Ifc Credit Corp. v. Magnetic Technologies
| Decision Date | 14 November 2006 |
| Docket Number | No. 1-06-0426.,1-06-0426. |
| Citation | 859 N.E.2d 76,307 Ill.Dec. 76 |
| Parties | IFC CREDIT CORPORATION, Plaintiff-Appellant, v. MAGNETIC TECHNOLOGIES, LTD., Defendant-Appellee. |
| Court | United States Appellate Court of Illinois |
Masuda, Funai, Eifert & Mitchell, Ltd., Chicago (Edward J. Underhill and Nancy E. Sasamoto, of counsel), for Appellant.
Michael J. Fleck, Huntley (Michael J. Fleck, Colleen E. Helenhouse & Thomas L. Schmid, of counsel); Attorneys for Pure Solutions and Charles Powers, Chicago (Roberti & Lohmar & Douglas W. Lohmar, Jr., of counsel), for Appellee.
IFC Credit Corporation (IFC) appeals from an order of the circuit court dismissing the instant breach of contract action pursuant to the doctrine of res judicata. For the reasons which follow, we reverse the judgment of the circuit court and remand this cause for further proceedings.
On October 10, 2003, NorVergence, Inc. (NorVergence) and IFC entered into a Master Program Agreement, governing the assignment of various equipment rental agreements from NorVergence to IFC. According to the Master Program Agreement, when IFC agreed to purchase a rental agreement, NorVergence would assign to IFC "all its rights, title and interest in and to the Rental Agreement and Equipment including all monies due and to become due under the Rental Agreement, but none of its obligations under the Rental Agreement."
On April 6, 2004, NorVergence and Magnetic Technologies, Ltd. (Magnetic) entered into a rental agreement for the lease of certain telecommunications equipment known as a "Matrix." Under the agreement, Magnetic was required to make sixty payments of $340.14. The agreement also contained a provision authorizing NorVergence to assign its rights under the contract. NorVergence assigned the contract to IFC in that same month.
In June of 2004, NorVergence involuntarily entered bankruptcy. While those bankruptcy proceedings were pending, in November of 2004, the Federal Trade Commission (FTC) filed a complaint against NorVergence in the United States District Court for the District of New Jersey. The FTC's complaint accused NorVergence of various unfair and deceptive acts in violation of Section 5(a) of the Federal Trade Commission Act (15 U.S.C. § 45(a) (2000)). Neither NorVergence nor the trustee in bankruptcy defended the lawsuit, and a default judgment was entered by the United States District Court on June 29, 2005. In that judgment, the district court found, inter alia, that NorVergence's rental agreements assigned after the bankruptcy court rejected those agreements were void and unenforceable. The district court also found that the rental agreements in which NorVergence still retained any residual rights were void and unenforceable.
In November of 2004, the Illinois Attorney General filed a complaint against NorVergence in the Circuit Court of Sangamon County, alleging violations of the Illinois Consumer Fraud and Deceptive Business Practice Act (815 ILCS 505/1 et seq. (West 2004)). On May 6, 2005, a default judgment was entered in that case, declaring all of NorVergence's rental agreements void ab initio and unenforceable. IFC was not a party to either the action brought by FTC or the action brought by the Illinois Attorney General.
The matter before us began when IFC filed a complaint against Magnetic in the Circuit Court of Cook County. IFC's complaint contained a single count for breach of contract, seeking damages resulting from Magnetic's alleged failure to make the required payments on its rental agreement with NorVergence. Magnetic filed a motion to dismiss pursuant to section 2-619(a)(4) of the Code of Civil Procedure (735 ILCS 5/2-619(a)(4) (West 2004)), arguing that the judgments entered in the United States District Court and the Circuit Court of Sangamon County, which declared NorVergence's rental agreements void and unenforceable, acted as a bar to IFC's current action. The circuit court granted Magnetic's motion, finding that IFC's claim was barred under the doctrine of res judicata. This appeal followed.
A section 2-619 motion to dismiss admits the legal sufficiency of the complaint and raises defects, defenses, or other affirmative matters that defeat the claim. Cohen v. McDonald's Corp., 347 Ill.App.3d 627, 632, 283 Ill.Dec. 451, 808 N.E.2d 1 (2004). When reviewing a dismissal pursuant to section 2-619, this court does not give deference to the circuit court's judgment, but rather reviews the matter de novo. Martin v. Illinois Farmers Insurance, 318 Ill.App.3d 751, 757, 252 Ill.Dec. 310, 742 N.E.2d 848 (2000).
In urging the reversal of the circuit court's judgment, IFC contends, inter alia, that it was neither a party to the actions commenced against NorVergence by the FTC or the Illinois Attorney General nor was it in privity with NorVergence for purposes of an application of the doctrine of res judicata based on the judgments entered in those cases. Consequently, IFC argues that the circuit court erred in dismissing its action. We agree.
Under the doctrine of res judicata, a final judgment rendered on the merits is conclusive as to the rights of the parties and their privies, and constitutes an absolute bar to a subsequent action involving the same claim, demand, or cause of action. Board of Education of Sunset Ridge School District No. 29 v. Village of Northbrook, 295 Ill.App.3d 909, 915, 230 Ill.Dec. 112, 692 N.E.2d 1278 (1998). The doctrine only applies, however, to subsequent actions involving the same parties or their privies. Yorulmazoglu v. Lake Forest Hospital, 359 Ill.App.3d 554, 559, 295 Ill.Dec. 887, 834 N.E.2d 468 (2005).
IFC was not a party to the actions against NorVergence brought by the FTC and the Illinois Attorney General. Consequently, application of the doctrine of res judicata rests on the question of whether IFC is considered to be in privity with NorVergence.
Magnetic alleges that privity arose from the long-standing and intertwined relationship between IFC and NorVergence regarding the assignment of various rental agreements. However, the only evidence Magnetic submitted in support of its motion to dismiss was the default judgments entered in the United States District Court and the Circuit Court of Sangamon County, the Master...
To continue reading
Request your trial
-
Ifc Credit Corp. v. Rieker Shoe Corp.
...monies due and to become due, but none of NorVergence's obligations under the agreement. IFC Credit Corp. v. Magnetic Technologies, Ltd., 368 Ill.App.3d 898, 899, 307 Ill. Dec. 76, 859 N.E.2d 76 (2006). Defendants are 18 out-of-state businesses (and some of their owners or officers as perso......
-
Oshana v. FCL Builders, Inc.
...and raises defects, defenses, or other affirmative matters that defeat the claim. IFC Credit Corp. v. Magnetic Technologies, Ltd., 368 Ill.App.3d 898, 900, 307 Ill.Dec. 76, 859 N.E.2d 76 (2006). We review a section 2–619 dismissal de novo. Id. ¶ 14 A prior judgment may have preclusive effec......
-
Valdovinos v. Tomita
...action between the same parties involving the same claim, demand, or cause of action. IFC Credit Corp., v. Magnetic Technologies, Ltd., 368 Ill.App.3d 898, 900, 307 Ill.Dec. 76, 859 N.E.2d 76 (2006). The bar extends not only to what was actually decided in the first action, but also to thos......
-
In re Liquidation of Legion Indem. Corp.
...Court's order. At oral argument, Legion Indemnity presented this court's recent holding in IFC Credit Corp. v. Magnetic Tech., Ltd., 368 Ill.App.3d 898, 307 Ill.Dec. 76, 859 N.E.2d 76 (2006), to argue that, in any event, it cannot be penalized for not intervening in the matter. IFC Credit i......