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Lawyer’s Fee Collection Lawsuit Doomed By Res Judicata – A Trap For the Unwary

The Law Offices of Nye and Associates, Ltd., v. Eduardo Boado, 2012 Il App (2d) 11084.

Plaintiff Nye is a law firm that filed a fee collection case against a former client.

Nye I

In September 2o08, Nye sued the former client.  On March 17, 2010, Nye moved to voluntarily dismiss the action without prejudice and with leave to refile them and to file an amended complaint seeking fees under section 508 of the Illinois Marriage and Dissolution of Marriage Act (750 ILCS 5/508).

The trial court granted the motion with a written order drafted by the defendant which stated that the claims were “voluntarily nonsuited.”

Nye then filed an amended complaint seeking fees under section 508.  (No date for this decision is provided in the court’s opinion).

On July 21, 2010, the trial court dismissed the complaint with prejudice on the basis that it was time-barred.  Nye did not appeal.

Nye II

On November 17, 2010, Nye filed a new complaint against Boado alleging the same two counts that Nye voluntarily dismissed in Nye I.

The trial court dismissed Nye II with prejudice on the grounds of res judicata.  It further found that the exception “based on an express permission by the court or an agreement of the parties for leave to refile did not apply.”

Nye appealed and the appellate court affirmed.

The court held that res judicata did apply because there was a final judgment in Nye I.  “There was a final judgment on the merits in Nye I, the issues that were raised in Nye II could have been adjudicated in Nye I, and the parties were identical.”  Paragraph 15.

The exception for claim-splitting did not apply because the order ending Nye I did not contain the required that the plaintiff had leave to refile the cause of action within one year.

The Appellate Court explained:  “Nye argues that the combination of its motion to voluntarily dismiss, which asked for leave to refile, with Boado’s failure to object, and the court’s grant of the motion, is sufficient to show that it had leave to refile the claims in a new lawsuit.  But, under the exception at issue, the court must expressly state the right to refile….An express reservation requires that the intent be clearly and unmistakably communicated or directly stated.  See Quintas v. Asset Management Group, Inc., 395 Ill. App. 3d 324, 333 (2009).  Here nothing was expressly stated by the court  in regard to the ability to refile.”  Paragraph 21.

Comment: Be careful in voluntarily dismissing any case in Illinois.  This holding, which ignores the motion of the Nye firm in Nye I, is a trap for the unwary.

Edward X. Clinton, Jr.