ILLINOIS OFFICIAL REPORTS

Appellate Court

Ross Advertising, Inc. v. Heartland Bank & Trust Co., 2012 IL App (3d) 110200

Appellate Court

Caption

ROSS ADVERTISING, INC., CHARLENE J. DEVORE, MARK J.

DOOLITTLE,ARTHUR WAYNEFLITTNER, and DAVID A. GOERS,

Plaintiffs-Appellants, v. HEARTLAND BANK AND TRUST

COMPANY, an Illinois State Bank, and DON SHAFER, DefendantsAppellees.

 District & No. Third District

Docket No. 3-11-0200

Filed May 22, 2012

Held

(Note: This syllabus

constitutes no part of

the opinion of the court

but has been prepared

by the Reporter of

Decisions for the

convenience of the

reader.)

In an action against defendant bank and an officer alleging breach of

contract, breach of the implied duty of good faith and fair dealing and

tortious interference with contract and business relations arising from the

termination of plaintiffs’ line of credit, the placement of a hold on their

bank account and other actions to enforce plaintiffs’ obligations to the

bank, the entry of summary judgment for defendants was affirmed, since

defendants’ actions complied with the terms of the loan documents

executed by plaintiffs and plaintiffs’ claims were barred by res judicata

or collateral estoppel.

Decision Under 

Review

Appeal from the Circuit Court of Peoria County, No. 10-L-17; the Hon.

Scott A. Shore, Judge, presiding.

Judgment Affirmed.
Counsel on

Appeal

Samuel B. Zabek and Thomas E. Leiter, both of Leiter Group, of Peoria,

for appellants.

Timothy J. Howard and Graciela M. Zamudio, both of Howard &

Howard Attorneys, PLLC, of Peoria, for appellees.

Panel JUSTICE HOLDRIDGE delivered the judgment of the court, with

opinion.

Justices Carter and Wright concurred in the judgment and opinion.

OPINION

¶ 1 This case involves claims brought by a corporate borrower and its guarantors against a

lender. Defendant, Heartland Bank and Trust Company (Heartland), issued plaintiff, Ross

Advertising, Inc. (Ross), a $750,000 revolving line of credit for one year secured by a

promissory note executed by Ross and guaranteed by individual plaintiffs, Charlene J.

Devore, Mark J. Doolittle, Arthur Wayne Flittner, and David A. Goers. The plaintiffs filed

a complaint against Heartland and its loan officer, Donald L. Shafer (Shafer), which the

circuit court dismissed. The plaintiffs subsequently filed an amended complaint in three

counts (the complaint). In count I, Ross asserted a claim against Heartland for breach of

contract and breach of the implied duty of good and fair dealing. In count II, Ross asserted

a claim against Heartland and Shafer for tortious interference with contract and business

relations. In count III, the plaintiff guarantors asserted claims against Heartland and Shafer

for tortious interference with contract and business relations.

¶ 2 The defendants filed a motion for summary judgment, which the circuit court granted.

After the circuit court denied the plaintiffs’ motion to reconsider, the plaintiffs timely

appealed the circuit court’s grant of summary judgment.

¶ 3 BACKGROUND

¶ 4 In 2005, Heartland issued Ross a revolving line of credit in the amount of $650,000.

Heartland renewed the line of credit for the next several years. On April 1, 2009, after

performing a full review of Ross’s financial condition (which included a review of Ross’s

then-current financial statements), Heartland again renewed the loan, this time extending

Ross a $750,000 revolving line of credit for one yearsecured by a promissory note executed

by Ross (the Note).

¶ 5 The Note provided that Ross agreed to pay the loan “in one payment of all outstanding

principal plus all accrued unpaid interest on April 1, 2010.” The Note required Ross to make

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regular monthly payments of all accrued unpaid interest due as of each payment date on the

first of each month, beginning on May 1, 2009. However, the Note did not require Ross to

make any principal payments until April 1, 2010.

¶ 6 The Note provided that “[u]pon default, [Heartland] may declare the entire unpaid

principal balance under this Note and all accrued unpaid interest immediately due, and then

[Ross] will pay that amount.” The Note listed various events or conditions which “shall

constitute an event of default” under the Note, including “[t]he dissolution or termination of

[Ross’s] existence as a going business” and “the insolvency of [Ross].” The Note also stated

that Heartland “will have no obligation to advance funds under th[e] Note” if: “(a) [Ross] or

any guarantor is in default under the terms of this Note or any agreement that [Ross] or any

guarantor has with [Heartland], including anyagreement made in connectionwith the signing

of this Note; or (b) [Ross] or any guarantor ceases doing business or is insolvent.”

¶ 7 Moreover, the Note stated that Ross “and any other party that signs, guarantees, or

endorses the Note, to the extent allowed by law, waive presentment, demand for payment,

and notice of dishonor.”

¶ 8 Each of the guaranty agreements signed by the individual guarantors provided that each

guarantor waived the right to require Heartland to “make any presentment, protest, demand,

or notice of any kind, including notice of any non-payment of the Indebtedness, or of any

non-payment related to any collateral, or any notice of any action or non-action on the part

of the Borrower.” (Emphasis added.)

¶ 9 Don Shafer was the loan officer for Heartland who handled the loan with Ross. On July

27, 2009, Shafer met with David Goers, the president of Ross, and Mark Doolittle, a vice

president of Ross, both of whom were guarantors of Ross’s obligations under the Note.

Goers testified in his deposition that the purpose of the July 27, 2009, meeting was to inform

Mr. Shafer of changes that had recently taken place inside Ross, including the fact that two

of Ross’s shareholders had resigned that day. During the meeting, Goers gave Shafer a

document detailing the measures Ross was taking to deal with the recessionary economy

(such as cost reductions and other measures) and describing Ross’s current business plan,

including its plan for servicing existing clients and acquiring new clients. The document also

included cash flow projections. At the conclusion of the meeting, Shafer asked Goers to

provide him with Ross’s updated balance sheet and income statement so he could review

Ross’s current financial position.

¶ 10 The next morning, Shafer sent Goers an e-mail stating that, in light of their discussion

during the meeting on July 27, 2009, Shafer was “sure” that Heartland would be requiring

Ross’s owners to provide Heartland with additional collateral in the form of cash, real estate,

or securities. Shaferstated that the amount of additional collateral would depend upon Ross’s

current inventory, receivables, and equipment balances, but he guessed it would be

approximately $500,000. In addition, Shafer told Goers that Heartland might also require

Ross’s owners to provide a capital infusion of approximately $100,000, but he would not

know for certain until he reviewed Ross’s updated financial information.

¶ 11 During his deposition, Shafer testified that he sent this e-mail to Goers because Goers

had told him during the July 27, 2009, meeting that Ross was suffering losses and that the

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decline in business had resulted in a drop in the company’s receivables. Accordingly, Shafer

was concerned that the outstanding balance on the line of credit was substantially higher than

Ross’s existing collateral for the loan (which consisted of Ross’s receivables and inventory),

and he wanted to get Ross back into a “positive position.”

¶ 12 Later that day, Shafer received Ross’s financial statement for the period ending June 30,

2009. The statement indicated that Ross’s total capital was negative $256,771.12. After

reviewing this financial statement, Shafer told Goers that Heartland would require Ross to

provide $500,000 in additional collateral, plus a cash infusion of approximately $300,000.

¶ 13 Shafer met with Goers and four other owners of Ross on July 29, 2009, to discuss these

demands. Goers and three other shareholders who were present at the meeting testified that

Shafer told them during the meeting that if Ross or the guarantors were not able to satisfy

Shafer’s demands for additional collateral and a cash infusion, Shafer would turn the loan

over to Heartland’s attorneys for collection against the guarantors. Shafer denied that he

made this statement during the meeting. At the time of the July 29, 2009, meeting, the

outstanding principal balance on the note was $690,000. After the meeting, Ross took an

additional principal advance of $33,000.

¶ 14 Goers and three other Ross shareholders testified that, on or about September 11, 2009,

Ross’s shareholders decided that Ross could not meet Shafer’s demands and, as a result,

would have to close the business. Ross’s shareholders met with Shafer again on September

15, 2009, and told him that they were not able to meet his demands and that Ross would be

closing the business on September 30, 2009. Later that day, Shafer terminated Ross’s line

of credit, placed a hold on Ross’s checking account, and applied proceeds from Ross’s

checking account to pay the outstanding loan balance on the Note.

¶ 15 During his deposition, Shafer testified that, when he learned on July 28, 2009, that Ross

had a “negative net worth” of approximately $257,000, Heartland concluded that Ross was

insolvent and that the bank considered this to be a “default situation” under the terms of the

Note.

¶ 16 However, Thomas Sapp, the certified public accountant who prepared Ross’s financial

statements, testified by affidavit that, as of June 30, 2009, and July 31, 2009, Ross was a

going business that was able to and did pay its debts in the ordinary course of business and

was “not insolvent.” Sapp opined that Heartland’s termination of the credit line and

placement of a hold on Ross’s bank account on or about September 15, 2009, “prevented

Ross from conducting business in the usual and customarymanner.” However, Sapp opined

that, before Heartland took these actions, Ross was able to pay its debts and was not

insolvent from August 31, 2009, through September 15, 2009.

¶ 17 On October 22, 2009, Heartland sent Ross and the guarantors a notice of default due to

insolvency and closure of the business and a demand for payment of the outstanding

principal and interest under the Note.

¶ 18 On December 3, 2009, Heartland filed a complaint and confession of judgment against

Ross in the circuit court of Peoria County, case number 09-L-365. Heartland obtained a

judgment by confession against Ross in the amount of $731,166.33. Pursuant to Illinois

Supreme Court Rule 276 (eff. July 1, 1982), Ross filed a “Motion to Vacate Judgment by

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Confession,” which the circuit court granted on March 19, 2010.

¶ 19 Heartland subsequently filed a motion for summary judgment. In opposition to

Heartland’s motion, Ross argued that summary judgment was inappropriate because there

were genuine issues of material fact as to whether Heartland’s demand for additional

collateral and a cash infusion caused Ross to go out of business, thereby causing Ross to

default and making it impossible for Ross to perform its obligations under the Note. In

addition, Ross argued that there were genuine issues of material fact as to whether Heartland

breached its dutyof good faith and fair dealing, therebyexcusing Ross’s default, when Shafer

(1) demanded that Ross provide additional cash and collateral at a time that Ross was “not

insolvent” and “not in default,” (2) informed Ross that Heartland would terminate the line

of credit and seek collection on the Note unless Ross met his demand, and (3) “unilaterally

decided to terminate Ross’s line of credit and remove funds without any notice whatsoever

to Ross.”

¶ 20 The circuit court granted Heartland’s motion for summary judgment. The court’s order

states that “there are no issues of material fact” because “[d]efendant was in default, as

alleged, when it ceased operations at the end of September, 2009,” and “[a]ny actions taken

by Plaintiff prior to that date, which defendant alleges caused the default, were authorized

by the loan documents.” Ross filed a motion to reconsider, which the circuit court denied.

In explaining its ruling, the court noted that it was undisputed that Ross went out of business,

which was an event of default under the Note. Moreover, the court stated that it did not

believe that Heartland did anything improper or illegal when it asked Ross to provide

additional collateral. The court also noted that Ross could have simply refused to provide any

additional collateral, but, instead, it voluntarily chose to go out of business, triggering

Heartland’s rights under the Note to demand payment and to freeze and set off Ross’s

checking accounts. Ross appealed. This court affirmed the circuit court’s judgment in

Heartland Bank & Trust Co. v. Ross Advertising, Inc., 2012 IL App (3d) 100774-U.

¶ 21 Heartland filed a separate action against the six individual guarantors in the circuit court

of Peoria County seeking to collect on the debt owed by Ross (case number 10-L-16).

Heartland filed a motion for summary judgment. In opposition to Heartland’s motion, Ross

raised the same arguments that it had raised in opposition to Heartland’s motion for summary

judgment in case number 09-L-365. Although the circuit court dismissed Heartland’s claims

against two of the guarantors, it granted Heartland’s motion for summary judgment against

the four remaining guarantors. This court affirmed the circuit court’s judgment in Heartland

Bank & Trust Co. v. Goers, 2012 IL App (3d) 110030-U.

¶ 22 The instant action involves a complaint filed by Ross and four of the individual

guarantors against Heartland and Shafer. In count I of the plaintiffs’ amended complaint,

Ross asserted a claim against Heartland for breach of contract and “breach of the implied

duty of good and fair dealing.” Ross alleged that Heartland breached the loan agreement and

acted arbitrarily in a manner inconsistent with the parties’ expectations by terminating the

line of credit without notice at a time when Ross was “not in default.” Ross also alleged that

Ross had “performed all of its obligations” under the loan agreement prior to Heartland’s

breach and that Heartland’s actions caused Ross to go out of business. In count II, Ross

asserted a claim against Heartland and Shafer for tortious interference with contract and

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business relations. Ross alleged that Heartland and Shafer wilfully and unreasonably

demanded that Ross provide additional collateral and cash, under threat to withhold credit,

knowing that Ross could not meet these demands. Ross alleged that Heartland and Shafer

knowingly caused Ross to go out of business and to lose existing and prospective customers.

In count III, the plaintiff guarantors brought claims against Heartland and Shafer for tortious

interference with contract and business relations which were substantively identical to the

claims that Ross asserted in count II.

¶ 23 Heartland filed a motion for summary judgment. In support of its motion, Heartland filed

two “Requests for Judicial Notice” which attached copies of the judgment order on the Note

in case number 09-L-365 and the judgment against the individual guarantors in case number

10-L-16. The circuit court granted Heartland’s motion. The circuit court found that the

defendants were entitled to act upon the Note and the individual guaranty agreements on the

basis of Ross’s insolvency and that there was no genuine issue of material fact as to the

defendants’ right to call the loan, declare a default on the basis of Ross’s insolvency, enforce

their right of setoff under the Note, and enforce the guaranty agreements. Accordingly, the

court found that Heartland and Shafer did not breach their duty of good faith and fair dealing

by taking these actions. The court found that the plaintiffs’ allegation that Heartland and

Shafer acted unreasonably was based on the factually unsupportable premise that the

defendants did not have a contractual right to call in the loan, declare Ross in default, and

enforce the obligations of the guarantors.

¶ 24 In addition, the court took judicial notice of the judgments previously entered against

Ross in the prior cases and found that those judgments “establish[ed] both collateral estoppel

and res judicata as to the issues that are required to be raised by [the] plaintiffs to sustain

their cause of action in this litigation.” Moreover, the court found that the plaintiffs’ claims

for tortious interference and punitive damages were barred by the economic loss doctrine

announced in Moorman Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69 (1982).

¶ 25 This appeal followed.

¶ 26 ANALYSIS

¶ 27 Summary judgment is proper if the pleadings, depositions and admissions on file,

together with the affidavits, if any, show that there is no genuine issue as to any material fact

and that the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c)

(West 2008). The purpose of summary judgment is not to try a question of fact, but simply

to determine whether a genuine issue of triable fact exists. Watkins v. Schmitt, 172 Ill. 2d

193, 203 (1996); Sameer v. Butt, 343 Ill. App. 3d 78, 85 (2003). In determining whether a

genuine issue of material fact exists, a court must construe the pleadings, depositions,

admissions, and affidavits strictly against the movant and liberally in favor of the opponent.

Watkins, 172 Ill. 2d at 203; Sameer, 343 Ill. App. 3d at 85.

¶ 28 A defendant moving for summary judgment bears the initial burden of proof. Benson v.

Stafford, 407 Ill. App. 3d 902, 912 (2010). The defendant may meet its burden either by

affirmatively showing that some element of the case must be resolved in its favor or by

establishing that there is an absence of evidence to support the plaintiff’s case. Id. To

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withstand a defendant’s motion for summary judgment, a plaintiff need not prove its case but

must present a factual basis that would arguably entitle the plaintiff to a judgment. Allegro

Services, Ltd. v. Metropolitan Pier & Exposition Authority, 172 Ill. 2d 243, 256 (1996);

Benson, 407 Ill. App. 3d at 912; see also Hussung v. Patel, 369 Ill. App. 3d 924, 931 (2007).

In other words, the plaintiff “must present enough evidence to create a genuine issue of fact.”

Hussung, 369 Ill. App. 3d at 931. If a plaintiff cannot establish an element of her cause of

action, summaryjudgment forthe defendant is proper. Id.Moreover, summaryjudgment may

be granted on the basis of res judicata or collateral estoppel. PeregrineFinancial Group, Inc.

v. TradeMaven, L.L.C., 391 Ill. App. 3d 309, 320 (2009); Schratzmeier v. Mahoney, 246 Ill.

App. 3d 871, 876 (1993). We review summary judgment rulings de novo. Espinoza v. Elgin,

Joliet & Eastern Ry. Co., 165 Ill. 2d 107, 113 (1995).

¶ 29 In this case, the circuit court properly entered summary judgment for Heartland. As the

circuit court correctly held, all of the claims asserted by the plaintiffs are barred by the

doctrine of res judicata. The doctrine of res judicata provides that a final judgment on the

merits rendered by a court of competent jurisdiction bars anysubsequent actions between the

same parties or their privies on the same cause of action. Rein v. David A. Noyes & Co., 172

Ill. 2d 325, 334 (1996). Res judicata promotes judicial economy by preventing repetitive

litigation and also protects parties from being forced to bear the unjust burden of relitigating

essentially the same case. Arvia v. Madigan, 209 Ill. 2d 520, 533 (2004).

¶ 30 When res judicata applies, it bars all matters that were offered to sustain or defeat a

claim in the first action, as well as all matters that could have been offered. Id. Moreover, the

doctrine bars a claim based on facts that would have constituted a counterclaim in the earlier

proceeding where successful prosecution of the later action “would either nullify the earlier

judgment or impair the rights established in the earlier action.” City of Rockford v. Unit Six

of Policemen’s Benevolent &Protective Ass’n, 362 Ill. App. 3d 556, 562-63 (2005); see also

Fuller Family Holdings, LLC v. Northern Trust Co., 371 Ill. App. 3d 605, 617 (2007).

¶ 31 For the doctrine to apply, three requirements must be met: (1) there was a final judgment

on the merits rendered by a court of competent jurisdiction; (2) there was an identity of cause

of action; and (3) there was an identity of parties or their privies. Hudson v. City of Chicago,

228 Ill. 2d 462, 467 (2008).

¶ 32 Each of these requirements is satisfied in this case. In case numbers 09-L-365 and 10-L16, final judgments were entered by courts of competent jurisdiction, and we have affirmed

those judgments. In count I of the plaintiffs’ amended complaint in this case, Ross asserts 1

Ross argues that “a final adjudication on the merits has not been made whether Heartland 1

breached its contractual obligationsto Ross.” Ross appears to suggest that, because of this, Heartland

cannot establish that there has been a “final judgment on the merits” in the prior cases, which is

required for the application of res judicata. Ross appears to misunderstand the “final judgment”

requirement. To satisfy that requirement, Heartland need only establish that the prior litigation ended

in a final judgment on the merits that was rendered by a court of competent jurisdiction. Ross does

not and cannot dispute that the judgments rendered in case numbers 09-L-365 and 10-L-16 satisfied

that requirement. Ross’s argument appears to confuse the final judgment requirement with one of

the requirements for the application of collateral estoppel, namely, that “an issue of fact or law”

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a claim against Heartland for breach of contract and “breach of the implied duty of good and

fair dealing.” In support of this claim, Ross alleges that Heartland, acting through Shafer,

breached the loan agreement and acted arbitrarily in a manner inconsistent with the parties’

expectations by terminating the line of credit without notice at a time when Ross was “not

in default.” Ross also alleges that Ross had “performed all of its obligations” under the loan

agreement prior to Heartland’s breach and that Heartland’s actions caused Ross to go out of

business. Moreover, Ross alleges that Heartland “breached its implied and express

obligations of good faith” in various dealings with Ross. For example, in the complaint’s

general allegations, which Ross restates and realleges in count I, Ross asserts that Shafer

“arbitrarilydemanded” that Ross provide additional collateral and a substantial cash infusion

at a time when Ross was not in default.

¶ 33 Ross raised the identical claims in opposition to Heartland’s motion for summary

judgment in case number 09-L-365. In that case, Heartland moved for summary judgment

on its complaint, which alleged that Ross had defaulted on the Note. Ross argued, inter alia,

that summary judgment was inappropriate because there were genuine issues of material fact

as to whether Heartland breached its duty of good faith and fair dealing when Shafer

demanded that Ross provide additional cash and collateral and terminated Ross’s line of

credit without notice at a time that Ross was “not in default.” In addition, Ross argued that

there were genuine issues of material fact as to whether Heartland’s actions (including

Shafer’s demand for additional collateral and a cash infusion) caused Ross to go out of

business, thereby causing Ross to default and making it impossible for Ross to perform its

obligations under the Note. The trial court rejected Ross’s defenses, and we affirmed.

¶ 34 Accordingly, count I of Ross’s complaint in this case raises the “same cause of action”

that was litigated and decided in case number 09-L-365. In determining whether there is an

identityof causes of action for purposes of res judicata, Illinois courts applya “transactional”

test. River Park, Inc. v. City of Highland Park, 184 Ill. 2d 290, 311 (1998). Under this test,

separate claims will be considered the same cause of action if they arise from a single group

of operative facts, regardless of whether they assert different theories of relief. Id. Here, the

claims asserted byRoss in both cases arise from the same loan transaction between Ross and

Heartland and involve the same actions taken by Heartland and Shafer. The very actions that

Ross now claims constituted a breach of contract by Heartland (i.e., Heartland’s termination

of the line of credit without notice at a time when Ross was “not in default”) formed the basis

of Ross’s defense in the prior action. Ross concedes that Ross’s claims in this case involve

the “same cause of action” under the transactional test.

¶ 35 Moreover, the parties named in count I of Ross’s complaint in this case are the same as,

or in privity with, the parties in case number 09-L-365. Case number 09-L-365 was brought

byHeartland against Ross. In count I of its complaint in this case, Ross named Heartland and

Shafer, one of Heartland’s loan officers, as defendants. The addition of Shafer as a defendant

relevant to the current litigation was “actually litigated and determined by a valid final judgment.”

(Internal quotation marks omitted.) Du Page Forklift Service, Inc. v. Material Handling Services,

Inc., 195 Ill. 2d 71, 79 (2001).

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in this case does not undermine the identity of the parties or otherwise defeat the application

of res judicata. “[W]hen a prior judgment is a bar to a claim against an employer, a claim

against an employee, predicated upon the same acts, is also barred.” Bonanno v. La Salle &

Bureau County R.R. Co., 87 Ill. App. 3d 988, 995 (1980); see also Towns v. Yellow Cab Co.,

73 Ill. 2d 113, 123-24 (1978); Neuberg v. Michael Reese Hospital & Medical Center, 118

Ill. App. 3d 93, 100 (1983). Ross’s claims against Shafer in this case are predicated on the

same acts that formed the basis of Ross’s defenses against Heartland in case number 09-L365 (i.e., Shafer’s allegedly “arbitrary” demand for additional capital and a cash infusion and

his allegedly premature termination of Ross’s line of credit). Because the trial court rejected

Ross’s defenses in case number 09-L-365, Ross may not reassert these claims against Shafer

in this case. Nor may Ross avoid the bar of res judicata merely by naming Shafer as a

defendant. See Michael Reese Hospital, 118 Ill. App. 3d at 100 (holding that the plaintiff’s

“attempt to name additional [employee] defendants to avoid the applicability of the doctrine

of res judicata” was “without legal effect”). In any event, as an employee of Heartland,

Shafer is in privity with Heartland for purposes of res judicata. See, e.g., Henry v. Farmer

City State Bank, 808 F.2d 1228, 1235 n.6 (7th Cir. 1986) (holding that even though a bank

was the only actual party in the first action, the other defendants in the second action were

in privity with the bank for purposes of res judicata because they were directors, officers,

employees, and attorneys of the bank).

¶ 36 Ross argues that res judicata does not apply here because, in case number 09-L-365, the

circuit court held only that Ross breached its contractual obligations to Heartland but did not

determine whether Heartland breached its contractual obligations to Ross. We disagree. As

noted above, res judicata does not merely bar all matters that were actually presented and

decided in the first action; it also bars all matters that could have been presented and decided

in that action. Arvia, 209 Ill. 2d at 533; River Park, 184 Ill. 2d at 302. Accordingly, the

doctrine bars a claim based on facts that would have constituted a defense or counterclaim

in the earlier proceeding where successful prosecution of the later action “would either

nullify the earlier judgment or impair the rights established in the earlier action.” City of

Rockford, 362 Ill. App. 3d at 562-63. Here, although Ross argued in case number 09-L-365

that Heartland breached its duty of good faith, it did not expressly argue that Ross breached

the terms of the loan documents. Nevertheless, Ross could have raised the latter claim as a

defense or as a counterclaim in case number 09-L-365. Moreover, if Ross were to prevail on

its current claim that Heartland breached the loan documents, that would nullify the

judgment rendered in case number 09-L-365. In rejecting Ross’s defenses in that case, both

the circuit court and this court found that the very actions that Ross now claims were

contractual breaches by Heartland were both appropriate and authorized by the loan

documents. A contrary ruling in this case would effectively annul that judgment.

¶ 37 Accordingly, the circuit court’s judgment in case number 09-L-365, and our affirmance

of that judgment, constitutes a final judgment on the merits that conclusively resolved the

claims that Ross asserts against Heartland in count I of his complaint in this case. The claims

raised in count I of Ross’s complaint are therefore barred by res judicata.

¶ 38 The claims raised in counts II and III of Ross’s complaint are also barred. In count II,

Ross asserts a claim against Heartland and Shafer for tortious interference with contract and

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“business relations.” In support of this claim, Ross alleges that Heartland and Shafer wilfully

and unreasonably demanded that Ross provide additional collateral and cash, under threat

to withhold credit, knowing that Ross could not meet these demands. Ross alleges that, in

performing these actions, Heartland and Shafer knowingly caused Ross to go out of business

and to lose existing and prospective customers. Ross’s tortious interference claim arises out

of the same group of operative facts as Ross’s defenses in case number 09-L-365, which the

circuit court rejected. The basis for Ross’s alleged liability in count II are the same actions

by Heartland and Shafer that the circuit court found to be appropriate and authorized by the

loan documents in case number 09-L-365. Accordingly, the claim is barred by res judicata,

even though it asserts a theory of reliefthat was not litigated in case number 09-L-365. River

Park, 184 Ill. 2d at 311. Moreover, Ross could have raised its tortious interference claim as

a counterclaim in case number 09-L-365. Further, if Ross were to prevail on its tortious

interference claim against Heartland and Shafer, the judgment in case number 09-L-365

would be nullified, because that judgment depended upon the trial court’s finding that

Heartland’s actions were appropriate, justified, and authorized by the loan documents. A

finding that Heartland and Shafer tortiously interfered with Ross’s current or prospective

clients by performing the same actions would necessarily invalidate that judgment, because

it would entail a finding that Heartland’s and Shafer’s actions were an “intentional and

unjustified inducement” of a breach of contract. (Emphasis added.)(Internal quotation marks

omitted.) HPI Health Care Services, Inc. v. Mt. Vernon Hospital, Inc., 131 Ill. 2d 145, 154-

55 (1989). For this additional reason, res judicata bars Ross’s claim in count II. City of

Rockford, 362 Ill. App. 3d at 562-63.

¶ 39 Count III is barred for similar reasons. In count III, the plaintiff guarantors assert claims

against Heartland and Shaferfor tortious interference withcontract which are nearlyidentical

in substance to the claims that Ross asserted in count II. Specifically, the guarantors allege

that Heartland and Shafer arbitrarily demanded that Ross provide additional collateral and

cash, under threat to withhold credit, knowing that Ross could not meet these demands and

that Ross would go out of business as a result. The guarantors allege that, in performing these

actions, Heartland intentionally caused Ross to go out of business. The guarantors also allege

that Heartland and Shafer had a duty to refrain from interfering with the guarantors’

accommodations and contracts of guaranty, and that Heartland and Don Shafer violated this

duty by interfering with Ross’s contracts and business relations, causing Ross to go out of

business. Further, the guarantors allege that, as a direct and proximate result of Heartland’s

and Don Shafer’s conduct, Ross went out of business and was unable to satisfy the loan,

thereby leaving the guarantors with the liability for repayment of the loan.

¶ 40 This claim is barred by the decision of the circuit court of Peoria County in case number

10-L-16. In that case, Heartland filed an action against the six individual guarantors seeking

to collect on the debt owed by Ross under the Note. Heartland filed a motion for summary

judgment. In opposition to Heartland’s motion, Ross argued that Heartland, acting through

Shafer, had arbitrarily demanded additional collateral and cash, causing Ross to go out of

business and thereby triggering the guarantors’ liability under the guaranty agreements. The

circuit court rejected the guarantors’ defenses and granted summary judgment for Heartland.

We affirmed the circuit court’s judgment. The guarantors’ claim for tortious interference in

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this case is based on the same group of operative facts as the guarantors’ defenses in case

number 10-L-16. Moreover, case number 10-L-16 involved the same parties plus Don

Shafer, who, as shown above, is considered identical to or in privity with Heartland for res

judicata purposes. The claims raised in count III are therefore barred by res judicata. See

City of Rockford, 362 Ill. App. 3d at 562-63.2

¶ 41 Ross’s claims against Heartland and Shafer fail for additional reasons. First, in count I,

Ross purports to assert a cause of action for “breach of the implied covenant of good faith

and fair dealing.” However, our supreme court has expressly declined to recognize such a

cause of action. Voyles v. Sandia Mortgage Corp., 196 Ill. 2d 288, 293-94 (2001).

¶ 42 Moreover, most of the factual and legal issues central to Ross’s claims in this case are

barred by collateral estoppel. Collateral estoppel, also referred to as issue preclusion, is an

equitable doctrine that promotes fairness and judicial economy by preventing the relitigation

of factual or legal issues that have already been resolved in earlier actions. Du Page Forklift

Service, Inc. v. Material Handling Services, Inc., 195 Ill. 2d 71, 77 (2001). Under the

doctrine of collateral estoppel, “[w]hen an issue of fact or law is actually litigated and

determined by a valid and final judgment, and the determination is essential to the judgment,

the determination is conclusive in a subsequent action between the parties, whether on the

same or a different claim.” (Internal quotation marks omitted.) Id. at 79. Collateral estoppel

may be applied when the issue decided in the prior adjudication is identical with the one

presented in the current action, there was a final judgment on the merits in the prior

adjudication, and the party against whom estoppel is asserted was a party to, or in privity

with a party to, the prior adjudication. Id.

¶ 43 In rejecting Ross’s defenses and granting summary judgment for Heartland in case

number 09-L-365, the circuit court held that Ross was “in default” when it ceased operations

at the end of September 2009, and “[a]ny actions taken by [Heartland] prior to that date,

which [Ross] alleges caused the default, were authorized by the loan documents.” (Emphasis

added.) Thus, the circuit court necessarily found that Heartland did not breach its contractual

obligations to Ross. It also rejected Ross’s defense that Heartland breached its duty of good

faith, the same claim that Ross raises in this case. In affirming the circuit court’s judgment,

we also held that Heartland had not breached its duty of good faith and fair dealing and that

Heartland’s decision to close the line of credit without notice when it did was “expressly

authorized by the Note.” Heartland Bank &Trust Co. v. Ross Advertising, Inc., 2012 IL App

(3d) 100774-U, ¶ 40. In addition, we held that Ross had failed to allege facts which arguably

suggest that Heartland caused Ross to go out of business. Each of these factual findings and

legal conclusions was essential to the final judgment in case number 09-L-365, because the

trial court could not have rejected Ross’s defenses and granted summary judgment for

Heartland without making those findings. Moreover, Ross raises the identical factual and

Moreover, in the guaranty agreements, the guarantors waived the right to assert claims like 2

those asserted in count III. Each of the individual guaranty agreements providesthat “Guarantor ***

waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under

this Guaranty for any claim of setoff, counterclaim, counter demand, recoupment or similar right,

whether such claim demand or right may be asserted by the Borrower, the Guarantor, or both.”

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legal issues in this case (i.e., whether Heartland breached the loan documents or its duty of

good faith when Shafer demanded additional collateral and cash and terminated the line of

credit, whether Ross was in default at the time Shafer terminated the line of credit, and

whether Heartland’s and Shafer’s actions caused Ross to go out of business). In addition,

Ross was a party to the prior litigation. Thus, collateral estoppel applies, and Ross may not

relitigate the factual and legal issues determined in case number 09-L-365. Because these

factual and legal issues are central to Ross’s claims in this case, Ross’s claims in counts I and

II cannot survive.

¶ 44 Because we find that all of the plaintiffs’ claims are barred by res judicata or collateral

estoppel, we do not need to address Heartland’s other arguments for affirming the circuit

court’s judgment.

¶ 45 CONCLUSION

¶ 46 For the foregoing reasons, we affirm the judgment of the circuit court of Peoria County

granting Heartland’s and Shafer’s motion for summary judgment.

¶ 47 Affirmed.

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