United States District Court, N.D. Illinois
March 12, 2004.
The opinion of the court was delivered by: PHILIP REINHARD, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff, ATT Systems Co. et al, filed a nine count amended complaint
against defendants, Vincent R. Tylman, Patricia B. Tylman and The Namlyt
Trust. Federal question jurisdiction exists under 28 U.S.C. § 1331 as the
complaint alleges violation of the federal securities laws, 15 U.S.C. § 77,
among other claims. Defendants move to dismiss claiming res judicata and
collateral estoppel bar the action. Defendants assert that the same
parties litigated the same issues in Illinois state court in a case that
was ultimately dismissed with prejudice based on a settlement agreement.
In their motion, defendants rely on attached exhibit which is an order of
dismissal with prejudice in a state court action captioned Sci-Tech
Building Systems. LLC, and Investors v. Vince R. Tylman. Patricia B.
Tylman. The Namlyt Co., a Business Trust, and Julie Vaughn and the
statement by plaintiff in paragraph 8 of a brief filed with Plaintiff's'
amended complaint in which counsel for plaintiff states "This present
action in federal court is brought on the same merits and for the same
fundamental reasons as those analyzed by Judge Glenn. . . . [T]he issues
presented arose from the same set of operative facts precipitating the
Sci-Tech investors' present RICO action" in this court.
Based on the information before the court at this time, it is not
possible to conclude that either res judicata or collateral estoppel bar
Plaintiff's' claims. The "preclusive effect of a state court judgment in
a federal case is a matter of state rather than federal law." Brokaw v.
Weaver. 305 F.3d 660, 669 (7th Cir. 2002). Under Illinois law, both res
judicata and collateral estoppel require an identity of parties or their
privies. Id. (applying Illinois law); Garcia v. Village of Mt. Prospect.
No. 02-2869, 2004 WL 324903, * 3 (7th Cir. Feb. 23, 2004) (applying
Illinois law). The Plaintiff's in the state court action ARB Sci-Tech
Building Systems, LLC which is not a plaintiff in this action and
"Investors" whose identities ARB not discernible from the state court
order. It cannot be said at this point on this record that identity of
parties or their privies exists. As such res judicata and collateral
estoppel cannot be used to bar Plaintiff's' claims now.
Defendants also filed a motion for sanctions pursuant to 28 U.S.C. § 1927
asserting this action is a "vexatious and unreasonable multiplying" of
the prior state court action. Based on the foregoing, this motion is
premature and is also denied.
For the foregoing reasons, defendants' motion to dismiss and motion for
sanctions ARB denied.
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