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People Ex Rel. Dept. of Public Aid v. Santos

OPINION FILED SEPTEMBER 17, 1982.

THE PEOPLE EX REL. THE DEPARTMENT OF PUBLIC AID, APPELLANT,

v.

LEIDA SANTOS ET AL., APPELLEES.



Appeal from the Appellate Court for the First District; heard in that court on appeal from the Circuit Court of Cook County, the Hon. Thomas J. O'Brien, Judge, presiding.

JUSTICE WARD DELIVERED THE OPINION OF THE COURT:

This appeal is from the circuit court of Cook County's dismissal of three actions filed by the Attorney General for the People ex rel. the Department of Public Aid (the Department). The actions were brought to collect upon promissory notes executed by three public assistance recipients who had been informed by the Department that they had received overpayments of benefits. At the time the complaints were filed in the circuit court, a class action was pending in a United States district court that challenged the validity of the notes on Federal grounds. That action is still pending. The named plaintiffs in it are the same three recipients who were sued in the circuit court, and the defendants in the Federal court action are the Director of the Department and the supervisor of the Department's collection division. The circuit court dismissed the State actions because it considered that section 48(1)(c) of the Civil Practice Act (Ill. Rev. Stat. 1979, ch. 110, par. 48(1)(c)) requires automatic dismissal of the later-filed action when two actions based on the same facts are pending between the same parties. The appellate court affirmed. (100 Ill. App.3d 237.) We granted leave to appeal. 73 Ill.2d R. 315.

The Federal action was filed on September 11, 1979, in the United States District Court for the Northern District of Illinois at Chicago. The suit was brought by Mentalio Taylor, Edna Dodge, and Leida Santos, on their behalf and on behalf of similarly situated public aid recipients. They allege that they are recipients of Aid to Families with Dependent Children (AFDC), and that the Department administers the AFDC program in Illinois. They allege that they executed notes promising to pay the Department claimed overpayments of AFDC benefits. They assert that the Department's practice of obtaining promissory notes to recover the overpayments of AFDC benefits violates Federal statutory law, implementing Federal regulations, and the Constitution of the United States. They request the district court to enjoin the challenged practice and to declare void all notes executed under the practice.

The State actions to recover on the notes were brought shortly after the commencement of the Federal action. The complaints were filed on October 24, 1979, in the circuit court of Cook County in Chicago. The complaints allege that the recipients received overpayments of benefits and executed the notes in consideration of the Department's promise to forbear from suing to recover. On the motion of the recipients, the circuit court dismissed the actions on June 25, 1980. The court considered that, under section 48(1)(c) of the Civil Practice Act (Ill. Rev. Stat. 1979, ch. 110, par. 48(1)(c)), it lacked discretion to permit the actions to continue where a previously filed action on the same matter was pending between the parties.

On the same day that the actions on the notes were filed in the circuit court, the Department officials who had been sued in the district court filed a motion to dismiss the Federal action. Among the grounds for their motion was that, in view of the filing of the State actions, the Federal court should abstain under the doctrine of Younger v. Harris (1971), 401 U.S. 37, 27 L.Ed.2d 669, 91 S.Ct. 746. The motion was denied after the circuit court dismissed the actions, although the district court's memorandum order makes it clear that the dismissal of the State actions was not the only ground for declining to abstain.

There has been no attempt in the district court to counterclaim for enforcement of the notes. After the State court actions were begun, the recipients asked the district court to declare that the Department's claims on the notes are compulsory counterclaims under Rule 13(a) of the Federal Rules of Civil Procedure. With certain exceptions, that rule requires that a pleader state as a counterclaim any claim existing against an opposing party at the time of service, if the claim arises from the transaction or occurrence that is the subject matter of his opponent's claim, and if it was not the subject matter of another pending suit at the time the action was commenced.

The district court denied the motion. In so doing, the court did not determine whether the claim for enforcement of the notes is a compulsory counterclaim. Instead, the court concluded that it would be inappropriate to allow the motion and decided that it was unnecessary to rule upon the issue. The court stated that the recipients' purpose in making the motion was to halt the State court actions, but a defendant's failure to advance a compulsory counterclaim in Federal court does not bar the defendant from seeking relief in State courts>.

The statutory section relied upon by the circuit court, section 48(1)(c) of the Civil Practice Act (Ill. Rev. Stat. 1979, ch. 110, par. 48(1)(c)), provides:

"Involuntary dismissal based upon certain defects or defenses.

(1) Defendant may, within the time for pleading, file a motion for dismissal of the action or for other appropriate relief upon any of the following grounds. If the grounds do not appear on the face of the pleading attacked the motion shall be supported by affidavit:

(c) That there is another action pending between the same parties for the same cause."

As we have stated, in dismissing the actions the circuit court deemed that it lacked any discretion to allow the actions to continue while the previously filed Federal suit was pending. That is incorrect, however, under this court's decision in A.E. Staley Manufacturing Co. v. Swift & Co. (1980), 84 Ill.2d 245.

Staley was decided a few months after the circuit court dismissed the actions here. It involved two suits arising out of Swift's sale to Staley of a processing plant that Swift was building, and had agreed to complete, in Iowa. Both Swift and Staley were Delaware corporations with their principal places of business in Illinois. The first suit was brought in a State court in Iowa by Swift against Staley. In the action, Swift sought to recover money that Staley had retained to insure construction of the plant. Less than two hours after that suit was filed, Staley filed an action in a circuit court in Illinois, for damages caused by Swift's failure to complete the ...


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