Dubina v. Mesirow Realty Development, Inc.

Dubina v. Mesirow Realty Development, Inc., No.81860 (9/18/97)_

NOTICE: Under Supreme Court Rule 367 a party has 21 days after the
filing of the opinion to request a rehearing. Also, opinions are
subject to modification, correction or withdrawal at anytime prior
to issuance of the mandate by the Clerk of the Court. Therefore,
because the following slip opinion is being made available prior to
the Court's final action in this matter, it cannot be considered
the final decision of the Court. The official copy of the following
opinion will be published by the Supreme Court's Reporter of
Decisions in the Official Reports advance sheets following final
action by the Court.

Docket No. 81860--Agenda 21--March 1997.
MICHAEL DUBINA et al., v. MESIROW REALTY DEVELOPMENT, INC., et
al. (Mesirow Realty Development, Inc., et al., Appellees; Litgen
Concrete Cutting & Coring Company, Appellant).
Opinion filed September 18, 1997.

JUSTICE NICKELS delivered the opinion of the court:
The issue presented in this appeal is whether defendant Litgen
Concrete Cutting & Coring Company (Litgen) may appeal certain final
orders entered in a suit that was voluntarily dismissed where the
action was later refiled in the circuit court. The appellate court
held that, because the suit was refiled by plaintiffs, it lost
jurisdiction to entertain Litgen's appeal. 283 Ill. App. 3d 36.
This court allowed Litgen's petition for leave to appeal (155 Ill.
2d R. 315), and the Illinois Appellate Lawyers Association filed a
brief as amicus curiae in support of Litgen. We reverse and remand
to the appellate court for further proceedings consistent with this
opinion.

BACKGROUND
Plaintiffs brought numerous separate actions in the circuit
court of Cook County. These separate suits were later consolidated
by the circuit court. In these suits, plaintiffs sought to recover
damages for fire losses incurred on April 15, 1989, when a Chicago
building, housing multiple art galleries, was damaged by fire. Most
plaintiffs were either artists or art gallery owners, and the
property damage claims related generally to works of art damaged or
destroyed by the fire. At the time of the fire, the building was
under renovation.
Most complaints involved the same group of defendants. These
defendants included: the owners and managers of the building, the
general contractors retained to perform renovation work on the
building, and the subcontractors involved in that renovation work.
In general, each defendant was alleged to have been negligent in
either causing the fire or contributing to the spread of the fire.
Each defendant filed an answer in the circuit court denying
liability. Most, if not all, defendants also filed third-party
claims for contribution against the other defendants.
Before trial, plaintiffs collectively settled their suits with
all defendants, except defendant Litgen. The multiple settlement
agreements provided that plaintiffs would release their claims
against all defendants, except Litgen.[fn1] They further provided
that plaintiffs would assign their direct claims against Litgen to
some of the settling defendants. Pursuant to the settlement
agreements, plaintiffs assigned their claims against Litgen to
Mesirow Realty Development and certain other settling defendants
(the Mesirow parties). Based on this assignment, the Mesirow
parties, not plaintiffs, are now the real parties in interest with
respect to the claims against Litgen.
In separate orders, on June 14, 1994, July 19, 1994, and July
26, 1994, the circuit court found that the settlement agreements
were made in good faith, as required by the Joint Tortfeasor
Contribution Act. 740 ILCS 100/2 (West 1992). Based on these good-
faith findings, the circuit court dismissed the contribution claims
between Litgen and the settling defendants with prejudice. 740 ILCS
100/2 (West 1992). Plaintiffs' direct claims against Litgen
remained pending in the circuit court. After the entry of the good-
faith settlement orders, plaintiffs filed a motion to voluntarily
dismiss their direct claims against Litgen, and these claims were
dismissed without prejudice. The circuit court then dismissed the
remaining claims pending in the circuit court.
After the voluntary dismissal, Litgen appealed to the
appellate court. Litgen appealed the orders finding the settlements
to have been made in good faith and dismissing its contribution
claims. While the appeal was still pending, plaintiffs filed a new
action against Litgen in the circuit court, as permitted by
statute. See 735 ILCS 5/13--217 (West 1992).[fn2] Based on this
refiling, the Mesirow parties filed a motion in the appellate court
to dismiss Litgen's appeal for lack of subject matter jurisdiction.
The appellate court held that it lacked jurisdiction to
consider Litgen's appeal. The court stated that, although it
initially had jurisdiction over Litgen's appeal, it was divested of
jurisdiction by the refiling. Because of the refiling, the
dismissal and good-faith orders were transformed from final orders
into nonfinal ones. The appellate court also found that, although
the contribution claims were dismissed with prejudice, Litgen would
not be barred by res judicata from filing its contribution claims
in the second action. The court therefore found that Litgen would
not be prejudiced by waiting for the conclusion of the second
action before being allowed to appeal.

ANALYSIS
Initially, we note that Litgen does not seek to appeal the
order of voluntary dismissal itself. Instead, Litgen seeks to
appeal the orders finding that the settlements were made in good
faith and dismissing Litgen's contribution claims with
prejudice.[fn3] Litgen argues that these were final orders
because they disposed of Litgen's third-party claims. According to
Litgen, once the case was voluntarily dismissed, these orders
became appealable. Litgen further argues that plaintiffs' refiling
of the action against Litgen did not alter this final and
appealable status and that the appellate court therefore had
jurisdiction to consider the merits of the appeal.
Resolution of this appeal requires consideration of Supreme
Court Rules 301 and 304 (155 Ill. 2d Rs. 301, 304). Rule 301 allows
appeals from final judgments as a matter of right. See also Ill.
Const. 1970, art. VI, sec. 6. A judgment or order is "final" if it
disposes of the rights of the parties, either on the entire case or
on some definite and separate part of the controversy. Village of
Niles v. Szczesny, 13 Ill. 2d 45, 48 (1958); see Waters v.
Reingold, 278 Ill. App. 3d 647, 651 (1996); Citicorp Savings v.
First Chicago Trust Co., 269 Ill. App. 3d 293, 296-97 (1995). A
dismissal with prejudice is usually considered a final judgment,
including the dismissal of claims in a complaint (J. Eck & Son,
Inc. v. Reuben H. Donnelley Corp., 188 Ill. App. 3d 1090 (1989)) or
third-party action (Geier v. Hamer Enterprises, Inc., 226 Ill. App.
3d 372, 379-81 (1992)).
The dismissal of a claim with prejudice, however, is not
always immediately appealable. Supreme Court Rule 304(a) provides:
"If multiple parties or multiple claims for relief
are involved in an action, an appeal may be taken from a
final judgment as to one or more but fewer than all of
the parties or claims only if the trial court has made an
express written finding that there is no just reason for
delaying either enforcement or appeal or both. *** In the
absence of such a finding, any judgment that adjudicates
fewer than all the claims or the rights and liabilities
of fewer than all the parties is not enforceable or
appealable and is subject to revision at any time before
the entry of a judgment adjudicating all the claims,
rights, and liabilities of all the parties." 155 Ill. 2d
R. 304(a).
Without a Rule 304(a) finding, a final order disposing of fewer
than all of the claims in an action is not instantly appealable.
Such an order does not become appealable until all of the claims in
the multiclaim litigation have been resolved. Once the entire
action is terminated, all final orders become appealable under Rule
301. Marsh v. Evangelical Covenant Church, 138 Ill. 2d 458, 464
(1990); see Ratkovich v. Hamilton, 267 Ill. App. 3d 908, 912
(1994).
In the instant case, the circuit court entered good-faith
findings and, accordingly, dismissed Litgen's contribution claims
with prejudice. These dismissal orders were "final" orders because
they terminated Litgen's third-party claims. The circuit court did
not enter a Rule 304(a) finding. Because other claims were still
pending at the time of the dismissal, these final orders were not
immediately appealable.
Later, plaintiffs voluntarily dismissed the action, as
permitted by statute. See 735 ILCS 5/2--1009 (West 1992). The
voluntary dismissal terminated the action in its entirety. All
pending claims were dismissed. The order of voluntary dismissal,
because it disposed of all matters pending before the circuit
court, rendered all orders which were final in nature, but which
were not previously appealable, immediately final and appealable.
It is well settled that final orders entered in a case become
appealable following a voluntary dismissal. See Maggini v. OSF
Healthcare System, 256 Ill. App. 3d 551, 552-53 (1994); Rein v.
David A. Noyes & Co., 230 Ill. App. 3d 12, 15 (1992); Howard v.
Druckemiller, 238 Ill. App. 3d 937, 940-41 (1992); Edward E. Gillen
Co. v. City of Lake Forest, 221 Ill. App. 3d 5, 9-10 (1991); Reagan
v. Baird, 140 Ill. App. 3d 58, 62-63 (1985); cf. Saddle Signs, Inc.
v. Adrian, 272 Ill. App. 3d 132 (1995) (denial of motion to dismiss
was not a final order and could not be appealed after entry of
voluntary dismissal).
Nevertheless, the appellate court held that it lacked
jurisdiction to consider Litgen's appeal because, while the appeal
was pending, the action had been refiled in the circuit court. The
appellate court relied heavily on Kleiman v. Northwestern Memorial
Hospital, 253 Ill. App. 3d 47 (1993). In Kleiman, the plaintiffs
were the ones who sought to appeal a final order after taking a
voluntary dismissal. The Kleiman court stated that the plaintiffs'
refiling of the action, while the appeal was pending, transformed
final orders into nonfinal ones and that it therefore had no
jurisdiction. The Kleiman court further stated that to hold
otherwise would allow litigants to take piecemeal appeals and would
hinder judicial economy.
We reject the reasoning of the appellate court in the instant
case and in Kleiman. The definition of "final," for purposes of
Rule 301, is well settled, and application of Rule 301 is
relatively straightforward. We note that the refiled action is an
entirely new and separate action, not a reinstatement of the old
action. Swisher v. Duffy, 117 Ill. 2d 376, 379 (1987); Kahle v.
John Deere Co., 104 Ill. 2d 302, 306 (1984); see Neuman v.
Burstein, 230 Ill. App. 3d 33, 36 (1992); Lyon v. Hasbro
Industries, Inc., 156 Ill. App. 3d 649, 656 (1987). Section 13--217
of the Code of Civil Procedure provides that following a voluntary
dismissal, a plaintiff "may commence a new action." (Emphasis
added.) 735 ILCS 5/13--217 (West 1992). The original and refiled
actions are completely distinct actions. Because they are distinct
actions, when the original action was terminated, the circuit court
lost jurisdiction of the original action and all final orders
became appealable under Rule 301. We decline to create a special
exception to Rule 301 that plaintiffs' refiling of the action in
the circuit court transforms final orders into nonfinal ones.
This court's recent decision in Rein v. David A. Noyes & Co.,
172 Ill. 2d 325 (1996), illustrates how final orders are treated
where a case is later dismissed voluntarily. There were two sets of
appeals in the Rein litigation. In the first round, the plaintiffs
alleged that the defendants fraudulently misrepresented the nature
of certain securities purchased by the plaintiffs. The complaint
consisted of counts that sought rescission of the purchase and
other counts seeking common law remedies. The circuit court ruled
that the rescission counts were barred by the pertinent statute of
limitations. The circuit court denied a request for a Rule 304(a)
finding, which would have allowed an immediate appeal. The
plaintiffs therefore took a voluntary dismissal of the remainder of
the action but only appealed the dismissal of the rescission counts
under Rule 301. Initially, on appeal, the appellate court
determined that it had jurisdiction because the voluntary dismissal
terminated all claims pending in the circuit court. Rein v. David
A. Noyes & Co., 230 Ill. App. 3d 12, 15 (1992). The appellate court
then determined that the rescission counts were barred by the
statute of limitations and affirmed the circuit court. Rein, 230
Ill. App. 3d at 15-18.
In the second round of litigation, the plaintiffs refiled
their action in its entirety. In the complaint, the plaintiffs
again raised the rescission counts and the common law counts. The
circuit court dismissed both sets of counts based on res judicata,
and the appellate court affirmed (Rein v. David A. Noyes & Co., 271
Ill. App. 3d 768 (1995)). In affirming the appellate court, this
court first stated the requirements for application of res
judicata: (1) a final judgment on the merits in the first suit, (2)
an identity of cause of action, and (3) an identity of parties or
their privies. This court determined that the dismissal of the
rescission counts, which was the subject of the first appeal, met
these requirements. The rescission counts were therefore barred by
res judicata. See Rein, 172 Ill. 2d at 334-36.
This court then determined that the common law counts, which
were not the subject of the first appeal, were also barred by res
judicata. This court found that although the common law counts were
not actually litigated in the first proceeding, they could have
been because they arose out of the same operative facts as the
rescission counts. Res judicata will not only bar any matter
actually litigated in the first suit but will also bar any matter
that might have been raised and determined in that suit. To avoid
res judicata, after their rescission counts were dismissed, the
plaintiffs should have proceeded to a decision on the merits on the
common law counts and then appealed the determinations involving
both the rescission and common law counts in one appeal. See Rein,
172 Ill. 2d at 336-43.
In Rein, this court treated the dismissals of the counts in
the first action as final judgments for the purpose of res judicata
in the second action. Final judgments entered in the first suit are
not treated as a nullity--they have consequences. In Rein, final
judgments followed by a voluntary dismissal were treated the same
as final judgments entered in other actions. The filing of a new
action did not make orders entered in the first suit any less
"final," as that term is used in Rules 301 and 304. It makes no
difference to the analysis in Rein whether the action is refiled
while the appeal is pending in the appellate court or after the
appellate court has issued a decision.
Because Rule 301 allows an appeal as of right, the appellate
court may not decline to consider an appeal under Rule 301 when it
believes that it would be more expedient for the appellant to take
the appeal at a later time. Litgen has a right under Rule 301 to
appeal now, whatever the reasons. Once the requisites of the rules
were satisfied, the appellate court had jurisdiction. Litgen
appealed in a timely manner and a controversy still existed between
the parties.
We further note that the appellate court's decision would
create uncertainty about appellate jurisdiction. If a plaintiff
refiled an action at any point during the appeal of the original
action, this refiling would destroy appellate jurisdiction. A
plaintiff could therefore defeat jurisdiction by strategically
choosing to refile the action at any point in the appellate
process. This court will not permit such procedural maneuvering to
involuntarily deprive Litgen of its right to appeal now, as
permitted by Rule 301.
The appellate court also stated that the policy of Rule 304(a)
is to discourage piecemeal appeals and that policy is violated by
allowing Litgen to appeal now. We find this concern unpersuasive
for three reasons. First, as noted, section 13--217 of the Code of
Civil Procedure, which permits the refiling of an action after a
voluntary dismissal, was recently amended and reduces the
likelihood of piecemeal appeals. The amendment makes it more
difficult for a plaintiff to file a new action after a voluntary
dismissal. See 735 ILCS 5/13--217 (West 1996). Second, the
situation involved in the instant case is unusual and unlikely to
encourage piecemeal appeals. In most circumstances, the plaintiff
would be the party seeking to appeal a final order after taking a
voluntary dismissal. Here, in contrast, one of the defendants (not
one of the plaintiffs) is seeking to appeal after plaintiffs took
a voluntary dismissal. Plaintiffs themselves created this unusual
situation by taking a voluntary dismissal that terminated all
claims pending in the circuit court. Third and most significantly,
the decision in Rein shows that a plaintiff seeking to split his
claims and appeal in a piecemeal manner may be barred by res
judicata. The doctrine of res judicata is the proper mechanism to
discourage piecemeal appeals, rather than a conclusion that the act
of refiling transforms final orders into nonfinal orders.
Finally, the Mesirow parties argue that Litgen has no need to
appeal at this time because its third-party contribution claims are
contingent upon liability in the underlying action. They argue that
considerations of judicial economy militate against jurisdiction.
Specifically, the Mesirow parties argue that the contribution
claims may become moot if plaintiffs are unsuccessful in their
direct action against Litgen. They argue that the issue is not ripe
for appeal and that the appellate court would be required to give
an advisory opinion on an abstract question of law.
The contingent nature of the appeal generally does not make
the orders any less final and does not affect appellate
jurisdiction under Rule 301. The question of finality of judgments
under Rule 301 is a separate consideration from the contingent
nature of the appeal. Ordinarily, the contingent nature of an
appeal is a factor the circuit court considers in determining
whether to allow a discretionary appeal under Rule 304. See Geier
v. Hamer Enterprises, Inc., 226 Ill. App. 3d 372, 379-80 (1992)
(circuit court conducts two-step analysis of whether the judgment
is final and whether certain discretionary factors, such as the
contingent nature of a third-party claim for contribution, favor
appealability under Rule 304); see also Curtiss-Wright Corp. v.
General Electric Co., 446 U.S. 1, 7, 64 L. Ed. 2d 1, 11, 100 S. Ct. 1460, 1464 (1980) (same approach under the federal counterpart to
Rule 304). Neither the circuit court nor the appellate court has
any such discretion under Rule 301. At this juncture, the appeal is
not moot and an actual controversy exists. Litgen remains subject
to liability in tort and the legal consequences of the settlement
agreements.

CONCLUSION
The orders finding the settlements to have been made in good
faith and dismissing Litgen's contribution claims with prejudice
were final orders. Absent a Rule 304 finding, these final orders
were not appealable until the entire action was terminated. These
final orders became appealable under Rule 301 when the voluntary
dismissal terminated the action. Accordingly, the appellate court
has jurisdiction under Rule 301. We reverse the judgment of the
appellate court and remand this cause to the appellate court for
further proceedings consistent with this opinion.

Appellate court judgment reversed;
cause remanded.

JUSTICE BILANDIC took no part in the consideration or decision
of this opinion.

[fn1] One other defendant, Gelick Foran Associates, Inc., also did
not settle with plaintiffs. The circuit court later granted summary
judgment in favor of Gelick, and it is not involved in this appeal.

[fn2] The statute was amended in 1995. Prior to the amendment, the
statute allowed a plaintiff to file a new action within one year of
a voluntary dismissal or within the remaining period of limitation,
whichever was greater. 735 ILCS 5/13--217 (West 1992). Pursuant to
the amendment, a plaintiff may file a new action following a
voluntary dismissal only within the remaining period of limitation.
735 ILCS 5/13--217 (West 1996). Thus, the amendment limits the
circumstances under which a plaintiff can file a new action
following a voluntary dismissal. The amendment, however, expressly
applies only to actions that accrue after March 9, 1995, the
effective date of the amendment. This action accrued before that
date. Accordingly, as the parties acknowledge, the amendment does
not apply to the instant case.

[fn3] The good-faith findings and the dismissal of contribution
claims are inextricably linked. Once the circuit court entered
orders finding the settlements to have been made in good faith, the
contribution claims had to be dismissed by operation of law. See
740 ILCS 100/2 (West 1992).