Opinion · Illinois Supreme Court
Richter v. Prairie Farms Dairy
53 N.E.3d 1
- Type
- Opinion
- Court
- Illinois Supreme Court
- Jurisdiction
- Illinois
- Date
- 2016-05-19
- Topic
- general
allowing new claims in a refiled action under section 13-217 that arose from the "same transaction" alleged in the prior action | “A nonfinal order cannot bar a subsequent action.”
Citator
- Cited by
- 25 opinions
2016 IL 119518
IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
(Docket No. 119518)
MICHAEL RICHTER et al., Appellees, v. PRAIRIE FARMS DAIRY, INC.,
Appellant.
Opinion filed May 19, 2016.
JUSTICE FREEMAN delivered the judgment of the court, with opinion.
Chief Justice Garman and Justices Thomas, Kilbride, Karmeier, Burke, and
Theis concurred in the judgment and opinion.
OPINION
¶1 Following a voluntary dismissal, plaintiffs, Michael Richter and Denise
Richter, doing business as Rich-Lane Farms, refiled their civil action against
defendant, Prairie Farms Dairy, Inc. The circuit court of Macoupin County
dismissed the refiled action pursuant to section 2-619 of the Code of Civil
Procedure on the grounds of res judicata and the statute of limitations. 735 ILCS
5/2-619(a)(4), (a)(5) (West 2012). The appellate court reversed and remanded for
further proceedings. 2015 IL App (4th) 140613
. This court allowed defendant’s
petition for leave to appeal. Ill. S. Ct. R. 315 (eff. Jan. 1, 2015). We now affirm the
judgment of the appellate court.
¶2 I. BACKGROUND
¶3 The pleadings alleged the following facts, which we accept as true in the
context of a dismissal pursuant to section 2-619. See Board of Managers of the
Village Centre Condominium Ass’n v. Wilmette Partners, 198 Ill. 2d 132, 134
(2001). Plaintiffs are partners in the business of dairy farming. Defendant is an
agricultural cooperative (see 805 ILCS 315/1 et seq. (West 2014)) in the business
of producing and supplying dairy products. In August 1980, plaintiffs became
members of defendant’s cooperative, paid $15 for shares of defendant’s common
stock, and entered into a “Milk Marketing Agreement” with defendant. According
to the agreement, plaintiffs would provide defendant with whole milk, which
defendant would market and sell.
¶4 In April 2005, plaintiffs temporarily ceased milk production. However,
plaintiffs had “hoped and expected to resume production within one year and [had]
retained their stock of heifers to enable them to do so.” At that time, defendant’s
bylaws provided, in pertinent part, as follows:
“Section 8. Termination of Stock Interest. Any common stockholder who
ceases to be a producer of agricultural products or who fails to patronize the
association for one (1) fiscal year or who violates any provision of the Articles
of Incorporation, the Bylaws, or a marketing agreement shall forfeit his right to
own Common Stock in this association when evidence of such fact has been
presented to the Board of Directors and upon passage of a resolution by the
Board finding such to be the fact, immediately thereupon all the rights of such
common stockholder shall cease ***. Upon termination of membership, the
Board shall redeem the outstanding Common Stock of the terminating member
by payment to the member of the actual dollar consideration paid by the
member for such Common Stock.”
Defendant became aware that plaintiffs temporarily ceased milk production no later
than April 30, 2005.
¶5 In an October 2005 letter, defendant notified plaintiffs that it had terminated
their agreement and plaintiffs’ membership in the cooperative. The letter contained
two alternative reasons for its actions: “You were no longer marketing milk as an
active producer of Prairie Farms, as set forth in the By-Laws, at the end of the fiscal
year ending 9/30/05,” or “During the current fiscal year, there was a change in the
way your membership was recorded in our books (name change, etc.).” Defendant
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tendered $15 to plaintiffs to redeem the shares of common stock, but plaintiffs
rejected the payment.
¶6 A. Richter I
¶7 In October 2006, plaintiffs filed a three-count complaint against defendant in
the circuit court of Madison County. Plaintiffs alleged that they sustained damages
as a result of defendant’s termination of their agreement and plaintiffs’ membership
in the cooperative. Count I sought shareholder remedies pursuant to section 12.56
of the Business Corporation Act of 1983 (Business Corporation Act) (805 ILCS
5/12.56 (West 2006)). Based on defendant’s alleged concealment, suppression, or
omission of its interpretation of section 8 of its bylaws, count II alleged a claim
pursuant to the Illinois Consumer Fraud and Deceptive Business Practices Act
(Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2006)), and count III alleged
common-law fraud.
¶8 Defendant moved to dismiss the complaint, arguing that each count failed to
state a claim upon which relief may be granted. See 735 ILCS 5/2-615 (West
2006)). Defendant asked the circuit court to “dismiss Counts I through III of the
Complaint with prejudice as a matter of law.”
¶9 On September 26, 2007, the circuit court ruled on defendant’s motion in a
written order, which stated in pertinent part:
“Defendant’s Motion to Dismiss as to Counts I, II, and III are heard and
argued.
Defendant’s motion as to Count I is denied.
Defendant’s Motion to Dismiss as to Counts II and III are granted.
Plaintiff[s] given leave to file amended complaint within 30 days.
Defendant given leave to file response to amended complaint within 30
days after plaintiff’s filing of the same.
Defendant to answer Count I within 30 day[s] of [today’s] order.”
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On October 24, 2007, plaintiffs moved for an extension of time to file an amended
complaint. On November 28, 2007, the circuit court granted plaintiffs an extension
of 120 days. However, plaintiffs never filed an amended complaint. Instead, the
case proceeded on plaintiffs’ sole remaining claim for shareholder remedies
pursuant to the Business Corporation Act as stated in count I.
¶ 10 In June 2011, the circuit court allowed plaintiffs’ attorney to withdraw. The
court stayed discovery deadlines and granted plaintiffs a continuance to find new
counsel. In November 2011, plaintiffs’ current attorney entered his appearance.
Beginning in February 2012, plaintiffs sought extensions of time to comply with
discovery requests. On July 13, 2012, the court granted plaintiffs 30 days to
disclose additional experts. On August 13, 2012, plaintiffs moved for a two-week
extension to disclose expert witnesses. On September 7, 2012, the court denied
plaintiffs’ request for a continuance. Plaintiffs then moved to voluntarily dismiss
their lawsuit without prejudice, which the court granted pursuant to section 2-1009
of the Code of Civil Procedure (735 ILCS 5/2-1009 (West 2012)).
¶ 11 B. Richter II
¶ 12 On September 6, 2013, plaintiffs filed their four-count complaint. Count I
sought shareholder remedies. Based on defendant’s alleged concealment,
suppression, or omission of its interpretation of section 8 of its bylaws, count II
alleged misrepresentation, and count III alleged common-law fraud. Count IV
alleged that defendant’s directors or officers breached their fiduciary duty owed to
plaintiffs. In December 2013, the circuit court of Madison County granted
defendant’s motion to transfer venue to Macoupin County.
¶ 13 In February 2014, defendant filed a combined motion to dismiss Richter II with
prejudice. See 735 ILCS 5/2-619.1 (West 2012). Defendant contended, inter alia,
that the doctrine of res judicata barred plaintiffs’ claims in Richter II and,
alternatively, that the five-year statute of limitations (see 735 ILCS 5/13-205 (West
2012)) barred plaintiffs’ claims for misrepresentation, fraud, and breach of
fiduciary duty. In June 2014, following a hearing, the circuit court of Macoupin
County granted defendant’s motion to dismiss Richter II based on res judicata and
the statute of limitations. 735 ILCS 5/2-619(a)(4), (a)(5) (West 2012).
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¶ 14 Plaintiffs appealed. The appellate court held that the doctrine of res judicata did
not bar plaintiffs from filing Richter II. The court recognized that one of the
requirements for res judicata to apply was a final judgment on the merits. 2015 IL App (4th) 140613, ¶ 23
. The court concluded that the circuit court’s order
dismissing the fraud counts in Richter I was not a final order. Id. ¶ 26. Thus, the
doctrine of res judicata did not bar plaintiffs from refiling their action. Id. ¶ 36. The
appellate court also held that the five-year statute of limitations (735 ILCS
5/13-205 (West 2012)) did not bar Richter II. The court agreed with plaintiffs that
the limitations savings statute (735 ILCS 5/13-217 (West 1994)) permitted the
refiled action. 2015 IL App (4th) 140613, ¶¶ 37-42
. The appellate court reversed
the dismissal and remanded the case to the circuit court for further proceedings. Id.
¶ 46.
¶ 15 Defendant appeals to this court. We granted the Illinois Association of Defense
Trial Counsel leave to submit an amicus curiae brief in support of defendant. We
also granted the Illinois Trial Lawyers Association leave to submit an amicus
curiae brief in support of plaintiffs. Ill. S. Ct. R. 345 (eff. Sept. 20, 2010).
Additional pertinent background will be discussed in the context of our analysis of
the issues.
¶ 16 II. ANALYSIS
¶ 17 Defendant contends that the appellate court erred in reversing the circuit court’s
section 2-619 dismissal of Richter II. Defendant argues that Richter II was barred
by (A) the doctrine of res judicata, (B) the rule against claim-splitting, (C) the
statute of limitations, and (D) the equitable doctrine of laches.
¶ 18 A section 2-619 motion provides for the involuntary dismissal of a cause of
action based on certain defects or defenses. 735 ILCS 5/2-619 (West 2012). In
ruling on the motion, the circuit court must interpret all pleadings and supporting
documents in the light most favorable to the nonmoving party. Porter v. Decatur
Memorial Hospital, 227 Ill. 2d 343, 352
(2008); Borowiec v. Gateway 2000, Inc.,
209 Ill. 2d 376, 383
(2004). A section 2-619 motion to dismiss presents a question
of law, which we review de novo. In re Estate of Boyar, 2013 IL 113655, ¶ 27
;
Robinson v. Toyota Motor Credit Corp., 201 Ill. 2d 403, 411
(2002).
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¶ 19 A. Res Judicata
¶ 20 Defendant contends that the circuit court correctly dismissed Richter II
pursuant to section 2-619(a)(4) of the Code of Civil Procedure, which provides for
dismissal where the action “is barred by a prior judgment.” 735 ILCS 5/2-619(a)(4)
(West 2012). This provision allows a defendant to raise the affirmative defense of
res judicata. Morris B. Chapman & Associates, Ltd. v. Kitzman, 193 Ill. 2d 560, 565
(2000).
¶ 21 The doctrine of res judicata provides that a final judgment on the merits
rendered by a court of competent jurisdiction bars a subsequent action between the
same parties or their privies involving the same cause of action. The bar extends not
only to what was actually decided in the prior action, but also to those matters that
could have been decided. Three requirements must be satisfied for res judicata to
apply: (1) a final judgment on the merits rendered by a court of competent
jurisdiction, (2) an identity of cause of action, and (3) an identity of parties or their
privies. Wilson v. Edward Hospital, 2012 IL 112898, ¶ 9
; Hudson v. City of
Chicago, 228 Ill. 2d 462, 467
(2008); Rein v. David A. Noyes & Co.,172 Ill. 2d 325, 334-35
(1996). The underlying policy of res judicata is to promote judicial
economy by preventing repetitive litigation and to protect a defendant from the
harassment of relitigating essentially the same claim. See Hayashi v. Illinois
Department of Financial & Professional Regulation, 2014 IL 116023, ¶ 45
(quoting Arvia v. Madigan,209 Ill. 2d 520, 533
(2004)).
¶ 22 The requirement of a final order or judgment is a “critical” component in
showing the applicability of res judicata. Hernandez v. Pritikin, 2012 IL 113054, ¶ 41
. A judgment cannot bar a subsequent action unless it is a “final” judgment.
Relph v. Board of Education of DePue Unit School District No. 103, 84 Ill. 2d 436, 441
(1981); People ex rel. Scott v. Chicago Park District,66 Ill. 2d 65, 69
(1976).
The party invoking res judicata carries the burden of establishing its applicability.
Hernandez, 2012 IL 113054, ¶ 41
; Chicago Historical Society v. Paschen,9 Ill. 2d 378, 382
(1956).
¶ 23 The parties agree that the second and third elements of res judicata have been
satisfied. However, the appellate court concluded that the circuit court’s September
2007 dismissal order in Richter I was not a final order, and, consequently, the bar of
res judicata did not apply. 2015 IL App (4th) 140613, ¶¶ 26, 36
. Before this court,
defendant assigns error to this conclusion. Defendant asserts that the dismissal of
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plaintiffs’ Consumer Fraud Act and common-law fraud claims in Richter I
“became a final order on the merits” when plaintiffs did not amend the complaint,
or seek appeal of that dismissal, but rather voluntarily dismissed the action.
¶ 24 To be “final,” a judgment or order must terminate the litigation and fix
absolutely the parties’ rights, leaving only enforcement of the judgment. In re
Detention of Hardin, 238 Ill. 2d 33, 42-43
(2010); Village of Niles v. Szczesny,13 Ill. 2d 45, 48
(1958). In determining when a judgment or order is final, one should
look to its substance rather than its form. In re J.N., 91 Ill. 2d 122, 128
(1982).
Illinois Supreme Court Rule 273 provides: “Unless the order of dismissal or a
statute of this State otherwise specifies, an involuntary dismissal of an action, other
than a dismissal for lack of jurisdiction, for improper venue, or for failure to join an
indispensable party, operates as an adjudication upon the merits.” (Emphasis
added.) Ill. S. Ct. R. 273 (eff. Jan. 1, 1967). If a circuit court involuntarily dismisses
a plaintiff’s action, other than for one of the rule’s three exceptions, and if the
plaintiff does not procure leave of court to refile the complaint or if a statute does
not guarantee that opportunity, then Rule 273 deems the dismissal to be on the
merits. DeLuna v. Treister, 185 Ill. 2d 565, 575
(1999). However, a dismissal
“without prejudice” signals that there was no final decision on the merits and that
the plaintiff is not barred from refiling the action. See DeLuna, 185 Ill. 2d at 576
;
People ex rel. Redd v. Mulholland, 134 Ill. App. 3d 929, 930-31
(1985).
¶ 25 The Code of Civil Procedure provides that the circuit court may allow
amendments to pleadings “[a]t any time before final judgment.” 735 ILCS
5/2-616(a) (West 2012). A dismissal order that grants leave to amend is
interlocutory and not final. Palm v. 2800 Lake Shore Drive Condominium Ass’n,
2013 IL 110505, ¶ 21
; Old Salem Chautauqua Ass’n v. Illinois District Council of
the Assembly of God, 13 Ill. 2d 258, 262
(1958) (stating that order partially striking
pleading and granting leave to amend is not final); see Hicks v. Weaver, 255 Ill. App. 3d 650, 652
(1994). An order that dismisses the counts of a complaint, but
grants the plaintiff leave to amend, is not “final” because the order does not
terminate the litigation between the parties. March v. Miller-Jesser, Inc., 202 Ill. App. 3d 148, 158-59
(1990); Gray v. Starkey,41 Ill. App. 3d 555, 558
(1976). A
dismissal with leave to amend is consequently without prejudice. See Dewan v.
Ford Motor Co., 343 Ill. App. 3d 1062, 1070
(2003); Perkins v. Collette,179 Ill. App. 3d 852, 854
(1989); Redd,134 Ill. App. 3d at 930-31
. Accordingly, for
purposes of Rule 273, where a dismissal order does not specify that it is “without
prejudice,” or that plaintiff was granted leave to file an amended complaint, the
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dismissal order is a final adjudication on the merits. See Kostecki v. Dominick’s
Finer Foods, Inc., of Illinois, 361 Ill. App. 3d 362, 373
(2005) (collecting cases).
¶ 26 In Richter I, defendant moved to dismiss the complaint based on insufficient
facts alleged in each count. The involuntary dismissal order expressly granted
plaintiffs leave to file an amended complaint within 30 days. Hence, there was no
“adjudication upon the merits” in Richter I because “the order of dismissal ***
otherwise specifie[d]” that plaintiffs had leave to file an amended complaint. Ill. S.
Ct. R. 273. See Hernandez, 2012 IL 113054, ¶ 47
; Stutzke v. Edwards,58 Ill. App. 3d 832, 834-35
(1978).
¶ 27 Defendant distinguishes an involuntary dismissal order that grants leave to
amend from an involuntary dismissal order that grants leave to amend within a time
period. In its brief, defendant argues: “If the leave period ‘otherwise specifie[d]’ by
the court expires and no action is taken by the plaintiff, Rule 273 operates to default
the involuntary dismissal order to an ‘adjudication on the merits.’ ” We observe
that during oral argument, defendant argued that a plaintiff is responsible for the
consequences of failing to amend within a prescribed time period because the order
is directed to the plaintiff. Indeed, defendant asserted that there was no rule even
allowing a defendant to move for a final dismissal order where a dismissal order
has a leave-to-amend time period and the plaintiff fails to timely amend. We cannot
agree.
¶ 28 Defendant attempts to create an “automatic final judgment” mechanism that
would absolve it of any responsibility for this prolonged litigation. However,
defendant’s argument overlooks a significant body of case law. Initially, this court
has repeatedly recognized the inherent power of the circuit court to review, modify,
or vacate interlocutory orders while the court retains jurisdiction over the entire
controversy. Hernandez, 2012 IL 113054, ¶ 42
(collecting cases); Catlett v. Novak,
116 Ill. 2d 63, 68
(1987) (collecting cases). Accordingly, where, as in this case, the
circuit court dismisses a complaint, and specifies a number of days for filing an
amended complaint, the court retains jurisdiction to allow the amended complaint
to be filed even after the time period has expired. Richardson v. Economy Fire &
Casualty Co., 109 Ill. 2d 41, 46
(1985) (collecting cases); Miller v. Suburban
Medical Center at Hoffman Estates, Inc., 184 Ill. App. 3d 545, 547
(1989)
(collecting cases). By failing to ask for leave to amend after the circuit court enters
an order dismissing a complaint, a plaintiff elects to stand on the complaint and a
subsequent order dismissing the suit may be entered. Doner v. Phoenix Joint Stock
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Land Bank of Kansas City, 381 Ill. 106, 108-09
(1942). Even if a plaintiff
subsequently elects to stand on his or her complaint, an order striking or dismissing
a complaint is not final until a subsequent order finally dismisses the action or suit.
See Boatmen’s National Bank of Belleville v. Direct Lines, Inc., 167 Ill. 2d 88, 99
(1995) (collecting cases); Cole v. Hoogendoorn, Talbot, Davids, Godfrey &
Milligan, 325 Ill. App. 3d 1152, 1153-54, 1156
(2001); Miller,184 Ill. App. 3d at 547
(collecting cases); Martin v. Marks,80 Ill. App. 3d 915, 919
(1980).
¶ 29 However, defendant relies on this court’s decision in Smith v. Central Illinois
Regional Airport, 207 Ill. 2d 578
(2003), in support of its “automatic final
judgment” mechanism. In Smith, the dismissal order granted the plaintiff 60 days to
amend the complaint. The plaintiff did not amend but instead filed a motion for a
voluntary dismissal (735 ILCS 5/2-1009 (West 2012)) within the 60-day period.
Smith, 207 Ill. 2d at 588-89
. This court held that the circuit court should have
allowed the plaintiff’s voluntary dismissal because it was within the time period
granted for leave to amend. In analyzing the nature and effect of the dismissal
order, this court stated:
“He [plaintiff] also could have elected, as he did here, to voluntarily dismiss the
count because the upshot of the court’s February 27 order was that the granting
of defendants’ section 2-615 motion would be considered to be with prejudice
only after the expiration of the 60-day period.” (Emphases in original and
added.) Id. at 588
.
In the case at bar, defendant focuses on the italicized sentence fragment to argue:
“Smith specifically directs that an involuntary dismissal order becomes a final
adjudication on the merits after the expiration of the temporary leave period.”
¶ 30 We do not read our opinion in Smith so broadly. Courts caution that “ ‘general
language in an opinion must not be ripped from its context to make a rule far
broader than the factual circumstances which called forth the language.’
[Citation.]” Rosewood Care Center, Inc. v. Caterpillar, Inc., 226 Ill. 2d 559, 572
(2007). Rather, the Smith opinion, “like all others, must be read in the context of the
specific problem that was before the court.” Touhy v. State Board of Elections, 62 Ill. 2d 303, 310
(1976); see Spring Hill Cemetery of Danville, Illinois v. Ryan,20 Ill. 2d 608, 619
(1960) (cautioning that a judicial opinion “must be read as
applicable only to the facts involved and is an authority only for what is actually
decided”). “In construing the language of this court, as in construing any other
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language, it is necessary to examine the context to find the connection in which the
language is used and to ascertain what was intended by such language.” Hoffman v.
Hoffman, 330 Ill. 413, 420
(1928).
¶ 31 To the end of construing our Smith decision in context, we quote at length
therefrom:
“In the present case, it is true that defendants challenged the sufficiency of
count III by way of a section 2-615 motion on December 29, 2000, and that the
circuit court heard the motion prior to plaintiff’s filing of his motion to
voluntarily dismiss. The court had, in fact, ruled in defendants’ favor by
dismissing count III. Contrary to defendants’ claims, however, that ruling did
not have the effect of a final disposition of the case because the court made the
dismissal without prejudice and gave plaintiff 60 days in which to file an
amendment. As we have explained, the order of February 27 was not a final
order. An order striking or dismissing a complaint is not final until the circuit
court enters an order dismissing the suit. [Citations.] We must stress that no
such order was entered in this case. Moreover, the circuit court made clear that
no such order would be entertained until at least after the passage of 60 days.
For all we know, the circuit court might even have allowed plaintiff more time
to amend had plaintiff sought leave to do so. We stress, as the United States
Supreme Court in [Jung v. K. & D. Mining Co., 356 U.S. 335, 336-37
(1958)]
stressed under similar facts, that the circuit court’s order did not direct that the
requested relief be denied but, rather, left the suit pending for further
proceedings.
“In our view, because the order of February 27 expressly left the suit
pending for further proceedings, the order not only allowed plaintiff the
opportunity to amend, but also allowed plaintiff to pursue other options
available to him during this 60-day time frame besides filing the amendment.
Plaintiff could have chosen to stand on his complaint and sought an order
dismissing the complaint with prejudice, as a means of obtaining a final,
appealable judgment. [Citations.] He also could have elected, as he did here, to
voluntarily dismiss the count because the upshot of the court’s February 27
order was that the granting of defendants’ section 2—615 motion would be
considered to be with prejudice only after the expiration of the 60-day period.
Under these circumstances, the circuit court should have allowed plaintiff to
seek a voluntary dismissal up until the expiration of the 60-day period to
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amend. In its order, entered on May 2, the circuit court stated that plaintiff
failed to act within the 60-day time period. Clearly this was error. We note that
plaintiff’s motion to voluntarily dismiss was filed on April 12, 2001, on day 48
of the 60-day time period set forth in the February 27 order. The circuit court
erred in its calculation that the 60-day period had passed without any action on
plaintiff’s part. This is not the case where the plaintiff waited until the
sixty-first day to seek voluntary dismissal. Because plaintiff acted within the
period of time left open for amendment, we believe his right to a voluntary
dismissal was intact.” (Emphasis in original.) Smith, 207 Ill. 2d at 587-89
.
¶ 32 When read in context, Smith did not hold that an involuntary dismissal order
automatically becomes a final adjudication on the merits after a leave-to-amend
time period expires. The plaintiff in Smith filed a motion for voluntary dismissal
within the 60-day leave-to-amend time period. Smith expressly recognized that the
circuit court retained jurisdiction to allow the plaintiff more time to amend had he
sought leave and that the dismissal order was not final and would not be final until
the circuit court entered a separate order dismissing the action or suit. Id. at 587-88
.
In Smith, this court specifically concluded that the plaintiff’s right to a voluntary
dismissal was intact because he acted within the leave-to-amend time period. Id. at 589
.
¶ 33 Although the Smith court conjectured that the dismissal order in that case would
have been considered to be with prejudice only after the leave-to-amend period
expired, that speculation was unnecessary to the court’s actual conclusion. This
court did not know how that litigation would have proceeded after the
leave-to-amend period expired. Id. at 588
(“For all we know, the circuit court might
even have allowed plaintiff more time to amend had plaintiff sought leave to do
so.”). In context, this court was merely attempting to emphasize the security of
plaintiff’s position within the 60-day period. This court did not intend to overrule a
significant body of case law by this single sentence. “We resist reading a single
sentence unnecessary to the decision as having done so much work.” Arkansas
Game & Fish Comm’n v. United States, 568 U.S. ___
, ___,133 S. Ct. 511, 520
(2012).
¶ 34 Defendant complains that the above-cited case law provides “no consequences
for a plaintiff’s failure to act within the temporary leave period. *** Accordingly,
there would never be a need to dismiss a claim or complaint with temporary leave
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to amend because the plaintiff would never be compelled to take any action within
the temporary leave period.”
¶ 35 However, this argument overlooks that the circuit court may impose whatever
“consequences” that defendant would seek in a proper motion. The circuit court
retains broad discretion in allowing or denying amendment to pleadings prior to the
entry of final judgment, and a reviewing court will not reverse the trial court’s
decision absent a manifest abuse of such discretion. Loyola Academy v. S&S Roof
Maintenance, Inc., 146 Ill. 2d 263, 273-74
(1992) (collecting cases). Further, the
Code of Civil Procedure provides that a circuit court may allow amendments to
pleadings “on just and reasonable terms.” 735 ILCS 5/2-616(a) (West 2010). Such
“just and reasonable terms” may include the enforcement of a time limitation
within which the amended pleading must be filed. See, e.g., Nicholson v. Chicago
Bar Ass’n, 233 Ill. App. 3d 1040, 1045
(1992); Shroat v. Robins,7 Ill. App. 3d 293, 295
(1972). Conversely, the court may permit amendment long after the time
period expires. Richardson, 109 Ill. 2d at 46
. This rule supports the circuit court’s
sound exercise of its discretion. “A contrary course would amount to a substitution
of the judgment of the reviewing court in place of that of the trial court in which
such discretion properly resides.” Nicholson, 233 Ill. App. 3d at 1045
. See, e.g.,
Bosch Die Casting Co. v. Biallas, 269 Ill. App. 3d 377
(1995) (granting leave to file
second amended complaint 25 days after court-imposed deadline, but denying
leave to file third amended complaint 71 days after court-imposed deadline). We
conclude that the involuntary dismissal order in Richter I did not automatically
become a final order when plaintiffs failed to file an amended complaint within the
leave-to-amend period.
¶ 36 In the case at bar, defendant moved to dismiss Richter I and Richter II each with
prejudice. Defendant, therefore, knew the legal significance of such a dismissal
order. Although nearly five years elapsed between the time plaintiffs were granted
leave to file an amended complaint and their voluntary dismissal, defendant did not
seek a final order dismissing Richter I with prejudice, definitively ending the
action. “[A] party claiming res judicata—as the party bearing the burden of
showing that res judicata applies—has a duty to clarify the record so as to clearly
demonstrate his entitlement to the doctrine’s application.” (Emphasis in original.)
Hernandez, 2012 IL 113054, ¶ 52
. We conclude that defendant has failed to carry
this burden.
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¶ 37 B. Claim Splitting
¶ 38 Defendant next contends that the dismissal order in Richter I became a final
judgment when the court granted plaintiffs’ motion to voluntarily dismiss the sole
remaining shareholder remedies claim. Therefore, according to defendant,
plaintiffs engaged in improper claim splitting by “refiling the entirety of Richter I,
including claims that Plaintiffs elected to abandon five years prior, as a new action
in Richter II.” Alternatively, defendant argues that plaintiff had a “limited” right to
refile only the shareholder remedies claim alleged in count I of Richter I.
¶ 39 We cannot accept this contention. The circuit court granted plaintiffs’ motion
for a voluntary dismissal of Richter I pursuant to section 2-1009 of the Code of
Civil Procedure (735 ILCS 5/2-1009 (West 2010)). A voluntary dismissal pursuant
to section 2-1009 terminates the entire action and renders immediately appealable
all final orders entered therein that were not previously appealable. Hudson, 228 Ill. 2d at 468
; Dubina v. Mesirow Realty Development, Inc.,178 Ill. 2d 496, 503
(1997). However, this court’s decisions in Rein and Hudson explained that res
judicata prohibits a litigant from using section 2-1009 to split claims into multiple
actions or suits. Hudson, 228 Ill. 2d at 471-72
; Rein,172 Ill. 2d at 339
. In Rein, this
court cautioned that a plaintiff’s statutory right to a voluntary dismissal within the
limitations period (735 ILCS 5/13-217 (West 2010)) does not “automatically
immunize a plaintiff against the bar of res judicata or other legitimate defenses a
defendant may assert in response to the refiling of voluntarily dismissed counts.”
Rein, 172 Ill. 2d at 342-43
. In Hudson, this court explained: “Rein thus stands for
the proposition that a plaintiff who splits his claims by voluntarily dismissing and
refiling part of an action after a final judgment has been entered on another part of
the case subjects himself to a res judicata defense.” (Emphasis added.) Hudson,
228 Ill. 2d at 473
.
¶ 40 Rein and Hudson are clearly distinguishable from the instant case. Here, the
circuit court never entered an order dismissing the action in Richter I, or any other
order that could be deemed final. A nonfinal order cannot bar a subsequent action.
Relph, 84 Ill. 2d at 441
. Because Richter I was dismissed with leave to file an
amended complaint, there was no final adjudication on the merits of any of those
three claims. Further, a voluntary dismissal pursuant to section 2-1009(a) is, by its
express terms, without prejudice. 735 ILCS 5/2-1009(a) (West 2010). Of course, it
was within the discretion of the circuit court in Richter I to entertain a defense
motion for a final order dismissing the cause of action prior to ruling on plaintiffs’
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motion for voluntary dismissal. See Morrison v. Wagner, 191 Ill. 2d 162, 165
(2000). However, defendant did not raise such a motion. Without a final
adjudication on the merits, the claim-splitting issues addressed in Rein and Hudson
are not presented here, and res judicata is not applicable. See Piagentini v. Ford
Motor Co., 387 Ill. App. 3d 887, 893-95
(2009). Hence, the circuit court’s nonfinal
ruling in Richter I had no effect on Richter II. See Wilson, 2012 IL 112898, ¶ 26
;
Hernandez, 2012 IL 113054, ¶ 54
; People ex rel. Williams v. Board of Education of
Pawnee Township High School, 350 Ill. 597, 601
(1932).
¶ 41 C. Statute of Limitations
¶ 42 Defendant alternatively contends that the circuit court correctly dismissed
Richter II pursuant to section 2-619(a)(5) of the Code of Civil Procedure, which
provides for dismissal where the action “was not commenced within the time
limited by law.” 735 ILCS 5/2-619(a)(5) (West 2012). This provision allows a
defendant to raise a statute of limitations defense in a motion to dismiss. See
Hermitage Corp. v. Contractors Adjustment Co., 166 Ill. 2d 72, 84
(1995).
¶ 43 The complaint in Richter II contained four counts. Plaintiffs sought shareholder
remedies (count I), alleged misrepresentation (count II), alleged common-law fraud
(count III), and alleged that defendant’s directors or officers breached their
fiduciary duty owed to plaintiffs (count IV). It is undisputed that the cause of action
in Richter II accrued in October 2005 when defendant terminated the milk
marketing agreement and plaintiffs’ membership in the cooperative and that
plaintiffs filed the complaint in Richter II on September 6, 2013. Defendant
contends that plaintiffs’ claims for misrepresentation, fraud, and breach of
fiduciary duty were not commenced within the applicable five-year statute of
limitations (735 ILCS 5/13-205 (West 2012)) and, therefore, are time-barred. In
response, plaintiffs contend that section 13-217 of the Code of Civil Procedure (735
ILCS 5/13-217 (West 2012)) saves these claims.
¶ 44 Section 13-217 provides in pertinent part that if the plaintiff voluntarily
dismisses a cause of action, “then, whether or not the time limitation for bringing
such action expires during the pendency of such action, the plaintiff *** may
commence a new action within one year or within the remaining period of
limitation, whichever is greater *** after the action is voluntarily dismissed by the
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plaintiff.” 735 ILCS 5/13-217 (West 1994). 1 Section 13-217 operates as a
limitations savings statute, with the purpose of facilitating the disposition of
litigation on the merits and avoiding its frustration upon grounds unrelated to its
merits. Case v. Galesburg Cottage Hospital, 227 Ill. 2d 207, 215
(2007); Gendek v.
Jehangir, 119 Ill. 2d 338, 343
(1988).
¶ 45 Although the cause of action in Richter II accrued in October 2005, plaintiffs
filed Richter I in October 2006, well within the applicable five-year limitations
period. Further, after plaintiffs voluntarily dismissed Richter I on September 7,
2012, section 13-217 conferred on plaintiffs the right to refile within one year even
if the statute of limitations had expired. As the appellate court correctly reasoned,
plaintiffs, therefore, had until September 7, 2013, to refile their action.
Accordingly, when plaintiffs refiled their action on September 6, 2013, the
limitations savings period had not yet expired. 2015 IL App (4th) 140613, ¶ 41
.
¶ 46 However, defendant contends that section 13-217 is not available to plaintiffs.
Defendant argues that Richter I was not terminated by plaintiffs’ voluntary
dismissal, which section 13-217 covers, but rather was terminated by the
September 2007 involuntary dismissal order with leave to amend. This argument is
premised on defendant’s position that the Richter I dismissal order with leave to
amend automatically defaulted to an adjudication on the merits. We reject this
argument as we earlier rejected its premise. We deem plaintiffs’ September 2012
voluntary dismissal to be the effective order finally terminating Richter I. See
Apollo Real Estate Investment Fund, IV, L.P. v. Gelber, 398 Ill. App. 3d 773, 785-86
(2009).
¶ 47 Defendant also repeats its contention before the appellate court that plaintiffs
may not raise new claims in a refiled action. Defendant argues that plaintiffs’
common-law fraud claim in Richter II is improper because the only claim that was
pending at the time of the voluntary dismissal in Richter I was count I for
shareholder remedies. Thus, reasons defendant, “Count I of Richter I is the only
claim that might conceivably be saved.”
¶ 48 The appellate court correctly rejected this argument. 2015 IL App (4th) 140613
,
¶ 42. A refiled action pursuant to section 13-217 is not a restatement of the old
1
This version of section 13-217 is currently in effect because it preceded the amendments of
Public Act 89-7, § 15 (eff. Mar. 9, 1995), which this court found unconstitutional in its entirety in
Best v. Taylor Machine Works, 179 Ill. 2d 367
(1997). See Hudson,228 Ill. 2d at 469
n.1.
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action, but an entirely new and separate action. Dubina, 178 Ill. 2d at 504
. Further,
a cause of action may contain several theories of recovery (Wilson, 2012 IL 112898, ¶ 25
(collecting cases)) arising from a single group of operating facts.
Hayashi, 2014 IL 116023, ¶ 46
. Here, plaintiffs’ claims in Richter II for
misrepresentation, fraud, and breach of fiduciary duty all grew out of the same
transaction alleged in Richter I.
¶ 49 D. Laches
¶ 50 Defendant lastly contends that the doctrine of laches bars Richter II. Section
2-619(a)(9) of the Code of Civil Procedure provides for dismissal where the claim
“is barred by other affirmative matter avoiding the legal effect of or defeating the
claim.” 735 ILCS 5/2-619(a)(9) (West 2012). One such affirmative matter is the
defense of laches. See Mo v. Hergan, 2012 IL App (1st) 113179, ¶ 34
; Summers v.
Village of Durand, 267 Ill. App. 3d 767, 771
(1994).
¶ 51 “ ‘Laches is an equitable principle which bars recovery by a litigant whose
unreasonable delay in bringing an action for relief prejudices the rights of the other
party.’ ” First National Bank of Springfield v. Malpractice Research, Inc., 179 Ill. 2d 353, 364
(1997) (quoting People ex rel. Daley v. Strayhorn,121 Ill. 2d 470, 482
(1988)). However, unlike a statute of limitations, “laches is not a mere matter of
time but principally a question of the inequity of permitting the claim to be
enforced,—an inequity founded upon some change in the condition or relation of
the property and the parties.” Holland v. Richards, 4 Ill. 2d 570, 578
(1955). In
other words, “it must appear that a plaintiff’s unreasonable delay in asserting his
rights has prejudiced and misled the defendant, or caused him to pursue a course
different from what he would have otherwise taken. [Citations.] If the defendant is
not injured by the delay, then plaintiff is not guilty of laches.” People ex rel. Casey
v. Health & Hospitals Governing Comm’n, 69 Ill. 2d 108, 115
(1977). The
applicability of laches to a given case lies within the discretion of the circuit court.
Finley v. Finley, 81 Ill. 2d 317, 330
(1980); Evans v. Woodsworth,213 Ill. 404, 409
(1904).
¶ 52 Here, the circuit court granted defendant’s section 2-619 motion to dismiss
Richter II expressly on the grounds of res judicata and the statute of limitations.
The court did not rule on the issue of laches, and, consequently, the appellate court
declined to address this issue. 2015 IL App (4th) 140613, ¶ 43
. We agree and do
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likewise. On remand, defendant is free to assert a laches defense. The circuit court
is in the best position to make the relevant factual findings based on the totality of
the circumstances of this particular case. See, e.g., Hurlbert v. Charles, 238 Ill. 2d 248, 261
(2010); Morel v. Coronet Insurance Co.,117 Ill. 2d 18, 27-28
(1987).
¶ 53 III. CONCLUSION
¶ 54 For the foregoing reasons, the judgment of the appellate court is affirmed, and
the cause remanded to the circuit court of Macoupin County for further
proceedings.
¶ 55 Affirmed and remanded.
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