Appeal from the Circuit Court of Cook County No. 88 CH 4670; 89 CH 4112 The Honorable Thomas A. Hett, Judge Presiding.
The opinion of the court was delivered by: Justice Cousins
In 1988, plaintiffs-appellants, Ernest Loberg, Harriet Loberg, and Sharon Menely, individually and on behalf of the class certified in September 1995, filed suit against Equitec Financial Group (Equitec Financial) and Equitec Fund A (Equitec A) seeking to rescind their purchases of Equitec A limited partnership interests on behalf of 41 Illinois residents who purchased the limited partnership interests in 1985 and 1986 from two unlicensed brokers. In 1989 Hallwood Realty Corporation (Hallwood) purchased the general partnership interests of 11 Equitec real estate limited partnerships.
In June 1990 Hallwood Realty Corporation issued a proxy statement that solicited the consent of the limited partners of 11 Equitec real estate limited partnerships sponsored by Equitec Financial to exchange or "roll-up" their limited partnership interests in their respective real estate limited partnerships for newly issued units of limited partnership interests in Hallwood Realty Partners, L.P. (HRP). This solicitation led to the litigation known as the Equitec Roll-up Litigation (Roll-up litigation), filed in California, in which the plaintiffs alleged that HRP, Equitec, and other defendants violated federal and state laws in conducting the 1990 proxy solicitation. In July 1994 plaintiffs amended their complaint in the Illinois litigation to add Hallwood Income Real Estate Investors A (Hallwood A) and HRP as defendants/successors-in-interest. The Roll-up litigation was settled in 1994.
On February 1, 2000, the trial court in the Illinois litigation granted summary judgment in favor of Hallwood A and HRP based upon the judgment and release by plaintiffs in the California Roll-up litigation.
The central issue in this case is whether the plaintiffs' claims in their Illinois class action litigation were released by the California judgment and release in the Roll-up litigation. We answer in the affirmative.
In 1988, plaintiffs filed suit against Equitec Financial and Equitec A seeking to rescind their purchases of Equitec A limited partnership interests purchased from unlicenced brokers Kenneth Boula and Dean Gordon. The general partner of Equitec A was Equitec Financial. Plaintiffs' suit against Equitec Financial and Equitec A was one of several class action suits filed due to purchases of securities from the same unregistered brokers. These suits were later consolidated under Hess v. I.R.E. Real Estate Income Fund, Ltd., 255 Ill. App. 3d 790, 629 N.E.2d 520 (1993).
In June 1990 Hallwood Realty Corporation issued a proxy statement that solicited the consent of the limited partners of 11 Equitec real estate limited partnerships sponsored by Equitec Financial to exchange or "roll-up" their limited partnership interests in their respective real estate limited partnerships for newly issued units of limited partnership interests in HRP. This solicitation led the Equitec Roll-up litigation. The plaintiffs in the Roll-up litigation alleged that HRP, Equitec and other defendants violated federal and state law in conducting the 1990 proxy solicitation.
In August 1991 a class was certified and a court-ordered notice of pendency of class action (Notice) was sent to class members in the Roll-up litigation. That Notice was addressed to: "ALL PERSONS WHO HELD INTERESTS AS OF APRIL 30, 1990, IN ANY OF THE FOLLOWING EQUITEC-SPONSORED REAL ESTATE LIMITED PARTNERSHIPS AND EXCHANGED THOSE INTERESTS FOR LIMITED PARTNERSHIP INTERESTS IN HALLWOOD REALTY PARTNERS, L.P., AS A RESULT OF THE CLOSING OF THE SUBJECT EXCHANGE TRANSACTION ON NOVEMBER 1, 1990." Those persons constituted the class for the pending action. The judgment, whether favorable or not, would apply to the class members' claims and would be binding upon them and the defendants. The Notice further stated, "[i]f you wish to be included in the Plaintiff Class, you do not need to take any action." However, in order to be excluded from the class, a class member was required to send a request along with other pertinent information to a California post-office box by September 28, 1991. Plaintiffs in the instant case did not request exclusion.
The Roll-up litigation was settled in 1994. The notice of the proposed settlement, which was dated August 15, 1994, was addressed to: "ALL PERSONS WHOSE INTEREST IN EQUITEC REAL ESTATE LIMITED PARTNERSHIPS WERE EXCHANGED FOR SECURITIES ISSUED BY HALLWOOD REALTY PARTNERS, L.P. ALL PERSONS WHO, ON APRIL 11, 1994, OWNED A BENEFICIAL INTEREST IN HALLWOOD REALTY PARTNERS, L.P. ('HRP UNITHOLDERS')." The notice of proposed settlement also provided the following definition of "settled claims":
"'Settled Claims' means any and all claims, causes of action, suits, demands or requests for relief, known or unknown, that are or were asserted or could have been asserted in the Actions and each and every complaint filed in the Actions, Plaintiffs' Statement of Issues To Be Tried and all amendments thereto, or claims which are otherwise referred to or described in any of the letters, pleadings, briefs, expert reports, trial testimony or deposition testimony ***, and all such claims which could have been asserted by the Settling Plaintiffs in any other action or proceeding against the Settling Defendants which arises or relates to the subject matter of these Actions or any matters, transactions, occurrences or omissions referred to in the pleadings, motions, discovery, trial or other papers and proceedings in any of these Actions, including but not limited to, claims relating to fees paid to Hallwood Group or its affiliates by HRP, claims for violations of the federal securities laws, state securities laws, *** and actions arising under state statutory or common law *** up through the entry of the District Court's Notice Order."
The notice of proposed settlement also provided that any class member could be heard at the settlement hearing and could object to or express his or her views regarding the proposed settlement. Plaintiffs did not object to the proposed settlement. The subsequent release that plaintiffs signed included the definition of "Settled Claims" found in the notice of proposed settlement.
In 1994, plaintiffs also sought to amend their complaint in the pending Illinois class action litigation to add Hallwood, alleging that the defendants were responsible as successors-in-interest for the prior conduct of Equitec and Equitec Fund A. The motion to amend was allowed. In answering plaintiffs' amended complaint, the Hallwood defendants asserted both that plaintiffs had already released their claims against the Hallwood defendants in connection ...