June 2008, vol. 53, no. 11 Trial Briefs The newsletter of the ISBA’s Section on Civil Practice and Procedure

Caution: Res judicata may bar the refiling of a voluntarily dismissed claim

By Timothy J. Chorvat and Sara S. Ruff1

n January of this year, the Illinois 12, at *2-3. wanton misconduct claim in Hudson II Supreme Court decided Hudson George’s parents initially filed a two- was not barred by res judicata because Iv. City of Chicago, No. 100466, count wrongful death complaint against there was no final adjudication on the 2008 Ill. LEXIS 12 (Ill. Jan. 25, 2008), the City of Chicago: Count I alleged merits of their willful and wanton mis- rehearing denied April 28, 2008. negligence and Count II alleged will- conduct claim in Hudson I. Id. Plaintiffs Hudson serves as a lesson to the ful and wanton misconduct (Hudson argued that Rein was distinguishable unwary wishing to voluntarily dismiss I). Defendants moved to dismiss Count and represented only a case-specific and refile their actions under Section I, claiming immunity under 210 ILCS decision rejecting abusive tactics in liti- 2-1009 of the Illinois Code: know the 50/3.150. The circuit court agreed and gation. Id. at *18. case law related to res judicata or you in October 1999 dismissed the negli- The Illinois Supreme Court agreed may find yourself without a remedy. gence count with prejudice. The action with defendants and affirmed the deci- Hudson arose from a deeply unfor- continued with respect to the willful sion of the appellate court. The court tunate event. In November 1998, and wanton misconduct claim. found that Rein case was controlling so five-year-old George Hudson, Jr., died On July 25, 2002, plaintiffs volun- that plaintiffs’ willful and wanton mis- from acute asthma exacerbation. His tarily dismissed their willful and wanton conduct claim was barred by res judi- mother had called 911 and informed misconduct claim after their attorney cata. Id. at *5. Justice Thomas, joined the operator that George Jr. was hav- passed away. Plaintiffs refiled their by Justices Freeman, Gorman, and ing breathing problems. The fire truck wrongful death action on July 23, 2003, Karmeier, wrote that, “Once the hold- dispatched in response to the 911 call alleging only willful and wanton mis- ing of Rein is understood, the analysis was not equipped to handle George Jr.’s conduct (Hudson II). Defendants moved in the present case becomes an unre- emergency. A life-support ambulance to dismiss Hudson II, arguing that it was markable exercise.” Id. at *16. was not dispatched until 15 minutes barred by res judicata. The circuit court The circumstances and holding in after the original 911 call. Plaintiffs agreed and dismissed the action, and Rein are central to the Supreme Court’s claimed that George Jr. died as a result the court of appeals affirmed. decision in Hudson. In Rein, plaintiffs of the delay. Hudson, 2008 Ill. LEXIS The issue before the Supreme Court filed an eight-count complaint based of Illinois was whether the involuntary upon fraudulent misrepresentation, dismissal of the plaintiffs’ negligence including claims for rescission and for In this issue claim and the voluntary dismissal of common law fraud. Rein, 172 Ill.2d at their willful and wanton misconduct 328, 665 N.E.2d at 1201. The trial court claim barred the refiling of their will- dismissed three of the rescission counts • Caution: Res judicata may bar ful and wanton misconduct claim. based upon the statute of limitations. Id. the refiling of a voluntarily ...... 1 Defendants argued that the dismissal at 329, 665 N.E.2d at 1202. After the dismissed claim of the negligence count in Hudson trial court denied plaintiffs’ request for • Czarnik v. Wendover: An I constituted a final adjudication on a Rule 304(a) finding, plaintiffs volun- Application of Collateral the merits for purposes of res judicata. tarily dismissed the remaining counts of 3 Estoppel to Arbitration ...... Defendants contended that Rein v. their complaint in order to appeal the • Who should speak on civility David A. Noyes & Co., 172 Ill. 2d 325, dismissal of the rescission counts. Id. in civil litigation? ...... 4 665 N.E.2d 1199 (1996), establishes at 330, 665 N.E.2d at 1202. After the • update on new, revised, and that res judicata bars plaintiffs’ will- appellate court affirmed the dismissal, withdrawn Illinois Civil Jury ful and wanton misconduct claim. plaintiffs refiled their case in Rein II, Instructions ...... 8 Hudson, 2008 Ill. LEXIS 12 at *5. with a complaint that was “virtually Plaintiffs argued that the willful and identical” to the complaint filed in Rein Trial Briefs

I. Id. at 331, 665 N.E.2d at 1202. The res judicata prohibits a party from seek- attorneys from using voluntary dismiss- trial court dismissed plaintiffs’ com- ing relief based upon issues that could als to avoid the trial court’s denial of a plaint in its entirety based upon res judi- have been resolved in a previous action Rule 304(a) motion. Id. at *28-29. ITLA cata and statute of limitations grounds, in order to prevent parties from splitting further argued that interpreting Rein and a divided appellate court affirmed. their claims into multiple actions. Id. at in that limited fashion would accord Id. at 332, 665 N.E.2d at 1203. 339-42, 665 N.E.2d at 1206-1208. The with separation of powers principles On the Rein plaintiffs’ appeal, the court reviewed each of the claim-split- and would preserve the right to refile Illinois Supreme Court reviewed the ting exceptions listed in Section 26(1) of provided by the legislature in Section three res judicata requirements: (1) a the Restatement 2d of Judgments (1982) 2-1009. Id. at *28. final judgment on the merits has been (parties agree to let plaintiff split his Addressing the ITLA arguments, rendered by a court of competent claim; case involves a recurrent wrong, the Supreme Court held that Rein was jurisdiction; (2) an identity of cause of etc.) and found that none of them not intended to address only the Rule action exists; and (3) the parties or their applied. Id. at 341, 665 N.E.2d at 1207. 304(a) problem. The Court concluded privies are identical in both actions. The court then addressed plaintiffs’ that limiting Rein would fail to address Id. at 335, 665 N.E.2d at 1204, citing claim that Sections 2-1009 and 13-217 the problem of the plaintiff who files Downing v. Chicago Transit Authority, of the Illinois Code of Civil Procedure multiple claims, dismisses some, and 162 Ill. 2d 70, 73-74, 642 N.E.2d 456 gave them an absolute right to refile the then refiles them after he is unsuccess- (1994). The Court held that the rescis- voluntarily dismissed counts within one ful on his original claims. Id. at *29-30. sion counts were barred by both res year or within the remaining period of Further, the court held that Rein recog- judicata and the statute of limitations. limitations. Id. at 342-43, 665 N.E.2d nizes the right to refile under 2-1009 Rein, 172 Ill.2d at 336, 665 N.E.2d at at 1208. Although the court acknowl- but simply holds that any refiling is 1205-06. The court then turned to the edged plaintiffs’ rights under those subject to the defense of res judicata. common law counts and determined sections, it held that these “legislatively Id. at *30-31. that all three of the res judicata require- created rights” did not “automatically Justice Kilbride dissented strongly in ments were present. With respect to immunize” plaintiffs against the res Hudson, joined by Justice Fitzgerald. whether there had been an adjudica- judicata defense. Id. at 342-43, 665 In Justice Kilbride’s view, neither res tion on the merits of the common law N.E.2d at 1208. judicata nor the rule against claim- counts, the court held: Finally, the court provided two splitting bars a plaintiff from refiling Although there was not an policy justifications for following Rein a claim if the previous dismissal was adjudication on the merits of the and applying res judicata principles in without prejudice. Id. at 34. Justice common law counts in Rein I, the Hudson. First, the Rein rule prevents Kilbride concluded that Rein should concept of res judicata is broader a party from filing an action with mul- be limited or overruled because it has than plaintiffs suggest. If the three tiple claims, dismissing some claims, proven unworkable and because the elements necessary to invoke res obtaining a final judgment on the decision was based upon public policy judicata are present, res judicata remaining claims and, if unsuccessful concerns rather than sound legal will bar not only every matter on the counts not dismissed, refiling the principles. Id. at 35. “Once the faulty that was actually determined in previously dismissed claims. Second, underpinnings of Rein are understood, the first suit, but also every matter the rule prevents plaintiffs from using the foundation of Rein’s rationale that might have been raised and voluntary dismissals to circumvent a crumbles.” Id. determined in that suit. Therefore, judge’s refusal of a Rule 304(a) certifica- Justice Kilbride contended that Rein’s if the three requirements of res tion (which is exactly what had hap- first error was in misinterpreting Illinois judicata are met and the com- pened in Rein). Id. at 343, 665 N.E.2d Supreme Court Rule 273, which states mon law counts could have been at 1208. that, under certain circumstances, an determined in Rein I, plaintiffs The Hudson court summarized involuntary dismissal “operates as an will be barred from litigating the Rein’s holding as: “[A] plaintiff who adjudication upon the merits.” Justice common law counts in Rein II. splits his claims by voluntarily dismiss- Kilbride stated that an adjudication ing and refiling part of an action after upon the merits is not necessarily a * * * a final judgment has been entered “final” judgment on the merits which is Because the common law counts on another part of the case subjects required before res judicata will apply. arise out of the same set of operative himself to a res judicata defense.” Id. at *36. He concluded that the invol- facts as the rescission counts, plaintiffs Hudson, 2008 Ill. LEXIS 12 at *16. The untary dismissal of the rescission counts could have litigated and resolved these Hudson court then applied the rea- in Rein I was unquestionably an adju- claims in Rein I. Having failed to do soning of Rein and reached the same dication on the merits, but it was not so, plaintiffs are barred by the doctrine result: res judicata barred plaintiffs a “final” judgment as required by Rule of res judicata from attempting to raise from refiling their willful and wanton 273. Id. at 37-38. and litigate them in Rein II, even though misconduct claim. Id. at *16-28. In an Justice Kilbride also wrote that, there was no adjudication on the merits amicus brief, the Illinois Trial Lawyers because the voluntary dismissal was of these claims in the prior suit. Association (ITLA) argued against not a final, appealable order, the court Id. at 337-39, 665 N.E.2d at 1205- the application of the Rein case in in Rein I had no jurisdiction to hear 1206 (internal citations omitted). Hudson. ITLA argued that Rein was the initial appeal. Id. at 39-43. He con- The Rein court stressed the policy right for the wrong reason; namely, tended that the court should clarify that against claim-splitting, explaining that that Rein was intended only to prevent a plaintiff’s voluntary dismissal is not

 Vol. 53, No. 11, June 2008 Trial Briefs a jurisdictional basis for appeal. Id. at certification. “An attorney’s subjec- ______45. He went on to conclude, “I would tive motivation in taking a voluntary 1. Mr. Chorvat is a partner, and Ms. Ruff not, therefore, rely on Rein’s res judi- dismissal is not part of the res judicata is an associate, with Jenner & Block LLP in cata analysis since the appeal in Rein I analysis.” Hudson, 2008 Ill. LEXIS 12 Chicago. was improper.” Id. at 49. Finally, Justice at *24. That Rein was reaffirmed in the 2. Justice Kilbride also filed a dissent Kilbride believed that “res judicata is face of Justice Kilbride’s dissent and in upon Denial of Rehearing which was added simply inapplicable to voluntarily dis- light of the sympathetic facts of Hudson to the Hudson opinion on April 23, 2008. In that dissent Justice Kilbride again reiter- missed claims.” Id. at 50.2 indicates that the strict res judicata rule ated his view that Hudson was incorrectly The main lesson to be learned from is here to stay. As always, attorneys decided because of its reliance upon Rein. Hudson is that Rein’s strict res judicata must be vigilant: before you voluntarily See Hudson opinion including Dissent ruling applies even when a plaintiff’s dismiss any action, it is critical to verify Upon Denial of Rehearing, available at voluntary dismissal is not undertaken to that res judicata will not prevent you .

By Hon. Daniel T. Gillespie

he Restatement (Second) of the filed an interlocutory appeal pursuant under the doctrine of res judicata or Law of Judgments refers to res to Supreme Court Rule 307(a)(1). collateral estoppel. Once the jury has Tjudicata and collateral estoppel The court observed that the contrac- apportioned fault among the various as former adjudication. The Restatement tual right to pursue arbitration could defendants, allowing the co-defen- uses res judicata to refer to claim pre- be limited by the effect of res judicata dants to relitigate their pro rata share clusion and collateral estoppel to refer or collateral estoppel, citing Peregrine of liability at an arbitration would be to issue preclusion. Financial Group, Inc., v. Amnuehl, 309 to grant the unsuccessful defendant a In Czarnik v. Wendover Financial Ill. App. 3d 101 (1st Dist. 1999). There second bite of the apple. Services, 374 Ill. App. 3d 113 (1st the court held that, notwithstanding In Peregrine, a trial court had Dist. 2007), the Illinois Appellate a party’s contractual right to arbitrate, already determined that the Peregrine Court addressed issues of res judicata a party cannot arbitrate claims that Financial Group had properly liqui- and collateral estoppel as they relate involve causes of actions or issues that dated the defendants’ stock accounts to an arbitration clause in a contract. have been previously adjudicated. toward payment of amounts owed Wayne Czarnik was injured when he Citing Gumma v. White, 216 Ill. 2d Peregrine and that deficits remained fell through the roof of a home he was 23, 38 (2005), the appellate court in which defendants failed to meet when inspecting for mold and water damage. Czarnik set forth the test for collateral proper demand was made. Peregrine He sued Wendover and Old National estoppel: (1) the issue decided in the then filed suit to enjoin the defen- Bancorp (ONB), whom he alleged prior adjudication is identical with the dants from relitigating those issues in owned and operated the premises. one presented here, (2) there was a an arbitration proceeding. Peregrine ONB filed a claim for contribution final judgment on the merits in the prior asserted that defendants should be against Wendover and other co-defen- adjudication, and (3) the party against collaterally estopped from pursuing dants, pursuant to the Joint Tortfeasor whom estoppel is asserted was a party certain allegations which were already Contribution Act, 740 ILCS 100/0.01 to the prior litigation. decided. Peregrine also claimed that et. seq. ONB argued that its contribution defendants should be enjoined under Wendover and ONB were them- claim against Wendover would be principles of res judicata from litigating selves parties to an agreement with an contingent on a finding that it was matters not raised in the previous case indemnification clause and an arbitra- liable to plaintiff. Also, before the that could have been raised. tion clause. Wendover filed a motion to arbitration could take place, a deter- The Peregrine court held that, not- dismiss the contribution claim pursuant mination of relative fault would first be withstanding a party’s contractual right to the agreement to arbitrate disputes litigated in court, pursuant to section to arbitrate, a party cannot arbitrate between Wendover and ONB. The trial 2-1117 of the Code of Civil Procedure. claims that involve causes of actions or judge denied the motion on the basis Accordingly, any subsequent litiga- issues that have been previously adju- that a complaint for arbitration was not tion to relitigate the issue of their pro dicated. The idea animating this deci- arbitrable as a matter of law. Wendover rata share of liability should be barred sion, Justice Theis pointed out, is that

Vol. 53, No. 11, June 2008