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09/29/89 Mannion Mechanical v. Stallings & Company

September 29, 1989

MANNION MECHANICAL SERVICES, INC., PLAINTIFF-APPELLANT

v.

STALLINGS & COMPANY, INC., DEFENDANT-APPELLEE



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FIFTH DIVISION

545 N.E.2d 956, 189 Ill. App. 3d 1097, 137 Ill. Dec. 195 1989.IL.1564

Appeal from the Circuit Court of Cook County; the Hon. Thomas E. Hoffman, Judge, presiding.

APPELLATE Judges:

PRESIDING JUSTICE MURRAY delivered the opinion of the court. PINCHAM and COCCIA, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MURRAY

Plaintiff Mannion Mechanical Services, Inc. (Mannion), appeals from an order of the circuit court of Cook County dismissing its complaint for monies allegedly due it from defendant Stallings & Company, Inc. (Stallings), pursuant to a written agreement requiring Stallings to pay Mannion royalties on sales of certain patented products. For the reasons set forth below, we reverse and remand the cause for further proceedings.

On January 1, 1979, Mannion was granted the exclusive license on various United States and Canadian patents. On the same day, it granted Stallings an exclusive license to manufacture, use and sell energy systems and system components under those patents. In return, Stallings agreed to pay Mannion royalties on all sales. One of Stallings' customers used the products in an installation known as the Hanil Development Job in Saudi Arabia.

On April 6, 1983, Mannion and other related parties filed an action in the Eighteenth Judicial Circuit, Du Page County, Illinois, for an accounting to recover royalties owed it on 11 jobs, including the Hanil job, pursuant to the parties' patent license agreement. The court subsequently granted summary judgment on October 19, 1983, on the issue of liability in favor of Mannion and, on March 23, 1984, it also entered judgment on the issue of damages on the Hanil and non-Hanil jobs in Mannion's favor in the amount of $162,975 plus interest and costs.

Stallings filed an appeal in the Appellate Court, Second District, on the issue of the damages award (Mannion I), arguing that the trial court erred in awarding royalties with respect to the Hanil job, because the amount of royalties could not then be determined since its expenses could not be known before the installation was completed and the system successfully started up and, in fact, the uncontroverted testimony of its accountant and bookkeeper demonstrated that the job was incomplete as of January 24, 1984, the time of trial. Based on the foregoing, on April 30, 1985, the appellate court, in an unpublished Rule 23 order (see 107 Ill. 2d R. 23), held that the trial court's award of royalties on the Hanil project and two other jobs was "against the manifest weight of the evidence" and remanded the cause for a recalculation of the amount of royalties due Mannion on the completed jobs pursuant to a specific formula set forth in its opinion (Mannion v. Stallings & Co. (1985), 132 Ill. App. 3d 1163).

On remand, the Du Page County court considered further evidence concerning the status of the Hanil job. Specifically, it allowed Stallings to file an affirmative defense, alleging that royalties could not be awarded on the Hanil project until all of the expenses for the job were determined and that the total amount of expenses was uncertain because one of its former salesmen, Raymond Putzi, had filed a lawsuit alleging it owed him a commission on the project pursuant to an oral agreement. The court also considered a stipulation between the parties, which provided in pertinent part that (1) if the project was completed, Stallings would owe Mannion $67,211 in royalties, (2) Stallings owed Mannion $50,425.98 on the non-Hanil projects, (3) if Putzi was owed a commission on the Hanil project, Mannion's royalties would be reduced to $49,349.84, and (4) the trial court was to consider the evidence depositions of two men connected with the Hanil project in determining whether the project had been completed. Based on the foregoing, the trial court found, among other things, that the Hanil project had been completed by the end of 1983 and that Putzi's third-party claim should not be considered in computing the amount of royalties owed Mannion. It then entered judgment on June 26, 1986, in favor of Mannion for the Hanil and non-Hanil projects.

Stallings again appealed from the trial court's order (Mannion II), arguing among other things, that the court erred in finding the Hanil project completed and in holding that Putzi's claim should not be considered in calculating the amount of royalties owed Mannion. The Mannion II court did not decide the issues raised but held that the circuit court's jurisdiction on remand was limited to following its directions set forth in Mannion I. (See PSL Realty Co. v. Granite Investment Co. (1981), 86 Ill. 2d 291 (upon remand of a cause of action, a trial court can take only such action which conforms to the judgment of the court of review and it has no authority to act beyond the dictates of the mandate).) Specifically, the court stated that pursuant to Mannion I, it intended that the trial court only apply the royalty formula approved by it in Mannion I to completed projects, that the trial court had no authority to consider additional evidence concerning the Hanil project, and that the trial court lacked jurisdiction to consider the issues of the completion of the Hanil project and Putzi's third-party claim. Accordingly, on June 30, 1987, the Mannion II court reversed the trial court's findings on the issues of the completion of the Hanil project, Putzi's third-party claim, and repayment of a loan made by Stallings to Mannion. The court further reversed the portion of the trial court's award representing royalties on the Hanil project and ordered that the court set off the $10,000 loan Mannion had received from Stallings against its award of $50,425.98 in royalties on the non-Hanil projects and enter judgment in the sum of the balance for Mannion.

On December 18, 1987, Mannion filed another action in the circuit court of Cook County seeking royalties due on the Hanil project, alleging the job "was completed in 1983." Stallings filed a motion to dismiss Mannion's complaint pursuant to section 2-619(4) of the Code of Civil Procedure (Ill. Rev. Stat. 1987, ch. 110, par. 2-619(4)), contending that the action was barred on the basis of res judicata. On July 18, 1988, the trial court granted the motion to dismiss, finding that Mannion's cause of action was identical to the one filed by it in Du Page County in 1983. The court also advised Mannion that it would entertain a motion to vacate the dismissal and allow Mannion to replead as long as any amended complaint alleged that the Hanil job was completed after January 24, 1984. Mannion did not elect to pursue this remedy and instead filed the instant appeal.

Mannion argues that since conditions precedent to a determination of its damages on the Hanil job had not yet occurred in the prior litigation (i.e., it was not completed), the trial court erred in applying the doctrine of res judicata in dismissing its complaint. Stallings, besides arguing that Mannion I is res judicata of the present case, also appears to contend that since Mannion I found that no royalties were due Mannion in 1983 on the Hanil job and it reversed the trial court's award therefor and ordered a recalculation excluding the amounts for the Hanil job and two other jobs which had not been completed, the court in effect also reversed the trial court's determination of its liability for the Hanil project, forever barring Mannion from receiving royalties on that project since Mannion did not appeal the decision or seek a clarification of it.

It is well settled that "[u]nder the doctrine of res judicata, a final judgment rendered by a court of competent jurisdiction on the merits is conclusive as to the rights of the parties and their privies, and that judgment is an absolute bar to subsequent actions involving the same claims or demands by the same parties or their privies." (Emphasis added.) (Catlett v. Novak (1987), 116 Ill. 2d 63, 67.) The burden of showing that the doctrine bars an action is upon the party seeking to invoke it. In determining what issues a court passed upon, a reviewing court must not look to the opinion rendered but must ...


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