Chicago Title Land Trust Co. v. Potash Corp. of Saskatchewan Sales Ltd.
2011 U.S. App. LEXIS 25813
| 7th Cir. | 2011Background
- Plaintiffs sued in federal court after two prior Illinois state suits over a lease dispute.
- The district court held res judicata bars the federal action based on the Individual Suit and Corporate Suit; the appellate panel relies only on the Individual Suit for this ruling.
- In the Corporate Suit, American National and Potash Corp sued PCS Sales and others for breach of lease and related claims; claims were resolved against plaintiffs on standing and related issues.
- In the Individual Suit, fraud claims against Doyle and Hampton were dismissed (initially without prejudice, then with prejudice after plaintiffs failed to amend).
- The Illinois appellate court affirmed the dismissal for failure to plead fraud against the individual defendants; the dismissal precluded later litigation of the same operative facts.
- Plaintiffs’ federal action seeks breach of lease, breach of guaranty, and fraud, and is barred by res judicata under Illinois transactional and privity-based analyses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether res judicata bars the federal action | Plaintiffs argue no final merits ruling due to dismissal without prejudice in Individual Suit | Defendants contend res judicata applies because Individual Suit ended with a merits-adjudicating dismissal and privity is satisfied | Res judicata bars the federal action based on the Individual Suit |
| Whether the two state suits constitute the same cause of action | Plaintiffs claim separate fights (Corporate vs. Individual) misstate the transactional scope | Illinois transactional test groups all related representations and lease-related claims as one action | One combined cause of action under Illinois transactional test; separate suits cannot be maintained |
| Whether privity exists between plaintiffs and corporate defendants | No privity since individual officers personally liable only in certain contexts | Harms Road in privity with Chicago Title; Doyle and Hampton in privity as PCS Sales officers | Privity established; res judicata applies via agency/representative interests |
| Whether claim-splitting excuses the res judicata bar | Procedural division into separate suits should be allowed to preserve claims | Rule precludes claim-splitting; split claims cannot defeat res judicata | No exception; claim-splitting barred; entire claim barred by prior adjudication |
Key Cases Cited
- River Park, Inc. v. City of Highland Park, 703 N.E.2d 883 (Ill. 1998) (transactional approach for same action; pragmatic grouping of operative facts)
- Hudson v. City of Chicago, 889 N.E.2d 210 (Ill. 2008) (three res judicata elements; privity and final judgment on the merits)
- Rein v. David A. Noyes & Co., 665 N.E.2d 1199 (Ill. 1996) (scope of res judicata; may bar issues not raised in prior suit)
- Nowak v. St. Rita High School, 757 N.E.2d 471 (Ill. 2001) (dismissal with prejudice as adjudication on the merits)
- Lebron v. Gottlieb Memorial Hospital, 930 N.E.2d 895 (Ill. 2010) (standing as affirmative defense; not jurisdictional in some contexts)
- Atherton v. Conn. General Life Ins. Co., 955 N.E.2d 656 (Ill. App. Ct. 2011) (privity of corporate officers with employer for res judicata)
- Czarniecki v. City of Chicago, 633 F.3d 545 (7th Cir. 2011) (res judicata review, de novo; Illinois judgments applied by federal court)