The opinion of the court was delivered by: ASPEN
MARVIN E. ASPEN, UNITED STATES DISTRICT JUDGE
The plaintiff, T.P. Crigler, filed this 10-count diversity action on November 22, 1989, alleging various breaches of contract, misrepresentation and fraud. Currently before us is the defendants' motion for summary judgment on the grounds that the action is either barred by res judicata or, in the alternative, that there exists no genuine issue of material fact and that a judgment in their favor is warranted as a matter of law. For the following reasons, we find that Crigler is precluded from bringing this action and grant the motion for summary judgment.
This case was originally filed in the Circuit Court of DuPage County, Illinois, on January 27, 1986. On June 1, 1988, Crigler filed an amended complaint in state court adding the individual defendants named in this action. After two and a half years of litigation, including what appears to have been fairly extensive discovery, the defendants filed a motion to dismiss Crigler's action on July 29, 1988, solely on the ground that the complaint was insufficient as a matter of law. The state court set a briefing schedule, and a hearing on the motion was scheduled for October 5, 1988. After failing to file any response to the defendants' motion, Crigler's attorney appeared at an October 10, 1988 status conference claiming that she needed additional documents from Axia in order properly to respond to the motion. The state court granted her request for production of the documents and ordered that "following production of documents by defendant, plaintiff is granted 28 days to file a reply brief to defendants' motion for summary judgment."
Axia provided the requested documents on October 17, 1988. The plaintiff again failed to file a reply brief within the requisite time, even after being advised of its due date by defense counsel, and after she herself checked the date with the clerk of the court.
On November 28, 1988, fourteen days after Crigler's response was due, the state court held a hearing on the defendants' motion to bar the plaintiff from filing a response to the motion to dismiss. Crigler's counsel did not appear at that hearing. Finding that the plaintiff had received due notice both of the filing date and of the hearing, the court then granted the defendants' motion to bar any response by the plaintiff. The court then heard extensive oral arguments on the substantive merits of the motion to dismiss and took the matter under advisement until December 2, 1988, stating that a ruling would be made by opinion letter. On December 2, 1988, the court continued its ruling date to December 19, 1988. On December 19, 1988, in a one page order ("December order"), the court dismissed Crigler's amended complaint without prejudice.
Crigler then filed a motion for reconsideration and the defendants filed a motion for an order dismissing the case with prejudice and finding that there is no just reason to delay enforcement or appeal from the order. After the court denied both motions on January 5, 1989 ("January order"),
Crigler filed a motion for a modification of the January order, asking that the December dismissal order be deemed final and appealable. In an order dated February 14, 1989 ("February order"), the court decided to first allow the plaintiffs 14 more days in which to refile the action and then provided that, absent a refiling within that time period, "the orders of December 19, 1988 and January 5, 1989, dismissing this action without prejudice shall become final and appealable orders." Crigler did not file a new action within the 14 days provided. Finally, after a status on March 14, 1989 at which neither Crigler nor his attorney appeared, the court deemed the December and January orders final, and found that there was no just reason for delay of enforcement or appeal from the orders ("March order"). With minor exceptions, the amended complaint in state court was verbatim to the complaint filed in this Court on November 22, 1989.
In determining whether Crigler is precluded from bringing this action, we are bound to give "state courts judgments the same effect such judgment would be given by the courts of the state in which the judgment was rendered." PaineWebber Inc. v. Farnam, 870 F.2d 1286, 1290 (7th Cir. 1989); 28 U.S.C. § 1738. Illinois adheres to traditional preclusion principles such that "when an issue of fact or law is actually litigated and determined by a valid and final judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim." Id. See also Harl v. City of LaSalle, 679 F.2d 123, 125-26 (7th Cir. 1982). Our resolution of the preclusion issue in this case is complicated by the fact that we have been presented with a series of orders from the state court and the parties disagree concerning the effect to be given each order individually and the effect of the orders taken as a whole. Both sides have framed their arguments in terms of whether or not the orders issuing from the state court acted as a complete bar to any subsequent suit between the parties, whether on the same or on a different claim, arising out of the same transaction. Our analysis, however, will proceed along two lines of inquiry.
I. Issue Preclusion -- The Law of the Case
Before addressing the issue whether the state court orders operated to bar Crigler from renewing his action in any form, we find that the December order of dismissal, standing alone, should at least be given issue preclusive effect -- namely, that Crigler's amended complaint failed to state a viable cause of action under Illinois law. Under the law of the case doctrine, which federal courts may apply to orders issuing from state courts, once a competent court rules on a question of law, that ruling is generally binding as to that legal issue between the same or substantially similar parties given the same material facts. See PaineWebber, 870 F.2d at 1290-91. In order for a ruling to constitute the law of the case,
the question of law presented in the current action must have been actually decided in the former proceeding. . . . An issue may be "actually decided" even without an express ruling if a court can determine that the issue in question was decided by necessary implication.
Id. We believe that the state court's December order operated as a substantive determination in favor of the defendants that the amended complaint, which had incorporated evidence adduced during the course of discovery, failed to state a claim as a matter of law. The denial of the motion for reconsideration made that specific determination final.
In opposition to this conclusion, Crigler makes much of the fact that the December order dismissed the amended complaint "without prejudice." We see no special significance to those words with respect to the substantive issue before the state court -- the question whether or not the amended complaint stated a viable cause of action. The words "without prejudice" simply indicate that procedurally the December order would have permitted Crigler to file a second amended complaint if he so chose. Certainly the court's order that the complaint be dismissed without prejudice did not contemplate the refiling of a complaint that was a duplicate of the one dismissed. If it was the court's intention to dismiss the complaint simply for want of Crigler's prosecution of the motion to dismiss, the court would have done so right away, without hearing extensive oral arguments on the substantive merits of the motion and then taking the matter under advisement for a period of several weeks. Moreover, there would have been no reason to order that Crigler be barred from filing a response to the motion to dismiss -- in essence, treating Crigler's failure to respond as a waiver of the opportunity to argue the substantive issues. We are aware that the court did not issue an opinion letter concerning the motion as promised. Nonetheless, we do not believe that fact outweighs the other considerations upon which we base our conclusion that the state court "actually decided" the issue whether the amended complaint stated a viable cause of action.
Accordingly, because the complaint filed in this Court is identical in all substantive respects to the amended complaint dismissed in the state court action, ...