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05/13/94 AGRISERVE v. ROBERT W. BELDEN

May 13, 1994

AGRISERVE, INC., AN ILLINOIS CORPORATION, PLAINTIFF-APPELLANT,
v.
ROBERT W. BELDEN, DEFENDANT-APPELLEE.



Appeal from Circuit Court of Macon County. No. 93CH17. Honorable John L. Davis, Judge Presiding.

As Corrected June 27, 1994. As Corrected July 25, 1994. Petition for Leave to Appeal Denied October 6, 1994.

Honorable Frederick S. Green, J., Honorable Robert J. Steigmann, Concurring, Honorable Robert W. Cook, Specially Concurring

The opinion of the court was delivered by: Green

JUSTICE GREEN delivered the opinion of the court:

On February 16, 1993, plaintiff Agriserve, Inc., filed suit in the circuit court of Macon County against defendant Robert W. Belden alleging that (1) plaintiff was a closely held corporation; (2) on June 2, 1982, defendant became a shareholder, director, officer, and employee of plaintiff; (3) on or about February 1, 1991, defendant became an officer and director of a competing business; and (4) defendant's relationship with the competing business constituted a breach of his fiduciary duty to plaintiff as a shareholder of a closely held corporation. The complaint requested monetary damages and an order on defendant to place his stock "in [a] constructive trust."

Defendant moved to dismiss the complaint on the basis that (1) the complaint failed to state a cause of action because even in a corporation of the nature alleged here, a stockholder owes no duty not to compete with the corporation; and (2) the suit was barred by the res judicata effect of a prior judgment in favor of defendant in a prior suit between the parties. On April 5, 1993, the court entered an order dismissing the complaint in bar of action. Plaintiff has appealed. We affirm.

We choose to consider only the issue of res judicata. Documents on the face of the record and filed by defendant in support of his motion to dismiss in the instant case show that the prior case between the parties was Macon County case No. 91-L-30. There, plaintiff filed a complaint against defendant on February 1, 1991, alleging, as in the instant case, that defendant was engaging in activities in competition with plaintiff within the same time frame as alleged here.

Thus, the alleged injury in the two cases was the same. However, there the duty which defendant was alleged to have breached arose not merely from being a stockholder but from a written stockholder agreement, binding on all of them, which defendant allegedly orally agreed to abide by. There, the complaint sought an injunction against further competitive activity by defendant and monetary damages. The record shows that, by agreement of the parties, a judgment in bar of action was entered in favor of defendant in that first case.

The latest decision of the supreme court concerning res judicata is Torcasso v. Standard Outdoor Sales, Inc. (1993), 157 Ill. 2d 484, 490-91, 626 N.E.2d 225, 228-29, 193 Ill. Dec. 192, where the court set forth the standards we must follow in deciding this case in the following words:

"Under the doctrine of res judicata, a final judgment rendered on the merits by a court of competent jurisdiction is conclusive as to the rights of the parties and their privies and, as to them, constitutes an absolute bar to a subsequent action involving the same claim, demand, or cause of action. ( People v. Kidd (1947), 398 Ill. 405, 408, 75 N.E.2d 851.) Where there is identity of parties, subject matter, and cause of action, the doctrine of 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. ( Boddiker v. McPartlin (1942), 379 Ill. 567, 577, 41 N.E.2d 756.) A cause of action consists of a single group of facts giving the plaintiff a right to seek redress for a wrongful act or omission of the defendant. ( Pierog v. H.F. Karl Contractors, Inc. (1976), 39 Ill. App. 3d 1057, 1060-61, 351 N.E.2d 249.) Although a single group of operative facts may give rise to the assertion of more than one kind of relief or more than one theory of recovery, assertions of different kinds or theories of relief arising out of a single group of operative facts constitute but a single cause of action. ( Baird & Warner, Inc. v. Addison Industrial Park, Inc. (1979), 70 Ill. App. 3d 59, 64, 26 Ill. Dec. 1, 387 N.E.2d 831.) The test generally employed to determine the identity of causes of action for purposes of res judicata is whether the evidence needed to sustain the second action would have sustained the first. ( Redfern v. Sullivan (1982), 111 Ill. App. 3d 372, 376, 67 Ill. Dec. 166, 444 N.E.2d 205; Pierog, 39 Ill. App. 3d at 1061.) If the same facts are essential to maintain both proceedings or the same evidence is necessary to sustain the two, there is identity between the causes of action asserted, and res judicata bars the latter one. ( Morris v. Union Oil Co. (1981), 96 Ill. App. 3d 148, 157, 51 Ill. Dec. 770, 421 N.E.2d 278.) Identity of the causes of action may be determined from the record as well as from the pleadings in both causes. ( Pierog, 39 Ill. App. 3d at 1061.) The burden of establishing res judicata, or estoppel by judgment ( Pierog, 39 Ill. App. 3d at 1060), is upon the party invoking it, and to operate as such it must either appear upon the face of the record or be shown by extrinsic evidence that the precise question, or point, was raised in determining the former suit. City of Geneseo v. Illinois Northern Utilities Co. (1941), 378 Ill. 506, 512, 39 N.E.2d 26."

As we will explain, we conclude that under the rationale set forth in Torcasso res judicata applies here because the issues raised in the second case could have been raised in the first case upon the factual matters before the court at that time. See Boddiker v. McPartlin (1942), 379 Ill. 567, 577, 41 N.E.2d 756, 761.

The promotion of judicial economy by prohibiting repetitive litigation is a principal purpose of the res judicata rules. ( Pedigo v. Johnson (1985), 130 Ill. App. 3d 392, 394, 474 N.E.2d 430, 432, 85 Ill. Dec. 702.) Sections 24 and 25 of the Restatement (Second) of Judgments (Restatement (Second) of Judgments §§ 24, 25 (1982)) adopt a transactional approach to res judicata which promotes judicial economy and which would clearly apply the rule here.

Section 24 of the Restatement (Second) of Judgments provides:

"Dimensions of 'Claim' for Purposes of Merger or Bar-General Rule Concerning 'Splitting' (1) When a valid and final judgment rendered in an action extinguishes the plaintiff's claim pursuant to the rules of merger or bar (see §§ 18, 19), the claim extinguished includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose.

(2) What factual grouping constitutes a 'transaction', and what groupings constitute a 'series', are to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business ...


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