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Speedy Gonzalez Landscaping, Inc v. Hanover Specialties

December 17, 2012

SPEEDY GONZALEZ LANDSCAPING, INC., PLAINTIFF,
v.
HANOVER SPECIALTIES, INC., DEFENDANT.



The opinion of the court was delivered by: Matthew F. Kennelly, District Judge:

MEMORANDUM OPINION AND ORDER

Speedy Gonzalez Landscaping, Inc. (SGL) has sued Hanover Specialties, Inc. (Hanover) for breach of contract, seeking damages in the amount of $108,841.15. Hanover has moved to dismiss the case for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). Hanover argues that SGL's claim is barred by the doctrine of res judicata, or claim preclusion. For the reasons stated below, the Court denies Hanover's motion.

Background

SGL alleges that it was hired by the Chicago Park District to construct playground facilities in 2006-2007. SGL subcontracted with Hanover to install soft tiles in the playground facilities. Approximately six months after the work was completed in 2008, the Park District notified SGL that the tiles were defective and had not been installed properly. SGL says that it advised Hanover about these complaints and the need to replace the tiles and correct the deficient installation.

Between April and August of 2009, SGL alleges, Hanover made repairs at various playground facilities. SGL alleges that although Hanover performed these repairs, it "failed to fulfill its contractual obligations in a good and workmanlike manner." Compl. ¶ 10. As a result, SGL says that it was forced to "incur[ ] additional costs, inter alia, the purchase of replacement tiles, the cost of and labor for new sealant and caulk, the cost for temporary fencing at each of the park facilities which needed repairs, and security for reinstallation." Id. SGL contends that it incurred damages in the amount of $108,841.15 and is suing Hanover for breach of contract to recover this amount.

Hanover's motion to dismiss is based on the proceedings in and outcome of a state court action that it filed against SGL in April 2011. In that case, Hanover alleged that SGL breached the parties' contract by failing to pay $62,123.51 for delivery of tiles. In its answer in that case, SGL admitted that it ordered and received the tiles but denied that it owed Hanover the amount claimed on the ground that the tiles were defective and SGL was damaged as a result.

Hanover ultimately moved for summary judgment in the state court case. Its motion was based on part on procedural developments in the case that, according to Hanover, precluded SGL from offering evidence to support its defense. Hanover contended that it was entitled to judgment for the amount due for delivery of the tiles.

In response, SGL again argued that the tiles that Hanover had provided were defective. It contended that its cost to remove and replace the tiles "equaled or exceeded the amount which [Hanover] claims it is entitled to recover from [SGL]."

Def.'s Mem. in Support of Mot. to Dismiss, Ex. D. SGL submitted an affidavit from its owner Jose Gonzalez in support of this contention. Gonzalez stated in his affidavit that after the Chicago Park District notified SGL of problems with the tiles, SGL "was required to remove all of the defective tiles" and replace them. Gonzalez further stated that although Hanover replaced the tiles, SGL "spent considerable time, labor and expense in supervising the reinstallation of tiles in ten (10) playgrounds, provided on-site security and furnished various materials including specialized calk [sic] to comply with the Chicago Park District specifications in accordance with the written warranty provided by Hanover." Id.

The state court granted summary judgment in favor of Hanover. The court did not issue a written decision, and Hanover has not offered a transcript of any oral ruling. The state court judge entered a form order presented by Hanover's counsel that included a handwritten statement that "[t]he court finds no material issue of fact or law, having considered the pleadings and Defendant's affidavit in response to [the] motion." Id., Ex. B. The Court awarded Hanover $54,375. Id.

Discussion

Hanover has moved to dismiss for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1), contending that SGL's claim is barred due to the doctrines of res judicata, otherwise known as claim preclusion,and collateral estoppel, otherwise known as issue preclusion. These defenses, however, do not implicate the Court's subject matter jurisdiction; rather, they are ordinary affirmative defenses. See Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 293 (2005). Thus there is no basis for a jurisdictional dismissal.

That does not mean, however, that the Court must deny Hanover's motion out of hand. Rather, the Court may consider the motion pursuant to Rule 12(b)(6), because that has no adverse procedural impact on SGL. And even though claim preclusion is an affirmative defense, a court may consider it on a Rule 12(b)(6) motion if the facts relevant to the defense are ascertainable from the complaint or "judicially noticeable records from the state-court case." Ennenga v. Starns, 677 F.3d 766, 776 n.6 (7th Cir. 2012). See also, e.g., General Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080-81 (7th Cir. 1997) (court may take judicial notice of matters of public record on a motion to dismiss under Rule 12(b)(6)).

The preclusive effect of an Illinois judgment is determined by Illinois law. See, e.g., In re Dollie's Playhouse, Inc., 481 F.3d 998, 1000 (7th Cir. 2007). In Illinois, in order for claim preclusion to apply, there must have been a final judgment on the merits rendered by a court of competent jurisdiction, regarding the same cause of action, involving the same parties as those in the second suit or their privies. See River Park, Inc. v. City of Highland Park, 184 Ill. 2d 290, 302, 703 N.E.2d 883, 889 (1998). If these requirements are met, the judgment "acts as a bar to a subsequent suit between the parties involving the same ...


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