ROSS ADVERTISING, INC. v. Heartland Bank
360 Ill. Dec. 921
Ill. App. Ct.2012Background
- Ross Advertising, Inc. (Ross) and guarantors borrow from Heartland Bank under a $750,000 revolving line of credit secured by a promissory note and guaranties.
- Note provides monthly interest payments starting May 2009 and a full balance due on April 1, 2010; principal payments are not required until that date.
- Heartland can declare default and demand payment for the entire balance; events of default include Ross’s insolvency or dissolution.
- Shafer, a Heartland loan officer, demanded additional collateral and a cash infusion after meetings with Ross’s principals in July 2009, warning that failure would lead to collection actions.
- Ross’s financials showed negative net worth; Heartland eventually terminated the line of credit in September 2009 and set off funds to pay the debt, leading to proceedings in separate prior cases.
- Ross then sued Heartland and Shafer in this action, raising breach of contract, good faith and fair dealing, and tortious interference claims, which Heartland moved to dismiss or for summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether prior judgments bar current claims via res judicata | Ross argues no final merits judgment bars new claims | Heartland asserts final judgments on the merits preclude relitigation | Yes; res judicata bars all counts (I, II, III) as the same cause of action and privity exist. |
| Whether collateral estoppel limits relitigation of factual issues | Ross contends issues were not identical to prior determinations | Heartland argues prior judgment resolved facts essential to current claims | Yes; collateral estoppel applies to central factual and legal issues. |
| Whether Ross’s counts are barred by the prior proceeding’s scope, and whether Shafer’s involvement changes the privity analysis | Ross argues Shafer’s involvement creates a different defendant set | Shafer is in privity with Heartland for res judicata purposes and does not defeat bar | Barred; Shafer’s involvement does not defeat res judicata; privity exists. |
| Whether the court should consider collateral estoppel/case law on good faith duty | Ross argues a duty of good faith was violated, independent of contract terms | Court previously held no breach of duty; actions authorized by loan documents | Barred; collateral estoppel aligns with prior determinations. |
Key Cases Cited
- River Park, Inc. v. City of Highland Park, 184 Ill. 2d 290 (1998) (transactional test for identity of causes of action)
- City of Rockford v. Unit Six of Policemen's Benevolent & Protective Ass'n, 362 Ill.App.3d 556 (2005) (identity of parties and actions; collateral estoppel considerations)
- HPI Health Care Services, Inc. v. Mt. Vernon Hospital, Inc., 131 Ill.2d 145 (1989) (economic loss/independent tort claims limitations; tortious interference context)
- Voyles v. Sandia Mortgage Corp., 196 Ill.2d 288 (2001) (recognition/limits of good-faith covenant in contracts)
- Arvia v. Madigan, 209 Ill.2d 520 (2004) (collateral estoppel principles and final judgments)
- Du Page Forklift Service, Inc. v. Material Handling Services, Inc., 195 Ill.2d 71 (2001) (issue preclusion and final judgments between litigants)