Appeal from the Circuit Court of Cook County No. 09 L 01162 Honorable Illinois ) Daniel J. Pierce,Judge Presiding.
The opinion of the court was delivered by: Justice Hyman
JUSTICE HYMAN delivered the judgment of the court, with opinion.
Presiding Justice Neville and Justice Sterba concurred in the judgment and opinion.
¶ 1 Plaintiff, BankFinancial, FSB, successor by merger to Success National Bank, appeals the trial court's order granting defendants' cross-motions for summary judgment based on the equitable doctrine of res judicata and the rule against claim-splitting. Plaintiff filed a five-count*fn1 complaint against defendants, Jagdish Tandon and Amitron, Inc. (BankFinancial I), seeking: (1) foreclosure of a leasehold mortgage; (2) breach of contract against defendant Tandon related to a promissory note in the amount of $1.2 million; (3) breach of guaranty against defendant Amitron, Inc., related to the same promissory note; (4) breach of contract against Tandon related to a promissory note in the amount of $80,000; and (5) breach of contract against Tandon related to a promissory note in the amount of $66,400. On September 8, 2006, plaintiff orally requested that count I be nonsuited and the matter was transferred from the chancery division to the law division for all further proceedings. The remaining counts were dismissed for want of prosecution in an order dated February 4, 2008 (DWP Order). The DWP Order was never vacated.
¶ 2 On January 30, 2009, plaintiff filed a new action (BankFinancial II), within one year of the DWP Order as permitted by section 13-217 of the Illinois Code of Civil Procedure (735 ILCS 5/13-217 (West 2008)). BankFinancial II contained counts II and III, pled in BankFinancial I: breach of promissory note for $1.2 million by Tandon and breach of the guaranty on the same promissory note by Amitron. The trial court granted defendants' cross-motion for summary judgment, holding the doctrine of res judicata barred BankFinancial II. The trial court held that as a matter of law the September 8, 2006, order in BankFinancial I voluntarily dismissing count I without prejudice became final and appealable when the DWP Order was not vacated within 30 days, despite plaintiff's timely filing of BankFinancial II under section 13-217. The trial court held the voluntary dismissal order constituted a final judgment as to count I of the original action sufficient to bar the second action under the doctrine of res judicata and rule against claim-splitting as articulated in Rein v. David A. Noyes & Co., 172 Ill. 2d 325 (1996), and Hudson v. City of Chicago, 228 Ill. 2d 462 (2008).
¶ 3 The September 8, 2006, order dismissing, without prejudice, count I of BankFinancial I is not a final order because it does not terminate the litigation between the parties on the merits. Plaintiff voluntarily decided not to further pursue count I, the leasehold mortgage foreclosure cause of action, after discovery revealed the cause of action to be ill-founded. Hence, the dismissal of the foreclosure count was not a final order because it was the intended voluntary actof plaintiff and not relief sought by either defendant. The February 4, 2008, order that dismissed counts II, III, IV and V for want of prosecution was not a final order because it did not terminate the litigation between the parties on the merits or adjudicate the rights of the parties on the entire controversy or a separate branch thereon. Plaintiff's timely filing of BankFinancial II under section 13-217 did not alter the September 8, 2006, order's interlocutory nature. Therefore, because the September 6, 2006, order that dismissed count I and the February 4, 2008, order that dismissed counts II, III, IV and V for want of prosecution were not final orders, BankFinancial II implicated neither the doctrine of res judicata nor the rule against claim-splitting. Accordingly, we reverse the trial court's order granting summary judgment and remand for further proceedings.
¶ 5 On September 8, 2006, plaintiff took a voluntarily non-suit of count I of BankFinancial I, a claim for foreclosure of a leasehold mortgage. The order entered by the court stated that count I was "stricken without prejudice." The breach of contract and breach of guaranty claims remained. The case was then transferred to the law division. The following was written on the transfer order as the reason for the transfer, "Plaintiff non-suited its mortgage foreclosure claim. Breach of contract claims remain pending."
¶ 6 Following transfer to the law division, dismissals for want of prosecution were repeatedly entered over the next year and a half, followed by repeated timely motions to vacate the dismissals. From October 23, 2006, to February 4, 2008, four DWP orders were entered. On March 4, 2008, plaintiff filed a motion to vacate the fourth DWP order, claiming it missed court due to misdocketing the court date. Plaintiff's motion was never noticed up or presented to the court. No other activity took place during this time.
¶ 7 On January 30, 2009, plaintiff filed BankFinancial II, which was amended on December 30, 2009. Plaintiff alleged breach of contract against Tandon on the $1.2 million note (count I) and against Amitron, breach of contract for guaranty of the same note (count II). Other than the interest amounts, all other allegations against the parties were identical to the claims as raised in BankFinancial I. Plaintiff did not refile count I of BankFinancial I, foreclosure of a leasehold mortgage, because plaintiff had determined there was no basis in law or fact for refiling that claim.
¶ 8 On April 12, 2010, while defending against plaintiff's motion to strike its affirmative defenses and for summary judgment, defendant Amitron filed a cross-motion for summary judgment as to its first affirmative defense, res judicata, and its third affirmative defense, laches. Plaintiff filed a response to Amitron's cross-motion and at the same time filed its reply to its own dispositive motions. Amitron replied to plaintiff's response.
¶ 9 On February 16, 2011, the trial court heard argument. When the parties raised the issue of res judicata, the court asked them to submit supplemental briefs addressing: (1) claim-splitting under Hudson v. City of Chicago, 228 Ill. 2d 462 (2008) and (2) the finality of the September 8, 2006, order, striking, without prejudice, count I of BankFinancial I.
¶ 10 On September 20, 2011, the trial court heard the parties'
arguments, and held, as defendants had urged, that the voluntary
dismissal of count I of BankFinancial I on September 8, 2006, together
with the February 4, 2008, DWP Order, constituted an adjudication
res judicata once the deadline for vacating the DWP Order
expired and, therefore, granted defendants' motion for summary
judgment. The court stated, "once the DWP--the fourth DWP was entered,
all BankFinancial's problems started at that point." The trial court
also held that plaintiff's subsequent filing of BankFinancial II gave
rise to issues claim-splitting, as discussed ...