Venturella v. Dreyfuss
2017 IL App (1st) 160565
| Ill. App. Ct. | 2017Background
- Venturella and Dreyfuss were 50/50 co-managers of Abbey Medco, LLC formed to develop real estate; Abbey Medco was to make a $1,280,000 down payment, of which Dreyfuss allegedly paid only $300,000, leaving $340,000 unpaid.
- In 2009 Dreyfuss (and related entities) sued Venturella in Chancery court; Abbey Woods (Venturella’s entity) counterclaimed, seeking the unpaid $340,000 among other relief.
- On the eve of the 2013 bench trial, Venturella sought leave to amend his counterclaim to add a derivative claim on behalf of Abbey Medco for the $340,000; the Chancery court heard argument and denied the motion, and in oral exchange said the denial was “at this time” and “not res judicata.”
- Venturella filed a separate derivative action in December 2013 (later refiled in June 2014) asserting the same operative facts; Dreyfuss moved to dismiss on res judicata/claim-splitting and other grounds.
- The circuit court dismissed the 2014 derivative action with prejudice under res judicata and the rule against claim-splitting; the appellate court affirmed, holding there was no "clear and unmistakable" express reservation by the Chancery court that would excuse preclusion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2014 derivative claim is barred by res judicata / claim-splitting | Venturella: the Chancery court expressly reserved the derivative claim when denying the amendment, so the exception to claim-splitting applies and the new suit is permitted | Dreyfuss: prior Chancery litigation encompassed the same cause of action; no valid express reservation was made, so res judicata and claim-splitting bar the derivative suit | Court: Affirmed dismissal — res judicata and rule against claim-splitting apply because there was no clear, unmistakable, written express reservation by the prior court |
| Whether the oral bench statement alone constituted an express reservation preventing preclusion | Venturella: brief bench comment (‘not res judicata’ / ‘at this time’) reserved right to refile | Dreyfuss: an oral, unwritten exchange is insufficient; reservation must be clear/unmistakable and typically memorialized | Court: Oral remark was not sufficiently clear or memorialized; reservation exception does not apply |
| Whether dismissal would be fundamentally unfair or barred by equitable doctrines (judicial estoppel/waiver) | Venturella: preclusion is fundamentally unfair; Dreyfuss should be estopped/waived from asserting res judicata after failing to object | Dreyfuss: no occasion to object because no clear reservation was made; equitable estoppel/waiver do not apply | Court: Rejected fairness/estoppel arguments; no unjust result and no basis to apply judicial estoppel or waiver |
| Whether dismissal under section 2-619 was proper where affirmative matter defeats the claim | Venturella: procedural posture and prior court comments prevent dismissal | Dreyfuss: res judicata is affirmative matter that defeats the claim, proper basis under 2-619(a)(9) | Court: Dismissal under 2-619 was proper because res judicata/claim-splitting are affirmative defenses defeating the complaint |
Key Cases Cited
- Nowak v. St. Rita High School, 197 Ill. 2d 381 (Ill. 2001) (defines res judicata elements and explains scope to claims that could have been raised)
- Rein v. David A. Noyes & Co., 172 Ill. 2d 325 (Ill. 1996) (adopts Restatement §26(1) exceptions to the rule against claim-splitting)
- Hudson v. City of Chicago, 228 Ill. 2d 462 (Ill. 2008) (explains claim-splitting prohibition and exception when the first court expressly reserves the claim)
- DeLuna v. Burciaga, 223 Ill. 2d 49 (Ill. 2006) (describes nature and scope of section 2-619 motions)
- Severino v. Freedom Woods, Inc., 407 Ill. App. 3d 238 (Ill. App. Ct. 2011) (applies requirement that express reservation be clearly communicated and memorialized)