A&R Janitorial v.Pepper Construction Company , 429 Ill. Dec. 452 ( 2018 )

2018 IL 123220
IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
(Docket No. 123220)
A&R JANITORIAL, Appellee, v. PEPPER CONSTRUCTION COMPANY et al. (Pepper
Construction Company, Appellant; Teresa Mroczko, Appellee).
Opinion filed November 29, 2018.
JUSTICE BURKE delivered the judgment of the court, with opinion.
Chief Justice Karmeier and Justices Thomas, Kilbride, Garman, Theis, and
Neville concurred in the judgment and opinion.
OPINION
¶1 Teresa Mroczko was injured at work due to the alleged negligence of third
parties. She filed a successful claim for workers’ compensation benefits but failed
to file a timely personal injury action against the third-party tortfeasors. Therefore,
Mroczko’s employer, A&R Janitorial (A&R), exercised its right under the
Workers’ Compensation Act to file a complaint in subrogation in the circuit court
of Cook County. See 820 ILCS 305/5(b) (West 2014). Mroczko later filed her own
personal injury action against the same defendants, but the circuit court dismissed
the action as untimely. Mroczko then filed a petition to intervene in A&R’s
subrogation action. The Cook County circuit court denied that petition on
res judicata grounds. The appellate court reversed and remanded, holding
res judicata did not apply. 2017 IL App (1st) 170385. For reasons that follow, we
reverse the judgment of the appellate court and affirm the judgment of the circuit
court.
¶2 BACKGROUND
¶3 On August 17, 2012, Mroczko was employed by A&R as a custodian at a
high-rise office building at 300 East Randolph Street in Chicago. At that time,
Pepper Construction Company (Pepper) had been hired by the owner of the
building to perform maintenance work at the premises. Pepper had hired a
subcontractor, Perez & Associates, Inc. (Perez), to replace the carpets on certain
floors of the building. While Mroczko was performing her cleaning duties, a desk
that had been placed in an upright position fell and injured her. Following the
accident, Mroczko filed a workers’ compensation claim against A&R and was
awarded relief.
¶4 Mroczko failed to file a timely personal injury action in the circuit court.
Accordingly, on August 11, 2014, A&R filed a complaint in subrogation pursuant
to section 5(b) of the Workers’ Compensation Act. 820 ILCS 305/5(b) (West
2014). This provision permits an employee to file her own personal injury action
against a third-party tortfeasor in order to recover damages for a work injury. Id.
The employer is entitled to reimbursement of its workers’ compensation benefits
out of the proceeds of any settlement or judgment obtained by the employee. Id. In
addition, the employer has a limited right to intervene in the employee’s action in
order to protect its workers’ compensation lien in all court orders entered after
hearing and judgment. Id. In the event that the employee fails to file her own action
prior to three months before the expiration of the limitations period, the statute
allows the employer to file the same action that the employee could have filed. Id.
Any proceeds obtained by the employer in excess of the amount of workers’
compensation benefits owed, plus reasonable expenses, attorney fees, and costs,
must be turned over to the employee. Id. Relevant to this appeal, the statute is silent
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with respect to whether an employee has the right to intervene in an action filed by
her employer. Id.
¶5 A&R filed its complaint pursuant to section 5(b) against Pepper, Perez, and
several other defendants. 1 A&R alleged that defendants’ negligent acts and/or
omissions caused Mroczko’s injuries and, thus, caused A&R to be liable for
worker’s compensation benefits. A&R requested judgment in its favor in an
amount sufficient to cover its losses and damages, plus reasonable costs.
¶6 On June 11, 2015, while A&R’s litigation was pending, Mroczko filed her own
personal injury action against Pepper, Perez, and two additional defendants, one of
whom was also named in the subrogation action. Upon Pepper’s motion, the circuit
court consolidated the two actions for purposes of discovery only. Perez filed a
motion to dismiss Mroczko’s complaint pursuant to section 2-615 of the Code of
Civil Procedure (735 ILCS 5/2-615 (West 2014)), alleging that the action was
barred by the two-year statute of limitations for personal injury actions. See id.
§ 13-202. Pepper joined Perez’s motion by leave of court. The circuit court granted
the motion and dismissed Mroczko’s complaint without prejudice. Mroczko then
filed an amended complaint alleging only one count against Pepper. She alleged
that her injuries arose out of Pepper’s construction of improvements to the building
and, thus, that her action was timely under the four-year construction statute of
limitations. See id. § 13-214(a). Pepper moved to dismiss the amended complaint
as untimely, pursuant to section 2-619 of the Code of Civil Procedure (id. § 2-619).
Pepper argued that the construction statute of limitations was inapplicable because
the law considers carpet replacement to be ordinary maintenance, not construction
or an improvement to real property.
¶7 On September 12, 2016, the circuit court entered an order dismissing with
prejudice Mroczko’s first amended complaint. The court entered a written finding
under Illinois Supreme Court Rule 304(a) (eff. Mar. 8, 2016), that there was no just
reason to delay enforcement or appeal of its decision. No appeal was taken from the
order of dismissal.
1
Several defendants initially named in A&R’s complaint were subsequently dismissed from the
litigation, leaving only Pepper and Perez.
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¶8 On November 10, 2016, Mroczko, with the assistance of new counsel, filed a
petition seeking leave to intervene in A&R’s subrogation action and to amend
A&R’s complaint in order to seek additional damages for her injuries. Mroczko’s
petition failed to set forth any statutory grounds in support of her right to intervene
in her employer’s lawsuit.
¶9 Pepper filed a brief in opposition, arguing that Mroczko’s petition to intervene
was barred by the applicable statute of limitations and the doctrine of res judicata,
pursuant to Sankey Brothers, Inc. v. Guilliams, 152 Ill. App. 3d 393 (1987). A&R
also filed a response to the petition, in which it took no position as to the merits of
Mroczko’s right to intervene in the subrogation action. It asserted, however, that
A&R should maintain control of the action in the event the court allowed the
petition.
¶ 10 The circuit court agreed with Pepper that Sankey Brothers, Inc. was almost
directly on point. The court held that res judicata barred Mroczko’s intervention
because her personal injury complaint raised the same cause of action against
Pepper and the order dismissing her original action as untimely constituted a final
judgment on the merits. On December 20, 2016, the court entered an order denying
the petition to intervene and to file an amended complaint at law. On January 31,
2017, the court entered a Rule 304(a) finding.
¶ 11 Mroczko filed a timely appeal on February 4, 2017. In the appellate court,
Mroczko argued (1) her right to intervene in her employer’s action was supported
by Echales v. Krasny, 12 Ill. App. 2d 530 (1957), and Geneva Construction Co. v.
Martin Transfer & Storage Co., 4 Ill. 2d 273 (1954), and (2) res judicata was
inequitable as applied to her because the dismissal of her untimely filed lawsuit was
not a final judgment on the merits.
¶ 12 The appellate court reversed the circuit court’s judgment and remanded for
further proceedings. 2017 IL App (1st) 170385, ¶¶ 36-37. The court first held that
res judicata did not bar Mroczko’s intervention because she had an “interest” in her
employer’s subrogation action. The court further held res judicata did not apply
because there was no identity of parties between the two actions. Next, the court
held that, since section 5(b) of the Workers’ Compensation Act was silent with
respect to an employee’s right to intervene in her employer’s action, section 2-408
of the Code of Civil Procedure (735 ILCS 5/2-408 (West 2014)) governed
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Mroczko’s petition. The court held that the circuit court abused its discretion in
failing to determine whether the petition satisfied the requirements for intervention
as of right in section 2-408(a), i.e., whether the petition was timely, whether
Mroczko’s interests were adequately represented by the existing parties, and
whether Mroczko would be bound by the judgment. 2017 IL App (1st) 170385,
¶¶ 30-33; see 735 ILCS 5/2-408(a) (West 2014). Accordingly, the court reversed
the order denying the petition and remanded the case to the circuit court to
determine whether the statutory factors for intervention were established. 2017 IL
App (1st) 170385, ¶¶ 33, 36.
¶ 13 This court allowed Pepper’s petition for leave to appeal. Ill. S. Ct. R. 315(a)
(eff. Nov. 1, 2017).
¶ 14 ANALYSIS
¶ 15 The order subject to review in this appeal is the circuit court’s December 20,
2016, order denying Mroczko’s petition to intervene. The court’s sole basis for
denying the petition was that res judicata barred Mroczko from intervening in her
employer’s subrogation action after her personal injury complaint was dismissed
with prejudice. A trial court’s decision whether to allow intervention will not be
reversed on appeal unless the court abused its discretion. In re Application of the
County Collector of Du Page County for Judgment for Delinquent Taxes for the
Year 1992, 181 Ill. 2d 237, 247 (1998). It is always an abuse of discretion for a trial
court to base a decision on an incorrect view of the law. North Spaulding
Condominium Ass’n v. Cavanaugh, 2017 IL App (1st) 160870, ¶ 46. Thus, if we
find that the circuit court erred in applying res judicata, we must also find that the
court abused its discretion in denying the petition on that basis.
¶ 16 “The doctrine of res judicata provides that a final judgment on the merits
rendered by a court of competent jurisdiction bars any subsequent actions between
the same parties or their privies on the same cause of action.” Rein v. David A.
Noyes & Co., 172 Ill. 2d 325, 334 (1996). Res judicata bars not only what was
actually decided in the first action but also those matters that could have been
decided. Id. at 334-35. The underlying policies of the doctrine are to promote
judicial economy and to protect defendants from the burden of having to relitigate
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essentially the same claim. Richter v. Prairie Farms Dairy, Inc., 2016 IL 119518,
¶ 21 (citing Hayashi v. Illinois Department of Financial & Professional
Regulation, 2014 IL 116023, ¶ 45). For res judicata to apply, three requirements
must be met: (1) a final judgment on the merits rendered by a court of competent
jurisdiction, (2) an identity of cause of action, and (3) an identity of parties or their
privies. Id. Whether res judicata applies is a question of law subject to de novo
review. Lutkauskas v. Ricker, 2015 IL 117090, ¶ 43.
¶ 17 Whether the first requirement for res judicata is met depends on whether the
circuit court’s September 12, 2016, order, dismissing with prejudice Mroczko’s
first amended complaint against Pepper, was a final judgment on the merits. A
judgment or order is considered “final” when it terminates the litigation and fixes
absolutely the parties’ rights, leaving only enforcement of the judgment. Richter,
2016 IL 119518, ¶ 24. There is no question that an order dismissing a complaint
with prejudice is a final, appealable order. See id. ¶ 36; Smith v. Central Illinois
Regional Airport, 207 Ill. 2d 578, 588 (2003). Furthermore, it is well settled that an
involuntary dismissal of an action based on the applicable statute of limitations is
deemed to be a judgment “on the merits” for purposes of res judicata. DeLuna v.
Treister, 185 Ill. 2d 565, 573-74 (1999); Rein, 172 Ill. 2d at 335-36; Downing v.
Chicago Transit Authority, 162 Ill. 2d 70, 74-75 (1994). Accordingly, the circuit
court’s order dismissing Mroczko’s personal injury action with prejudice on
grounds that it was filed past the applicable limitations period was a final judgment
on the merits.
¶ 18 The second requirement for applying res judicata is an identity of cause of
action. Under the transactional test used by Illinois courts, separate claims are
considered the same cause of action if they “arise from a single group of operative
facts, regardless of whether they assert different theories of relief.” River Park, Inc.
v. City of Highland Park, 184 Ill. 2d 290, 311 (1998). The prior claim is the one
alleged in Mroczko’s previously dismissed personal injury action. The subsequent
claim is Mroczko’s petition to intervene in A&R’s subrogation action, which is a
“claim” for purposes of res judicata because she is seeking to intervene as a party
to that action. Specifically, she is seeking to control the litigation and to amend
A&R’s complaint in order to allege additional damages against defendants. See
735 ILCS 5/2-408(f) (West 2014) (“[a]n intervenor shall have all the rights of an
original party”). Both of these claims arose from the same group of operative
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facts—alleged negligence by defendants that caused Mroczko’s workplace injury
on August 17, 2012. Therefore, the second res judicata element, an identity of
cause of action, has been established.
¶ 19 The third requirement for res judicata, an identity of parties or their privies, is
also present in this case. For res judicata purposes, the parties need not be identical
to be considered the same. Langone v. Schad, Diamond & Shedden, P.C., 406 Ill.
App. 3d 820, 832 (2010). The fact that Mroczko was the party seeking to sue
Pepper for her injuries in both her personal injury action and her petition for
intervention satisfies the identity of parties element.
¶ 20 Despite the fact that all three res judicata requirements were clearly present, the
appellate court held the doctrine did not bar Mroczko’s petition because she had an
“interest” in her employer’s action, in contrast to the employee in Sankey Brothers,
Inc., 152 Ill. App. 3d 383. The employee in that case, William Osborne, was
performing road construction and repair work when he was struck and injured by a
truck owned by a third-party corporation. Osborne filed suit against the truck’s
owner, but the suit was dismissed on grounds that the defendant was not served
with process within the relevant limitations period. Id. at 394. In the meantime,
Osborne’s employer had filed a timely action pursuant to section 5(b) of the
Workers’ Compensation Act against the driver and owner of the truck. Osborne
sought to intervene in his employer’s action. The circuit court denied the petition to
intervene, and the appellate court affirmed. Id. at 395, 399. The court held, in part,
that Osborne’s petition to intervene was barred by res judicata because the
dismissal of his original suit for failure to comply with the statute of limitations
constituted a judgment on the merits. Id. at 398. The court stated, “Osborne had full
opportunity to present in the [personal injury] action all of his claims pertaining to
defendants’ negligence; that he was unable to do so is attributable to the failure of
Osborne (or of the attorney who represented him in that action) to timely serve
[defendant] with process.” Id.
¶ 21 The appellate court attempted to distinguish Sankey Brothers, Inc., by pointing
out that, in that case, the employer sought only indemnification for workers’
compensation benefits owed to its employee. 2017 IL App (1st) 170385, ¶ 21
(citing Sankey Brothers, Inc., 152 Ill. App. 3d at 395). Unlike Osborne, the court
held, Mroczko had an interest in her employer’s lawsuit based on the fact that A&R
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had recently amended its subrogation complaint to seek additional damages for
Mroczko’s pain and suffering. Id. ¶ 23. The court concluded that Mroczko’s
interest in her employer’s lawsuit rendered res judicata inapplicable. Id. We
disagree.
¶ 22 Whether Mroczko had an interest in A&R’s action based on A&R’s pursuit of
certain damages has nothing to do with whether res judicata bars her petition for
intervention. The reason res judicata applies is that Mroczko previously asserted
the same claim against the same defendant, which resulted in a final judgment on
the merits. The fact that A&R’s amended complaint sought damages for her pain
and suffering is irrelevant to this analysis.
¶ 23 The appellate court also held that res judicata was inapplicable because there
was no identity of parties between the two actions. This, too, is incorrect. The
appellate court apparently misunderstood which party’s claim was the one being
barred. The court held that res judicata could not bar the action filed by A&R
because A&R was not a party to Mroczko’s untimely personal injury action. Id.
However, A&R’s claim is not the one barred by res judicata. Mroczko’s petition to
intervene in A&R’s lawsuit is barred because her previous attempt to raise the same
claim against Pepper was involuntarily dismissed as untimely.
¶ 24 Mroczko does not dispute that all three elements of res judicata are established
in this case. Instead, she argues that it would be inequitable to apply res judicata to
her petition because A&R has no interest in protecting her right to recovery for
noneconomic damages. We reject this contention. This case does not present any
inequities for this court to address. After Mroczko filed her personal injury
complaint, Pepper was compelled to expend time and resources and incur legal
expenses in order to defend that action. The circuit court dismissed the action based
on the expiration of the applicable statute of limitations. The dismissal was fully
consistent with the purposes of a statute of limitations, which are “ ‘to require the
prosecution of a right of action within a reasonable time to prevent the loss or
impairment of available evidence and to discourage delay in the bringing of
claims.’ ” Country Preferred Insurance Co. v. Whitehead, 2012 IL 113365, ¶ 32
(quoting Tom Olesker’s Exciting World of Fashion, Inc. v. Dun & Bradstreet,
Inc., 61 Ill. 2d 129, 132 (1975)).
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¶ 25 Mroczko did not appeal the order dismissing her action as untimely. Instead,
she sought to intervene in A&R’s action in order to obtain additional damages for
her injuries. Because Mroczko’s petition for intervention was her second attempt to
sue Pepper for the same claim following an adjudication on the merits, the circuit
court denied her petition on res judicata grounds. Thus, Mroczko’s inability to
intervene in the subrogation action did not result from the inequitable application of
res judicata against her. If Mroczko has suffered damages as a result of being
barred from suing Pepper directly for her injuries, her remedy may lie in a legal
malpractice action against the attorney who filed an untimely personal injury action
on her behalf. 2
¶ 26 The circuit court correctly held that res judicata barred Mroczko from
intervening in A&R’s subrogation action. We, therefore, hold that the court did not
abuse its discretion in denying the petition to intervene. We make no findings on
whether Mroczko otherwise had a right to intervene in her employer’s subrogation
action if res judicata were inapplicable or whether her petition for intervention was
timely.
¶ 27 Finally, we note that A&R argues it should be allowed to control the litigation
in the event that Mroczko is permitted to intervene in the subrogation action. Given
our resolution of this appeal, it is not necessary to address this argument. In
addition, we note that the appellate court purported to reverse an order of the circuit
court entered after the notice of appeal was filed. 2017 IL App (1st) 170385, ¶¶ 11,
36 (reversing the circuit court’s September 22, 2017, order dismissing with
prejudice A&R’s subrogation action, as all claims had been compromised and
settled by the parties). Obviously, the appellate court had no authority to review an
order entered after the date of the notice of appeal. See General Motors Corp. v.
Pappas, 242 Ill. 2d 163, 176 (2011) (a notice of appeal confers jurisdiction on a
reviewing court to consider only the judgments or parts of judgments specified in
the notice of appeal). Since we are reversing the appellate court’s judgment in its
entirety, however, we need not address those parts of the opinion based on matters
2
This court takes judicial notice that a legal malpractice suit filed by Mroczko against her
former attorney is currently pending in the circuit court of Cook County (Mroczko v. Belcher, No.
2017 L 000697 (Cir. Ct. Cook County)).
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not properly before the court.
¶ 28 CONCLUSION
¶ 29 For the foregoing reasons, we reverse the judgment of the appellate court and
affirm the judgment of the circuit court denying Mroczko’s petition to intervene in
the subrogation action filed by A&R.
¶ 30 Appellate court judgment reversed.
¶ 31 Circuit court judgment affirmed.
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