Yorulmazoglu v. Lake Forest Hosp.

Decision Date05 August 2005
Docket NumberNo. 1-04-2763.,1-04-2763.
Citation834 N.E.2d 468
PartiesErol YORULMAZOGLU, Plaintiff-Appellant, v. LAKE FOREST HOSPITAL, Defendant-Appellee.
CourtIllinois Supreme Court

Peter M. Kelly, Evanston (Peter M. Kelly, of counsel), for Appellant.

Sidley Austin Brown & Wood, LLP, Chicago (Patrick S. Casey and Ami N. Wynne, of counsel), for Appellee.

Justice GALLAGHER delivered the opinion of the court:

Plaintiff, Erol Yorulmazoglu, appeals from the dismissal by the circuit court of Cook County, pursuant to section 2-619(a)(4) of the Code of Civil Procedure (735 ILCS 5/2-619(a)(4)(West 2002)), of his petition seeking to vacate an arbitration award entered in a proceeding between plaintiff, two other claimants, and defendant, Lake Forest Hospital. We affirm.

BACKGROUND

In August 1999, plaintiff, a physician, became an employee of defendant. Pursuant to a three-year employment agreement, plaintiff was employed as an oncologist in a division of the hospital named Deerpath Medical Associates. At the time, Deerpath Medical Associates (DMA) was staffed by approximately 32 physicians, all of whom had employment agreements with defendant. Pursuant to an arbitration clause in their employment agreements, plaintiff, along with fellow oncologists Rohit Shah (Shah) and Ira Piel (Piel)(collectively, the other two claimants), were claimants in an arbitration against defendant. The other two claimants initiated the arbitration on December 13, 2000. They also filed an action against defendant in the circuit court of Lake County (case No. 01 CH 14) (Lake County action). Plaintiff's attorney, who also represented the other two claimants, then requested that plaintiff be added to the arbitration. Defendant agreed, but requested that plaintiff also file a formal demand for arbitration. Plaintiff did so on March 15, 2001. Thereafter, plaintiff and the other two claimants pursued all of their claims together in the arbitration. The arbitration was pursued through the American Arbitration Association (AAA) as AAA case No. 51 160 00580 00.

In the arbitration, plaintiff and the other two claimants asserted breach of contract claims arising out of defendant's September 2000 unilateral decision to shut down DMA and its subsequent actions implementing that decision, which allegedly included offers of inducements and threats to other DMA physicians and the involuntary termination of those who did not cooperate. The arbitrator bifurcated the action into Phase I and Phase II.1 Phase I was limited to: (a) whether defendant had the right to terminate the physicians' employment agreements without cause; and (b) whether defendant breached a duty it owed to the claimants not to engage in an effort to break up DMA or to encourage substantially all other DMA physicians to leave the group and to actually implement such breakup without the consent of these physicians. At the end of the first phase, in a preliminary award, the arbitrator ruled in favor of claimants. All of the Phase I findings were confirmed in the final award at the end of Phase II. The arbitrator's final award found that defendant had breached its contracts with plaintiff and the other two claimants and that plaintiff was wrongfully discharged. The arbitrator also found, however, that all of the claimants failed to prove: (1) their breach of contract claim regarding billing and collection; (2) their claim that any alleged damages or loss of income were a result of the breach of contract; and (3) numerous other claims. As a result of the pending arbitration and the arbitrator's findings: (1) the other two claimants retained the value of their employment despite defendant's efforts to terminate them prior to the expiration of their employment contracts; (2) plaintiff remained employed for a year beyond the time most similarly situated physicians in his medical group were terminated or induced to leave the group; and (3) defendant was required to pay monetary damages to plaintiff and Piel. With respect to Phase I, the arbitrator awarded reasonable attorney fees to all claimants. In addition, the arbitrator awarded attorney fees to plaintiff and one of the other claimants with respect to the individual claims on which they prevailed. With respect to the final award, the arbitrator determined that defendant was the prevailing party on most of the claims. Thus, the arbitrator awarded defendant its reasonable attorney fees, which were determined to be $424,185, with the net amount being $344,283.

On April 7, 2004, plaintiff timely filed a "Verified 710 ILCS Section 5/12 Petition to Vacate Certain Arbitration Awards" (Cook County action), seeking to vacate all attorney fee awards granted by the arbitrator to defendant (including those of the other two claimants), and to remand certain issues already decided by the arbitrator for reconsideration.2 Neither of the other two claimants, however, filed a petition by the deadline for doing so. Instead, the other two claimants, who still had time remaining on their employment contracts with defendant, paid defendant the attorney fees allocable to them before February 8, 2004, which was the due date pursuant to the final arbitration award. Also, plaintiff's counsel, on behalf of the other two claimants, filed a motion to confirm the final arbitration award in the Lake County action. On April 22, 2004, the trial court in the Lake County action, pursuant to section 11 of the Uniform Arbitration Act (710 ILCS 5/11 (West 2002)), entered an order confirming the final arbitration award.

On June 22, 2004, defendant moved to dismiss plaintiff's petition in the Cook County action pursuant to sections 2-615 and 2-619 of the Code of Civil Procedure (735 ILCS 5/2-615, 2-619 (West 2002)). The basis for defendant's section 2-615 motion was that plaintiff failed to allege any of the statutory grounds for vacating an arbitration award under section 12 of the Uniform Arbitration Act (710 ILCS 5/12 (West 2002)). The basis for defendant's section 2-619 motion was that, pursuant to section 2-619(a)(4), the confirmation award entered in the Lake County action collaterally estopped plaintiff from seeking to vacate the final award. On August 19, 2004, the trial court in the Cook County action granted defendant's motion to dismiss pursuant to section 2-619(a)(4).

STANDARD OF REVIEW

Our review of the trial court's order dismissing plaintiff's petition pursuant to section 2-619 is de novo. Casanova v. City of Chicago, 342 Ill.App.3d 80, 87, 276 Ill.Dec. 148, 793 N.E.2d 907, 914 (2003). Pursuant to section 2-619(a)(4), where a plaintiff's claim is barred by a prior judgment, a defendant may seek an involuntary dismissal on a theory of collateral estoppel or res judicata. Dick v. Peoples Mid-Illinois Corp., 242 Ill.App.3d 297, 303, 182 Ill.Dec. 463, 609 N.E.2d 997, 1002 (1993). "For the doctrine of res judicata to apply, the following three requirements must be satisfied: (1) there was a final judgment on the merits rendered by a court of competent jurisdiction; (2) there is an identity of cause of action; and (3) there is an identity of parties or their privies." Evans v. General Motors Corp., 314 Ill.App.3d 609, 617, 247 Ill.Dec. 363, 732 N.E.2d 79, 86 (2000), citing Downing v. Chicago Transit Authority, 162 Ill.2d 70, 73-74, 204 Ill.Dec. 755, 642 N.E.2d 456 (1994). "A party asserting collateral estoppel must show that (1) the issue previously adjudicated is identical to the question presented in the subsequent action; (2) a final judgment on the merits exists in the prior case; and (3) the party against whom estoppel is directed was a party to the prior litigation or is in privity with such a party." Midland Hotel Corp. v. Director of Employment Security, 282 Ill.App.3d 312, 315-16, 217 Ill.Dec. 897, 668 N.E.2d 82, 86 (1996). Although there are distinctions between the doctrine of res judicata and the doctrine of collateral estoppel (see, e.g., LaSalle Bank National Ass'n v. Village of Bull Valley, 355 Ill.App.3d 629, 635-36, 292 Ill.Dec. 308, 826 N.E.2d 449, 455-56 (2005)), these distinctions are not at issue here.

What is relevant to the instant case is that both doctrines only apply to later actions between the same parties or their privies. Board of Trustees of Addison Fire Protection Dist. No. 1 Pension Fund v. Stamp, 241 Ill.App.3d 873, 878, 181 Ill.Dec. 800, 608 N.E.2d 1274, 1280 (1993), citing Simcox v. Simcox, 131 Ill.2d 491, 496-97, 137 Ill.Dec. 664, 546 N.E.2d 609 (1989). A nonparty may be bound under privity if his interests are so closely aligned to those of a party that the party is the virtual representative of the nonparty. Purmal v. Robert N. Wadington and Associates, 354 Ill.App.3d 715, 723, 289 Ill.Dec. 578, 820 N.E.2d 86, 95 (2004). Defendant maintains that plaintiff was in privity with the other two claimants because plaintiff's claims in the arbitration were the same as the claims asserted by the other two claimants and because plaintiff availed himself of the Lake County action when that action was used to enforce a subpoena related to the arbitration. We agree with plaintiff that merely because persons are once in privity does not necessarily mean that they are always in privity. The relevant time for determining whether privity existed was April 22, 2004, when the order confirming the arbitration award was entered in the Lake County action. At that time, plaintiff argues, he was no longer in privity with the other two claimants because their interests diverged once plaintiff filed his petition to vacate the arbitration award on April 7, 2004.

The term "privity" is not a precise one. Diversified Financial Systems, Inc. v. Boyd, 286 Ill.App.3d 911, 916, 222 Ill.Dec. 696, 678 N.E.2d 308, 311 (1997); accord Purmal, 354 Ill.App.3d at 722, 289 Ill.Dec. 578, 820 N.E.2d at 94 ("With respect to the doctrine of res judicata, there is no generally prevailing definition of `privity' which can automatically be applied to all cas...

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