BMO Harris Bank, N.A. v. K & K Holdings, LLC
2016 IL App (2d) 150923
| Ill. App. Ct. | 2016Background
- BMO Harris Bank sued K&K Holdings and others in Du Page County on three loan breaches, two claims against guarantors Frank Kaldis and John Karagiannis under a written guaranty, and foreclosure counts.
- Earlier, BMO had sued K&K, Kaldis, and Karagiannis in Kane County on a separate loan and asserted breach of the same guaranty against the two guarantors; the Kane County court entered summary judgment and a final judgment for BMO.
- The guaranty signed by Kaldis and Karagiannis was a continuing guaranty promising to guarantee existing and future indebtedness of K&K on an "open and continuing basis," and it included broad waiver language.
- In Du Page, BMO moved for summary judgment; the trial court granted it and entered deficiency judgments against Kaldis and Karagiannis.
- Kaldis and Karagiannis sought reconsideration, arguing res judicata barred BMO’s Du Page guaranty claims because the Kane County judgment involved the same guaranty; the Du Page court denied reconsideration.
- The appellate court reviewed whether the guaranty claims in the two suits constituted the same cause of action for res judicata purposes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether res judicata bars BMO’s Du Page guaranty claims because the same guaranty was previously litigated in Kane County | BMO: The guaranty is a continuing guaranty that creates a new guarantor obligation for each separate loan; each loan is a distinct transaction, so prior judgment does not bar later claims | Kaldis/Karagiannis: There was only one guaranty (one transaction), so the prior final judgment on that guaranty in Kane County precludes later claims under res judicata | The court held res judicata does not apply: each loan that invoked the continuing guaranty was a separate transaction/operative fact, so the Du Page guaranty claims were not the same cause of action as Kane County |
Key Cases Cited
- Gurba v. Community High School District No. 155, 2015 IL 118332 (Illinois Supreme Court) (summary-judgment and de novo review principles)
- River Park, Inc. v. City of Highland Park, 184 Ill. 2d 290 (1998) (sets forth Illinois transactional test for res judicata)
- Telegraph Savings & Loan Ass’n v. Guaranty Bank & Trust Co., 67 Ill. App. 3d 790 (1979) (guaranties construed according to parties’ commercial understandings)