No. 2--08--0220 Filed: 11-13-09

______________________________________________________________________________ IN THE AP PE LLATE COU RT OF ILLIN OIS SECOND DI STRICT

______________________________________________________________________________ ROGER R. KASNY, ) Appeal from the Circuit Court ) of Mc He nr y Co un ty. Plaintiff -Appella nt, )

) v. ) No. 07--LA--120 ) COONEN AND ROTH, LTD., ) n/k/a Roth, Melei, Santeler, Ltd., ) Honorab le ) Maureen P. McInty

re, Defendant-Appellee. ) Judge , Pres idin g.

______________________________________________________________________________ JUSTICE McLA REN delive

red the o pinion of t

he court : Plaintiff, Roger R. Kasny, appea ls th e dismissal of his leg al malpra ctice c laim ag ainst defenda nt, Coonen &

Roth, L td., n/k/a Roth, Mele i, Santeler, Ltd. Pl aintiff c ontends that a small claims judgment for outstanding attorney fees enter ed in defendant's favor does not bar his legal malpractice case. We reverse a nd remand. In2002, plaintiff retained de fendant to r epresent him in the dissolution of his marriage. Plaintiff signed an engagement ag

reement with defendant, whereby

plaintiff agreed to pay

defendant
reasona ble fees for necessary

work done and to work toward reconciliation. Plaintiff and his ex-wife eventua lly executed a marital settlement agreement, and plaintiff failed to pay defenda nt for its service s. Defend

ant sued p laintiff

in small cl aims cour

t for outst anding legal f ees t ot aling $4,955.15. Plaintiff never appeared in small claims court to defend a gainst the breach of c ontract action. A judgment for the unpaid legal fee s plus costs was entered in defendant's favor on April 13, 2006.No. 2--08--0220

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In2007, plaintiff sued defendant for bre ach of c ontra ct and legal m alprac tice. Alth ough the trial court dismissed plaintiff's breach of contract claim with pre judice, it dismissed plaintiff's legal malpractice claim with

out preju dice, an d plaintif f filed a n amende d complai

n t. In p laint iff's amended complain t, in which

he claime d at leas t $200,000 in damag es, he al leged t

hat defe ndant: failed to apprais e variou s marital assets a nd relie d on the ina

ccurat e appraisals that plaintiff's ex-wife prepared; did not discover plaintiff's ex-wife's nonmarital assets and unde rstand the impact that her nonmarital real propert

y c ould have

on a fair division of

the marit al prope rty ; negle cted to pr

omptly and properly

answer discovery ; allowed the dissolution case to continue for more than three y

ears with li tt le or no wo rk do ne to wa rd re so lv in g t he ma tt er ; v io la te d d is co ve ry r ules, for example by failing to disclose expert witnesses who could testify about the va lue of various marital assets, which violations resulted in plaintiff's inability to proc eed with a tria

l; failed to advise plaintiff that he c ould notprocee d with

a trial because

of the dis covery

violations ; and induc ed plaint iff to set tle the ca se by telling plaintiff t

hat apprais als were too expensive, that his own appraisals would not alter the valuation of the property , and that he had no choice but to agree to a settlement. Plaintiff asserted that he was unaware of a

cause of action for leg al malpra ctice a gainst d efenda nt until some

time in June 2006, two months after the small claims case was resolved, when the malpractice attorney he contacted had adequately investigated plaintiff's case. Defendan t move d to dismiss plaintiff's amended complaint, arguing that the judg ment for unpaid legal fees entered in the small claims ca se barred plaintiff from bringing a cause of ac

tion for legal malpractice. Defendant asserted tha t plaintiff's lack of

knowledge of a le gal mal

practic e claim
was no defense, as he could have discovere d a cause of action for lega

l malpractice had he exercised due dili ge nce . The trial court granted defenda nt's motion to dismiss, finding that professionalNo. 2--08--0220

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negligence

is a defense to a claim for outstanding attorney fees and that, thus, plaintiff should have raised the issue of legal malpractice in the small claims case. This timely appea l followed. At issue in thi s case is whether defendant' s motion to dismiss plaintiff's complaint for legal malpractice was properly gra nted. More specifically , we consider whether the judgment for outstanding attorne

y f ees ente red in the small cla ims case has res judic ata

effect in plaintiff's action for legal malpractice. A motion to dismiss pu rsua nt to secti on 2--619of the Cod e of Civil Pr

ocedure (735 I LCS 5/ 2--619 (West 2006)) admits all well-pleaded facts, the reasonable inferences to be drawn from those facts, a

nd the legal suffic iency

of the complaint; bu

t it asser ts affirma tive matte r to avoid or defeat the claim. Fl oyd v. Rockford Park District , 355 Ill. App. 3d 695, 704 (2005). When ruling
ona motion to d

ismiss, th e trial court must interpret all pleadings and supporting documents in a light mo st fa vo ra bl e t o t he no nm ov in g p ar ty. Lucas v. Tay lor , 349 Ill. App. 3d 995, 998 ( 2004) . We review de novo the dismissal of the amende d compl aint. Stahelin v. Forest Preserve District of Du Page County , 376 Ill. App. 3d 765, 771 (2007). One def ense tha t a defe ndant may

raise ina section 2--619 motion is that a prior judgment bars the plaintiff's cause of action, i.e. , that the prior jud

gment ha s res judic ata

effect in the subsequent

lawsuit. 735 IL CS 5/2--619(a)(4) (West 2006). "The doctrine of res judic ata provides that a final judgment on the merits rendered by a court of competent jurisdiction is conclu sive as to the rights of the parties and their privies, and as to them constitutes an absolute bar to a subsequent action involving the same claim, demand, or cause of actio n." City of Rockford v. Unit Six of the Poli cemen's Benevo lent & Prot ectiv e Ass'n , 362 Ill. App. 3d 556, 560-61 ( 2005). Res judica ta applies if (1) the

re was a final judgment on the merits rendered by a court of competent jurisdiction;No. 2--08--0220

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(2) there is an identity of c auses of action; and ( 3) there is an ide ntity of partie s or their

privies. Yorulmazo glu

v. Lake Fore st Hospital , 359 I ll . App. 3d 55 4, 558 (20 05). The party seeking to invoke res judic ata

bears the burden of

demonstr

ating that it appli es ( Cload v. We st , 328 Ill. App. 3d 946, 950 (2002)), and the doctrine bars not only all claim s actual ly r

esolved i n the for mer suit, butalso any claims that could ha ve been raised ( In re Marriage of Kohl , 334 I ll. App. 3d 867, 879-80 (2002)). The parties agree that the judg ment for outstandi ng fee s represents a final judgment on the merits render

ed by a court o f compet

ent jurisd iction and that the

re is an id entity of partie s in

both
cases. Howeve

r, they disagr ee abou t whether there is a n identity of cause s o f action

betw een the malpractice cause and the small claims cause. Inconsidering whether there is an identity of causes of act ion in this case an d the small claims case, we note that, "in Illinois, counterclaims are generally per missive rather t

han mandatory." Corcora n-Haka la v. Dowd , 362 Ill. App. 3d 5 23, 530 (2005). "Thus, a defendant [in the original action] generally

may raise his or he

r claim against the plaintiff [in the original action] by way of a counter claim or by way of a separate actio n." Dowd , 362 Ill. App. 3d at 530-31. "Howe ver, if the defend ant's claim

involves t

he same o perativ e facts

as the pla intiff' s claim, res judic ata

may bar the defendant from raisin g his or her clai m in a subs equent actio n." Dowd , 36 2 Il l. App. 3d at 531. "S pe ci fi ca ll y, res judic ata bars a subsequent action if successful prosecution of that action would in effect nulli fy the judgment entered in the ini tial actio n." Dowd , 362 Ill. App. 3d at 531. Illinois cases are split on

the issue of whether an

attorne y' s claim for fees a

nd a clie nt's cla im for mal practice are a single c ause of action. In Bennett v. Gordon , 282 Ill. App. 3d 378, 383-8 4 (1996), the Firs tDistrict held that they wer e. Plaintiff, on the other hand, relies on Wilson v. M.G.No. 2--08--0220

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Gulo & Associates, Inc

. , 294 Ill. App. 3d 89 7 ( 19 98 ), in wh ic h t he Th ir d D is tr ic t h el d t o t he co nt ra ry. See also We isman v. Sc hill er, Ducanto & Fleck , 314 Ill. App. 3d 577, 581 (2000) (First District declines to follow Bennet t ). However, in River Park, Inc. v. City of Highland Park , 184 Ill. 2d 290, 316 (1998), the supreme court cited Bennet twith approval, and in Dowd , this court stated its belief "that Wilson was wrongly decided." Dowd , 362 I ll. App. 3d at 529. Th

us, at lea st

in this distr

ict, the law is settled that these claims indeed are the same cause of action, such t ha t o rd in ar il y a counterclaim is mandatory . See Dowd , 362 Ill. App. 3d at 530-31. This is notto say, howeve r, that res judic ata

necessarily

applies. As noted, the doctrine bars only those cla im s that could have been raised. Indeed, res judic ata extends only to claims that

" 'could h ave been presented by the exercise of due diligence .' " (Emphasis added.) Hu gh ey v . Industrial Comm 'n , 76 Ill. 2d 577, 582 (1979), quoting 46 Am. Jur. 2d Judgments §417, at 585-86. Citing Hu ghey , defenda

nt asser ts that "t he rele vant inqui

ry is not whet

her the l itigant knewof a claim, but ra

ther whet her t he cl aim[] existedat the time of the prior proceeding and

theref ore coul d have been raised by

exercising due diligence." (E mphases in original.) However, the mere fact that

a claim exists

does not e stablish that a

litigant exercisin g due di ligenc e would di scover i t. If a claim exists and the litigant does not discov er it despite his due diligence, res judic ata do es no t a pp ly. This principle is perfe ctly

consiste nt with the

notion tha

t res judic ata , a t i ts co re , i s a do ct ri ne of eq ui ty, notlaw. See City of Chi cago v. Midland Smelting Co. , 385 Ill. App. 3d 945, 963 (2008) (" res judicata is an equitable doctrine that should only be applied as fairness and justice require" ). Here, plaintiff alleged that he "did not learn of the exist e nce of a cause of action for legal malpractice and cons equently could not f

ile such action until at the earliest *** well aft er Defe ndants [ sic ] had sued [plaintiff] and successfully obtained a de fault judgment for fees." He further allegedNo. 2--08--0220

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that he did not, and could

not, discover

his malpra

ctice c laim "unt

il after consultin g with an attorney experienced

in legal malpractice matters and *** un til that att orney had ade quate time

to investigate and opine on the existence of a legal malpractice matter after sufficient

due diligence so as not to run afoul of [Supreme Court] Rule 137, in the proper investigation of facts and law prior to opining and the preparation o f a suitable complaint ." That is, pl aintiff a lleged that, thro ugh the exercise of due diligence, he could not have raised his malpractice claim as a c ounterclai m in defen dant's small claims case. Taking these allegations as true a nd reading them liberally , as we must at this stage, we hold that defendant has failed to establish the applicability of res judic ata
. The cases on

which defendant relies are easily distinguishable. In Singer v . Steven K okes, Inc. , 39 Md. App. 180, 384 A .2d 463 (1 978), the plaintiff s sued torecove r for t he defe ndant 's alleged breach of warranty

and negligence in constructing a house. The defendant claimed res judic ata . In a prior s uit, the defendant had sought to foreclose a mechanic's lien, and the plaintiffs had alleged 57 defect s as a cr

edit ag ainst

the lien. The plaintiffs attempted to avoid res judic ata by claiming tha

t they had not known o f the 141 a dditional d

efects that supported the ir prese nt suit. I n affir min g summary judgmen t for the d efenda nt, the ap pellate c ourt held

that the p laintiff

s "could not avoid the entry of summary

judgment by mer

ely alleging they ha

d no knowledge of the defects. Rather, they were required to have shown also that the defects could not

have be en discovered wit h reasonable diligence." Singer , 39 Md. App. at 185, 384 A.2d at 467; see also Badger v. Badg er , 69 Utah 293, 301, 254 P. 784, 787 (1927) ("In the a mended petition which was stricken there is no allegation that [the petitione

r] did not ha

ve the sa me knowledge *** at the time she filed her first petition"). Here, of course, plaintiff did not allege merely that during t he small c laims case he had no knowledge ofNo. 2--08--0220

1 Indeed, some authority

sugge sts that res judic ata is in ap pl ic ab le pr ec is el y because plaintiff did not appear in the small claims case. See Restatement (Second) of Judgments §22, Comment a , at 186 (1982) ("Even in jurisdictions hav ing a statute or rule mak

ing cer tain coun terclai ms
co mp ul so ry, suchprovisions may not apply when no a

nswer or other responsive pleading is filed" ); -7- his malpractice cla

im. Rather, he alle ged tha t throug h the exer cise of r easonab le dilige

nce he c ould not have discovered it in time to raise it there. Defendant

asserts that due diligence "would have required [plaintiff] to at least appear at the [smallclaims] hearingto co nt es t h is li ab il it y. Had he appeared and responde d to the fee litigation, [plaintiff] could have learned of the purported legal malpractice and

should have raised the claim at that time. " De fend

ant notes a

lso th at pla

intif f cou ld ha ve sought to tak e disc over

y t o rea lize h is claim. See 145 Ill. 2d R. 287(a) (no discovery in small claims except by leave of c ourt). "Instead, [plaintiff] simply ignored the fee litiga tion." Defendant

here raises only

a question of fact. In lig ht of plaintiff's allegation s, we cannot
necessa rily attribute his defa ult in the small claim s case to a lack of diligence in

exploring his defense s. Small claims proceedings are designe d to be exped

ient ( Tannenbaum v. Fleming , 234 I ll. App. 3d 1 0 41, 1044 (1992)), such that plaintiff might have diligently investigated but determined that, as of then, he simply had no defe nse to offer. To the extent he had any inkling of malpractice, he would not necessa

rily have be en unrea sonable f or failin g to rel y on the pro spect of

small cla ims di sc ov er y, which he

could not c onduct as

a matter of righ t, to flesh it out. While

a sm all claim s defendant cannot use the expediency of the pr oceedin g as a sh ield if he has truly failed to be dilig ent, the smallclaims plaintiff cannot use it as a sword if the defendant, despite his dilige nce, is unable to marshal a counterclaim in time. 1No. 2--08--0220

Restatement

(Second) of Judgments §22, Illus tratio n 2, at 186 (1982) ("A, a physician, brings an actionagainst B for the price of medic al servic es rende red to B . B fails

to plead and judgment by default is given against him. B is not precl uded from subseque

ntly maintaini ng an a ction ag ainst A for malpractice relating to the service s sued upon in the prior action"). Plaintiff does not ma

ke this argume nt, howev er, and t

hus we do n

ot addre ss it. -8- A section 2--619 moti on may not be g ranted when the asserted defense requires the resolution of a material fact before it is proven. Reilly v. Wyeth , 377 Ill. App. 3d 20, 36 (2007). Here, pla intiff alleged that he was duly

diligent, and defendant alleged othe rwise. Diligence is gener

ally a question of fact ( In re Application of the County Collector , 219 I ll. App. 3d 396, 404 (1991 )), and i t certai nly is here. Thus, res judic ata has not been proven, and thetrial c ourt e rred i n grant ing def endan t's motion. The judgment

of the circuit court of

McHenry County is reversed, a

nd this cause is remanded for fur ther pro ceeding s. Reversed and remanded. BURKE and HUDSON, JJ., concur.