JOHN OVNIK, KIMBERLEE OVNIK, аnd CHICAGO MUSIC WORKS, INC., d/b/a Deaf Dog Music, Plaintiffs-Appellees, v. GALINA PODOLSKEY and VADIM GOSHKO, Defendants-Appellants.
Docket No. 1-16-2987
Appellate Court of Illinois, First District, Sixth Division
September 1, 2017
2017 IL App (1st) 162987
Illinois Official Reports
Appeal from the Circuit Court of Cook County, No. 13-L-12989; the Hon. Patrick J. Sherlock, Judge, presiding.
Judgment: Reversed and remanded.
Counsel on Appeal: Alexander Michalakos, of Law Office of Alexander Michalakos, P.C., of Park Ridge, for appellants.
Meghan M. Hubbard, of FactorLaw, of Chicago, for appellees.
OPINION
¶ 1 The defendants, Galina Podolskey (Galina) and Vadim Goshko (Vadim), appeal from various orders entered by the circuit court in the instant action brought by the plaintiffs, John Ovnik (John), Kimberlee Ovnik (Kimberlee) (collectively, the Ovniks), and Chicago Music Works, Inc. d/b/a Deaf Dog Music (CMW), seeking damages by reason of the defendants’ failure to return the security deposit posted with them in connection with the rental of a townhouse plus penalties, interest, attorney fees, and costs under the Chicago Residential Landlord and Tenant Ordinance (RLTO) (
¶ 2 The following factual recitation is derived from the pleadings and exhibits of record.
¶ 3 In May 2009, the defendants, as the lessors, entered into a two-year lease agreement to lease a townhouse located at 1816 South Indiana Avenue in Chicago. The lease agreement stated that it was “for a private dwelling” and included a copy of the RLTO. The named lessee was CMW, and John, CMW‘s sole shareholder, was a guarantor. Although Kimberlee paid the $6375 security deposit with a personal check (thе 2009 security deposit), the lease agreement stated that “[l]essee has deposited with [l]essor the security deposit” and that, upon termination of the lease agreement, the security deposit “shall be returned to [l]essee, including interest.” In October 2010, CMW fell behind on its rent payments due under the lease. On November 12, 2010, John sent a text message to Galina, stating that she could deduct October‘s rent from the 2009 security deposit and that he was “not concerned with earning interеst on the deposit.”
¶ 4 The lease agreement was renewed for another two-year term beginning in June 2011. The renewal lease agreement listed both CMW and John as tenants and required an additional security deposit of $6757.50, which CMW paid (the 2011 supplemental security deposit), for a total security deposit of $13,132.50 (the combined security deposit). In May 2013, at the end of the two-year renewal lease term, the townhouse was vacated, but the defendants refused to return the combined security deposit.
¶ 6 On August 11, 2014, the defendants filed a motion pursuant to
¶ 7 A three-count second amended complaint was subsequently filed by John, Kimberlee, and CMW, alleging that the defendants (1) failed to return the combined security deposit (count I), (2) failed to pay interest on the security deposit from June 1, 2011, to May 31, 2012 (count II), and (3) failed to pay interest on the security deposit from June 1, 2012, to May 29, 2013 (count III). The same attorney rеpresented both CMW and the Ovniks.
¶ 8 On April 20, 2015, the defendants filed a motion to dismiss the second amended complaint pursuant to
¶ 9 On June 3, 2015, the circuit court granted the defendants’ motion in part. Although the circuit court held that the RLTO applied to all three plaintiffs, it, nevertheless, dismissed the Ovniks as party-plaintiffs for lack of standing based upon its finding that they had not paid any security deposit. The circuit court denied the motion as to CMW.
¶ 10 On June 10, 2015, the defendants filed their answer to the second amended complaint along with their affirmative defenses and a four-count counterclaim. In their affirmative defenses, the defendants again asserted that the RLTO did not apply to corporate lessees and that John had waived interest on the security deposit in his November 12, 2010, text message.
¶ 11 On July 2, 2015, the Ovniks filed a motion to reconsider the circuit court‘s order dismissing them as plaintiffs. They argued that, contrary to the court‘s factual determination, Kimberlee had paid the 2009 security deposit. In support of their motion was Kimberlee‘s affidavit and a copy of a check from her bank account in the аmount of $6375, payable to Vadim.
¶ 12 On July 16, 2015, before the circuit court ruled on the Ovniks’ motion to reconsider, the matter proceeded to mandatory arbitration on CMW‘s claims against the defendants. In its “Statement of the Case” filed in the arbitration proceeding, CMW stated that it sought “the amount of the security deposit ($13,132[.]50),” plus penalties, interest, and attorney fees, and it
¶ 13 On September 28, 2015, the circuit court granted in part the Ovniks’ motion to reconsider its June 3, 2015, order dismissing them as party-plaintiffs. Specifically, the circuit court vacated its order as to Kimberlee but did not vacate its order as to John.
¶ 14 On September 29, 2015, the circuit court entered a $21,187.86 judgment in favor of CMW on the arbitrator‘s award against Galina and Vadim, jointly and severаlly, and a judgment in favor of the Ovniks and CMW on the defendants’ counterclaims. The order states that, as to CMW and John, it “is a final order and there is no reason for delaying enforcement, appeal or both.”
¶ 15 On October 13, 2015, the defendants filed a section 2-619 motion to dismiss, arguing, inter alia, that Kimberlee‘s claim based upon their failure to return the 2009 security deposit or pay interest thereon was barred by the doctrines of res judicata and collateral estoppel. The circuit court denied thе defendants’ motion, finding that “[t]he amount of [the arbitrator‘s] award shows he did not *** enter” an award as to the 2009 security deposit.
¶ 16 On April 28, 2016, Kimberlee moved for summary judgment on her individual claims. She asserted that “judgment has already been entered in favor of CMW and against [the defendants] with respect to one of the two security deposits,” and that the only remaining issue was the defendants’ failure to return the security deposit which she posted in 2009, along with interest thereon from 2012 and 2013.
¶ 17 On June 15, 2016, the defеndants filed their response in opposition to Kimberlee‘s motion for summary judgment, asserting that she was in privity with CMW and, as a consequence of the judgment in favor of CMW on the arbitration award, her claims based upon the 2009 security deposit were barred under the doctrine of res judicata.
¶ 18 On July 6, 2016, the circuit court granted summary judgment in favor of Kimberlee and against the defendants in the sum of $19,125 for the 2009 security deposit and penalties under the RLTO. On October 5, 2016, the circuit court granted Kimberlee an additional $25,200 for attorney fees, costs, and interest. The circuit court denied the defendants’ postjudgment motions on November 3, 2016, and this appeal followed.
¶ 19 The defendants argue initially that the circuit court erred by denying, in whole or in part, the section 2-619 motions to dismiss which they filed on August 11, 2014, April 20, 2015, and October 13, 2015. However, we need not address the merits of the defendants’ arguments as the denial of a section 2-619 motion to dismiss is not generally reviewable on appeal as any error in the denial of the motion merges into the final judgment, which in this case was the summary judgment entered in favor of Kimberlee, and it is from that final judgment that an appeal is taken. In re Marriage of Sorokin, 2017 IL App (2d) 160885, ¶ 22; In re J.M., 245 Ill. App. 3d 909, 919-20 (1993); Paulson v. Suson, 97 Ill. App. 3d 326, 328 (1981).
¶ 20
¶ 21 We are not unmindful that, in CitiMortgage, Inc. v. Hoeft, 2015 IL App (1st) 150459, a panel of this court considered an appeal from the denial of a section 2-619 motion to dismiss in the context of an appeal filed following a final judgment in a mortgage foreclosure action. After recognizing that the denial of a motion to dismiss is not a final and appealable order, the court in CitiMortgage, nevertheless, concluded that it had jurisdiсtion to review the trial court‘s order denying the defendant‘s section 2-619 motion, reasoning that the order was a procedural step toward the final judgment confirming the sale after foreclosure. Id. ¶ 8. However, we decline to follow the CitiMortgage court‘s determination that an order denying a section 2-619 motion to dismiss is appealable following the entry of a final order terminating the litigation in which it was entered for three reasons. First, contrary to the court‘s analysis, the issue in CitiMortgage was not one of jurisdiction; rather, it was one of merger. The defendants in CitiMortgage did not attempt to appeal immediately from the interlocutory order
denying their section 2-619 motion as did the defendant in Cabinet Service Tile, Inc. v. Schroeder, 255 Ill. App. 3d 865 (1993), a case relied upon by the court in CitiMortgage. The court in Cabinet Service Tile found that it lacked jurisdiction to entertain the appeal because it was brought directly from the denial of a section 2-619 motion, a non-final, interlocutory order. Id. at 869. When, as in this case, a defendant attempts to appeal from an order denying a section 2-619 motion in the context of an appeal from a final order disposing of the litigation, this court will not review the order denying the section 2-619 motion, not because we lack jurisdiction to hear the appeal, but because the order merges into the final judgment from which the appeal was taken. See In re Marriage of Sorokin, 2017 IL App (2d) 160885, ¶ 22; In re J.M., 245 Ill. App. 3d at 919-20; Paulson, 97 Ill. App. 3d at 328. Second, the court in CitiMortgage relied upon the holding in Knapp v. Bulun, 392 Ill. App. 3d 1018 (2009), in support of the proposition that an appeal from a final judgment draws into issue all previous interlocutory orders that produced the final judgment. Knapp, however, did not involve an appeal from the denial of a motion to dismiss but, rather, from an order vacating an order that granted the plaintiff leave to file an amended complaint. Id. at 1023. The vacating of the order that granted the plaintiffs in Knapp leave to file an amended complaint was a procedural step in the progression leading to the order terminating the status of a doctor and his corporation as respondents in discovery. Id. In contrast, the denial of the section 2-619
¶ 22 The defendants’ only assignment of error that is properly before this court is their argument that the trial court erred in entering summary judgment in favor of Kimberlee. As to that issue, the defendants contend that Kimberlee‘s claims based upon the 2009 security deposit are barred under the doctrine of res judicata. Although we are not called upon to decide the question оf whether Kimberlee‘s claims are barred by the doctrine of res judicata, we do find that a genuine issue of material fact exists on the issue.
¶ 23 “The purpose of summary judgment is not to try a question of fact, but to determine whether a genuine issue of material fact exists.” Illinois State Bar Ass‘n Mutual Insurance Co. v. Law Office of Tuzzolino & Terpinas, 2015 IL 117096, ¶ 14. Summary judgment is proper when the pleadings, depositions, admissions, and affidavits on file show that there is no genuine issue of material fact and that the moving party is entitled tо judgment as a matter of law.
¶ 24 Under the doctrine of res judicata, a final judgment on the merits will bar any subsequent actions between the same parties or their privies involving the same cause of action. Hudson v. City of Chicago, 228 Ill. 2d 462, 467 (2008). For res judicata to apply, three conditions must be met: “(1) a final judgment on the merits has been rendered by a court of competent jurisdiction; (2) an identity of cause of action exists; and (3) the parties or their privies аre identical in both actions.” Id. “An adjudication is considered ‘on the merits’ when it
‘determines the parties’ respective rights and liabilities based on the facts before the court.’ ” Lelis v. Board of Trustees of Cicero Police Pension Fund, 2013 IL App (1st) 121985, ¶ 31 (quoting Lehman v. Continental Health Care, Ltd., 240 Ill. App. 3d 795, 802 (1992)). A cause of action, in turn, is “a single group of facts giving the plaintiff a right to seek redress for a wrongful act or omission of the defendant.” Torcasso v. Standard Outdoor Sales, Inc., 157 Ill. 2d 484, 490 (1993).
¶ 25 In this case, the defendants contend, as they did before the circuit court, that res judicata barred Kimberlee‘s claims. They assert (1) that the circuit court‘s judgment in favor of CMW on the arbitrator‘s award is a final judgment on the merits, (2) that Kimberlee‘s claims are identical to CMW‘s, and (3) that privity exists between Kimberlee and CMW. In response, Kimberlee argues both that she is not in privity with CMW and that the
¶ 26 In considering the scope of the arbitrator‘s award in this case and the judgment in favor of CMW entered thereon, we are instructed by our supreme court‘s reasoning in Cruz v. Northwestern Chrysler Plymouth Sales, Inc., 179 Ill. 2d 271 (1997). As the supreme court explained, an arbitrator‘s award disposes of all claims for relief because the arbitration system will function “only if defendants can rely on the arbitrator‘s award as fixing their maximum exposure to liability.” Id. at 280. In this case, CMW‘s “Statement of the Case” filed in the arbitration proceeding, stated that it sought “the amount of the security deposit ($13,132[.]50).” Here, as in Cruz, we have no reason to speculate as to what claims were adjudicated in arbitration because the arbitrator‘s award in favor of CMW disposed of “all claims for relief,” including CMW‘s claim for the 2009 security deposit. See
¶ 27 Turning to the second element of res judicata, we find that an identity of causes of action exists in this case. Separate claims are considered the same cause of action for purposes of res judicata if they arise from the same transaction, series of transactions, or group of operative facts. See River Park, Inc. v. City of Highland Park, 184 Ill. 2d 290, 311-12, 315 (1998). This is plainly the situation in the case at bar, where CMW‘s and Kimberlee‘s claims for the 2009 security deposit involved precisely the same facts. Notably, Kimberlee, John, and CMW filed a single complaint, relied on the same allegations therein, and sought the same relief. See Torcasso, 157 Ill. 2d at 491 (causes of action are identical when the same facts are essеntial to both proceedings, as indicated by the record and pleadings). CMW‘s and Kimberlee‘s causes of action based upon the defendants’ failure to return the 2009 security deposit or pay interest thereon are identical.
¶ 28 Kimberlee argues, however, that CMW lacked standing to raise a claim for the 2009 security deposit because she paid it with a personal check. However, Kimberlee is a stranger to the May 2009 lease; she was neither the named lеssee nor the guarantor. As stated earlier, although Kimberlee‘s affidavit and cancelled check show that she paid the 2009 security deposit, the lessee was CMW and the lease states that “[l]essee has deposited with [l]essor the security deposit” and that, upon termination of the lease agreement, the security deposit “shall be returned to [l]essee, including interest.” Clearly a factual issue remains as to whether Kimberlee posted the 2009 security deposit on behalf of CMW. In addition to the factual
question of whether Kimberlee posted the 2009 security deposit on behalf of CMW, there also exists the question of whether Kimberlee was in privity with CMW for res judicata purposes.
¶ 29 We begin our analysis of the issue with the distinction between standing and privity. “Standing” refers to whether a litigant “is entitled to have the court decide the merits of a dispute or a particular issue” and “requires some injury in fact to a legally recognized interest.” In re Estate of Wellman, 174 Ill. 2d 335, 344-45 (1996). Privity,
¶ 30 CMW was the lessee under the May 2009 lease and a co-lessee with John under the June 2011 renewal lease. Before the second amended complaint named CMW as a party-plaintiff, Kimberlee and John sought damages based upon the defendants’ failure to return both the 2009 security deposit that was paid by Kimberlee and the 2011 supplemental security deposit paid by CMW or pay interest on either. In their second amended complaint, Kimberlee, John, and CMW sought damages based upon the defendants’ failure to return both security deposits or pay interest thereon. After John and Kimberlee were dismissed as party-plaintiffs, CMW persisted in prosecuting claims based upon both the 2009 security deposit and the 2011 supplemental security deposit, and in its “Statement of the Case” filed in the arbitration proceeding, stated that it sought “the amount of the security deposit ($13,132[.]50).” In addition, CMW listed Kimberlee and John as witnesses to be called at the arbitration hearing, and throughout all of the proceedings, CMW, John, and Kimberlee were represented by the same attorney. See Johnson v. Nationwide Business Forms, Inc., 103 Ill. App. 3d 631, 635 (1981) (finding privity where the plaintiffs were represented by the same attorneys and their causes of action “contained identical allegations of misconduct“); Houghton v. Novak, 9 Ill. App. 3d 699, 701 (1973) (recognizing privity between claimants who were in “a mutual relationship to the same property rights which were the subject matter of the prior litigation“).
¶ 31 Viewing the evidentiary material contained in the record before us in the light most favorable to the defendants (see Williams v. Manchester, 228 Ill. 2d 404, 417 (2008) (evidentiary material in a summary judgment proceeding must be construed liberally in favor of the opponent of the motion)), we believe that, at minimum, there exists a material issue of fact on the question of whether Kimberlee was in privity with CMW. As such, the defendants’ invocation of the doctrine of res judicata as a bar to Kimberlee‘s claims based upon the 2009 security deposit should not have been resolved against them in а summary judgment proceeding.
¶ 32 Based upon the foregoing analysis, we reverse the summary judgment entered in favor of Kimberlee and remand this matter back to the circuit court for further proceedings consistent with the opinions expressed herein.
¶ 33 Reversed and remanded.
¶ 34 JUSTICE DELORT, specially concurring:
¶ 35 The defendants moved to dismiss the complaint pursuant to
¶ 36 The majority finds that the defendants cannot pursue this claim on appeal because the denial of a section 2-619 motion merges into the ultimate judgment. See supra ¶¶ 19-21. The majority relies on several cases which so hold: In re Marriage of Sorokin, 2017 IL App (2d) 160885; In re J.M., 245 Ill. App. 3d 909 (1993); and Paulson v. Smith, 97 Ill. App. 3d 326 (1981). The majority then distinguishes these cases from a case which no party cited, CitiMortgage v. Hoeft, 2015 IL App (1st) 150549.
¶ 37 The CitiMortgage court recognized that denials of section 2-619 motions are not normally appealаble. See id. ¶ 8. And just as in this case, after the defendants’ section 2-619 motion was denied, the defendants pleaded an affirmative defense raising the same issue. However, unlike here, the circuit court in CitiMortgage specifically struck that affirmative defense, essentially barring the defendants from raising the issue either at trial in opposition to the plaintiff‘s motion for summary judgment. Accordingly, the CitiMortgage court determined it should address the issue on the merits. It applied the rule that an appeal frоm a final judgment order “‘draws into issue all previous interlocutory orders that produced the final judgment.’ ” Id. (quoting Knapp v. Bulun, 392 Ill. App. 3d 1018, 1023 (2009)).
¶ 38 The majority here takes issue with that approach. But this court has often squarely addressed appeals from the denial of a section 2-619 motion to dismiss, after a final judgment was entered, and resolved the propriety of the section 2-619 denial on the merits. See, e.g., Whetstone v. Sooter, 325 Ill. App. 3d 225, 232 (2001); Rohter v. Passarella, 246 Ill. App. 3d 860, 870 (1993). Despite the authorities cited by the majority, this court has not always honored the rule enunciatеd in those cases, and our supreme court has never adopted that rule itself. Accordingly, I must respectfully decline to join the majority‘s analysis of CitiMortgage. I note, however, that even under the majority‘s analysis, the central holding of CitiMortgage, which pertained to whether particular language in a mortgage acceleration notice is defective, is unaffected by today‘s decision.
¶ 39 Unlike the majority, I would apply the procedural progression rule and address the dеnial of the section 2-619 motion on the merits. The issue presented is straightforward. The defendants contend that a corporation that is a tenant cannot bring claims under the RLTO. When a court interprets an ordinance, it must “ascertain
The ordinance‘s language, given its plain and ordinary meaning, is the best indication of legislative intent. Palm, 2013 IL 110505, ¶ 48.
¶ 40 The plain language of the ordinance provides an easy answer to the question defendants raise.
¶ 41 Notwithstanding our difference in approach on the section 2-619 issue, I otherwise concur with the remainder of majority‘s opinion and judgment.