Exceptions Exist to Claim-Splitting Rule

“Claim-splitting,” as that concept was originally understood, was when a party divided a cause of action that is in its nature entire and individible by filing separate lawsuits in multiple for a or at different times.  Quintas v. Asset Management Group, Inc., 2009 WL 3161743, *6 (Sept. 30, 2009), citing Best Coin-Op Inc. v. Paul F. Ilg Supply co., 189 Ill.App.3d 638, 657 (1989).  Courts disfavor this piecemealing of the litigation because of the unfairness it can cause to a party forced to endlessly defend itself on several fronts from claims that should be contained in one lawsuit.  Piagentini v. Ford Motor Co., 387 Ill.App.3d 887, 891 (1009) (noting that the rule against claim-splitting is “based on the principle that litigation should have an end and that no person should be unnecessarily harassed with a multiplicity of lawsuits”).

Our Supreme Court, however, has expanded the definition of “claim-splitting” to those situations in which a plaintiff voluntarily dismisses the remaining claims in an action after other claims have gone to final judgment.  See Quintas, slip op. at *6 (stating that this extension was “first proposed” in Revin v. David A. Noyes & Co., 172 Ill.2d 325 (1996) and “clarified” in Hudson v. City of Chicago, 228 Ill.2d 462 (2008)).  Under Rein and Hudson, if a plaintiff does so, res judicata may bar him from refilling his case.

The conduct that is captured by this broadened definition does not appear to implicate the original rational for the rule since this sort of claim-splitting doesn’t require a party to defend itself in multiple venues at the same time.  And with a one-year period (or whatever time is left on the statute of limitations) in which the refilling must occur, it doesn’t give a plaintiff the means to engage in endless litigation.  But lower courts have issued a flurry of opinions attempting to apply it.

Last month’s article looked at how courts have interpreted the “final adjudication on the merits” element of the res judicata analysis in this newly expanded claim-splitting context.  So far it appears that whether or not the plaintiff (1) what was involuntarily dismissed prior to the voluntary dismissal, i.e., an entire count/theory versus allegations within a particular count/theory and (2) the nature of the order granting that involuntary dismissal; inserting language in the order that the dismissal is “with-out prejudice” or granting the plaintiff leave to re-plead may not be enough to avoid the res judicata bar.

But even if res judicata would otherwise bar the refilling, there are several recognized exceptions to the rule against claim-slitting:  (1) the parties have agreed in terms or in 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 recurring wrong; or (6) it is clearly and convincingly shown that the policies favoring preclusion of a second action are overcome for an extraordinary reason.  See Hudson, 228 Ill.2d at 472-73, quoting Rein, 172 Ill.2d at 341.  Several recent cases have attempted to apply the first two of those exceptions.

Acquiescence by the defendant to refilling

Unfortunately, the Restatement does not offer much guidance on determining what it takes for a defendant to “acquiesce” to the refilling – its example is based not on the expanded definition adopted by our Supreme Court but on the original understanding of claim-splitting where a defendant allows a plaintiff to maintain simultaneous, separate actions based upon parts of the same claim.  See Restatement (Second) of Judgments § 26, Comment a, at 234-35 (1982).  But whether this “acquiescence” exception is applicable appears to depend upon when a defendant raises the res judicata/claim-splitting defense.  See Piagentini, 387 Ill.App.3d at 897 (“the key element in determining acquiescence is the failure of the defendant to object to the claim-splitting”).

So far courts have been unified in finding that a defendant need not object to the refilling before a plaintiff actually attempts to refile the case.  See Matejczyk v. City of Chicago,  2009 WL 4981047, *7 (Dec. 21, 2009), citing Rein, 172 Ill.2d at 342 (“Until the plaintiff attempted to re-file . . . no reason existed for defendants to object”); Quintas, slip op. at *8 (“We agree that defendants were under no obligation to object at the time of the voluntary dismissal.  The appropriate time to object is when the action is refilled”).  And this appears to be true even where the circuit court expressly grants the plaintiff leave to refile.  See Quantas, slip op. at *7-8 (finding that the defendants were not required to object when the circuit court granted the plaintiff ‘leave to refile’.  Notably, in Matejczyk, this exception was not applicable even though the order granting the voluntary dismissal had been labeled as “agreed.”  Materjczyk, slip op. at *7.

Instead, it appears that whether acquiescence has occurred depends on what a defendant does once the case is refilled.  For instance, courts have found that the exception did not apply where the defendant immediately moved to dismiss the refilled complaint (Matejczyk, slip op. at *7), or included a res judicata affirmative defense in its answer to the refilled complaint (Quintas, slip op. at *8).

But where the defendant fails to raise its hand initially and allows the case to proceed towards trial, it risks being found to have acquiesced to the refilling.  See Piagentini, 387 Ill.App.ed at 897-98 (finding exception applied where the defendant filed several answers without raising res judicata affirmative defense, responded to discovery, retained experts, attended depositions, and otherwise defended the lawsuit for 3 and a half years before making an objection); Curtis v. Lofy, 394 Ill.App.3d 170, 188 (2009) (finding the defendant acquiesced to refilling where it defended the case for 3 and a half years without objection and without raising res judicata as an affirmative defense).

So it appears that a defendant’s conduct after refilling, not before the motion for voluntary dismissal or during the hearing on that motion, is what’s relevant to this acquiescence exception analysis.

Court expressly reserves the plaintiff’s right to refile

Another exception that courts have recently attempted to apply is whether the court, which granted the plaintiff’s motion for voluntary dismissal expressly, reserved the plaintiff’s right to refile the case.  The granting of a voluntary dismissal would appear to be, by definition, “without prejudice” since a plaintiff has the right to refile the case under sections 2-1009 (735 ILCS 5/2-1009 (West 2000)) and 13-217 (735 ILCS 5/13-217 (West 2000)).  But the mere grant of a voluntary dismissal in-and-of itself does not seem to be enough to qualify as an “express reservation” of that right under this exception.  See Lane v. Kalcheim, 394 Ill.App.3d 324, 335 (2009) (noting that argument “could be made” based upon the “express language” of section 2-1009, but recognizing the Rain court’s holding that section 2-1009 “should not be read to automatically immunize a Plaintiff against the bar of res judicata when the voluntarily dismissed counts are filed”).  Instead, it appears that the record must show that the court actually contemplated, and intended to preserve, the plaintiff’s right to refile the case in granting the voluntary dismissal.

For instance, in Quintas, the written orders entered by the circuit court granting dismissal stated that the dismissal was “without prejudice” but did not contain any reference to refilling.  The court’s docket sheet stated:  “VOLUNTARY DISMISSAL W[ITH] LEAVE TO REFILE-ALLWOED.”

Tough the plaintiffs pointed to additional evidence to support their argument that the circuit court had intended to preserve their right to refile (i.e., the circuit court’s desire to preside over the refilled case if the parties agreed, its decision to continue the defendants’ motion for costs “based on the plaintiffs’ representation that their claims will be refilled,” and the defendants stating in a motion for administrative transfer that the plaintiffs’ motion for voluntary dismissal “with leave to refile” was granted), the language of the docket sheet entry is what implicated this exception.  That language showed that the circuit court “gave the instruction that the docket sheet entry should include the language ‘with leave to refile,’” which “clearly and unmistakably grants leave to refile.”  Quintas, slip op. at *7. 

But what happens when the docket sheet does not say that.  And the order granting the motion for voluntary dismissal does not discuss refilling, and merely states that eh dismissal is “without prejudice” or gives the plaintiff leave to re-plead?  We have seen that that is not enough to make a final order non-final for res judicata purposes.  Kiefer v. Rust-Oleum Corporation, 394 Ill.App.3d 485 (2009); Doe v. Gleicher, 393 Ill.App.3d 31 (2009); Matejczyk v. City of Chicago, 2009 WL 4981047 (Dec. 21, 2009). And the Rein court was adamant that a voluntary dismissal, which under the statutory scheme is by definition “without prejudice,” does not automatically immunize a plaintiff’s refilled case from a res judicata defense.  See Lane, 394 Ill.App.3d at 335, citing Rein, 172 Ill.2d at 342-43.

In Quintas, the fact that the orders stated that the dismissal was “without prejudice” was important because it made those orders consistent (or, at least, not inconsistent) with the docket sheet entry and, thus, rendered the normal rule that a written order trumps the docket sheet entries inapplicable.  What isn’t clear is whether that “without prejudice” language would have been enough to implicate the exception without the docket sheet entry – the Kiefer/Doe/Matejczyk cases suggest the answer would be no.  Though the Kiefer and Doe courts where not analyzing this exception (they were attempting to determine if the order was rendered non-final because of that language), in Matejczyk, the court order granting leave to replead was not good enough because there was “no indication in the record that the dismissal order was written with an exception to claim-splitting in mind.”  Matejczyk, slip op. at *8.

The bottom line:  in order for this exception to apply; there must be sufficient evidence in the record to conclude that the circuit court specifically intended to grant the plaintiff leave to “refile.”