LaHood v. Couri

• Decision Date: 06 October 1992
• Docket Number: No. 3-92-0035,3-92-0035
• Citation: 603 N.E.2d 1165,177 Ill.Dec. 791,236 Ill.App.3d 641
• Parties: , 177 Ill.Dec. 791 Martha LaHOOD, as Executrix of the Estate of Anthony T. LaHood, Deceased, Plaintiff-Appellee, v. Peter J. COURI, Defendant-Appellant (United Federal Savings Bank f/k/a United Federal Savings & Loan Association of Illinois; Unknown Owners and Non-Record Claimants, Defendants).
• Court: United States Appellate Court of Illinois

Page 1165

603 N.E.2d 1165

236 Ill.App.3d 641, 177 Ill.Dec. 791

Martha LaHOOD, as Executrix of the Estate of Anthony T LaHood, Deceased, Plaintiff-Appellee, v. Peter J. COURI, Defendant-Appellant (United Federal Savings Bank f/k/a United Federal Savings & Loan Association of Illinois; Unknown Owners and Non-Record Claimants, Defendants).

No. 3-92-0035.

Appellate Court of Illinois Third District.

Oct. 6, 1992.

As Modified Dec. 4, 1992.

Rehearing Denied Dec. 4, 1992.

Valerie Moehle Umholtz (argued), Moehle, Swearingen & Associates, Ltd., Pekin, for Peter J. Couri.

Kevin D. Schneider, L. Lee Smith, James R. Morrison, Westervelt, Johnson, Nicoll & Keller, Peoria, for Martha LaHood.

Justice HAASE delivered the modified opinion of the Court.

The present action comes before us for the third time. (E.g. Couri v. Korn (1990), 202 Ill.App.3d 848, 148 Ill.Dec. 77, 560 N.E.2d 379; Couri v. Korn (1990), 203 Ill.App.3d 1091, 149 Ill.Dec. 771, 562 N.E.2d 235.) Martha LaHood, the executrix of the Estate of Anthony LaHood, brought the present foreclosure action against the defendant, Peter Couri. LaHood claims that Couri defaulted on a promissory note currently held by the Estate of Anthony LaHood. The note at issue was assigned by the South Side Trust & Savings Bank of Peoria, (South Side), to Anthony LaHood prior to his death. The note is secured by a mortgage on farm property owned by Couri. Couri claims that the mortgage was extinguished when South Side assigned the note to LaHood. LaHood filed a motion for summary judgment claiming that the propriety of the assignment had been litigated and resolved in its favor. Based upon this prior adjudication, LaHood argued that it was entitled to summary judgment. The trial court agreed and granted LaHood's motion. Couri appeals. We affirm in part and reverse in part.

Anthony LaHood and Peter Couri signed a note for $12,645 at the South Side Trust & Savings Bank of Peoria. Because there is no indication to the contrary on the face of the note, it appears both Couri and LaHood signed as co-makers. The note was secured by a mortgage on property owned by Couri. When the note came due, LaHood paid off the note. In exchange for the payment, South Side assigned its interest in the mortgage to LaHood. LaHood then demanded that Couri pay the amount due on the note. Couri refused and filed an action for quiet title. Approximately one year later, LaHood filed the present foreclosure action. Couri then filed a motion to dismiss or, in the alternative, to stay the foreclosure proceedings pursuant to 2-619(a)(3) of the Code of Civil Procedure. (Ill.Rev.Stat.1989, ch. 110, par. 2-619(a)(3)). The trial court granted Couri's motion and ordered the foreclosure proceedings stayed pending resolution of the quiet title action. LaHood appealed this order. We affirmed the trial court's ruling (Couri v. Korn (1990), 203 Ill.App.3d 1091, 149 Ill.Dec. 771, 562 N.E.2d 235), and upon remand, the court ruled in favor of LaHood. No further appeals were taken in that case.

After judgment was entered in the quiet title action, LaHood sought a judgment on its foreclosure action. Couri asserted, as a defense to the foreclosure action, the same theories he unsuccessfully argued in the quiet title action. The trial court ruled these issues had already been litigated and that LaHood was entitled to summary judgment as a matter of law. The trial court also awarded LaHood, pursuant to the terms and conditions of the note, his reasonable attorneys fees and court costs. Couri appeals. Couri claims (1) the trial court erred by using "offensive" collateral estoppel and res judicata; and, (2) the trial court erred in awarding the plaintiff his attorney's fees.

In Illinois, summary judgment is appropriate "if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." (Ill.Rev.Stat.1989, ch. 110, par. 2-1005(c).) The aim of summary judgment is not to try issues but to determine whether any triable issues exist. The court is to determine the existence or absence of a genuine issue as to any material fact from the affidavits, depositions, admissions, exhibits and pleadings in the case. Allen v. Meyer (1958), 14 Ill.2d 284, 152 N.E.2d 576.

In the case at bar, the issue in dispute is the validity of the assignment of the mortgage from South Side to LaHood. Couri claims that LaHood was a co-maker on the note and that the debt was extinguished when paid by LaHood. LaHood claims he was an accommodation party and that the assignment was valid. This issue, however, was resolved in the quiet title action. In Couri v. Korn (1990), 203 Ill.App.3d 1091, 149 Ill.Dec. 771, 562 N.E.2d 235, we ruled that the trial court acted properly in granting a stay of the foreclosure proceedings. We opined that the stay was proper because the issue to be litigated in the quiet title and foreclosure actions were the same; namely, the validity of the assignment of the mortgage to LaHood. We said that granting the stay would make it unnecessary to relitigate the validity of the assignment.

"The essential subject matter of the quiet title claim in the 1987 action and this foreclosure action is the same: the mortgage from Couri to plaintiff as assignee of South Side. Staying this foreclosure action will eliminate the need to relitigate the common issue in both cases; namely, the validity of the assignment to plaintiff by South Side." (emphasis added) (Couri, 203 Ill.App.3d at 1094, 149 Ill.Dec. 771, 562 N.E.2d 235)

Couri now asks this court to disregard our prior ruling and allow him to relitigate the validity of the assignment. In effect, Couri argues that the trial court erred in the quiet title action. Couri may well be correct. In fact, a very strong argument may be made to that effect. The correctness of the court's ruling in the quiet title action, however, is not before this court. The issue that is presently before us is whether the trial court erred in granting summary judgment in the foreclosure action. Couri argues that the prohibition against "offense" collateral estoppel and res judicata allow him to litigate this issue yet again. We disagree.

Illinois distinguishes between estoppel by judgment (res judicata in the narrow sense, i.e. claim preclusion) and estoppel by verdict (collateral or direct estoppel, i.e. issue preclusion). Redfern v. Sullivan, 111 Ill.App.3d 372, 375, 67 Ill.Dec. 166, 169, 444 N.E.2d 205, 208 (4th Dist.1983); Morris v. Union Oil Co., 96 Ill.App.3d 148, 153-54, 51 Ill.Dec. 770, 774, 421 N.E.2d 278, 282 (5th Dist.1981). See People v. Bone, 82 Ill.2d 282, 45 Ill.Dec. 93, 412 N.E.2d 444 (1980), cert. denied, 454 U.S. 839, 102 S.Ct. 145, 70 L.Ed.2d 120 (1981); Gay v. Open Kitchens, Inc., 100 Ill.App.3d 968, 56 Ill.Dec. 258, 427 N.E.2d 338 (1st Dist.1981).

There is a difference between the effect of a judgment as a bar to the prosecution of a second action upon the same claim or demand and the effect of a judgment as an estoppel in another suit between the same parties on a different claim or cause of action. Bone, 82 Ill.2d at 286-87, 45 Ill.Dec. at 95, 412 N.E.2d at 446; Skolnick v. Petella, 376 Ill. 500, 503-04, 34 N.E.2d 825, 826-27 (1941). The former is res judicata (claim preclusion), which "operates as an absolute bar to a subsequent action where a prior judgment rests on the merits, 'not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose.' " Bone, 82 Ill.2d at 287, 45 Ill.Dec. at 95, 412 N.E.2d at 446 (quoting Cromwell v. County of Sac, 94 U.S. (4 Otto) 351, 352, 24 L.Ed. 195 (1877)). See Skolnick, 376 Ill. at 504-05, 34 N.E.2d at 827; Redfern, 111 Ill.App.3d at 375, 67 Ill.Dec. at 169, 444 N.E.2d at 208; Morris, 96 Ill.App.3d at 154, 51 Ill.Dec. at 774, 421 N.E.2d at 282. The latter constitutes collateral estoppel or estoppel by verdict (i.e. issue preclusion), which "concludes only 'those matters in issue or points controverted, upon the determination of which the finding or verdict was rendered.' " Bone, 82 Ill.2d at 287, 45 Ill.Dec. at 95, 412 N.E.2d at 446 (quoting Cromwell, 94 U.S. at 353). See Skolnick, 376 Ill. at 503, 34 N.E.2d at 826; Redfern, 111 Ill.App.3d at 375, 67 Ill.Dec. at 169, 444 N.E.2d at 208-09; Morris, 96 Ill.App.3d at 153, 51 Ill.Dec. at 774, 421 N.E.2d at 282.

In order to be barred by issue preclusion, or by claim preclusion where the claim was litigated, the prior decision must have been on the merits of the issue. Bone, 82 Ill.2d at 286-87, 45 Ill.Dec. at 95, 412 N.E.2d at 446; Morris, 96 Ill.App.3d at 153-54, 51 Ill.Dec. at 774, 421 N.E.2d at 282; Rotogravure Service, Inc. v. R.W. Borrowdale Co., 77 Ill.App.3d 518, 524, 32 Ill.Dec. 762, 767-68, 395 N.E.2d 1143, 1148-49 (1st Dist.1979). In addition, the party against whom the prior judgment is asserted must have had an effective opportunity to litigate the issue in the prior proceedings. Gay v. Open Kitchens, 100 Ill.App.3d at 971, 56 Ill.Dec. at 261, 427 N.E.2d at 341. For "while the purpose of the doctrine is to prevent a party from litigating the same issue twice, it should not be used to preclude a party from litigating the matter at all." Id. at 972, 56 Ill.Dec. at 262, 427 N.E.2d at 341-42. The party must have had a full and fair opportunity to litigate the issue, and it must not be an injustice to apply the doctrine. Fred Olson Motor Service v. Container Corp. of America, 81 Ill.App.3d 825, 37 Ill.Dec. 5, 401 N.E.2d 1098 (1st Dist.1980). See Franciscy v. Jordan, 43 Ill.App.2d 344, 354-58, 193 N.E.2d 219, 223-25 (1963). In this sense the doctrine is an equitable doctrine, and subject to equitable principles. Gay v. Open Kitchens, 100 Ill.App.3d at 971, 56 Ill.Dec. at 261, 427 N.E.2d at 341. It "should only be applied as...