Venturella v. Dreyfuss , 2017 IL App (1st) 160565 ( 2017 )

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Venturella v. Dreyfuss, 2017 IL App (1st) 160565
Appellate Court GEORGE VENTURELLA, Individually and Derivatively on Behalf
Caption of ABBEY MEDCO, LLC, Plaintiff-Appellant, v. DAVID A.
DREYFUSS, M.D., Defendant-Appellee.
District & No. First District, Third Division
Docket No. 1-16-0565
Filed June 21, 2017
Decision Under Appeal from the Circuit Court of Cook County, No. 2014-L-006000;
Review the Hon. Patrick J. Sherlock, Judge, presiding.
Judgment Affirmed.
Counsel on Thomas E. Patterson, Erik J. Chisholm, and Elise H. Yu, of Patterson
Appeal Law Firm, LLC, of Chicago, for appellant.
Richard J. Hickey and Kyle Seay, of Hickey, O’Connor & Battle,
LLP, of Chicago, for appellee.
Panel PRESIDING JUSTICE FITZGERALD SMITH delivered the
judgment of the court, with opinion.
Justices Lavin and Pucinski concurred in the judgment and opinion.
OPINION
¶1 Appellant George Venturella, individually, and derivatively on behalf of Abbey Medco,
LLC, appeals from the dismissal, pursuant to section 2-619 of the Code of Civil Procedure
(Code) (735 ILCS 5/2-619 (West 2014)), of his lawsuit against appellee David A. Dreyfuss,
M.D. On appeal, Venturella contends that the circuit court erred in dismissing his derivative
claim under the doctrine of res judicata and the rule against claim-splitting because another
court in a previous case expressly reserved the claim. Specifically, Venturella does not argue
that the elements of res judicata are not met, but instead claims that his case falls into an
exception to res judicata: that the circuit court expressly reserved his right to maintain the
second action. For the following reasons, we affirm.
¶2 I. BACKGROUND
¶3 This action arises from a failed real estate development. Plaintiff Venturella is a real
estate developer. Defendant Dreyfuss is a plastic surgeon. Together, they were comanagers
and 50% interest holders of Abbey Medco, LLC (Abbey Medco), a limited liability company
formed in May 2008 and registered in the State of Illinois specifically for the purpose of
developing and constructing a new office complex. The parties intended to build an office
complex on land that Venturella owned. Venturella and Dreyfuss both agreed to contribute
funds to the project, and Dreyfuss agreed to have his surgical practice sign a lease for space
in a building controlled by Venturella. The parties apparently made a series of oral and
written agreements regarding the planned transactions for the project.
¶4 On January 25, 2008, Abbey Medco entered into a written contract with Abbey Woods
Office Park (Woods LLC), an entity solely owned by Venturella. Under the contract, Woods
LLC would build office buildings on the land and sell the land and buildings to Abbey
Medco. Abbey Medco’s down payment was $1.28 million, or $640,000 per partner. Dreyfuss
paid $300,000 but not the remaining balance of $340,000.1
¶5 Eventually, the deal fell apart and litigation ensued. One of the many issues of
controversy between the parties was Dreyfuss’s failure to make the rest of the $340,000
down payment.
1
Due to the complex procedural history of this cause, we briefly summarize the facts here before
going into more detail below: Dreyfuss’s failure to make the $340,000 down payment was litigated in
the trial court. Dreyfuss’s complaint in that related litigation sought a ruling that he was not liable for
the $340,000. Venturella and his wholly owned LLC, Woods LLC, counterclaimed to collect the
$340,000. On the eve of trial, Venturella sought leave to amend his counterclaim to add count IV, a
derivative claim on behalf of another LLC that he and Dreyfuss jointly owned, Abbey Medco. The
proposed count IV also alleged that Dreyfuss was obligated to pay the $340,000 down payment. The
trial court denied Venturella’s motion for leave to amend his counterclaim to add a derivative claim on
behalf of Abbey Medco. In response to prodding from Venturella’s counsel, the court stated that the
denial was not res judicata in connection with future lawsuits that might be filed. Following trial, then,
the court entered an order finding Dreyfuss liable to Venturella or Abbey Woods for the $340,000. The
order also stated that the $340,000 was not owed pursuant to count IV of Venturella’s counterclaim,
despite the fact that Venturella had not been permitted to amend his counterclaim to include the
derivative claim. The court later corrected this error, since this issue was not pending at the time.
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¶6 In 2009, Dreyfuss, Abbey Medco, and Plastic Surgery Specialists, Inc.,2 filed a lawsuit in
chancery against Venturella and Woods LLC concerning matters related to the development
and construction project (the prior suit, or the 2009 case). By that suit, Dreyfuss alleged
Venturella had “represented that he was a successful and sophisticated commercial real estate
developer” who was looking for a partner to develop an office building in the Abbey Woods
development in Frankfort, Illinois. According to Dreyfuss, he and Venturella orally agreed
that (1) they would form Abbey Medco, to be owned 50/50 by Dreyfuss and Venturella but
managed by Venturella who would advise Dreyfuss of “all business developments”; (2)
Venturella would cause Abbey Medco to have all necessary and proper documentation
prepared to fully protect the interest of Dreyfuss; (3) Venturella would contribute the real
property and the development rights, as well as secure the permits and licenses as part of his
capital contribution to Abbey Medco, and would oversee and manage the development as
well as the day-to-day business of Abbey Medco; (4) Dreyfuss would move the surgical
practice into an adjacent building owned by Venturella, and the surgical practice “would be
charged a monthly rental price which was inflated, but that was intended to generate higher
income figures for that separate project of Venturella, so that when that project was
examined by Venturella’s bank, the bank would promptly make all necessary loans in
connection with the proposed project for Abbey Medco,” and these inflated payments would
be considered as part of Dreyfuss’ capital contribution; (5) the surgical practice would not
build out to its desired specifications, and could cancel its lease at any time without penalty
or obligation; (6) Dreyfuss would contribute $300,000 to fund the operations of Abbey
Medco to complete the development of the anticipated project, and Venturella would meet
with Dreyfuss and discuss the project and Abbey Medco business in detail if the project
required more funding (if they agreed, Dreyfuss would contribute up to an additional
$300,000 to Abbey Medco); and (7) the project was to be completed by September 2009.
¶7 Dreyfuss further alleged that he moved the surgical practice into Venturella’s other
building at great expense, and he tendered $300,000 to Abbey Medco, but that Venturella
never furnished him a receipt for the $300,000 or other necessary documents.
¶8 The first count alleged conversion as to Venturella and Abbey Woods, the second count
alleged fraud as to Venturella and Abbey Woods, the third count alleged breach of fiduciary
duty as to Venturella, the fourth count alleged breach of contract as to Venturella and Abbey
Woods, and the fifth count requested injunctive relief against Venturella, terminating his
ownership of and participation in Abbey Woods and requiring him to return funds to
Dreyfuss.
¶9 In August 2009, Abbey Woods filed a three-count counterclaim against Abbey Medco,3
Plastic Surgery Specialists of Illinois, d/b/a Dreyfuss, and Gelman Plastic Surgery over
Dreyfuss’s failure to pay the $340,000. By that counterclaim, Abbey Woods alleged (1)
“breach of build to suit purchase agreement,” where Abbey Medco and Abbey Woods
2
Dreyfuss was a part owner of Plastic Surgery Specialists, Inc.
3
In this counterclaim, Abbey Medco is defined as “an Illinois limited liability company that was
formed and controlled by Dreyfuss to purchase and own the property referenced in the Purchase
Agreement.” We note here for the record that the official articles of incorporation for the formation of
the LLC are in the record on appeal and reflect that Abbey Medco was coformed and is co-owned by
both George Venturella and David Dreyfuss.
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entered into a build to suit purchase agreement in 2008 by which Abbey Medco was to
deposit $1.28 million as earnest money, but breached the agreement when “Dreyfuss
tendered only three $100,000 installment payments”; (2) another “breach of build to suit
purchase agreement” count, whereby Abbey Woods alleged incurred damages in the amount
of $3,313,234 because of the above-mentioned breach; and (3) “breach of lease,” by which
Abbey Woods alleged it had incurred damages in the amount of $54,076 in unpaid rent,
taxes, attorney fees, and court costs due to the breach of the lease agreement.
¶ 10 In the months leading up to trial, Venturella’s counsel withdrew. In July 2013, the court
set a trial date for October 30, 2013. A new law firm came on to represent Venturella on
October 16, 2013.
¶ 11 Two days before the scheduled trial date, on October 28, 2013, Venturella’s counsel
sought leave to amend the counterclaim. Specifically, Abbey Woods and Venturella sought
to withdraw two of the three counts and to include a derivative claim on behalf of Abbey
Medco and against Dreyfuss individually for failure to pay the $340,000. It stated that
“Counts I and II of the Counterclaim allege damages that were sustained but which may not
be recoverable, whereas a new claim for $340,000 against Dreyfuss, while a lower amount, is
owed and should be recovered.” Further, “Count III, for breach of the lease agreement,
contained outdated information relating to the lease between Abbey Woods and Plastic
Surgery.” Therefore, leave was sought to amend the counterclaim to withdraw counts I and II
and update the facts contained in count III, as well as add a derivative claim. The proposed
derivative claim itself acknowledged that Abbey Medco was owned by Dreyfuss and
Venturella as sole owners and comanaging members, each owning a 50% share of the LLC.
It described the alleged agreements of the parties, the alleged subsequent breach of the
agreements by Dreyfuss, and the resulting damages. It alleged that “Abbey Medco has
suffered as a result of Dreyfuss’ refusal to pay his capital contribution” and that, as Abbey
Medco was “now winding up,” “Venturella is entitled to a distribution of the unpaid
$340,000, net of attorneys fees.”
¶ 12 On the day of trial, after hearing detailed arguments on the motion by both parties, the
court denied the motion to amend the counterclaim. The court ruled:
“THE COURT: Having reviewed the plaintiff’s counterclaim, which carries
Venturella’s motion for leave to amend the counterclaim and having read the original
counterclaim, the motion for leave to amend is denied as well at this time.
What other motions do you have?
MR. PATTERSON [ATTORNEY FOR DEFENDANT] A. Your Honor, could I
ask that this—does [Y]our Honor intend that to have res judicata effect or is it just
denied at this time as a procedural matter so if I want to and it’s timely I could
commence a new lawsuit on it.
THE COURT: It’s denied at this time.
MR. PATTERSON: At this time, but not res judicata?
THE COURT: Yes.”
The court did not enter a written order to that effect, and the parties do not direct us to a copy
of the docket sheet, a specific docket entry, or any other written document regarding the
doctrine of res judicata. Venturella did not file a motion to reconsider the denial of his
motion to amend the counterclaim.
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¶ 13 A bench trial commenced, beginning that same day and concluding on December 6,
2013.
¶ 14 On January 10, 2014, the court entered its order in the prior suit. It found against the
plaintiffs, Dreyfuss and his entities, on all of their claims. It also denied the majority of the
claims in the counterclaim brought by Venturella and his entity. Generally, the order found
that plaintiffs and defendants had failed to follow procedures and requirements applicable to
their entities and purported contracts, thereby frustrating their causes of action and proofs.
The order included a judgment for Dreyfuss on Venturella’s claim for the $340,000.4
¶ 15 On December 16, 2013, after trial but before any order was issued by the court,
Venturella filed the derivative claim in the Law Division on behalf of Abby Medco and
against Dreyfuss individually, alleging that Dreyfuss owed $340,000 under the build to suit
agreement. The plaintiff was Venturella, individually and derivatively on behalf of Abbey
Medco. The case was dismissed for want of prosecution in April 2014. Venturella refiled the
derivative action in June 2014 (the 2014 derivative action). The 2014 derivative action
involved the same set of operative facts as the counterclaim in the 2009 action.
¶ 16 In August 2014, Dreyfuss filed a motion to dismiss the 2014 derivative action, arguing, in
part, that the derivative claim should be dismissed because there was another action pending
between the same parties for the same cause, that it should be barred by the doctrine of
res judicata, and that it should be barred by the rule against claim-splitting, collateral
estoppel, the statute of limitations, and the doctrine of laches. After the parties briefed the
issues, the court dismissed the 2014 derivative action with prejudice in November 2014.
Venturella filed a motion to reconsider, which the court denied in March 2015. Two days
later, however, the court ordered the parties to submit supplemental briefing regarding how
Wilder Chiropractic, Inc. v. State Farm Fire & Casualty Co., 2014 IL App (2d) 130781,
might impact the disposition. After this further briefing, the court vacated its previous
November 2014 dismissal as well as the March 2015 order denying Venturella’s motion to
reconsider. The court allowed Dreyfuss to file a second motion to dismiss the complaint.
¶ 17 Dreyfus did so, filing his second motion to dismiss pursuant to section 2-619 of the Code
(735 ILCS 5/2-619 (West 2014)) in December 2015. By that motion, Venturella again
argued, in part, that the derivative claim should be barred by the doctrine of res judicata, the
rule against claim-splitting, collateral estoppel, the statute of limitations, and the doctrine of
laches.
¶ 18 After briefing by the parties, the court dismissed the 2014 derivative action with
prejudice in January 2016, concluding that both the doctrine of res judicata and the rule
against claim-splitting barred the derivative claim.
¶ 19 Venturella appeals the dismissal of the 2014 derivative claim.
4
The January 10, 2014, order also erroneously entered judgment for Dreyfuss on Abby Medco’s
derivative claim for the $340,000, even though leave to amend the counterclaim to include the
derivative claim had been denied. A subsequent order on April 21, 2014, corrected the error with the
following language: “Regarding the derivative action the January 10, 2014, order is vacated and the
Court’s ruling on October 31, 2013 shall stand.”
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¶ 20 II. ANALYSIS
¶ 21 Before addressing the merits of appellant’s claims, we must first note that both
appellant’s and appellee’s briefs on appeal fail to comply with the requirements of Illinois
Supreme Court Rule 341 (eff. Jan. 1, 2016). Rule 341(h)(6) requires a statement of facts that
contains the facts “necessary to an understanding of the case, stated accurately and fairly
without argument or comment, and with the appropriate reference to the pages of the record
on appeal.” Ill. S. Ct. R. 341(h)(6) (eff. Jan. 1, 2016). This court may strike a statement of
facts when the improprieties hinder our review. John Crane Inc. v. Admiral Insurance Co.,
391 Ill. App. 3d 693, 698 (2009).
¶ 22 The purpose of the rules is to require parties before a reviewing court to present clear and
orderly arguments so that the court can properly ascertain and dispose of the issues involved.
Zadrozny v. City Colleges of Chicago, 220 Ill. App. 3d 290, 292 (1991). A reviewing court
may choose to disregard portions of a brief that do not comply with the supreme court rules.
Merrifield v. Illinois State Police Merit Board, 294 Ill. App. 3d 520, 527 (1998).
¶ 23 Both appellant and appellee in the case at bar have submitted briefs that include fact
sections rife with opinion, analysis, and insufficient citation to the record. The rules of
procedure concerning appellate briefs are rules, not mere suggestions, and it is within the
appellate court’s discretion to strike a brief and dismiss the appeal for failure to comply with
those rules. See Niewold v. Fry, 306 Ill. App. 3d 735, 737 (1999); Burmac Metal Finishing
Co. v. West Bend Mutual Insurance Co., 356 Ill. App. 3d 471, 478 (2005); Tannenbaum v.
Lincoln National Bank, 143 Ill. App. 3d 572, 574 (1986) (a brief that lacks substantial
conformity to the pertinent supreme court rules may justifiably be stricken). However, we
find that the parties’ lack of compliance with Rule 341 here does not preclude our review, as
the errors are not dispositive to our decision. Accordingly, despite these deficiencies, we
continue with our review here, while cautioning the parties to be aware of the appellate rules
in the future. See, e.g., Spangenberg v. Verner, 321 Ill. App. 3d 429 (2001) (declining to
strike brief where it complied with the rules in other ways and none of the violations were so
flagrant as to hinder or preclude review).
¶ 24 Turning to the merits, Venturella contends on appeal that the circuit court erred in
dismissing the 2014 derivative action under the doctrine of res judicata and claim-splitting
because the other court in the 2009 case, sitting in chancery, expressly reserved the claim.
Specifically, Venturella does not argue that the elements of res judicata are not met, but
instead claims his case falls into an exception to the rule of res judicata: that the circuit court
expressly reserved his right to maintain the second action. We disagree.
¶ 25 A motion to dismiss pursuant to section 2-619 of the Code (735 ILCS 5/2-619 (West
2014)) admits the legal sufficiency of the plaintiff’s complaint but asserts affirmative
defenses or other matter that avoids or defeats the plaintiff’s claim. DeLuna v. Burciaga, 223
Ill. 2d 49, 59 (2006); Patrick Engineering, Inc. v. City of Naperville, 2012 IL 113148, ¶ 31.
Dismissal is proper where “the claim asserted against defendant is barred by other
affirmative matter avoiding the legal effect of or defeating the claim.” 735 ILCS
5/2-619(a)(9) (West 2014). Such affirmative matter has been defined as “a type of defense
that either negates an alleged cause of action completely or refutes crucial conclusions of law
or conclusions of material fact unsupported by allegations of specific fact contained in or
inferred from the complaint.” Neppl v. Murphy, 316 Ill. App. 3d 581, 585 (2000).
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¶ 26 Res judicata is an equitable doctrine designed to encourage judicial economy by
preventing a multiplicity of lawsuits between the same parties where the facts and issues are
the same. Arvia v. Madigan, 209 Ill. 2d 520, 533 (2004). The doctrine also “protects [the]
parties from being forced to bear the unjust burden of relitigating essentially the same case.”
Arvia, 209 Ill. 2d at 533.
¶ 27 “The doctrine of res judicata provides that a final judgment rendered by a court of
competent jurisdiction on the merits is conclusive as to the rights of the parties and their
privies, and, as to them, constitutes an absolute bar to a subsequent action involving the same
claim, demand, or cause of action.” Nowak v. St. Rita High School, 197 Ill. 2d 381, 389
(2001). The essential elements of res judicata are (1) a final judgment on the merits, (2) an
identity of parties or their privies, and (3) an identity of causes of action. Hudson v. City of
Chicago, 228 Ill. 2d 462, 467 (2008); Northeast Illinois Regional Commuter R.R. Corp. v.
Chicago Union Station Co., 358 Ill. App. 3d 985, 1000 (2005). “Moreover, the doctrine of
res judicata applies not only to claims that have been fully litigated in an earlier proceeding,
but also those that could have been raised or decided, but were not, thus barring such claims
from relitigation at a later date.” Northeast Illinois Regional Commuter R.R. Corp., 358 Ill.
App. 3d at 1000; Rein v. David A. Noyes & Co., 172 Ill. 2d 325, 334-35 (1996) (res judicata
“extends not only to what was actually decided in the original action, but also to matters
which could have been decided in that suit”). In addition, the issue of whether a claim is
barred by res judicata is an issue of law that mandates de novo review by this court.
Northeast Illinois Regional Commuter R.R. Corp., 358 Ill. App. 3d at 1000.
¶ 28 “[T]he principle that res judicata prohibits a party from seeking relief on the basis of
issues that could have been resolved in a previous action serves to prevent parties from
splitting their claims into multiple actions.” Hudson, 228 Ill. 2d at 471-72. “[T]he rule against
claim-splitting would not bar a second action if: *** (2) the court in the first action expressly
reserved the plaintiff’s right to maintain the second action ***.” (Internal quotation marks
omitted.) Hudson, 228 Ill. 2d at 472.
¶ 29 The exceptions to claim-splitting are set forth in section 26(1) of the Restatement
(Second) of Judgments (1982), and were adopted in Rein. The Rein court interpreted that
section to provide that “the rule against claim-splitting does not apply to bar an independent
claim of part of the same cause of action.” Rein, 172 Ill. 2d at 341; see also Nowak v. St. Rita
High School, 197 Ill. 2d 381, 392 (2001) (“Although the claims in question may be initially
regarded as a single cause of action for application of res judicata, subsequent events may
alter their status. For example, res judicata does not apply to bar an independent claim of part
of the same cause of action if the court in the first action expressly reserves the plaintiff’s
right to maintain the second action ***.”). Under this section, the rule against claim-splitting
would not bar a second action in certain circumstances:
“[Section 26(1) of the Restatement (Second) of Judgments] provides that the rule
against claim-splitting does not apply to bar an independent claim of any part of the
same cause of action if: (1) the parties have agreed in terms or in effect that plaintiff
may split his claim or the defendant has acquiesced therein; (2) the court in the first
action expressly reserved the plaintiff’s right to maintain the second action; (3) the
plaintiff was unable to obtain relief on his claim because of a restriction on the
subject-matter jurisdiction of the court in the first action; (4) the judgment in the first
action was plainly inconsistent with the equitable implementation of a statutory
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scheme; (5) the case involves a continuing or recurrent wrong; or (6) it is clearly and
convincingly shown that the policies favoring preclusion of a second action are
overcome for an extraordinary reason.” Rein, 172 Ill. 2d at 341 (citing Restatement
(Second) of Judgments § 26(1) (1980)).
¶ 30 “The exception to the rule against claim-splitting necessarily implies that the specific
claims that have already reached a final judgment remain final judgments.” Green v.
Northwest Community Hospital, 401 Ill. App. 3d 152, 157 (2010). The express reservation
exception applies only to those portions of the prior complaint that had not reached final
judgment and the plaintiff voluntarily dismissed. See Restatement (Second) of Judgments
§ 26, cmt. b (1982) (“the plaintiff should be left with an opportunity to litigate in a second
action that part of the claim which he justifiably omitted from the first action. A
determination by the court that its judgment is ‘without prejudice’ (or words to that effect) to
a second action on the omitted part of the claim, expressed in the judgment itself, or in the
findings of fact, conclusions of law, opinion, or similar record, unless reversed or set aside,
should ordinarily be given effect in the second action.” (Emphases added.)).
¶ 31 “An express reservation requires that the intent be clearly and unmistakably
communicated or directly stated.” Law Offices of Nye & Associates, Ltd. v. Boado, 2012 IL
App (2d) 110804, ¶ 21 (citing Quintas v. Asset Management Group, Inc., 395 Ill. App. 3d
324, 333 (2009)); Severino v. Freedom Woods, Inc., 407 Ill. App. 3d 238, 250-51 (2010)
(because of the language on the docket sheet, and in light of the fact that there was no
contradiction between the docket sheet and the order granting the plaintiff’s voluntary
dismissal, the court was compelled to find that the express reservation exception applied to
prevent application of the res judicata bar to the plaintiff’s refiled claim).
¶ 32 Here, the parties do not dispute that the res judicata elements are met. In fact, Venturella
specifies in his reply brief: “Venturella’s opposition to the dismissal of the Derivative Claim
has never involved a debate over [the elements of res judicata].” Rather, the dispute lies in
whether an exception to res judicata should apply, that is, whether the chancery court
expressly reserved the derivative claim. “[O]nce a party establishes a prima facie case of
res judicata, the burden shifts to the opposing party to properly plead the existence of an
exception to res judicata.” Deutsche Bank National Trust Co. v. Bodzianowski, 2016 IL App
(3d) 150632, ¶ 19.
¶ 33 As noted above, in order for a circuit court to expressly reserve a claim that otherwise
would be res judicata such that a party may raise it in a second lawsuit, the reservation must
be “clearly and unmistakably communicated or directly stated.” Law Offices of Nye &
Associates, Ltd., 2012 IL App (2d) 110804, ¶ 21 (citing Quintas, 395 Ill. App. 3d at 333);
accord Severino, 407 Ill. App. 3d at 250-51 (docket sheet included words “VOLUNTARILY
DISMISSAL W[ITH] LEAVE TO REFILE—ALLOWED” (internal quotation marks
omitted)); accord Robinson v. Toyota Motor Credit Corp., 201 Ill. 2d 403, 414 (2002)
(considering the Seventh Circuit Court of Appeals’ statement that the “reservation of a cause
of action must be ‘both express, as in writing, and express, as in specifically identified’
[citation]” and agreeing that “to avoid the preclusive effect of res judicata any reservation of
a cause of action must be expressly reserved by the parties”).
¶ 34 Here, however, there was no such express reservation. Venturella sought to amend his
counterclaim against Dreyfuss on the eve of trial to include a derivative claim for the
$340,000 on behalf of Venturella and Abbey Woods. On the day of trial, after hearing
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detailed arguments on the motion by both parties, the court denied the motion to amend the
counterclaim. The court ruled:
“THE COURT: Having reviewed the plaintiff’s counterclaim, which carries
Venturella’s motion for leave to amend the counterclaim and having read the original
counterclaim, the motion for leave to amend is denied as well at this time.
What other motions do you have?
MR. PATTERSON [ATTORNEY FOR DEFENDANT] A. Your Honor, could I
ask that this—does [Y]our Honor intend that to have res judicata effect or is it just
denied at this time as a procedural matter so if I want to and it’s timely I could
commence a new lawsuit on it.
THE COURT: It’s denied at this time.
MR. PATTERSON: At this time, but not res judicata?
THE COURT: Yes.”
¶ 35 The court did not enter a written order to that effect, and the parties do not direct us to a
copy of the docket sheet, a specific docket entry, or any other written document regarding the
doctrine of res judicata. In fact, the crux of Venturella’s argument is that this one comment
from the bench operated to create an exception to the doctrine of res judicata, reserving the
claim such that Venturella could bring it in a subsequent lawsuit. We find that the facts of
this case do not meet the requirements set forth by the courts of this state regarding express
reservation of claims. The chancery court did not enter any order permitting Venturella to
maintain a second lawsuit for the $340,000 as a derivative action on behalf of Abbey Medco,
but merely responded briefly to questioning from Venturella’s attorney. There is no docket
entry or written order, and, in our opinion, no “intent *** clearly and unmistakably
communicated or directly stated.” Law Offices of Nye & Associates, Ltd., 2012 IL App (2d)
110804, ¶ 21 (citing Quintas, 395 Ill. App. 3d at 333).
¶ 36 We disagree with Venturella’s characterization of the circuit court’s intent, as well.
Rather than the court having clearly and unmistakably reserved this claim, our review of the
record leaves us with the impression that any intent on the court’s part to reserve the claim
was unclear. At the October 2013 hearing, the court first considered Dreyfuss’s motion to file
a second amended complaint. It heard extensive arguments on the motion, took a recess to
review the filings, then denied leave to file the second amended complaint. The court then
immediately transitioned to arguments on Venturella/Woods’s motion to file an amended
counterclaim. The parties argued the motion extensively, the court took a recess to review the
filings, and then returned to the bench. It denied the motion to file the amended counterclaim,
as quoted directly above. In so doing, the court did not provide grounds for the denial of the
motion. Although Venturella characterizes the exchange as a clear demonstration of the
court’s intent to expressly reserve the claim, we do not think this intent is clear.
¶ 37 We acknowledge Venturella’s argument that the circuit court, in its memorandum order
ruling on the section 2-619 motion to dismiss, misstated the facts regarding the October 31,
2013, hearing. Specifically, in its order granting Dreyfuss’s motion to dismiss, the court
referred to case law indicating that the reservation of the right to bring a separate claim
should be memorialized in writing in some way, whether in a court order or in a docket sheet
entry, in order to avoid preclusion under the principles of res judicata. The order then cited
an apparently nonexistent order from the prior case, stating:
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“The order entered on that date (October 31, 2013) denied Venturella’s motion to
amend his counterclaim. It did not reference the res judicata exchange and said
nothing about reserving Venturella’s ability to pursue the derivative claim in a
subsequent lawsuit.”
That portion of the well-reasoned order was in error, as there was no October 31, 2013,
written order. While Venturella urges that this error alone requires reversal, we disagree, as
this was but a single misstatement in a nine-page memorandum order that is sound in fact and
law.
¶ 38 Venturella also urges us to reverse because dismissal of the derivative claim is
fundamentally unfair. We disagree. The doctrine of res judicata is an equitable remedy that
should not be applied if the result would be fundamentally unfair. Novak, 197 Ill. 2d at 390.
In this case, however, there is nothing fundamentally unfair about barring this derivative
lawsuit on the basis of res judicata, as Dreyfuss’s underlying liability for the $340,000 down
payment was previously decided in his favor in the 2009 case. The issue has been litigated
and it is not fundamentally unfair to now bar the derivative action.
¶ 39 We also reject Venturella’s arguments based on judicial estoppel and waiver.
Specifically, Venturella urges this court to find that Dreyfuss should be judicially stopped
from “both (1) asserting that the Derivative Claim is the same action as the Prior Suit and (2)
asserting the doctrine of res judicata as a defense after declining to object to the request that
the denial have no res judicata effect.” He relies on the legal principle that the failure to
object constitutes a waiver (Kotvan v. Kirk, 321 Ill. App. 3d 733, 750 (2001)) and, citing to
Barack Ferrazzano Kirschbaum Perlman & Nagelberg v. Loffredi, 342 Ill. App. 3d 453
(2003), argues that under the doctrine of judicial estoppel, “it is impermissible for a party to
receive a benefit for taking a legal position during one proceeding then subsequently advance
a contrary theory during a later proceeding.” As noted above, however, in order to reserve a
claim, the court must “clearly and unmistakably communicat[e] or directly stat[e]” the
reservation. Law Offices of Nye & Associates, Ltd., 2012 IL App (2d) 110804, ¶ 21 (citing
Quintas, 395 Ill. App. 3d at 333); accord Severino, 407 Ill. App. 3d at 250-51. That did not
happen here. Because it did not happen, there was nothing to which Dreyfuss should have
objected. Moreover, had Venturella submitted a proposed written order stating that the court
was expressly ruling that Venturella had a right to file a derivative claim in a separate action,
Dreyfuss could have objected. Venturella did not submit such an order, however, and there
was nothing to which Dreyfuss could have objected.
¶ 40 Under the strictures of a section 2-619 motion to dismiss, dismissal is allowed when a
“claim asserted against defendant is barred by other affirmative matter avoiding the legal
effect of or defeating the claim.” 735 ILCS 5/2-619(a)(9) (West 2014); see Patrick
Engineering, Inc., 2012 IL 113148, ¶ 31. Because Venturella’s argument on appeal that the
circuit court expressly reserved his right to pursue litigation of the derivative claim in a
separate lawsuit fails, we affirm the circuit court’s entry of dismissal of Venturella’s 2014
derivative action against Dreyfuss based on res judicata.
¶ 41 III. CONCLUSION
¶ 42 Accordingly, for all of the foregoing reasons, the decision of the circuit court of Cook
County is affirmed.
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¶ 43 Affirmed.
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