Law Offices of Edward P. Graham, Ltd. v. Kornesczuk , 2024 IL App (3d) 230208-U ( 2024 )

NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except
in the limited circumstances allowed under Rule 23(e)(1).
2024 IL App (3d) 230208-UOrder filed May 10, 2024
____________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
2024
LAW OFFICES OF EDWARD P. GRAHAM, ) Appeal from the Circuit Court
LTD., ) of the 18th Judicial Circuit,
) Du Page County, Illinois,
Plaintiff-Appellant, )
)
v. ) Appeal No. 3-23-0208
) Circuit No. 22-SC-5531
JAMES KORNESCZUK, as Trustee of the )
Kornesczuk Family Trust, ) Honorable
) Thomas A. Else,
Defendant-Appellee. ) Judge, Presiding.
____________________________________________________________________________
JUSTICE DAVENPORT delivered the judgment of the court.
Justice Holdridge specially concurred.
Justice Albrecht dissented.
____________________________________________________________________________
ORDER
¶1 Held: The trial court’s prior adjudication of a billing dispute does not bar attorney’s
current action to recover unpaid legal fees where former client’s nonpayment of
fees persisted after the prior judgment’s entry. Upon modifying the original bill, the
prior judgment renewed the former client’s money obligation and thereby renewed
the attorney’s right to collect.
¶2 Plaintiff, the Law Offices of Edward P. Graham, Ltd., appeals the dismissal of its complaint
to recover unpaid fees against defendant and former client, James Kornesczuk, in his capacity as
trustee of the Kornesczuk Family Trust (Trust). The parties dispute whether res judicata bars
plaintiff’s complaint, where plaintiff withdrew a counterclaim in a prior action stemming from the
same contractual relationship underlying plaintiff’s current complaint. Because defendant’s
nonpayment persisted after judgment was entered in the prior action, res judicata was improperly
applied. Accordingly, we reverse and remand.
¶3 I. BACKGROUND
¶4 In August 2017, defendant retained plaintiff to represent the Trust in a guardianship case
involving his mother, Nora Kornesczuk. Defendant signed an engagement agreement and paid an
initial retainer of $2500 to be applied toward plaintiff’s fees. Thereafter, from August through
September 2017, plaintiff represented defendant in the guardianship case and sent him a series of
invoices, billing him $12,815.03. Defendant paid plaintiff a total of $4000 in September and
October 2017. Defendant did not remit any payments thereafter.
¶5 Plaintiff continued to represent defendant until November 1, 2017, and subsequently billed
defendant $1,681.09 for services rendered through that date. (Thus, plaintiff billed defendant a
total of $14,496.12, and defendant paid plaintiff a total of $6500.) Plaintiff’s final invoice sought
an outstanding balance of $7,996.12. Thereafter, between March 2018 and June 2019, plaintiff
periodically sent defendant invoices for the outstanding balance of $7,996.12. 1
¶6 A. Case I
¶7 In August 2019, defendant pro se filed a small claims complaint against plaintiff and its
owner, attorney Edward P. Graham, claiming Graham and his law practice were indebted to him
in the amount of $10,000. Defendant alleged Graham delegated the guardianship matter to an
Each invoice was addressed to “Estate of Nora Kornesczuk c/o Mr. James Kornesczuk,”
1
corresponding to the parties’ engagement agreement, which misidentified the client as the Estate of Nora
Kornesczuk, rather than the Trust.
2
inexperienced attorney whose poor representation resulted in an unfavorable outcome for the
Trust. In September 2019, plaintiff pro se filed a counterclaim for $7,996.12, the outstanding
balance of its legal fees, in addition to accrued interest and court costs. Plaintiff alleged
Kornesczuk had individually agreed, through a series of promises, to pay plaintiff’s fees. Attached
as exhibits to plaintiff’s counterclaim were copies of (1) the engagement agreement, (2) invoices
sent to defendant, and (3) an August 2017 email addressed to Graham and his associate attorney.
In the email, defendant stated, “I will see to it that you are paid, but without any cash and without
any way to get out cash without liability ***, we may need a different [billing and payment]
arrangement.”
¶8 In March 2020, defendant, through counsel, filed an amended complaint for breach of
contract and fraud. Defendant alleged plaintiff breached the engagement agreement by overbilling
him in the amount of $7619. Under the fraud count, defendant alleged Graham induced him to
enter an engagement agreement by representing that his practice specialized in guardianship
litigation, only to then assign the case to an associate attorney with no experience in guardianship
matters. Under both counts, defendant alleged damages in the amount of $7619 (i.e., the sum of
the alleged excessive billing charges) and requested “an award of prejudgment interest, costs, and
attorney’s fees, and for such further relief as [the trial court] deems equitable and just.” According
to the amended complaint, plaintiff’s invoices totaled $14,496.12, of which defendant had paid
$6500.
¶9 In April 2020, plaintiff retained counsel and filed an amended counterclaim seeking the
outstanding balance of $7,996.12 (i.e., $14,496.12 reduced by $6500), in addition to accrued
interest, in the amount of $2,133.32, and legal costs. The amended counterclaim’s allegations
identified Kornesczuk as “the trustee of the KORNESCZUK FAMILY TRUST” but its caption
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did not do so, despite the amended claim being brought by Kornesczuk in his capacity as trustee.
Much like the original counterclaim, the amended counterclaim attached plaintiff’s invoices and
the parties’ engagement agreement as exhibits; however, the amended counterclaim did not attach
the August 2017 email as an exhibit.
¶ 10 A trial was held on the matter. The court heard evidence on April 27 and May 19, 2021,
and issued its decision on August 27, 2021. Plaintiff voluntarily dismissed its amended
counterclaim in early July 2021, before the court issued its ruling. On July 6, 2021, the court
entered an order setting the matter for a final decision and stating, “On the oral motion of the
counter plaintiff, the amended counter complaint is dismissed with prejudice and without costs
over the objection of the counter defendant.”
¶ 11 On August 27, 2021, the court issued its decision in open court:
“I find that the hourly rate of Mr. Graham in the amount of $350 per hour is
reasonable and that of his associate *** of $300 per hour is likewise reasonable
based on what other lawyers in DuPage County with similar background charge for
the same or similar services.
I further find that the fees charged for clerical and paralegal services are
reasonable and de minimis. ***
With the exception of what I’m about to discuss, I find that the services
performed by Mr. Graham’s office were fair and necessary.
***
So, in sum, the following fees are disallowed: August 1st, 2017, $1,070;
August 17th, $900; August 31st, 2017, $870; November 1st, 2017, $1,050; the
amount billed after the withdrawal [of representation] of $116. The total judgment
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in favor of [Kornesczuk, as trustee] and against [Graham’s office] is $4,006, and I
will prepare that judgment.”
The court entered a written order the same day. The order provided, “For the reasons stated on the
record, Count II of the Plaintiff’s Amended Complaint [fraud] is dismissed with prejudice. With
respect to Count I [breach of contract], judgment is entered for Plaintiff and against the Defendant
in the amount of $4006.00 plus costs of suit.”
¶ 12 Plaintiff filed a motion to reconsider, disputing the court’s reduction of its attorney fees for
August 17, 2017, by $900. The court denied plaintiff’s motion on November 23, 2021. Plaintiff
did not appeal the denial of its motion to reconsider or the court’s August 27, 2021, decision.
¶ 13 B. Current Case
¶ 14 On November 15, 2022, plaintiff filed a breach of contract suit against defendant, claiming
defendant had not paid the outstanding legal fees after crediting defendant for the $6500 already
paid and the $4006 disallowed in Case I. According to plaintiff, the outstanding balance was now
$3,916.72.
¶ 15 Defendant moved to dismiss under section 2-619(a)(4) of the Code of Civil Procedure (735
ILCS 5/2-619(a)(4)) (West (2022)) (Code), arguing res judicata barred plaintiff’s claim. On April
6, 2023, the court granted defendant’s motion. Its oral ruling provided as follows:
“This case was first heard by this Court several years ago. The plaintiff in
the first case, hereinafter referred to as ‘Graham One,’ was James Kornesczuk, the
trustee of the Kornesczuk Family Trust.
In sum, the complaint alleged that the defendant, the Law Offices of Edward
Graham, had overbilled the plaintiff. Defendant Graham filed a countercomplaint
and an amended countercomplaint, which was dismissed with prejudice on July
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5th, 2021 on the oral motion of the counter-plaintiff, Graham, without costs, over
the objection of the — over the objection of the counter-defendant.
That countercomplaint sought legal fees against the counter-defendant and
plaintiff, James Kornesczuk, and is, for practical purposes, a mirror image of the
complaint filed in this case, except that the complaint in this case documents the
proceedings at the previous trial.
At the conclusion of the first trial, the Court ruled in favor of the plaintiff
for the reasons stated on the record, entered judgment in the amount of $4,006, plus
costs of suit. The defendant in Graham One filed a motion for reconsideration,
which was denied. The case was not appealed.
The current complaint alleges, in sum, that there were legal fees owed to
Graham over and above the 4,006 judgment entered for Kornesczuk. The argument
goes thusly: Graham is allegedly owed $7,922.72, or thereabouts, pursuant to a fee
agreement. The Court’s judgment order of $4,006 is a set-off against that amount,
leaving a balance of $3,916.72, plus interest, et cetera, to which Graham is entitled.
The problem that the plaintiff in this case has is that the countercomplaint,
which was dismissed with prejudice at his request, was the identical cause of action
which is pleaded in this case in every way. The reason that there was no judgment
entered for Graham in Graham One was that Graham withdrew his
countercomplaint, for whatever reason, with prejudice.
Graham now argues that said dismissal should not count because the
Court’s ruling was an advisory opinion. The Court’s ruling was not an advisory
opinion, it was a money judgment for what the Court found was a partial breach of
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contract. If Graham had wanted a money judgment in Graham One, he should not
have dismissed his countercomplaint with prejudice.
Res judicata is a well-known legal concept that a further recitation in this
ruling is unnecessary. Graham had the chance to litigate this issue in the prior case,
but for reasons known only to him and his attorney decided not to. Res judicata
demands that the defendant’s motion be granted. Case dismissed.”
¶ 16 The court entered a written order providing, “For the reasons stated on the record, the
motion to dismiss filed by the defendant is granted. Case dismissed with prejudice. Strike future
dates. Case closed.” This appeal followed.
¶ 17 II. ANALYSIS
¶ 18 A section 2-619 motion to dismiss asserts affirmative matter to avoid or defeat a claim
while admitting the complaint’s legal sufficiency, all well-pled facts, and the reasonable inferences
to be drawn from those facts. 735 ILCS 5/2-619 (West 2022). When ruling on a motion to dismiss,
all pleadings and supporting documents are viewed in a light most favorable to the nonmoving
party. Lucas v. Taylor, 349 Ill. App. 3d 995, 998 (2004). We review the complaint’s dismissal
de novo. Bouton v. Bailie, 2014 IL App (3d) 130406, ¶ 7.
¶ 19 “One defense that a defendant may raise in a section 2-619 motion is that a prior judgment
bars the plaintiff’s cause of action, i.e., that the prior judgment has res judicata effect in the
subsequent lawsuit.” Kasny v. Coonen & Roth, Ltd., 395 Ill. App. 3d 870, 873 (2009) (citing 735
ILCS 5/2-619(a)(4) (West 2008)). “The doctrine of res judicata provides that a final judgment on
the merits rendered by a court of competent jurisdiction acts as an absolute bar to a subsequent
action between the same parties or their privies involving the same claim, demand, or cause of
action.” Wilson v. Edward Hospital, 2012 IL 112898, ¶ 9. “The bar extends not only to all matters
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that were actually decided but also to those matters that could have been decided in the prior
action.” Id. The party invoking res judicata bears the burden of demonstrating its application.
Kasny, 395 Ill. App. 3d at 873. “[R]es judicata is an equitable doctrine that should be applied only
as fairness and justice require.” McHenry Savings Bank v. Moy, 2021 IL App (2d) 200099, ¶ 38.
“Equity dictates that the doctrine of res judicata should not be technically applied if to do so would
be fundamentally unfair or would create inequitable or unjust results.” Id. Our review of a
complaint’s dismissal on res judicata grounds is de novo. Buchanan v. Legan, 2017 IL App (3d)
170037, ¶ 22.
¶ 20 Plaintiff argues defendant’s res judicata defense does not apply. According to plaintiff, its
counterclaim in Case I was not identical to its current claim because while its counterclaim was
filed against Kornesczuk individually, this claim was filed against Kornesczuk as trustee. Plaintiff
further argues its breach of contract claim does not seek to nullify the judgment in Case I, which
was merely a declaratory judgment against plaintiff. Finally, plaintiff argues the “ongoing harm”
and “extraordinary reason” exceptions to res judicata apply to prevent what would amount to a
“windfall double recovery” for defendant.
¶ 21 In response, defendant maintains this case satisfies each of the elements of res judicata and
does not fall into any of the doctrine’s established exceptions. He argues plaintiff’s election to file
a counterclaim in Case I, rather than a third-party complaint, suggests it intended to bring a claim
against the Trust rather than defendant in his individual capacity. Defendant further argues the
outcome of Case I was not a declaratory judgment, but rather a $4006 monetary judgment. Finally,
defendant argues res judicata applies because plaintiff could have litigated its claims against the
Trust in Case I yet chose not to do so.
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¶ 22 Res judicata applies if the following three requirements are met: (1) a final judgment on
the merits by a court of competent jurisdiction, (2) identity of cause of action, and (3) identity of
parties or their privies. Wilson, 2012 IL 112898, ¶ 9.
¶ 23 A. Final Judgment on the Merits
¶ 24 Defendant argues plaintiff’s voluntary dismissal of its counterclaim in Case I was a final
judgment on the merits. He cites Illinois Supreme Court Rule 273, which states that, except in a
few circumstances, “an involuntary dismissal of an action *** operates as an adjudication upon
the merits.” Ill. S. C. R. 273 (eff. Jan. 1, 1967). This rule is inapplicable here as plaintiff has
voluntarily dismissed its counterclaim. “Rule 273 applies only to an involuntary dismissal of an
action.” Rein v. David A. Noyes & Co., 172 Ill. 2d 325, 335 (1996). Even so, plaintiff’s voluntary
dismissal was with prejudice. Generally, a “dismissal with prejudice is an adjudication on the
merits for purposes of the application of the doctrine of res judicata.” Mann v. Rowland, 342 Ill.
App. 3d 827, 836 (2003); see also Van Slambrouck v. Marshall Field & Co., 98 Ill. App. 3d 485,
487 (1981) (“A dismissal with prejudice is tantamount to an adjudication on the merits.”).
¶ 25 Plaintiff argues its voluntary dismissal with prejudice should not bar its present claim
against defendant, Kornesczuk as trustee, because its decision to voluntarily dismiss its
counterclaim was motivated by a realization that Kornesczuk was not individually liable for the
failure to pay plaintiff’s invoices. Plaintiff’s argument, which implicates res judicata’s identity-
of-parties requirement, is unavailing. “An attorney’s subjective motivation in taking a voluntary
dismissal is not part of a res judicata analysis.” Hudson v. City of Chicago, 228 Ill. 2d 462, 478
(2008).
¶ 26 Moreover, even if plaintiff’s voluntary dismissal of its counterclaim did not constitute a
final judgment, the court’s adjudication of defendant’s claim following a bench trial is a final
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judgment on the merits for purposes of res judicata. The first requirement of res judicata is thus
met.
¶ 27 B. Identity of Cause of Action
¶ 28 Next, the parties dispute the existence of an identity of cause of action. “In determining
whether there is an identity of causes of action for purposes of res judicata, Illinois courts apply a
transactional test.” (Internal quotation marks omitted.) Ross Advertising, Inc. v. Heartland Bank
& Trust Co., 2012 IL App (3d) 110200, ¶ 34. “Under this test, separate claims will be 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.” Id. We approach this inquiry “pragmatically, giving weight
to such considerations as whether the facts are related in time, space, origin, or motivation, whether
they form a convenient trial unit, and whether their treatment as a unit conforms to the parties’
expectations or business understanding or usage.” (Internal quotation marks omitted.) First
Midwest Bank v. Cobo, 2018 IL 123038, ¶ 19.
¶ 29 Plaintiff’s claim in this case and his counterclaim in Case I both request unpaid legal fees
arising from the same engagement agreement, executed in August 2017. However, while the
counterclaim sought an outstanding balance based solely on plaintiff’s invoices, the current claim
seeks a reduced amount that purports to account for the trial court’s judgment in Case I.
¶ 30 1. Nature of Prior Judgment
¶ 31 The parties fundamentally disagree as to the nature of the trial court’s judgment in Case I.
Plaintiff maintains the court issued a declaratory judgment, disallowing $4006 of the $14,496.12
billed by plaintiff and thereby reducing the remaining balance owed from $7,922.72 to $3,916.72.
Defendant, in contrast, maintains the trial court upheld only $2500 of the $14,496.12 billed by
plaintiff. According to him, plaintiff’s “billing practices were so egregious” that the trial court not
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only absolved plaintiff of any liability on the unpaid fees, but also required plaintiff to repay the
Trust $4006 of the $6500 previously paid. 2
¶ 32 The record overwhelmingly supports plaintiff’s interpretation. In Case I, the court
summarized its ruling as follows:
“So, in sum, the following fees are disallowed: August 1st, 2017, $1,070;
August 17th, $900; August 31st, 2017, $870; November 1st, 2017, $1,050; the
amount billed after the withdrawal [of representation] of $116. The total judgment
in favor of [Kornesczuk, as trustee] and against [Graham’s office] is $4,006[.]”
The court expressly disallowed a total of $4006 in legal fees. It is no coincidence that the
disallowed fees—in the amounts of $1070, $900, $870, $1050, and $116—yield a sum of $4006.
The judgment was “in favor of” defendant, therefore, because it reduced the Trust’s total liability
by $4006.
¶ 33 Yet defendant insists plaintiff’s “billing practices were so egregious” that the court decided
plaintiff should not have received more than $2500 for all of its work on the guardianship case.
Such an interpretation finds no support in the record. First, it would necessitate the court to have
disallowed nearly $12,000 of the $14,496.12 billed by plaintiff. Second, it contradicts the court’s
findings that (1) plaintiff’s hourly rates were reasonable, (2) plaintiff’s fees for clerical and
paralegal services were reasonable and de minimus, and (3) except for services linked to the
disallowed fees, plaintiff’s services were fair and necessary. Third, it is contradicted by
defendant’s own admission at oral argument that he did not attempt to collect a “repayment” after
Case I’s termination. In view of the record, we see no indication the trial court intended to absolve
2
$6500 less $4006 yields $2494, just shy of $2500.
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defendant of all liability on the outstanding fees, let alone to transfer defendant’s liability onto
plaintiff.
¶ 34 We acknowledge the trial court, in its oral ruling on the motion to dismiss, stated its
judgment in Case I was a money judgment, and not an advisory opinion. We agree in part. “An
opinion is advisory if it is impossible for [the] court to grant effectual relief to either party.” In re
Marriage of O’Brien, 2011 IL 109039, ¶ 20. The court’s prior judgment was not an advisory
opinion where it granted defendant effectual relief by reducing the Trust’s money obligation to
plaintiff. Having said that, we fail to see how the prior judgment was a money judgment. A money
judgment is defined as a “judgment for damages subject to immediate execution.” Black’s Law
Dictionary (11th ed. 2019). Although the court called its prior judgment a money judgment, it did
not go so far as to say it was for damages or that it required plaintiff to pay (or repay) the Trust. In
fact, the court never contradicted plaintiff’s understanding that the $4006 judgment was a set-off
against the original balance of unpaid fees.
¶ 35 Plaintiff argues the judgment in Case I was a declaratory judgment. A “declaratory
judgment” is defined as “[a] binding adjudication that establishes the rights and other legal
relations of the parties without providing for or ordering enforcement.” Black’s Law Dictionary
(11th ed. 2019). Here, the trial court’s judgment (1) established the parties’ rights in relation to
plaintiff’s invoices by disallowing $4006 in fees (2) without requiring either party to pay a
specified sum to the other side. Thus, while the judgment could be loosely termed a “money
judgment” to the extent it adjudicated a money obligation, it was a textbook example of a
declaratory judgment.
¶ 36 “The declaratory judgment procedure allows the court to take hold of a controversy one
step sooner than normally—that is, after the dispute has arisen, but before steps are taken which
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give rise to claims for damages or other relief.” (Internal quotation marks omitted.) Ludwig, 376
Ill. App. 3d at 101. In his motion to dismiss, defendant stated, “When [plaintiff] continued to bill
Defendant exorbitant amounts *** Defendant took the proactive step of requesting the Circuit
Court to decide whether the amounts claimed by [plaintiff] were meritorious.” (Emphasis added.)
Defendant’s characterization of his lawsuit in Case I as a “proactive step” is consistent with the
facts of this case and with the nature of a declaratory judgment action.
¶ 37 The essential requirements of a declaratory judgment action are (1) a plaintiff with a legal
tangible interest, (2) a defendant having an opposing interest, and (3) an actual controversy
between the parties concerning such interests. Brandt Construction Co. v. Ludwig, 376 Ill. App.
3d 94, 101 (2007). A legal tangible interest is “some personal claim, status, or right which is
capable of being affected by the grant of [declaratory] relief.” Greer v. Illinois Housing
Development Authority, 122 Ill. 2d 462, 493 (1988). The parties’ billing dispute in Case I meets
all three requirements of a declaratory judgment action.
¶ 38 Nevertheless, defendant contends his claim did not seek declaratory relief because the
conduct giving rise to the claim—plaintiff’s representation of the Trust—occurred well before he
filed his claim, and there was no chance of future conduct that could serve as the basis for a
declaratory judgment. He cites the principle that declaring nonliability for past conduct is not a
function of a declaratory judgment action. See Howlett v. Scott, 69 Ill. 2d 135, 143 (1977). We
reject defendant’s attempt to apply the “nonliability for past conduct” principle to plaintiff’s
conduct in representing the Trust rather than to defendant’s ongoing payment delinquency, which
continued after he filed his complaint in Case I. Where defendant’s nonpayment persisted through
the date of filing, it was not past conduct.
13
¶ 39 Finally, defendant’s contention fails even assuming his flawed interpretation of the
“nonliability for past conduct” principle. The principle does not define a declaratory judgment;
instead, it states a criterion for a properly entered declaratory judgment. In other words, whether
the court should have issued a declaratory judgment does not change the fact that its prior judgment
was a declaratory judgment. 3
¶ 40 Through its declaratory judgment, the court modified and authoritatively established the
Trust’s liability as it related to plaintiff’s legal fees. By disallowing only some of plaintiff’s fees,
the court necessarily allowed the rest of plaintiff’s fees, which the court found were based on
reasonable rates and services that were “fair and necessary.” Thus, upon final judgment in Case I,
the Trust owed plaintiff the outstanding balance of fees that the court had implicitly allowed to
stand.
¶ 41 2. Separate Causes of Action
¶ 42 Having established the nature of the judgment in Case I, we return to the second
requirement of res judicata—identity of cause of action. “Under res judicata principles, a
defendant’s continuing course of conduct, even if related to conduct complained of in an earlier
action, creates a separate cause of action.” (Internal quotation marks omitted.) Wilmington Savings
Fund Society, FSB v. Barrera, 2020 IL App (2d) 190883, ¶ 19. “Put another way, one course of
conduct may give rise to a second cause of action when that conduct persists after the original
judgment.” Id. “Thus, an earlier judgment relating to a course of conduct does not bar claims for
3
Moreover, defendant’s recitation of the principle overlooks its reasoning. The principle states, “A
declaratory judgment action is not the vehicle for a declaration of nonliability for past conduct, as it deprives
the potential plaintiff of his right to determine whether he will file, and, if so, when and where.” (Emphasis
added and internal quotation marks omitted.) Travelers Indemnity Co. of America v. Townes of Cedar Ridge
Condominium Ass’n, 2022 IL App (3d) 200542, ¶ 10. By taking a “proactive step” to limit the Trust’s
liability with respect to plaintiff’s invoices, defendant conceivably deprived plaintiff of its right to
determine whether to file, and if so, when and where.
14
continuing conduct complained of in the second lawsuit that occur[s] after judgment has been
entered in the first lawsuit.” (Internal quotation marks omitted.) Id.¶ 43 After judgment was entered in Case I, defendant continued to disregard its (now reduced)
debt to plaintiff. Defendant’s “continuing course of conduct” in failing to pay the outstanding
balance of plaintiff’s legal fees created a separate cause of action for purposes of res judicata. Id.The second requirement of res judicata is therefore not met.
¶ 44 The dissent opines that “the claims asserted in the previous action, including plaintiff’s
original counterclaim, arise from the same group of operative facts as the claim in the instant case.”
Infra ¶ 62; see Ross Advertising, Inc., 2012 IL App (3d) 110200, ¶ 34 (separate claims are
considered the same cause of action if they arise from a single group of operative facts). Crucially,
the dissent’s position overlooks the practical implications of the trial court’s prior judgment. Cobo,
2018 IL 123038, ¶ 19 (res judicata’s transactional test is a pragmatic inquiry). By disallowing
some of plaintiff’s fees, the judgment abrogated plaintiff’s invoices such that plaintiff could no
longer rely on those invoices as self-contained evidence of debt. From that point forward,
plaintiff’s right to collect was no longer based on its invoices alone, but on a judgment that had
modified the invoices and authoritatively established the Trust’s liability.
¶ 45 In short, plaintiff’s counterclaim and the current complaint did not arise from the same
group of operative facts. While plaintiff’s invoices constituted the chief “operative facts”
underlying its counterclaim in Case I, plaintiff’s current complaint goes beyond its invoices in
seeking to enforce the court’s declaratory judgment—a judgment that did not exist when plaintiff
filed its counterclaim. In deciding whether separate claims are the same cause of action, courts
consider whether the claims’ operative facts are “related in time, space, origin, or motivation.” Id.Here, plaintiff’s invoices and the trial court’s declaratory judgment are disconnected in time,
15
origin, and motivation. A pragmatic assessment of the operative facts confirms that plaintiff’s
claims constituted separate causes of action.
¶ 46 This conclusion aligns with the principles of fairness and justice underlying the doctrine of
res judicata. See Moy, 2021 IL App (2d) 200099, ¶ 38. By merely reducing the original bill, the
court’s prior judgment renewed the Trust’s money obligation and, in turn, conferred on plaintiff a
renewed right to collect.
¶ 47 Where res judicata’s second requirement is not met, we need not address the doctrine’s
identity-of-parties requirement or its “ongoing harm” and “extraordinary reason” exceptions.
Defendant’s motion to dismiss was improvidently granted.
¶ 48 III. CONCLUSION
¶ 49 The judgment of the circuit court of Du Page County is reversed and remanded for further
proceedings.
¶ 50 Reversed and remanded.
¶ 51 JUSTICE HOLDRIDGE, specially concurring:
¶ 52 I concur with the majority’s ruling that res judicata should not bar the claim at issue,
however, I would reach this conclusion because it would be fundamentally unfair to do otherwise.
¶ 53 As the majority points out, “res judicata is an equitable doctrine that should be applied
only as fairness and justice require.” McHenry Savings Bank v. Moy, 2021 IL App (2d) 200099, ¶
38. “Equity dictates that the doctrine of res judicata should not be technically applied if to do so
would be fundamentally unfair or would create inequitable or unjust results.” Id.¶ 54 Illinois has adopted Section 26(1) of the Restatement (Second) of Judgments which lists
the various exceptions to res judicata. Hudson v. City of Chicago, 228 Ill. 2d 462, 472-73 (2008)
(citing Rein v. David A. Noyes & Co., 172 Ill. 2d 325, 341 (1996)). Under Section 26(1),
16
res judicata would not bar a second action if: (1) the parties have agreed in terms or effect that the
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 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. Hudson, 228 Ill. 2d at 472-73.
¶ 55 It has not been suggested by anyone that exceptions (1) through (4) should apply. The
plaintiff and the majority have stated that section (5) should apply because there is a recurrent
wrong which is still ongoing, i.e., the continued nonpayment of attorneys’ fees owed to the plaintiff
by the defendant. Whether this could or should be considered an ongoing wrong is obviously
debatable, however, I believe that exception (6) provides a simpler, more straightforward method
to ensure justice is achieved in the present case.
¶ 56 The Restatement (Second) of Judgments states that res judicata should not preclude
relitigation of a cause of action if “[i]t is clearly and convincingly shown that the policies favoring
preclusion of a second action are overcome for an extraordinary reason, such as the apparent
invalidity of a continuing restraint or condition having a vital relation to personal liberty or the
failure of the prior litigation to yield a coherent disposition of the controversy.” (Emphasis added.)
Restatement (Second) of Judgments § 26(1)(f) (1982). “Such an exception is not lightly to be found
and must be based on a clear and convincing showing of need.” Id., n.i. “Confined within proper
limits, this concept is central to the fair administration of the doctrine of res judicata.” Id.
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¶ 57 The plaintiff and the majority state that the record suggests the trial court did not intend to
absolve the defendant of all liability on the outstanding fees. I agree. There was nothing in the
record to suggest that the trial court found the Trust is not liable for the remaining attorney fees
after the money damages judgment of $4,006.00 for partial breach of contract was deducted from
the remaining balance of $7,996.12. As the majority points out, there was ample evidence that the
trial court intended that the Trust should pay the remainder of the plaintiff’s attorney fees.
¶ 58 When the trial court delivered its judgment in Graham I, it was still unknown whether the
Trust would pay the remaining balance of attorney fees, and the plaintiff did not need a judgment
at that time to be owed or to collect the remaining balance. However, because of the unusual
procedural history of the case, if the Trust did not pay the remainder of its legal fees, and we know
it did not, res judicata would apply, potentially barring the plaintiff from bringing a suit seeking
to collect from the Trust. Yet on August 27, 2021, when the trial court gave its judgment in
Graham I, it gave every indication that it did not intend to absolve the Trust of all liability on the
outstanding fees, but at that time there was no way for the plaintiff to know whether the Trust was
going to pay until it was too late to seek a judgment from the court. The plaintiff was in a situation
where he could not collect once he knew for certain that the defendant was not going to pay.
¶ 59 For the reasons listed in the majority’s opinion and mentioned above, there was a failure
of the prior litigation to yield a coherent disposition of the controversy, and for this reason I believe
the present appeal involves an extraordinary reason to overcome res judicata. Upholding the
dismissal of Graham II due to res judicata would (1) allow the trustee to avoid paying a balance
of attorneys’ fees that was effectively set by the trial court, and (2) allow the Trust to reap a double
recovery of damages at the plaintiff’s expense. The reason it would be a double recovery is that, if
the plaintiff is not allowed to proceed in Graham II, the ruling of the trial court has not only reduced
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the plaintiff’s invoices by $4,006.00, but it has then additionally required the plaintiff to pay
$4,006.00 to the Trust. To force this outcome in order to adhere to a rigid application of
res judicata would be fundamentally unfair and is precisely why exceptions were made for the
rule.
¶ 60 JUSTICE ALBRECHT, dissenting:
¶ 61 I respectfully dissent from the majority’s ruling that res judicata does not bar the claim at
issue. I disagree with the majority’s analysis that identity of a cause of action does not exist and
would hold that all three requirements of res judicata have been met, barring plaintiff from
pursuing this claim.
¶ 62 The second requirement of res judicata, identity of a cause of action, establishes that if the
claim involves the same operative facts as a claim in the original proceeding, res judicata may bar
a party from raising his or her claim in a subsequent action. Torcasso v. Standard Outdoor Sales,
Inc., 232 Ill. App. 3d 500, 503-04 (1993). Here, the claims asserted in the previous action,
including plaintiff’s original counterclaim, arise from the same group of operative facts as the
claim in the instant case.
¶ 63 The majority recognizes that the continuing course of conduct exception may provide a
party relief from res judicata and applies this exception to the case before us. Supra ¶ 42. However,
there is no “course of conduct” here. Repeated action or a series of acts demonstrating continuity
of purpose creates a course of conduct, not the single, yet ongoing, act of not paying an invoice.
¶ 64 A continuing course of conduct suggests more than one act is necessary, which shows an
intent to continue the violating conduct. See e.g., Feltmeier v. Feltmeier, 207 Ill. 2d 263, 278
(2003) (continuing violations are the continued acts, not the continuation of a single wrong). The
recurring wrong in the “course of conduct” exception allows for a subsequent claim because the
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continuing conduct creates a successive injury that constitutes a separate cause of action. See
Kidney Cancer Ass’n v. North Shore Community Bank and Trust Co., 373 Ill. App. 3d 396, 400
(2007) (continuing course of conduct is numerous separate transactions, not one continuing
transaction). Further, the precedent utilizing this doctrine demonstrates that “course of conduct”
refers to repeated activity constituting separate claims, such as continuing to default on installment
payments and continued actions that constitute harassment or nuisance violations. See e.g.,
Wilmington Savings Fund Society, FSB, 2020 IL App (2d) 190883 (installment payments); Raabe
v. Messiah Evangelical Lutheran Church, 245 Ill. App. 3d 539 (1993) (continuing nuisance);
Green v. Illinois Department of Transportation, 609 F. Supp. 1021 (1985) (continuing
harassment). The continued conduct in these cases resulted in either a new injury or compounded
the injury already received.
¶ 65 Here, there is one single act – lack of payment on an attorney’s invoice. No additional work
was performed after litigation of the first proceeding that would create a new bill or further injury.
With no new services being performed that would add to the invoice, there will always only be
one single action of nonpayment. This single action is not a continuing course of conduct and does
not create a new injury from which plaintiff may recover. See Kidney Cancer Ass’n, 373 Ill. App.
3d at 400.
¶ 66 The last requirement of res judicata, identity of parties or their privity, is clearly met here
as well. See Indian Harbor Ins. Co. v. MMT Demolition, Inc., 2014 IL App (1st) 131734, ¶ 41.
Privity exists between “parties that adequately represent the same legal interests.” Oshana v. FCL
Builders, Inc., 2013 IL App (1st) 120851, ¶ 23. “It is the identity of interest that controls in
determining privity, not the nominal identity of the parties.” People ex rel. Burris v. Progressive
Land Developers, Inc., 151 Ill. 2d 285, 296 (1992). While plaintiff names defendant as the trustee
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of the Kornesczuk trust in the current claim, instead of individually as in his original counterclaim,
the two parties are one in the same. The legal interest between defendant as an individual or as
trustee is identical—the obligation to pay for work performed for the benefit of the trust. Thus, the
identity of parties requirement is clearly met.
¶ 67 The purpose of res judicata is to prevent the multiplicity of lawsuits between causes of
action that involve the same parties and the same facts and issues. See Murneigh v. Gainer, 177
Ill. 2d 287, 299 (1997). It acts to bar the parties from relitigating causes of action that were raised
in an earlier lawsuit and also those claims that could have been raised in the earlier litigation.
Hudson, 228 Ill. 2d at 467 (2008). Here, not only could plaintiff’s claim be raised in the earlier
lawsuit, it was, in fact, raised in the form of a counterclaim. Plaintiff chose to voluntarily dismiss
that claim with prejudice, barring him from raising it again now. I would therefore conclude that
all three requirements implicating res judicata are met and would affirm the circuit court’s ruling.
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