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Johnson v. Nationwide Business Forms

OPINION FILED DECEMBER 28, 1981.

GEORGE C. JOHNSON ET AL., PLAINTIFFS-APPELLANTS,

v.

NATIONWIDE BUSINESS FORMS, INC., ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Cook County; the Hon. WARREN D. WOLFSON, Judge, presiding.

JUSTICE MCGLOON DELIVERED THE OPINION OF THE COURT:

Plaintiff George Johnson appeals from the dismissal of his action and, on appeal, argues that the action was not barred under the doctrine of collateral estoppel. Plaintiff Roslyn Johnson appeals from the denial of her motion to reinstate an action.

We affirm.

Plaintiffs George and Roslyn Johnson filed several actions alleging that Insurance Producers Bulletin, Inc. (IPB), was fraudulently and maliciously dissolved in order to avoid paying the Johnsons amounts due under their contract to sell IPB. The first action was filed on August 2, 1971, against Nationwide Business Forms, Inc. (Nationwide), the successor to IPB. On July 18, 1972, George and Roslyn Johnson filed an amended complaint adding as defendants Donald C. Peterson, E. Dean McAlister, Robert Shaffer, and Elmer W. Johnson, Jr. The complaint alleged that the individual defendants conspired to dissolve IPB and transfer its assets to Nationwide so as to defeat plaintiffs' contractual rights in IPB. Roslyn Johnson was dismissed as a party plaintiff and appealed. Thereafter George Johnson filed a second amended complaint, but the action was dismissed for want of prosecution on November 12, 1975. The dismissal of Roslyn Johnson was reversed by this court in Johnson v. Nationwide Business Forms, Inc. (1976), 41 Ill. App.3d 128, 359 N.E.2d 171, but she made no attempt to reinstate her action until 1980.

On December 1, 1975, George Johnson filed a diversity action in Federal district court against Donald C. Peterson (the Peterson action). Count I of the complaint alleged that Peterson, with the assistance of McAlister and Elmer Johnson, conspired to dissolve IPB and deprive Johnson of the benefit of the sales contract. Count II alleged tortious interference with contractual relations. After a trial, the jury returned a verdict in favor of defendant Peterson on count I and in favor of plaintiff Johnson on count II. The district court thereafter granted Peterson's motion for judgment n.o.v. on count II.

The action which is the subject of this appeal was filed by George Johnson on October 2, 1976. The named defendants were Shaffer, McAlister, Elmer Johnson, and Nationwide (the Shaffer action). On February 20, 1980, after the Federal court of appeals affirmed the judgment of the district court in the Peterson action, the Shaffer defendants moved to dismiss the action on the grounds that George Johnson was estopped from pursuing it because of the judgment and findings in the Peterson action. On February 29, 1980, Roslyn Johnson moved to reinstate her action, to consolidate her case with Shaffer, and to file an amended complaint instanter. Roslyn Johnson's proposed amended complaint was virtually identical to that filed by George Johnson in Federal court and that filed in the first action in 1971.

After a hearing, the trial court granted the motion to dismiss the Shaffer action filed by George Johnson and denied Roslyn Johnson's motions. In addition to its order, the trial court issued a supporting memorandum opinion. In the opinion, the trial court found that the Shaffer action was barred under the doctrine of collateral estoppel. It further found that because Roslyn was George's privy, her action was also barred. George and Roslyn Johnson each filed a notice of appeal. Their appeals were consolidated by this court.

On appeal, George Johnson contends that the issues decided by the Federal court in the Peterson action were not identical to the issues presented in the Shaffer action because the defendants in each action were different. He therefore maintains that he is not estopped from pursuing the Shaffer action.

The doctrine of collateral estoppel provides that an adjudication on the merits of an issue by a court of competent jurisdiction precludes relitigation of the issue in a subsequent action. (General Parking Corp. v. Kimmel (1979), 79 Ill. App.3d 883, 398 N.E.2d 1104; Riley v. Unknown Owners (1975), 25 Ill. App.3d 895, 324 N.E.2d 78.) The doctrine is applicable where the following requirements are met:

(1) the issue decided in the prior adjudication is identical to that presented in the action in question;

(2) a final judgment on the merits was rendered in the prior action; and

(3) the party against whom estoppel is asserted is the same as or in privity with a party to the prior adjudication. (Illinois State Chamber of Commerce v. Pollution Control Board (1979), 78 Ill.2d 1, 7, 398 N.E.2d 9, citing Riley v. Unknown Owners (1975), 25 Ill. App.3d 895, 899, 324 N.E.2d 78.)

Regarding the third requirement, the court in Illinois State Chamber of Commerce noted the trend to discard the identical parties rule. The court disapproved of In re Hutul (1973), 54 Ill.2d 209, 296 N.E.2d 332, wherein identical parties were required for the application of collateral estoppel and res judicata, and stated that Hutul should not be followed on this point.

• 1 Upon applying the aforementioned legal principles and considering our supreme court's explicit rejection of the identical parties rule, we find George Johnson's contention to be without merit. The mere fact that defendants in the court below were not parties to the Peterson action in Federal ...


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