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07/07/95 TRUDE SCHNITZER v. JAMES J. O'CONNOR

July 7, 1995

TRUDE SCHNITZER, AS EX'R OF THE ESTATE OF SELMA BERNHEIMER, INDIV. AND DERIVATIVELY ON BEHALF OF COMMONWEALTH EDISON COMPANY, PLAINTIFF-APPELLANT,
v.
JAMES J. O'CONNOR, THOMAS L. BIDE, JEAN ALLARD, JAMES W. COMPTON, DONALD P. JACOBS, GEORGE E. JOHNSON, HARVEY KAPNICK, BYRON LEE, JR., PATRICK G. RYAN, AND LANDO W. ZECH, JR., DEFENDANTS-APPELLEES (COMMONWEALTH EDISON COMPANY, NOMINAL DEFENDANT-APPELLEE).



APPEAL FROM THE CIRCUIT COURT COOK COUNTY. THE HONORABLE ALBERT GREEN, JUDGE PRESIDING.

Released for Publication September 6, 1995. As Corrected September 15, 1995.

Presiding Justice Cousins delivered the opinion of the court: Gordon and McNULTY, JJ., concur.

The opinion of the court was delivered by: Cousins

PRESIDING JUSTICE COUSINS delivered the opinion of the court:

The plaintiff, Trude Schnitzer, filed a shareholder derivative suit on behalf of Commonwealth Edison Company (Edison) against the defendants - certain present and former directors of Edison - alleging a breach of their duties regarding the construction of nuclear power plants. Six months before the Schnitzer complaint, another Edison shareholder, Bertha Miller, had filed a shareholder derivative suit against the same defendants alleging the same breach of duties in Miller v. Thomas, No. 93 CH 9532. While the Miller plaintiffs had previously demanded that Edison's board sue the defendants, the Schnitzer complaint alleged that demand was futile due to the board's lack of independence. The defendants filed a motion to dismiss pursuant to section 2-619(a)(3) of the Code of Civil Procedure (735 ILCS 5/2-619 (West 1992)), alleging that Miller was another action pending between the parties for the same cause. The trial court granted the motion, from which the plaintiff appeals. Two months after the dismissal, Miller was dismissed on the merits, and plaintiff filed a petition for relief from judgment pursuant to section 2-1401 of the Code of Civil Procedure. (735 ILCS 5/2-1401 (West 1992).) The trial court denied plaintiff's petition, and plaintiff's appeal of that order is consolidated with her previous appeal in this matter.

We affirm.

BACKGROUND

On October 1, 1992, two Edison shareholders - Bertha Miller and Fred Steinlauf - filed a derivative action on behalf of Edison alleging that certain current and former officers and directors of Edison breached their duties regarding the construction of the Byron and Braidwood nuclear plants. An additional count in their action sought damages against the current directors for not acting against those responsible. Before filing suit, the Miller plaintiffs had demanded that Edison's board sue the individual officers and directors for their breaches of duty. Miller was stayed by the trial court on November 25, 1992, until Edison's board had acted on the demand request.

In response to the demand request, the board retained independent counsel - the law firm of Jenner and Block - to conduct an investigation of the issues raised in the demand. At the conclusion of its investigation in April of 1993, the board decided that the allegations in Miller were meritless and that pursuing litigation was not in the best interests of Edison. Accordingly, on April 20, 1993, the board rejected the demand and moved to dismiss the Miller complaint pursuant to section 2-619. 735 ILCS 5/2-619 (West 1992).

The plaintiff in this matter, Trude Schnitzer, instituted her two-count derivative action on April 14, 1993, on behalf of Edison. The first count alleged that current and former directors of Edison had breached their duties regarding the construction of the Byron and Braidwood nuclear plants. All of the Schnitzer defendants were named as defendants in Miller, and the plaintiff's substantive allegations were nearly identical to the Miller complaint. Plaintiff's second count, as in Miller, sought damages against current directors for not acting against those responsible. Plaintiff concluded her complaint with demand allegations in which she alleged that any demand by her to Edison's board would be futile, citing several grounds: the board's failure to respond to previous demands, the board's previous awareness of negligent conduct, its insurance policies, and its friendships and alliances among those responsible.

On June 18, 1993, the defendants filed a motion to dismiss pursuant to section 2-619(a)(3) of the Code of Civil Procedure (735 ILCS 5/2-619(a)(3) (West 1992)), alleging that plaintiff's complaint should be dismissed because Miller was another action pending between the parties for the same cause. Plaintiff opposed the motion on two grounds: (1) Miller had different plaintiffs and thus was not the same party, and (2) Miller was a different cause because it was a "demand made" case while plaintiff's complaint was a "demand futile" case. On August 4, 1993, the plaintiff moved to consolidate her case with Miller solely for the purpose of discovery. The trial court rendered the discovery motion moot on October 7, 1993, when it granted the defendants' motion to dismiss, from which the plaintiff appeals.

On December 7, 1993, the Miller action was dismissed on the merits. The Miller court barred the derivative action after finding that Edison's board had made its decision not to litigate with adequate information, due care, and good faith under the discretion of the business judgment rule. The Miller plaintiffs have filed an appeal which is currently pending before this court.

On February 9, 1994, plaintiff filed a petition for relief from judgment pursuant to section 2-1401 of the Code of Civil Procedure (735 ILCS 5/2-1401 (West 1992)), arguing that she should be allowed to proceed now that Miller was no longer pending. The trial court denied plaintiff's petition on April 14, 1994, for three separate reasons: (1) Miller was still pending on appeal, (2) Miller acted as res judicata towards plaintiff's complaint, and (3) Miller adjudicated plaintiff's claim on the merits. The plaintiff appeals that order, and her two appeals were consolidated on April 27, 1994.

I

Addressing the first appeal, the court dismissed plaintiff's action under section ...


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