Voluntary Nonsuit? You’d better think twice

This article discusses the minefield facing practitioners who file multi-count complaints and live in an imperfect world. For a much more thorough and scholarly analysis of the Illinois Supreme Court decision which has caused much consternation and confusion, see Ann Lee Drushal’s “Free to Litigate or Free from Litigation: Balancing Plaintiffs’ Rights with Court Considerations and Defendants’ Interests in Hudson v. City of Chicago,” 40 Loyola U.Chi.L.J. 994 (2008).1

Suppose the following scenario: The complaint alleges negligence, both ordinary and wilful and wanton, plus intentional and negligent infliction of emotional distress and conspiracy. The facts: Plaintiff was walking down the street, fell on a patch of ice in front of a building owned by two brothers who took turns shoveling. Plaintiff was seriously injured. Upon seeing the accident, one of the brothers hollered, “Hey, dummy. Why did you walk there? Can’t you see I hadn’t finished shoveling?” The example may be far-fetched but many of us have seen these multi-count complaints naming every theory in the books and/or engaging in overkill.2

So. In our hypothetical, there’s some motion practice and the intentional infliction and conspiracy counts are dismissed with prejudice. Perhaps the wilful and wanton count gets dismissed on summary judgment. The case is set for trial. Something happens. Plaintiff has moved and hasn’t left a forwarding number. The treating doctor is now in another state. Whatever the problem, plaintiff’s counsel can’t proceed with the trial. Do some research and the answer seems straight forward and easy. Take a voluntary nonsuit, pursuant to Section 2-1009(a) of the Illinois Code of Civil Procedure,3 and re-file within one year as permitted by Section 13-217 of the Code and include, in your dismissal order, the right language, i.e., “without prejudice,” as hinted at in Supreme Court Rule 273 which provides:

Unless the order of dismissal or a statute of the 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.

The answer is not easy as it appears because you can not always accomplish what the statutes and rules seem to permit. Confronted with voluntary dismissals and re-filings in a variety of contexts, re-filed cases are now being dismissed based on the principles of res judicata. One would think that if the attorney who takes the voluntary dismissal puts the words “without prejudice” in the dismissal order, the plaintiff’s claim would be safe. Not any more. The words “without prejudice” in a voluntary dismissal order will not automatically prevent a re-filed case from being dismissed based on res judicata.

A good starting point for understanding why the statutes and rule don’t mean what they say is the Illinois Supreme Court’s 1996 decision in Rein v. David A. Noyes & Co.4 There, Plaintiffs’ multi-count complaint alleged fraud in the sale of securities and sought rescission of their purchases. The rescission counts were dismissed on statute of limitations grounds and the motion to reconsider was denied. Plaintiffs then voluntarily dismissed the remaining counts and appealed the dismissal of the rescission counts. Plaintiffs lost the appeal and then filed a second complaint. The second complaint was dismissed on res judicata grounds. A divided appellate court affirmed the dismissal5 and the Supreme Court took the case and likewise affirmed the dismissal.6

Rein re-iterates that res judicata applies when:

(1) there was a final judgment on the merit rendered by a court of competent jurisdiction; (2) there was an identity of cause of action; and (3) there was an identity of parties or their privies.7

The Rein court reasoned that the fraud counts in the first case became final when plaintiff voluntarily dismissed them in order to appeal the rescission counts, because the fraud counts could have been decided in the first suit. The Supreme Court also held that plaintiff was guilty of claim splitting which occurs a party pursues a claim in one action and then sues for the remainder of the claim in another.8

In 2008, the Illinois Supreme Court had the chance to limit Rein to its facts. After all, it does seem unfair to a defendant to allow a plaintiff to litigate in the piecemeal fashion (voluntarily dismissing the viable count in order to appeal the dismissed count, losing the appeal, and then refiling both counts).

Hudson v. City of Chicago9 was a case where plaintiff’s negligence count was dismissed on statutory immunity grounds, the intentional tort claims were pursued for three years, but the case was dismissed on the eve of trial because plaintiff’s lead counsel died.10 Within a year, suit based solely on the alleged intentional tort was re-filed. Hudson involved the alleged wrongful death of a five year old child. If ever a case had a sympathy factor, this was it. Nonetheless, on a four to two vote, the Illinois Supreme Court affirmed the lower court’s dismissal on res judicata grounds, holding that the voluntary dismissal order in the first case made all prior orders, including the dismissal of the negligence count, immediately appealable.

The decision in Hudson has been interpreted in a number of contexts involving both “re-filed” cases and “second” suits involving similar fact patterns or parties. Although the term is used by this author, “re-filed” is the wrong term. Citing Hudson, the First District has held, “The refiling of a cause of action that the party had previously and voluntarily dismissed does not constitute a continuation of the previous action; rather, it is an entirely new action.”11

Lane v. Kalcheim12 was the legal malpractice outgrowth of a domestic relations matter. In the first case, a count was dismissed with prejudice on statute of limitations grounds. Litigation continued on the other counts involving conduct by defendants which had occurred much later in time than the dismissed count. Two years later, the case was voluntarily dismissed and was re-filed eleven and a half months after that. The re-filed case did not assert the claims that had previously been involuntarily dismissed. Plaintiff argued that the second case was not barred by res judicata because the evidence to support the re-filed claims had not been ruled upon in the prior case. The First District disagreed and accepted the defendants’ argument by ruling that the “transactional test” applied. Relying on River Park v. City of Highland Park,13 the Court sustained the dismissal because the causes of action “arose from a single group of operative facts, namely defendants’ representation of plaintiff in his marital dissolution case ....”14

In Keifer v. Rust-Oleum Corp.,15 plaintiff was injured by a product made in Canada. He sued alleging negligence and products liability. His products count was involuntarily dismissed because Canadian law does not recognize the theory of strict products liability. Amended complaints were filed alleging negligence. A few weeks before trial was set to begin, plaintiff voluntarily dismissed the negligence claims without prejudice. Within a year, the negligence case was re-filed. Relying on Hudson and Rein, the First District sustained the trial court’s dismissal on res judicata grounds citing Rein for the proposition that the involuntary dismissal of a count in the complaint constituted a final adjudication on the merits for purposes of res judicata even though there was no adjudication on the merits of the other claims in the voluntarily dismissed action.16 (Try explaining that to a lay person!).

Matejcezyk v. City17 was a slip and fall which began in 2006. A motion to dismiss one count of the amended complaint was granted on statute of limitations grounds, but plaintiff was given leave to file an amended complaint containing only an amended version of the other count. Plaintiff filed the amended complaint and the following day voluntarily dismissed it via an agreed order. Twelve days later, plaintiff filed a new complaint which plaintiff identified as a re-filed complaint. The re-filed complaint was dismissed based on res judicata. The Matejcesk opinion repeats the scary warning in a footnote in Hudson18 and in Keifer19 that the absence of the words “with prejudice” in a dismissal order does not trump a res judicata defense, when another count of the complaint has been dismissed with prejudice.

Not only did Hudson’s interpretation of res judicata bar a re-filed suit by plaintiff against a fertility clinic, but it also barred suit against the new owners of the clinic who were found to be in privity with the prior owners in Doe v. Gleicher.20

Hudson was been distinguished in a number of cases as the courts wrestle with its expanded definition of res judicata. Taking a voluntary nonsuit when the trial court has given you leave to amend (and thus not issued a “final” judgment), may be the key to avoiding the “final judgment on the merits” prong of res judicata. For example, Jackson v. Victory Memorial Hospital,21 a pro se plaintiff filed a medical malpractice case without attaching the required 622 affidavit. A 2-615 motion to dismiss was granted and plaintiff advised to obtain a lawyer. Plaintiff was given several continuances and ten months after the case was filed, plaintiff’s motion for a voluntary nonsuit was granted. The re-filed suit was dismissed, but the Appellate Court reversed, ruling that the dismissal of the first case was not a final judgment on the merits, because plaintiff had been given leave to amend.

After the Illinois Supreme Court decided Hudson it issued a supervisory order directing the Appellate Court to vacate its judgment in Piagentini v. Ford Motor Co. and reconsider. Upon reconsideration, the First District held that when plaintiff re-filed after a voluntary dismissal of his first case, there had been no final adjudication on the merits in that first case.22 Two facts stand out in Piagentini. In the first case, sub-paragraphs of the negligence and strict liability counts had been dismissed, but plaintiff had been granted leave to amend. Thus, claims under both counts remained viable when the voluntary dismissal was taken and there was no final decision on either branch of the controversy.23 Also, Ford litigated the second suit for three and a half years before moving for summary judgment on res judicata grounds three months before trial. The Appellate Court treated Ford’s delay in raising the res judicata defense an “acquiesence” and an exception to the rule against claim-splitting.24

The Fourth District adopted the Piagentini approach in Curtis v. Lofy,25 finding that the dismissal of two subparagraphs of the pedestrian’s allegations of negligence against a driver in the first suit did not have res judicata effect on a re-filed suit because the entire negligence cause of action had not been dismissed.

The identity of causes of action has been the focus of at least three post-Hudson cases. City of Chicago v. Midland Smelting26 has a complicated historical background. Suffice it to say that the City of Chicago attempted to use its power of eminent domain to purchase a large parcel of land, but the trial court ruled that the taking was excessive and dismissed the City’s complaint. Thereafter, the City Council adopted a new ordinance approving a smaller taking and the City sued the same defendant again, this time to take the smaller parcel. The trial court denied Midland Smelting’s motion to dismiss on res judicata grounds. The Appellate Court affirmed focusing on the second prong of the res judicata test, namely whether there was an identity of causes of action. The Court reasoned that the City could not amend the first suit because the ordinance required the taking of all of Midland Smelting’s property, so the issue of the propriety of taking the smaller portion was never reached.

Hudson holds that res judicata bars not only what was actually decided, but also what could have been decided in a lawsuit. Kasny v. Coonen and Rath, Ltd.27 did not extend that logic to a legal malpractice lawsuit filed after the lawyers had gotten a default judgment for unpaid legal fees against their former client. The former client alleged, in his malpractice suit, that he did not know that a malpractice claim existed until he consulted with an attorney experienced in malpractice matters. Accepting these allegations as true at the motion to dismiss stage, the Appellate Court held that dismissal of the former client’s lawsuit was error.28

Another case in which plaintiff did not know of the existence of a claim, and therefore was not barred by res judicata is Fakhoury v. Pappas.29 Plaintiff had objected to his tax valuation, filed the appropriate complaint and ultimately an agreed judgment order was entered granting him the refund and ordering the Treasurer to issue a refund with interest. When plaintiff and the Treasurer could not agree on the amount of interest, plaintiff filed a class action on behalf of all those whose refund checks included interest below the newly enacted statutory interest rate. The Appellate Court made quick work of the Treasurer’s Hudson argument, finding that the retroactivity of the interest statute was not a part of the judgment granting plaintiff the refund, nor was it anticipated or argued and, therefore, there was no final decision on the merits.

In re D.W., V.R., and N.B., Jr,30 the Juvenile Court had found that three minor children had been sexually abused by their stepfather and that the mother neglected them by allowing the abuse. Because the mother had been found guilty of similar neglect with respect to a fourth child, the Public Guardian argued that res judicata prevented her from appealing the case involving the other three children. The Appellate Court said no, the parties are different and res judicata was not a bar.31 For a contrary result when the Appellate Court found privity, see State Farm Fire & Co. v. John J. Rockhoff Sheet Metal Co.,32 an appeal resulting from a dispute over whether the insurer had a duty to defend or indemnify an additional insured.33

Because lawyers do indeed live in an imperfect world where they can not always control the progress of litigation, their own health and that of clients and witnesses, and manage all of the myriad factors that influence the development of a case, litigators will remain tempted to voluntarily dismiss. Given the draconian impact of Hudson v. City of Chicago, voluntary dismissal is no longer a step to be taken lightly. ■

__________

1. Ms. Drushal was mentored by Judge Diane Larsen who handles motions in non-commercial cases in the Circuit Court of Cook County.

2. A cynic might suggest that the plaintiff’s lawyer was searching for a cause of action that brought with it the right to attorney’s fees. A philosopher would suggest that counsel searching for a way to push the boundaries of the common law, exactly what makes our legal system thrive.

3. 735 ILCS 5/2-1009 (a). “The plaintiff may, at any time before trial or hearing begins, upon notice to each party ... and upon payment of costs, dismiss his or her action or any part thereof as to any defendant, without prejudice, by order filed in the cause.”

4. 172 Ill.2d 325 (1996).

5. Rein v. David A. Noyes & Co., 271 Ill.App.3d 768 (? Dist. 19??).

6. Rein v. David A. Noyes & Co., 172 Ill.2d 325 (1996). For a recent case finding that there was impermissible claim splitting, despite the parties alleged agreement, see Cartwright v. Moore, 394 Ill.App.3d 1163 (1st Dist. 2009).

7. 172 Ill.2d at 334.

8. 172 Ill.2d at 340.

9. 228 Ill.2d 462 (2008).

10. The majority opinion in Hudson does not reveal the fact that plaintiff’s attorney died. This fact is found in the dissent.

11. Long v. Elborne, __ N.E.2d __, 2010 WL 246146, *5 (1st Dist. 2010). Hudson becomes easier to understand when you think of the “re-filed” case as a brand new case, since most of us know that you can’t sue twice over the same thing.

12. 394 Ill.App.3d 324 (1st Dist. 2009).

13. 184 Ill.2d 290 (1998).

14. Lane, 394 Ill.App.3d at ___, 915 N.E.2d at 101. But see Valdovinos v. Tomita, 394 Ill.App.3d 14 (2009) where a chancery suit alleging Petrillo violations by a med mal plaintiff’s treater, and seeking an injunction requiring the treater to meet with plaintiff prior to the trial against other defendants, was held not to bar plaintiff’s second suit against the treater alleging the plaintiff’s injuries were due to the treater’s fraud.

15. 916 N.E.2d 22 (1st Dist. 2009).

16. 916 N.E.2d at 28, citing Rein, 172 Ill.2d at 337-39.

17. __ Ill.App.3d __, __ N.E.2d ___, 2009 WL 4981047 (1st Dist. 2009).

18. 228 Ill. 2d at 472, n.2.

19. 394 Ill.App.3d at 494.

20. 393 Ill.App.3d 31, 39 (1st Dist. 2009).

21. 387 Ill.App.3d 342 (2nd Dist. 2008).

22. 387 Ill.App.3d 887 (1st Dist. 2009).

23. 387 Ill.App.3d at 895.

24. 387 Ill.App.3d at 898.

25. ___ Ill.App.3d __, 914 N.E.2d 248 (4th Dist. 2009).

26. 385 Ill.App.3d 945 (1st Dist. 2008).

27. ___ N.E.2d ___, 2009 WL 3838995 (2nd Dist. 2009).

28. Quoting City of Chicago v. Midland Smelting Co., 385 Ill.App.3d 945, 963 (1st Dist. 2008) (“res judicata is an equitable doctrine that should only be applied as fairness and justice require”), Justice McLaren in Kasny reminds us that “res judicata, at its core, is a doctrine of equity, not law.” 2009 WL 3838995, *3. A cynic might wonder if the Justice was also ruminating about the justice and fairness of dismissing a lawsuit based on res judicata when the prior suit was dismissed because plaintiff’s attorney died.

29. 395 Ill.App.3d 302 (1st Dist. 2009).

30. 386 Ill.App.3d 124 (1st Dist. 2008).

31. In re D.W., V.R., and N.B., Jr., 386 Ill.App.3d at 135-36.

32. 394 Ill.App.3d 548 (1st Dist. 2009).

33. Justice Theis begins the State Farm opinion noting that the case “involves five layers of litigation.” 394 Ill.App.3d at 550. Along the way, we learned that the injured party was paid $110,000 and State Farm paid about $82,000 in attorneys fees and other defense costs. 394 Ill.App.3d 552. A cynic might wonder whether so much money fighting over which insurance company pays is a wise use of legal resources and whether cooler heads might have achieved a cheaper result earlier on. The cynic does not wonder why people don’t like lawyers.