The opinion of the court was delivered by: Reagan, District Judge
Southern Illinois Railcar Company ("SIRC") filed this suit in Illinois state court, claiming that Nashville & Eastern Railway Corp. ("NERC") breached a railcar lease agreement between the two parties and was unjustly enriched thereby. NERC removed the action to this United States District Court one year ago. Subject matter jurisdiction lies under the federal diversity statute, 28 U.S.C. § 1332.
With leave of court (and following the Court's ruling on a motion to dismiss), SIRC filed an amended complaint in November 2005. NERC responded with an answer and four-count counterclaim the following month.
NERC's counterclaim alleges: (1) SIRC breached the lease agreement by failing to provide NERC with railcars in satisfactory condition and failing to repair the railcars as required, (2) SIRC knowingly made false representations regarding the condition of the railcars, which NERC relied on to its detriment, (3) SIRC carelessly or negligently made representations regarding the condition of the railcars, without ascertaining the truth of those statements (statements which were relied on by NERC), and (4) SIRC's concealment of facts regarding the condition of the railcars violated the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1, et seq.
In April 2006, the undersigned Judge denied SIRC's motion to dismiss NERC's counterclaim, explaining (Doc. 40, pp. 3-4):
Arguing for and against dismissal of NERC's counterclaim, the parties submitted hundreds upon hundreds of pages of material (much of which originated in the bankruptcy proceedings). This Court cannot properly consider all of that documentation on a Rule 12(b)(6) motion.
Assuming, arguendo, that this material could properly be assessed under Rule 12(b)(6), after accepting all well-pled factual allegations in the counterclaim as true and drawing all reasonable inferences in the counterclaimant's favor, this Court would be hard-pressed to dismiss NERC's counterclaim at this point.
Nor is the Court persuaded by SIRC's argument for dismissal of the counterclaim for lack of subject matter jurisdiction....
As to the Rule 12(b)(6) motion, the undersigned Judge further noted (Id., p. 3): "the question of res judicata is better decided via summary judgment motion than via Rule12(b)(6) motion."
On July 5, 2006, SIRC moved for summary judgment on NERC's counterclaim and affirmative defenses. NERC responded on August 3, 2006. For the reasons stated below, the Court grants SIRC's motion.
B. Applicable Legal Standards
Summary judgment is appropriate when the record reveals that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); Phillips v. Quebecor World RAI, Inc., 450 F.3d 308, 310 (7th Cir. 2006); Crouch v. Whirlpool Corp., 447 F.3d 984, 985-86 (7th Cir. 2006). See alsoCelotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
The doctrine of res judicata holds 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." Highway J Citizens Group v. U.S. Dept. of Transp., -- F.3d --, 2006 WL 2136639, *5 (7th Cir. Aug. 2, 2006), citingAllen v. McCurry, 449 U.S. 90, 94 (1980).
The three requirements for res judicata under federal law are: (1) an identity of the parties or their privies; (2) an identity of the causes of actions; and (3) a final judgment on the merits. Id., quotingCent. States, S.E. & S.W. Areas Pension Fund v. Hunt Truck Lines, Inc., 296 F.3d 624, 628 (7th Cir. 2002). If these requirements are fulfilled, res judicata bars not only those issues which were actually decided in a prior suit but also all issues which could have been raised in that action. Id., citing Brzostowski v. Laidlaw Waste Sys., Inc., 49 F.3d 337, 338 (7th Cir. 1995).
Although the doctrine of res judicata applies in the context of a bankruptcy confirmation/discharge, see, e.g., D & K Properties Crystal Lake v. Mutual Life Ins. Co. of New York, 112 F.3d 257, 259 (7th Cir. 1997), the doctrine does not override the requirements of due process, and a court must take care not to enforce a bankruptcy ...