from the United S t ates Di strictC our t fo r the S outhernDi stricto f Illino is. No . 3:10- cv-00517

— G . Patri ckMu rp hy, Judg e.
A RGUED M AY 12, 2011

— D ECI DE D J UNE 30, 2011

Befo re B AUER, F LA UM, a nd E VANS, C ircu it Judges . E VANS, Cir cu i tJudg e . J i m m y Co nno r s i s k no wn th r o ug hout the t enni s worl d fo r m any thi ngs: hi s fi er ce tw o- hand ed backhand , h is num er ous Gra nd S l am singl es titl es (ei gh t, on th ree d ifferent su rfaces), and his fiery com peti ti ve spi ri t, to nam e j ust a few . I n addit ion t o hol ding the m en’ s num bero ne worl d ranki n g f or16 0 conse cuti ve w eek s ( 1974

- 77) , he i s known f orhi s l onge vi ty, perf or m i ng welll ate r i n hi s ca re er agai nst pl aye rs l i ke

### 2 No. 10-3825

I n th e f o u r th r o u n d, C o n n o r s d e f e a t e d a 2 4

- y e a r - o l d, Aa r on 1 K rick stein, 3

– 6 , 7– 6, 1–6 , 6– 3, 7–6 in 4 h ou rs an d 41 m inu tes, com ing back f rom a 2–5 defi ci t in the final se t. Co nnors als o had to rally bac k t o wi n h i s qua rt er fi nalm at c h a gai ns tPa ul H aarhuis , w h o had upset the num ber one s eed, Boris Becker. Conno rs was d ef ea t ed by J i m Cour i er i n s t ra i ghts et s i n the sem ifi na ls. C ou rier the n lost in straig ht sets to S tefan E d b erg in the fina ls. Bj ö r n Bo r g, J o hn M cEnr o e, a nd IvanLe ndla nd r ea ch i ng th e sem ifinals ofthe 19 91 U

. S. Op en a t t he age of 39. M ore 1 re centl y, Connors h as been engag ed i n an e quall y l ongrun nin g battle offthe cou rt

— or rath e r, i n cou rt

— aga i nst hi s f o r m era tt o r ne y, Edwar d Br enna n. Br enna n fi rst s ue d Co nno r s i n 1 99 8 f o r a l l eg edl y f ai l i ng to t r an sfersha r es ofa ga m i ngco m pan y to Br enna n pur su ant to thei r re prese ntati on agr eem ent. The sui t w as set tl ed el eve n yea rs l ate r i n 200 9. But afterBrennan was acc used byhi s f o r m erl aw pa r tn er, M i ch ae l Co ns ta nc e, o fc he at i ng him out of a portion of the sh ares, B r en na n su ed Con nors aga i n, thi s t i m e cl ai m i ng tha t, i fBrennan i s f ound li abl e t o Constance, Connors m ust i nd em ni fy Brennan pursuant t o thei r set tl em ent a gr eem ent. T h e dist ri ct j ud ge gr anted Connors’ m oti on t o dism i ss, fi nd i ng tha t the i nd em ni ty p r o v i s i o n i n th e s e t t l e me n ta g r e e me n tf a i l e d b y i t s t e r ms and that, i n any eve nt, I llin oi s publ i c pol i cy w oul d not perm i t ind em ni fi cati on under these f acts
. Brennan no w appeal s. I n 199 2, Brennan, then a par tneri n the Bel l evi l l e, I l l i noi s, l aw fir m B re nnan, Cates & Consta nce, P. C., ag re ed to r epr es en t Conno r s i n, a m o ngo th erthi ng s, “ al l pr es en t an d

### No. 10-3825 3

The repres entat ion agreem ent als o prov ided for le gal s ervic es 2 f or Conn or s ’ m othe r, Glo ri a, a nd the i r c om pany , Te nni s M anagem ent, Inc

. The p lai nti ff s in that c ase w ere actuall y B renn an and his l aw 3 firm , an d the d efend an ts w ere C on no rs, G loria , an d T en nis M an ag em en t, Inc

. O urc ase o nly con cern s B ren na n a nd C on no rs, s o we wi l l i gn or e the o the r pa r t i e s g oi ng f or war d. fu t u r e c o n t r a c t s . ” I n 1 9 9 7, th e fi r m d i s s o l v e d

. T h e f o l l o w- 2 i ngy e a r, Br e nn a n s ue d C o nn o r s i n I l l i no i s s t a t e c o ur t, al l eg i ngtha t Conno r s had un i l at er al l y t er m i na te d the re prese ntati on a gr eem ent without fulfi l l i ng hi s o bl i gati on under the ag re em ent t o tr ansfershar es ofA rg osy Gam i ng Co. ( an A l ton, I l l i noi s, cas i n o op erato r l ate r ac qui r ed byPe nn N at i o na l Ga m i ng, I nc . ) t o Br enna n. 3 Ele ven y ear s l ate r, the sui t w as set tl ed f ora paym ent b y Conno r s o f $1 0. 5 m i l l i o n to Br enna n. The settle m en t a g r e e men tc o nt a i ne d a n i nd e mni fi c a t i o n c l a us e tha ts a i d: [B re n n an ] a n d [C on n or s] w ar ra n t th at t h ey are th e s ole own er s o fthe ri ghts a ss erted i n the prese nt l aw sui t, and that they ha ve m ade n o assi gnm ent ofany ofthes e rig h ts . [B re n n an ] fu rt h er d ec lar e[s ] th at [h e] w ill ho ld h ar m les s a n d ind em n ify [C on n or s] fro m an y a n d all co st s, fee s, l i ab i l i ti es a nd l o ss es whi chmightb e i ncur r ed by[ Connors] as a r es ul t o fa ny o ut st an di ng l i ens, o r any othercla i m s by any other party, i ncl ud i ng, but notl i m i ted to , cl ai m s byf or m erpartners o r shar ehold ers or any cu rrent partn er or shareh older r egar di ng t h ec o n t r a c tre

f e r e n c e d i n t h eCompl a i n to rr ig h t s o f re i mburs e m e nts ar i s i ng outof t heal l egat i ons i n [ Bre nna n’s]

### 4 No. 10-3825

The pr oc edur al pos t ur e ofthese c ase s i s as m es s y a s the 4 al l eg at i ons . B re nna n w as ins t ru c t ed to b ri ng hi s i ndem ni fi c at i on act ion a s a thi rd-party cl aim i n the Co nst ance c ase , w hich w as origi nall y fil ed in st ate court bu t r em oved by B rennan to f ederal court based on all eged diversi ty ofci ti zenshi p. Brennan ignored the ins tr ucti ons and fil ed a se parate ac ti on that w as then consol id ated w ith the Co nst ance c ase . Bu t the m att ers w ere 

### (c ontinue d

... ) C o m pla int. [C on n or s] fu rt h er d ec lar e[s ] th at [h e] w ill ho l d ha r m l es s an d i nde m ni fy [ Br enna n] f r o m a ny a nd al l c o st s, fee s, i nc l udi ng an y a nd a l l l i ab i l i ti es a nd los se s w h ich m igh t be inc u rre d by [B re n n an ] as a re su lt o fa ny o ut st an di ngl i en s, o r a ny o th er cl ai m s bya ny othe r party, i ncl ud i ng, but not l i m i ted to , cl aim s by f or m erpartners o r shar ehol ders orany curr ent par tner or sh ar eh old er , regarding thecontract ref erence d in t heCom pl ai ntorr ights of re im b urs e m e ntar i s i ng outof [C o nn o rs’] C o un tercla im s or A ffirm a tiv e D efenses. ( Em phasi s a dd ed .) T h e ce ase fi re di dn ’ t l astl ong. I n 201 0, Constance sued Brennan , cl ai m i ng tha t Bre nnan engag ed in frau d an d br ea c h of fid u c iar y d u ty by d el ibe ra te ly re fusi ng to acc ept the A rg osyshar es f ro m Connors i n 199 7 bef or e the fi rm di sso lved and by concea l i ng Connor s’ att em pted tr ansferfro m Consta nce. Consta nce further alle ge d th at h e w aiv ed an y in te re st h e m ay h av e h ad in th e sh ar es i n r el i an ce o n Br enna n’ s m i sr epr es en ta ti o ns a nd o m i ss i o ns . Br enna n, i n tur n, s ue d Co nno r s, s ee k i ng a decl ar ati on that the set tl em ent agr eem en t e nti tl es B re n n an to ind em n i f i c at ion from C on n or s if B re n n an is f ound li abl e t o Constance. 4

### No. 10-3825 5

(...continued)
se parated again w hen the dist ri ctj ud ge determ in ed that di ver s i t y di d not ex i s t bet ween Bre nna n a nd Cons t anc e. So , the Co ns t a nc e c a s e i s n ow b a c k i n s t a t e c ou r twhe r e i ts t a r t e d. T h e d i st rict jud g e fou nd it un ne cessary to trea t C on no rs’ 5
m oti on as a m oti on f or s um m ary j ud gm ent because the s ett le

m en tag re em entwas at t ac he d t o Br en nan ’ s c om pl ai nt, an d t he previ ou s l it igat ion between the parti es w as j ud ic ial ly noti ceable

. The dis tr i ct j ud ge subsequentl y o r de r e d B r e nnan to show cause w hy the c as e s houl d not be di sm i sse d because i nd em ni fi cati on a gr eem ents f ori ntenti onalm i sco nd uct vi ol ate I l l i noi s publ i c pol i cy. Connors then fi l ed a m oti on to di s mi s s , o r, i n the a l t e r na t i v e , f o r s ummar y j udgm ent, al ong the sam e lines. T he d i str i ct j ud ge gr anted the m oti on to dism i ss o n thr ee gr ounds: ( 1) the i nd em ni ty provi si on

5 creat ed an“ i nfi ni te l y r epe at i ngl o o p” o fl i ab i l i tya nd th e r e f o r e f a i l e d b y i t s t e r ms; ( 2 ) I l l i no i s p ub l i c p o l i cy gen er al l y pr o hibi ts c o nt r ac tu ali nde m ni fi ca ti o n f o r i nt en ti onalm i sco nd uct; and (3) the ind em ni ty provi si on was not speci fi c eno ugh to exem pt i t fro m the gener alr ule

. W e begin ou r denovo r ev i ew wi ththe l an g ua g e o fthe se ttlem en t ag r ee m en t. The di st r i ctj udg e f o und tha t th e i nde m ni fi ca ti o n pr o vi si o n f ai l ed be ca us e i t l o ck ed the parti es i n an i nfini tel y re peati ng l oo p of l i abi l i ty : und er the thi rd se ntence, Connors m ust ind em nify B rennan fo r Constance’ s cl ai m , but th en, under the se cond sente nce, Br enna n musti nde m ni fy Co nnors forthe c o st s r es ul ting f ro m Connors i nd em ni fyi ng Bre nnan. Brennan arg ues th at th is in te rp re ta tio n is “a b su rd ” (a te rm u se d p ro fu se ly

### 6 No. 10-3825 by both part i es)

. H e m ai ntai ns that a cl ai m by Connors f or i nd emni fi c a t i o n f r o m Br e nn a n i n the s i t ua t i o n we j ust described w oul d be a cl ai m r ega rdi ng the ind em ni ty ag re em en t it se lf, n ot“ re ga rd in g th e c on tr ac t re fer en c ed in the Com pla i nt. ” Th er e i s no support f orthi s inter preta ti on i n the agr eem ent. The i nd em ni fi cati on l anguage i s the sa m e f orbo th p ar tie s, so if “r eg ar d in g t h e c on tr ac t re fer en c ed in th e C om p lain t” is b ro ad e n ou gh t o c ov er B re n n an ’s c laim f ori nd em ni fi cati on from Connors , i t would al so cove r Connors’ subse quent cl aim fori nd em ni fi cati on fro m B re n n an . M or eo ve r, C on n or s ha s p ro p os ed a m u c h m or e s en sib le in te rp re ta tio n of th e pr ov isio n : th e m u tu al in d em n itie s in the s eco nd and thi rd se ntences r el ate to the “w ar ra nt” o fs ol e o wner sh i p o fthe r i g ht s as se r te d i n the fi r sts en ten ce. T h a t i s, th e pa rties only agreed to i nd em nify each o therfro m cla i m s that they c oul d have a ssi gned to som eone el se. Fo r exam ple , i f som eone , l et’ s cal l hi m S tev e Ep ste i n, m ade a dem and on Brenna n forl ega l se rv i ces und er t h e r epres entat i on a gr eem ent, Brennan would be en titl ed to i nd em nifi cation from Con nors becau se C onn ors w ar ra nt e d tha th e wa s the s o l e o wne r o ftho s e r i g ht s. L ik ew ise, i f E p stein m ad e a de m an d on C onn ors for co m pensati on under the r epres entat i on a gr eem ent, Connors w oul d be e nti tl ed to i nd em n ifi cati on fro m Br enna n. H er e, Consta nce i s no t s uingBrennan based o n an as se rti on o fr i ghts und erthe re prese ntati on a gr eem ent. Ra th er, Co ns ta nc e i s al l eg i ngthat he r el i nqui sh ed an y

### No. 10-3825 7 ri ghts he m ay have had und er the agr eem ent b ecause o f Brenn a n’ s wi l fulde c e i t
. T hu s , Co ns t a nc e ’ s c l a i m i s not “r eg ar d in g t h e c on tr ac t,” an d th e in d em n ifica tio n p ro visi o n doe s no t appl y . Thi s i nt er pr et at i o n i s undo ubt edly the m ore l ogical, as i t is ha rd

— if no t im p os sib le

— to i m ag i ne w hy Connor s would have ag re ed to i nd em ni fy Bre nnan f or del iber ate l y cheati ng hi s l aw partner out ofa fi rm as set
. E v e n i fwe c r e d i t e d Br e n n a n ’ s i n t e r p r e t a t i o n, th e i n d e mni fi cati on pro vi si on wo u ld s til l f ai l

. A s the as tute dist ri ct j ud ge correctly not ed , i n Il li nois, agreem en ts to ind em nify aga i nst intenti on al m i sco nd uct g ener al l y a re vo i d as ag ain stp u b lic p olic y a n d u n en for c ea b le. D avi s v. Com m onw eal t h Edi s on Co. , 3 36 N. E. 2d 88 1, 8 85 ( I l l

. 1 975)

. There are at least tw o e xc ep tions: ( 1) I ll inois l aw perm its i ns uranc e agr eem ents aga i nst intenti onalm i sco nd uct wh en th e b e ne fi ciary of th e proc eed s is not the w rongd oer, s e eD ixon D i s t r i b ut i ng Co. v. Ha nove rIns uranc eCo. , 64 1 N

. E.2 d 395, 40 1 (I l l

. 19 94) ; and ( 2) I l l i noi s l aw per m i ts agr eem ents to be const rued as i nd em ni fyi ng a perso n aga i nst hi s own negl i gence ( and per hap s int enti onal m i sc o nduc t) wh en suppor te d b y c l ea r a nd e xpl i ci t l an gu ag e, see Wes ti ngho use Elect ri c Elevator C o. v. La Salle M onroeBui l di ng Corp

. , 70 N .E .2d 60 4, 60 7 (Ill. 19 46 ). I n C hicago H ousing Authority v. F ed era l Se curi ty, Inc. , 161 F. 3d 485 ( 7th Ci r. 19 98) , we app l i ed these pri nci ple s t o a c a s e i nv o l v i nga sh o o t i ngb y t wo F S Is e c ur i t y g ua r ds W o rk in g u n d er co n tr ac t fo r C H A . Th e c on tr ac t o b ligat ed FS Ito i nd em ni fy CH A “a gai nst any l i abi l i ty or expense . . . ar i sin g ou t of a ny l oss es, cl ai m s, dam age s o r i nj ur y r es ul tingfr o m a ny i nt en ti o na l ac ts o r a ny ne g l i g en t

### 8 No. 10-3825
acts or om i ssi ons of [ FS I ]

. . . . ” Id. at4 87

. W e fi r stc i te d the Westing ho use r ule and f ound that the l anguage o f the a gr eem ent was br oad eno ugh and expli ci t e n ou gh to p erm it CH A ’s cl aim of ind em nifi catio n from FSI for C H A ’s ow n n egli gen ce. W e the n con side red CH A ’s cl ai m o fi nd em ni fi cati on fro m FS If orCH A ’ s intenti onal acts
. T here , w e ci ted the D avis rul e but f ound i t inapp l i cabl e be cau se w e f aced an enti re l y di ff er ent f actualse tting

— that i s, enf or ci ng the ind em ni fi cati on co ntra ct aga i nst FSI w oul d m er el y “ re quir [ e] the pri m ar y wrongdoerto bea r the fi nanci alburden of it s a cti ons. ” Id. at 489. We the r e f o r e c o nc l ud e d tha tF S Iwa s r e qu i re d t o i n d e mn i fy C HA. B r e n n a n ’ s p r i ma r y c o n t e n t i o n i s n o t th a te i th e r o fth e t wo rec og n ized exce pti ons to the D a vis rul e a pp l i es, o r eve n th atthe s i tu at i o n r es embl es the o ne i n Chic ago Hous i ng Aut hor i ty ( i nd eed, the Constance com pla i nt at tr ibutes no bl am e t o Connors). Rather, he a rgues that ind em ni ty agreem en ts for futu re conduct a r e d i s t i n c t f r o m i n d e mnity agreem en ts for past conduct and that the l att erag re em ents, such a s the o ne atissue her e, ar e no t a gai nst p u b lic p olic y. Se ege ne r al l y 8 Wi l l i s t o n o n Co nt r a cts § 1 9: 18 ( 4th e d. 2010 ) ( “A co ntra ct t o in d em ni fy a gai nst the c o ns e qu e nc e s o fa n a c ttha th a s a l r e a dy b e e n c o mm i tte d h as als o b ee n ge n er ally u p h eld

. . . .”). The probl em i s that thi s p ast- ver sus- future dist i ncti on an d c at eg o r i za ti o n o fi nde m ni tya g re ement s ha s no su p p ort i n Il li nois law

. I n f act, the Il li nois Sup rem e C ou rt ha s s t a t e d tha t“ i ts e r v e s no u s e fulp ur po s e t o a t t e mpt to a na l y ze o r r ec o nc i l e th e numer o us c as es i nt er pr et i ng

### No. 10-3825 9 i nd e mni t y c l a us e s s i nc e e a c h i nd i v i du a l c a s e de pe nd s upo n the par ti cul arl an g ua g e us ed an d the f ac tu als et ting ofthe case . ” Bue nz v. Frontli neTr ans por t at i on Co. , 882 N

. E

. 2d 525, 530 (I ll

. 2008) (int erna l citation om it t e d ). A cc o r di ng l y, o urb e s tg ue s s i s tha tI l l i no i s wo ul d r ej ect Brennan’s ar gum ent a nd applythe D avis r ule

. Insu m , th e in d em n ity p ro vis ion d oe s n otap p ly t o th is m at te r, a n d e ve n if it d id , w e w ou ld fin d it u n en for c ea b le u nd erI l l i noi s publ i c pol i cy. Gam e, se t, and m atch t o Connors. The j ud gm ent o fthe dist ri ct c ourti s A FFI RMED
.

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