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CAPLAN v. INTERNATIONAL FID. INS. CO.

May 8, 1995

MITCHELL CAPLAN, Plaintiff,
v.
INTERNATIONAL FIDELITY INSURANCE COMPANY, Defendant.



The opinion of the court was delivered by: JAMES H. ALESIA

 Plaintiff Mitchell Caplan brings this diversity suit against defendant International Fidelity Insurance Company ("IFIC"). Plaintiff owns 53,000 shares of IFIC stock. Plaintiff's five-count complaint alleges breach of fiduciary duty (Count I), conspiracy (Count II), fraud (Count III), and intentional infliction of emotional distress (Count IV), and asserts an oppressed minority shareholder action (Count V).

 Before the court is defendant's motion for summary judgment or, in the alternative, motion to dismiss Counts II, III and IV of plaintiff's Amended Complaint.

 I. BACKGROUND

 Plaintiff Mitchell Caplan alleges that he purchased 53,000 shares of IFIC stock in 1968, and that defendant IFIC wrongfully attempted to divest plaintiff of his ownership interest in the stock. Plaintiff alleges that defendant's plan included a bogus offer to purchase the stock, and use of a third party to falsely assert ownership interest in the stock.

 In reaction to defendant's alleged actions, plaintiff Caplan filed suit in Cook County, Illinois, circuit court on February 4, 1994. Initially, plaintiff named IFIC and three individuals as defendants. Plaintiff sought a declaratory judgment that he owned the 53,000 shares of IFIC stock (Count I), and money damages for an alleged conspiracy to defraud him of his ownership interest (Count II). The state court dismissed the three party defendants, and granted remaining defendant IFIC's motion to strike Count II. The state court afforded plaintiff an opportunity to amend Count II of his complaint. Plaintiff chose not to amend at that time.

 On September 9, 1994, the state court granted summary declaratory judgment on Count I naming plaintiff as the sole and exclusive title holder of the 53,000 shares of IFIC stock. Mitchell Caplan v. International Fidelity, Insurance Company, et al., Docket No. 94 CH 1137. Following a hearing on December 20, 1994, the state court granted plaintiff's amended motion for voluntary nonsuit of Count II. In addition, the state court denied defendant's motion to dismiss Count II with prejudice.

 II. DISCUSSION

 A. Motion for Summary Judgment

 Defendant IFIC's primary contention is that the doctrine of res judicata applies to bar all proceedings in this action, and on that basis defendant moves for summary judgment. See FED. R. CIV. P. 56. Defendant argues that the September 9 Order constituted a final judgment on the merits. Defendant asserts that the cause of action in this suit is identical to the cause of action in the state suit.

 This court applies the res judicata rules of Illinois to determine the preclusive effect of the September 9 Order issued by the Illinois state court. See Kremer v. Chemical Constr. Corp., 456 U.S. 461, 466, 102 S. Ct. 1883, 1889, 72 L. Ed. 2d 262 (1982) (applying 28 U.S.C. § 1738). The doctrine of res judicata provides that a "final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action." Allen v. McCurry, 449 U.S. 90, 94, 101 S. Ct. 411, 414, 66 L. Ed. 2d 308 (1980). Under Illinois law, the elements of res judicata are: (1) identity of parties in the two suits; (2) identity of causes of action in the two suits; and (3) a final judgment on the merits of the earlier suit. Welch v. Johnson, 907 F.2d 714, 720 (7th Cir. 1990).

 Plaintiff Caplan may assert his claims in this court because the state court expressly reserved his right to maintain a subsequent suit. See Torres v. Rebarchak, 814 F.2d 1219, 1223-26 (7th Cir. 1987) (anticipating that Illinois law of splitting of claims would include Restatement (Second) of Judgments § 26, providing that plaintiff may split his claim if court in first action has expressly reserved plaintiff's right to maintain second action); Merrifield v. Beaven/Inter-American Cos., 1992 U.S. Dist. LEXIS 11964, No. 89 C 8436, 1992 WL 193553, at *3 (N.D. Ill. Aug. 3, 1992) (applying the rationale of Torres in denying defendant's motion for summary judgment based on the doctrine of res judicata).

 The Illinois state court manifested its intention to allow plaintiff Caplan to refile his voluntarily dismissed claim in two ways. First, the language of a December 20, 1994, Order indicates the state court's decision to dismiss without prejudice. The Order provides, "For the reasons stated in open court defendant's motion to dismiss with prejudice is denied and plaintiff's amended motion for voluntary non-suit of Count II be and hereby is granted." (See Defendant's 12(m) Statement Ex. B.) It is well-settled in Illinois law that voluntary nonsuit does not bar another action for the same cause if the second action is timely filed, therefore the circuit judge was preserving a future right. See 735 ILCS 5/2-1009; Baird & Warner v. Addison Indus. Park, 70 Ill. App. 3d 59, 74, 387 N.E.2d 831, 844, 26 Ill. Dec. 1 (1st Dist. 1979).

 Second, during oral argument leading up to the December 20 Order, the state court judge expressed its ...


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