Opinion ID: 2215629
Heading Depth: 2
Heading Rank: 2

Heading: Common Law Counts

Text: In Rein I, after the trial judge denied plaintiffs' motion for a Rule 304(a) finding, plaintiffs voluntarily dismissed the common law counts of their complaint, pursuant to section 2-1009 of the Code (735 ILCS 5/2-1009 (West 1992)), in order to appeal the dismissal of the rescission counts. Following the unsuccessful appeal to the appellate court of the dismissal of the rescission counts, plaintiffs contended that they had a right, by virtue of section 2-1009, to refile the common law counts. The trial court dismissed the common law counts as being barred by res judicata and the applicable statute of limitations. The appellate court affirmed. On appeal to this court, plaintiffs argue that because there was no final adjudication on the merits of the voluntarily dismissed common law counts, these counts are not barred by res judicata. Plaintiffs also argue that res judicata cannot bar the common law counts because there was no identity of causes of action between the suits. Plaintiffs maintain that for there to be an identity of causes of action between the two suits, the same evidence must be needed to support the ruling in the first action as is needed to sustain the judgment in the second. Plaintiffs argue that the evidence needed to sustain the first action concerned the statute of limitations relating to the rescission counts, not the facts relating to the underlying securities transactions. Since the common law counts involve the facts relating to the securities transaction, plaintiffs contend there is not an identity of causes of action between the first and second suits. For the reasons that follow, we reject both of plaintiffs' arguments. As previously discussed, for res judicata to bar a subsequent action, 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. Downing, 162 Ill.2d at 73-74, 204 Ill.Dec. 755, 642 N.E.2d 456. The first element of res judicata is met here because the dismissal of the rescission counts with prejudice in Rein I operates as an adjudication on the merits for purposes of res judicata, as explained earlier. Although there was not an adjudication on the merits of the common law counts in Rein I, the concept of res judicata is broader than plaintiffs suggest. If the three elements necessary to invoke res judicata are present, res judicata will bar not only every matter that was actually determined in the first suit, but also every matter that might have been raised and determined in that suit. Torcasso v. Standard Outdoor Sales, Inc., 157 Ill.2d 484, 490, 193 Ill.Dec. 192, 626 N.E.2d 225 (1993). Therefore, if the three requirements of res judicata are met and the common law counts could have been determined in Rein I, plaintiffs will be barred from litigating the common law counts in Rein II. The third element of res judicata is also met here, as there is obviously an identity of parties in both suits. The key question here is whether the second essential element for res judicata has been metwhether there was an identity of causes of action in the first and second suits. A cause of action is defined by the facts which give a plaintiff a right to relief. Progressive Land, 151 Ill.2d at 295, 176 Ill. Dec. 874, 602 N.E.2d 820. As this court recently stated: While one group of facts may give rise to a number of different theories of recovery, there remains only a single cause of action. `If the same facts are essential to the maintenance of both proceedings or the same evidence is needed to sustain both, then there is identity between the allegedly different causes of action asserted and res judicata bars the latter action.' Progressive Land, 151 Ill.2d at 295, 176 Ill. Dec. 874, 602 N.E.2d 820, quoting Morris v. Union Oil Co., 96 Ill.App.3d 148, 157, 51 Ill.Dec. 770, 421 N.E.2d 278 (1981). See also Torcasso, 157 Ill.2d at 491, 193 Ill.Dec. 192, 626 N.E.2d 225. Therefore, to determine whether there is an identity of causes of action between the first and second suits, we must look to the facts that give rise to plaintiffs' right to relief, not simply to the facts which support the judgment in the first action, as plaintiffs contend. The causes of action in the two suits were substantially identical. The 1990 complaints and the present complaint raise the same theories of recovery. Moreover, there is a single set of operative facts common to both suitsthat defendants fraudulently misrepresented the nature of certain securities they sold to plaintiffs in 1985. Since the same set of facts is necessary for the maintenance and proof in both cases, the causes of action are identical for purposes of res judicata. See Progressive Land, 151 Ill.2d at 296, 176 Ill.Dec. 874, 602 N.E.2d 820. The requirements for res judicata are therefore met. Consequently, the judgment in Rein I is an absolute bar to subsequent actions involving the same claims or demands by the same parties or their privies. Torcasso, 157 Ill.2d at 490, 193 Ill. Dec. 192, 626 N.E.2d 225; Progressive Land, 151 Ill.2d at 294,176 Ill.Dec. 874, 602 N.E.2d 820. As previously noted, where there is identity of parties, subject matter, and cause of action, res judicata extends not only to every matter that was actually determined in the prior suit, but to every other matter that might have been raised and determined in it. Torcasso, 157 Ill.2d at 490, 193 Ill.Dec. 192, 626 N.E.2d 225. Because the common law counts arise out of the same set of operative facts as the rescission counts, plaintiffs could have litigated and resolved these claims in Rein I. Having failed to do so, plaintiffs are barred by the doctrine of res judicata from attempting to raise and litigate them in Rein II, even though there was no adjudication on the merits of these claims in the prior suit. See Restatement (Second) of Judgments § 24 (1982). The principle that res judicata prohibits a party from later seeking relief on the basis of issues which might have been raised in the prior action also prevents a litigant from splitting a single cause of action into more than one proceeding. Plaintiffs' quandary here arises from their decision to split their lawsuit into separate actions by dismissing the common law counts of their complaints, while attempting to litigate the rescission counts in Rein I, and then refiling both the common law and rescission counts in Rein II. Although the same set of facts gives rise to various theories of recovery, plaintiffs had only one cause of action. Torcasso, 157 Ill.2d at 491, 193 Ill.Dec. 192, 626 N.E.2d 225. As a matter of public policy, however, plaintiffs generally are not permitted to split their causes of action. The rule against claim-splitting, which is an aspect of the law of preclusion, prohibits a plaintiff from suing for part of a claim in one action and then suing for the remainder in another action. See Baird & Warner, Inc. v. Addison Industrial Park, Inc., 70 Ill.App.3d 59, 63-64, 26 Ill.Dec. 1, 387 N.E.2d 831 (1979); Radosta v. Chrysler Corp., 110 Ill.App.3d 1066, 1068, 66 Ill. Dec. 744, 443 N.E.2d 670 (1982); Thorleif Larsen & Son, Inc. v. PPG Industries, Inc., 177 Ill.App.3d 656, 662, 126 Ill.Dec. 738, 532 N.E.2d 423 (1982); Best Coin-Op, Inc. v. Paul F. Ilg Supply Co., 189 Ill.App.3d 638, 657, 136 Ill.Dec. 957, 545 N.E.2d 481 (1989). This rule is founded on the premise that litigation should have an end and that no person should be unnecessarily harassed with a multiplicity of lawsuits. Radosta, 110 Ill.App.3d at 1069, 66 Ill.Dec. 744, 443 N.E.2d 670. Therefore, plaintiffs' claims resulting from the sale of the Richmond bonds could not be divided. Thus, following the final adjudication of the rescission counts in Rein I, plaintiffs were barred from litigating the common law counts in a subsequent action. To avoid the bar of res judicata, plaintiffs could have proceeded to a decision on the merits of the common law counts in Rein I and, if unsuccessful, appealed both the result regarding the common law counts and the trial judge's order dismissing the rescission counts with prejudice. By failing to proceed on the common law counts in the first action, plaintiffs are barred from attempting to litigate those issues in a subsequent suit. See Restatement (Second) of Judgments § 24 (1982). Plaintiffs argue, however, that even if their claims are technically barred by the rule against claim-splitting, the rule should be relaxed here. Plaintiffs contend that it would be inequitable to apply the rule in the present case because they dismissed the common law counts of their complaints to appeal the dismissal of the rescission counts. The rule against claim-splitting has been relaxed where there has been an omission due to ignorance, mistake or fraud, or where it would be inequitable to apply the rule. Thorleif, 177 Ill.App.3d at 662, 126 Ill.Dec. 738, 532 N.E.2d 423; see also Adams v. Pearson, 411 Ill. 431, 440-42, 104 N.E.2d 267 (1952); People v. Somerville, 42 Ill.2d 1, 4, 245 N.E.2d 461 (1969). Situations in which it would be inequitable to apply the rule are detailed in section 26(1) of the Restatement (Second) of Judgments (Restatement (Second) of Judgments § 26(1) (1980)). This section provides that the rule against claim-splitting does not apply to bar an independent claim of part of the same cause of action if: (1) the parties have agreed in terms or in effect that plaintiff may split his claim or the defendant has acquiesced therein; (2) the court in the first action expressly reserved the plaintiff's right to maintain the second action; (3) the plaintiff was unable to obtain relief on his claim because of a restriction on the subject-matter jurisdiction of the court in the first action; (4) the judgment in the first action was plainly inconsistent with the equitable implementation of a statutory scheme; (5) the case involves a continuing or recurrent wrong; or (6) it is clearly and convincingly shown that the policies favoring preclusion of a second action are overcome for an extraordinary reason. Restatement (Second) of Judgments § 26(1) (1980); see also Airtite v. DPR Ltd. Partnership, 265 Ill.App.3d 214, 219, 202 Ill.Dec. 595, 638 N.E.2d 241 (1994); Thorleif, 177 Ill.App.3d at 661-62, 126 Ill. Dec. 738, 532 N.E.2d 423. Nothing in the record indicates that any of these exceptions apply to the present case. The record is devoid of any allegations of ignorance, mistake, or fraud in refiling the common law counts in Rein II. Further, defendants did not stipulate or agree to plaintiffs' refiling of the common law counts. Moreover, the fact that defendants failed to object to plaintiffs' voluntarily dismissing the common law counts cannot be equated with defendants' acquiescing to plaintiffs' refiling of these counts. Until plaintiffs attempted to refile the common law counts, no reason existed for defendants to object. Defendants made a timely objection to the plaintiffs' refiling of the common law counts at the appropriate time-when plaintiffs attempted to refile the common law counts. See 1 Am.Jur.2d Actions § 113 (1994); cf. Thorleif, 177 Ill.App.3d at 662-63, 126 Ill.Dec. 738, 532 N.E.2d 423. Moreover, the trial judge's granting plaintiffs' motion to voluntarily dismiss the common law counts without prejudice under section 2-1009 should not be interpreted as immunizing plaintiffs against defenses defendants may raise when the voluntarily dismissed counts were refiled. Further, we do not believe that the policies favoring preclusion are overcome in this case, or that the application of the doctrine of res judicata here produces an inequitable result. Plaintiffs further argue that barring the common law counts violates the express language of sections 2-1009 and 13-217. Plaintiffs maintain that these sections give them the absolute right to refile the voluntarily dismissed common law counts within one year after the voluntary dismissal or within the remaining period of limitations. Although the language of these sections appears to support plaintiffs' contention (see Gendek v. Jehangir, 119 Ill.2d 338, 116 Ill. Dec. 230, 518 N.E.2d 1051 (1988); see also Tuch v. McMillen, 167 Ill.App.3d 747, 750, 118 Ill.Dec. 525, 521 N.E.2d 1218 (1988)), we do not believe that these sections should be read to automatically immunize a plaintiff against the bar of res judicata or other legitimate defenses a defendant may assert in response to the refiling of voluntarily dismissed counts. If plaintiffs were permitted to proceed on their common law counts, any plaintiff could file an action with multiple counts, dismiss some but not all of the counts, obtain a final judgment on the undismissed counts, and if unsuccessful on the counts not dismissed, refile the previously dismissed counts. Such a practice would impair judicial economy and would effectively defeat the public policy underlying res judicata, which is to protect the defendant from harassment and the public from multiple litigation. Moreover, an interpretation contrary to that reached here would emasculate Rule 304(a) by allowing a plaintiff to circumvent a trial judge's denial of a Rule 304(a) certification by refiling previously dismissed counts following an unsuccessful judgment or appeal on counts not previously dismissed. Plaintiffs also argue that their claims were timely filed. They contend that their actions were filed within five years of the date they discovered their injuries and, therefore, their actions were filed within the applicable limitations periods. Plaintiffs further argue that the appellate court in Rein II should have held that the common law counts were timely filed, rather than deciding the appeal solely on the basis of res judicata. Because we have already determined that the rescission and the common law counts were properly dismissed as being barred by res judicata, we need not address these arguments. Moreover, to the extent that plaintiffs argue that the appellate decision in Rein I was wrongly decided, we note that such decision is not before us, and we therefore do not address these arguments.