In the
United States Court of Appeals
For the Seventh Circuit
No. 10-3825
E DWARD F. B RENNAN,
Plaintiff-Appellant,
v.
JAMES S. C ONNORS,
Defendant-Appellee.
Appeal from the United States District Court
for the Southern District of Illinois.
No. 3:10-cv-00517— G. Patrick Murphy, Judge.
A RGUED M AY 12, 2011 — D ECIDED JUNE 30, 2011
Before B AUER, F LAUM, and E VANS, Circuit Judges.
E VANS, Circuit Judge. Jimmy Connors is known through-
out the tennis world for many things: his fierce
two-handed backhand, his numerous Grand Slam singles
titles (eight, on three different surfaces), and his fiery
competitive spirit, to name just a few. In addition to
holding the men’s number one world ranking for 160
consecutive weeks (1974-77), he is known for his longevity,
performing well later in his career against players like
2 No. 10-3825
Björn Borg, John McEnroe, and Ivan Lendl and reaching
the semifinals of the 1991 U.S. Open at the age of 39. 1 More
recently, Connors has been engaged in an equally long-
running battle off the court—or rather, in court—against
his former attorney, Edward Brennan.
Brennan first sued Connors in 1998 for allegedly failing
to transfer shares of a gaming company to Brennan pursu-
ant to their representation agreement. The suit was settled
eleven years later in 2009. But after Brennan was accused
by his former law partner, Michael Constance, of cheating
him out of a portion of the shares, Brennan sued Connors
again, this time claiming that, if Brennan is found liable to
Constance, Connors must indemnify Brennan pursuant to
their settlement agreement. The district judge granted
Connors’ motion to dismiss, finding that the indemnity
provision in the settlement agreement failed by its terms
and that, in any event, Illinois public policy would not
permit indemnification under these facts. Brennan now
appeals.
In 1992, Brennan, then a partner in the Belleville, Illinois,
law firm Brennan, Cates & Constance, P.C., agreed to
represent Connors in, among other things, “all present and
1
In the fourth round, Connors defeated a 24-year-old, Aaron
Krickstein, 3–6, 7–6, 1–6, 6–3, 7–6 in 4 hours and 41 minutes,
coming back from a 2–5 deficit in the final set. Connors also had
to rally back to win his quarterfinal match against Paul
Haarhuis, who had upset the number one seed, Boris Becker.
Connors was defeated by Jim Courier in straight sets in the
semifinals. Courier then lost in straight sets to Stefan Edberg in
the finals.
No. 10-3825 3
future contracts.” 2 In 1997, the firm dissolved. The follow-
ing year, Brennan sued Connors in Illinois state court,
alleging that Connors had unilaterally terminated the
representation agreement without fulfilling his obliga-
tion under the agreement to transfer shares of Argosy
Gaming Co. (an Alton, Illinois, casino operator later
acquired by Penn National Gaming, Inc.) to Brennan.3
Eleven years later, the suit was settled for a payment by
Connors of $10.5 million to Brennan. The settlement
agreement contained an indemnification clause that said:
[Brennan] and [Connors] warrant that they are the sole
owners of the rights asserted in the present lawsuit,
and that they have made no assignment of any of these
rights. [Brennan] further declare[s] that [he] will hold
harmless and indemnify [Connors] from any and all
costs, fees, liabilities and losses which might be in-
curred by [Connors] as a result of any outstanding
liens, or any other claims by any other party, including,
but not limited to, claims by former partners or share-
holders or any current partner or shareholder regarding
the contract referenced in the Complaint or rights of reim-
bursements arising out of the allegations in [Brennan’s]
2
The representation agreement also provided for legal services
for Connors’ mother, Gloria, and their company, Tennis Man-
agement, Inc.
3
The plaintiffs in that case were actually Brennan and his law
firm, and the defendants were Connors, Gloria, and Tennis
Management, Inc. Our case only concerns Brennan and Connors,
so we will ignore the other parties going forward.
4 No. 10-3825
Complaint. [Connors] further declare[s] that [he] will
hold harmless and indemnify [Brennan] from any and
all costs, fees, including any and all liabilities and
losses which might be incurred by [Brennan] as a result
of any outstanding liens, or any other claims by any
other party, including, but not limited to, claims by
former partners or shareholders or any current partner
or shareholder, regarding the contract referenced in
the Complaint or rights of reimbursement arising out of
[Connors’] Counterclaims or Affirmative Defenses.
(Emphasis added.) The ceasefire didn’t last long. In 2010,
Constance sued Brennan, claiming that Brennan engaged
in fraud and breach of fiduciary duty by deliberately
refusing to accept the Argosy shares from Connors in 1997
before the firm dissolved and by concealing Connors’
attempted transfer from Constance. Constance further
alleged that he waived any interest he may have had in
the shares in reliance on Brennan’s misrepresentations and
omissions. Brennan, in turn, sued Connors, seeking
a declaration that the settlement agreement entitles
Brennan to indemnification from Connors if Brennan is
found liable to Constance.4
4
The procedural posture of these cases is as messy as the
allegations. Brennan was instructed to bring his indemnification
action as a third-party claim in the Constance case, which was
originally filed in state court but removed by Brennan to federal
court based on alleged diversity of citizenship. Brennan ignored
the instructions and filed a separate action that was then
consolidated with the Constance case. But the matters were
(continued...)
No. 10-3825 5
The district judge subsequently ordered Brennan to show
cause why the case should not be dismissed because
indemnification agreements for intentional misconduct
violate Illinois public policy. Connors then filed a motion
to dismiss, or, in the alternative, for summary judgment,
along the same lines. The district judge granted the motion
to dismiss 5 on three grounds: (1) the indemnity provision
created an “infinitely repeating loop” of liability and
therefore failed by its terms; (2) Illinois public policy
generally prohibits contractual indemnification for inten-
tional misconduct; and (3) the indemnity provision was
not specific enough to exempt it from the general rule.
We begin our de novo review with the language of the
settlement agreement. The district judge found that the
indemnification provision failed because it locked the
parties in an infinitely repeating loop of liability: under
the third sentence, Connors must indemnify Brennan for
Constance’s claim, but then, under the second sentence,
Brennan must indemnify Connors for the costs resulting
from Connors indemnifying Brennan. Brennan argues
that this interpretation is “absurd” (a term used profusely
(...continued)
separated again when the district judge determined that
diversity did not exist between Brennan and Constance. So, the
Constance case is now back in state court where it started.
5
The district judge found it unnecessary to treat Connors’
motion as a motion for summary judgment because the settle-
ment agreement was attached to Brennan’s complaint, and the
previous litigation between the parties was judicially noticeable.
6 No. 10-3825
by both parties). He maintains that a claim by Connors for
indemnification from Brennan in the situation we just
described would be a claim regarding the indemnity
agreement itself, not “regarding the contract referenced in
the Complaint.”
There is no support for this interpretation in the agree-
ment. The indemnification language is the same for both
parties, so if “regarding the contract referenced in
the Complaint” is broad enough to cover Brennan’s claim
for indemnification from Connors, it would also cover
Connors’ subsequent claim for indemnification from
Brennan.
Moreover, Connors has proposed a much more sensible
interpretation of the provision: the mutual indemnities in
the second and third sentences relate to the “warrant”
of sole ownership of the rights asserted in the first sen-
tence. That is, the parties only agreed to indemnify
each other from claims that they could have assigned to
someone else. For example, if someone, let’s call him Steve
Epstein, made a demand on Brennan for legal services
under the representation agreement, Brennan would be
entitled to indemnification from Connors because Connors
warranted that he was the sole owner of those rights.
Likewise, if Epstein made a demand on Connors
for compensation under the representation agreement,
Connors would be entitled to indemnification from
Brennan.
Here, Constance is not suing Brennan based on an
assertion of rights under the representation agreement.
Rather, Constance is alleging that he relinquished any
No. 10-3825 7
rights he may have had under the agreement because of
Brennan’s wilful deceit. Thus, Constance’s claim is not
“regarding the contract,” and the indemnification provi-
sion does not apply. This interpretation is undoubtedly the
more logical, as it is hard—if not impossible—to imagine
why Connors would have agreed to indemnify Brennan for
deliberately cheating his law partner out of a firm asset.
Even if we credited Brennan’s interpretation, the indem-
nification provision would still fail. As the astute district
judge correctly noted, in Illinois, agreements to indemnify
against intentional misconduct generally are void as
against public policy and unenforceable. Davis v. Common-
wealth Edison Co., 336 N.E.2d 881, 885 (Ill. 1975). There
are at least two exceptions: (1) Illinois law permits insur-
ance agreements against intentional misconduct when
the beneficiary of the proceeds is not the wrongdoer,
see Dixon Distributing Co. v. Hanover Insurance Co., 641
N.E.2d 395, 401 (Ill. 1994); and (2) Illinois law permits
agreements to be construed as indemnifying a person
against his own negligence (and perhaps intentional
misconduct) when supported by clear and explicit lan-
guage, see Westinghouse Electric Elevator Co. v. La Salle
Monroe Building Corp., 70 N.E.2d 604, 607 (Ill. 1946).
In Chicago Housing Authority v. Federal Security, Inc.,
161 F.3d 485 (7th Cir. 1998), we applied these principles
to a case involving a shooting by two FSI security guards
Working under contract for CHA. The contract obli-
gated FSI to indemnify CHA “against any liability or
expense . . . arising out of any losses, claims, damages or
injury resulting from any intentional acts or any negligent
8 No. 10-3825
acts or omissions of [FSI] . . . .” Id. at 487. We first cited the
Westinghouse rule and found that the language of
the agreement was broad enough and explicit enough
to permit CHA’s claim of indemnification from FSI
for CHA’s own negligence. We then considered CHA’s
claim of indemnification from FSI for CHA’s intentional
acts. There, we cited the Davis rule but found it inapplica-
ble because we faced an entirely different factual set-
ting—that is, enforcing the indemnification contract
against FSI would merely “requir[e] the primary wrong-
doer to bear the financial burden of its actions.” Id. at
489. We therefore concluded that FSI was required
to indemnify CHA.
Brennan’s primary contention is not that either of the two
recognized exceptions to the Davis rule applies, or even
that the situation resembles the one in Chicago Housing
Authority (indeed, the Constance complaint attributes
no blame to Connors). Rather, he argues that indemnity
agreements for future conduct are distinct from indem-
nity agreements for past conduct and that the latter agree-
ments, such as the one at issue here, are not against
public policy. See generally 8 Williston on Contracts
§ 19:18 (4th ed. 2010) (“A contract to indemnify against
the consequences of an act that has already been commit-
ted has also been generally upheld . . . .”).
The problem is that this past-versus-future distinction
and categorization of indemnity agreements has no
support in Illinois law. In fact, the Illinois Supreme Court
has stated that “it serves no useful purpose to attempt
to analyze or reconcile the numerous cases interpreting
No. 10-3825 9
indemnity clauses since each individual case depends
upon the particular language used and the factual setting
of the case.” Buenz v. Frontline Transportation Co.,
882 N.E.2d 525, 530 (Ill. 2008) (internal citation omitted).
Accordingly, our best guess is that Illinois would reject
Brennan’s argument and apply the Davis rule.
In sum, the indemnity provision does not apply to this
matter, and even if it did, we would find it unenforceable
under Illinois public policy. Game, set, and match to
Connors. The judgment of the district court is A FFIRMED.
6-30-11