Lutkauskas v. Ricker

2015 IL 117090

IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS

(Docket No. 117090)

ANTHONY LUTKAUSKAS et al., Appellants, v. TIMOTHY RICKER et al., Appellees.

Opinion filed January 23, 2015.

JUSTICE FREEMAN delivered the judgment of the court, with opinion.

Chief Justice Garman and Justices Thomas, Kilbride, Karmeier, Burke, and Theis
concurred in the judgment and opinion.

OPINION

¶1 Plaintiffs, resident taxpayers of Lemont-Bromberek Combined School District 113A
(School District), filed three taxpayer derivative actions on behalf of the School District.
Plaintiffs sought relief against certain officers and employees of the School District and current
and former members of its board of education (collectively, the District defendants), alleging
that they had improperly transferred money from the School District’s Working Cash Fund, in
violation of article 20 of the School Code (105 ILCS 5/20-1 et seq. (West 2010)). Plaintiffs
also sought recovery against the surety that issued the bond for the School District’s treasurer
and against the accounting firm that performed audits of the School District’s finances during
the relevant time period. The circuit court of Cook County dismissed all of plaintiffs’ claims,
and the appellate court affirmed. 2013 IL App (1st) 121112. We allowed plaintiffs’ petition for
leave to appeal (Ill. S. Ct. R. 315(a) (eff. July 1, 2013)). For the reasons that follow, we affirm
the judgment of the appellate court.
¶2 BACKGROUND

¶3 Article 20 of the School Code permits a school district to create and maintain a Working
Cash Fund to meet expenditures for the school district’s purposes. 105 ILCS 5/20-1 (West
2010). A Working Cash Fund is funded either through tax levies or by issuance of bonds and is
designed to ensure that a school district has enough funds on hand to meet its financial
obligations pending the deposit of tax receipts. 105 ILCS 5/20-2, 20-3, 20-4 (West 2010).
Section 20-4 specifically authorizes the school board to use money in the Working Cash Fund
“for any and all school purposes.” 105 ILCS 5/20-4 (West 2010). Section 20-5 authorizes the
transfer of sums of money from the Working Cash Fund to other funds in accordance with a
specified procedure that requires passage of a school board resolution directing the school
treasurer to transfer “such sums as may be required for the purposes *** authorized.” 105
ILCS 5/20-5 (West 2010). A Working Cash Fund may be either abated or abolished. 105 ILCS
5/20-8, 20-10 (West 2010). Upon abolishment, the balance remaining in the Working Cash
Fund is transferred to the Educational Fund and any monies owed the Working Cash Fund are
to be paid into the Educational Fund. 105 ILCS 5/20-8 (West 2010).

¶4 Section 20-6 prescribes both criminal penalties and civil remedies for willful violations of
the provisions of article 20. Section 20-6 provides:

“Any member of the school board of any school district to which this Article is
applicable, or any other person holding any office, trust, or employment under such
school district who wilfully violates any of the provisions of this Article shall be guilty
of a business offense and fined not exceeding $10,000, and shall forfeit his right to his
office, trust or employment and shall be removed therefrom. Any such member or other
person shall be liable for any sum that may be unlawfully diverted from the working
cash fund or otherwise used, to be recovered by such school district or by any taxpayer
in the name and for the benefit of such school district in an appropriate civil action;
provided that the taxpayer shall file a bond for all costs and be liable for all costs taxed
against the school district in such suit, and judgment shall be rendered accordingly.
Nothing herein shall bar any other remedies.” 105 ILCS 5/20-6 (West 2010).

¶5 In this case, the School District maintained a Working Cash Fund pursuant to the terms of
article 20. On December 2, 2009, the school board passed a resolution to partially abate the
fund, and on April 28, 2010, the school board passed a resolution abolishing the Working Cash
Fund.

¶6 On December 17, 2010, plaintiffs Laura Reigle, Duane Bradley, and Louis Emery filed a
three-count complaint seeking monetary damages and other relief based on improper transfers
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 from the School District’s Working Cash Fund. On that same date, plaintiff Janet Hughes, who
was represented by the same counsel, filed a separate complaint that was virtually identical to
that of Reigle, Bradley, and Emery. Both complaints were brought “for and on behalf of” the
School District and named as defendants several current and former members of the School
District’s board of education, as well as Timothy Ricker, the School District’s superintendent,
and Robert Beckwith, the School District’s treasurer. In addition, both complaints sought
recovery from Knutte & Associates, P.C. (Knutte), the accounting firm that performed
financial audits for the School District from 2007 through 2010, and from Lloyd’s Illinois Inc.
(Lloyd’s), the surety company that issued the bond securing the performance of Beckwith. The
two actions filed by Reigle, Bradley, Emery, and Hughes (the original plaintiffs) were
consolidated.

¶7 Count I of the consolidated action asserted statutory violations against the District
defendants and alleged that they had willfully violated sections 20-4 and 20-5 of the School
Code by improperly transferring and spending money from the School District’s Working
Cash Fund. In particular, plaintiffs claimed that the District defendants’ improper actions
consisted of the following: failure to pass any resolutions authorizing the transfers, as required
by section 20-5; failure to reimburse the Working Cash Fund upon receipt of tax revenues;
expenditure of money in excess of “legal appropriation” and attempt to conceal such
expenditures; and failure to document the improper transfers and expenditures.

¶8 As relief, count I requested (1) a declaration that the District defendants had forfeited their
offices and employment with the School District, (2) a monetary judgment in an amount
sufficient to “make the [School District] whole” and reimburse the funds that were “unlawfully
diverted” from the Working Cash Fund, and (3) fines assessed pursuant to section 20-6.

¶9 Count II sought recovery from Lloyd’s and alleged that, as surety for Beckwith, it was
liable for damages suffered by the School District as a result of Beckwith’s failure to faithfully
discharge the duties of his office. Count II subsequently was voluntarily dismissed, with leave
to replead against another Lloyd’s entity.

¶ 10 Count III was directed against Knutte and asserted that the accounting firm was liable
under section 20-6 of the School Code for accountant negligence. This claim was predicated on
allegations that, despite knowledge of the District defendants’ alleged statutory violations,
Knutte issued “clean” audit reports of the School District’s financial statements for the years
2007 through 2009, which concealed the District defendants’ illegal conduct and resulted in
substantial losses to the School District.

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¶ 11 The original complaints contained no allegations that any of the School District’s money
had been stolen, converted, or otherwise spent on anything but legitimate School District
expenses.

¶ 12 The District defendants filed a combined motion to dismiss pursuant to section 2-619.1 of
the Code of Civil Procedure. 735 ILCS 5/2-619.1 (West 2010). With regard to count I, the
District defendants sought dismissal under section 2-615 of the Code of Civil Procedure (735
ILCS 5/2-615 (West 2010)) for failure to plead sufficient facts to support a violation of the
School Code and based on the fact that they had been sued in their individual capacities. The
District defendants also sought dismissal of count I under section 2-619 (735 ILCS 5/2-619
(West 2010)) on the grounds that (1) plaintiffs lacked standing to sue under section 20-6 of the
School Code, which was criminal in nature and did not authorize a private right of action
absent a predicate criminal conviction, and (2) legislative immunity protected the District
defendants from liability. In addition, the motion contended that certain of the named
defendants should be dismissed because none of the factual allegations in the complaints were
directed at those individuals.

¶ 13 Knutte filed a combined motion to dismiss count III, seeking dismissal under section 2-615
for failure to allege facts sufficient to support a claim for accountant negligence. In particular,
the motion asserted that Knutte did not owe the plaintiffs a duty of care and that Knutte had
disclosed the information that plaintiffs alleged had been concealed. Knutte also sought
dismissal of count III under section 2-619 on the ground that plaintiffs lacked standing to sue
under the Illinois Public Accounting Act (225 ILCS 450/30.1 (West 2010)).

¶ 14 On July 17, 2011, the circuit court granted the motions to dismiss filed by the District
defendants and Knutte. With regard to the dismissal of count I, the court determined that
section 20-6 included both criminal and civil actions, with certain remedies reserved for each
type of action. The court found that section 20-6 authorizes only the State of Illinois to seek
removal of a public employee from office or imposition of fines for Working Cash Fund
violations. The court further found that taxpayers who bring suit under section 20-6 on behalf
of a school district are entitled to seek only recovery of funds for the benefit of the school
district. Therefore, plaintiffs, as private taxpayers, could not seek removal of any School
District employee or official from office, nor did they have the right to request imposition of
fines for School Code violations. In addition, the court held that plaintiffs had not pled
sufficient facts to support a violation of the Working Cash Fund provisions of the School Code.
In particular, the court cited plaintiffs’ failure to delineate the wrongful conduct alleged to have
been committed by each of the 10 District defendants. Accordingly, the court ordered that
count I be stricken with leave to replead.
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¶ 15 With respect to Knutte’s motion to dismiss count III, the circuit court found that there was
no basis for liability against the accounting firm. In reaching this conclusion, the court first
noted that public accountants are not among the list of potential defendants identified in
section 20-6 of the School Code. In addition, the court observed that there is no privity of
contract between Knutte and the individual taxpayer plaintiffs who brought the derivative
action. Consequently, the court dismissed count III with prejudice. At plaintiffs’ request, the
circuit court entered a finding under Illinois Supreme Court Rule 304(a) (eff. Feb. 26, 2010)
that there was no just cause to delay appeal of the dismissal of count III. Plaintiffs did not
appeal the judgment in favor of Knutte.

¶ 16 On August 29, 2011, the original plaintiffs filed an amended consolidated complaint,
asserting two counts against the District defendants. Count I again asserted statutory violations
and claimed that certain of the District defendants willfully violated sections 20-4 and 20-5 of
the School Code by causing money to be diverted from the School District’s Working Cash
Fund without the passage of a resolution or reimbursement. The amended complaint further
alleged that certain of the District defendants attempted to conceal the allegedly improper
spending from the Working Cash Fund by using money from other funds and by
under-budgeting for the School District’s expenses. As relief, plaintiffs again requested a
declaration that the District defendants had forfeited their offices and employment, imposition
of fines pursuant to section 20-6 of the School Code, and entry of judgment against the District
defendants “personally in an amount sufficient to make [the School District] whole and replace
the public funds *** unlawfully diverted from the Working Cash Fund.”

¶ 17 The amended complaint also asserted in count IA that the District defendants breached
their fiduciary duties to the School District. This claim was based on the same conduct
underlying the statutory violations alleged in count I and sought the same relief. The amended
complaint contains no allegation that any of the School District’s money was stolen, converted,
or otherwise spent on anything other than legitimate School District expenses.

¶ 18 Count II of the amended complaint was directed against Underwriters at Lloyd’s, London
and restated the claim that the surety for Beckwith was liable for damages suffered by the
School District as a result of Beckwith’s failure to faithfully discharge the duties of his office.

¶ 19 The amended complaint also included counts III and IV, which were directed against
Knutte. Count III restated the claim for accountant negligence that had been dismissed with
prejudice. Count IV asserted a taxpayer derivative action based on allegations similar to those
underlying the accountant negligence claim.

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¶ 20 Plaintiffs also filed a motion to reconsider the dismissal of count III with prejudice, in
which they requested leave to file the amended claims against Knutte. The circuit court denied
that motion and ordered that counts III and IV of the amended complaint be stricken.

¶ 21 On October 11, 2011, plaintiff Anthony Lutkauskas, who was represented by the same
counsel as the original plaintiffs, filed a separate complaint against the District defendants,
Lloyd’s, and Knutte. Lutkauskas’s claims against the District defendants and Lloyd’s were
virtually identical to the claims asserted by the original plaintiffs in their amended complaint.
In seeking recovery against Knutte, Lutkauskas’s complaint asserted claims for accountant
negligence, professional malpractice, breach of fiduciary duty, and aiding and abetting illegal
conduct by the District defendants. The action filed by Lutkauskas was consolidated with that
of the original plaintiffs, and all of the defendants sought dismissal of the two pending
complaints.

¶ 22 In response to the original plaintiffs’ amended complaint, the District defendants filed a
combined motion to dismiss asserting several grounds for dismissal, which the circuit court
ruled would also apply to Lutkauskas’s complaint. Of relevance here, the District defendants
asserted that the plaintiffs’ claims should be dismissed under section 2-615 of the Code of Civil
Procedure (735 ILCS 5/2-615 (West 2010)) for failure to plead a prima facie cause of action
for violation of the School Code or for breach of fiduciary duty. In addition, the motion sought
dismissal under section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 2010))
because common law legislative immunity and the Local Governmental and Governmental
Employees Tort Immunity Act (Tort Immunity Act) (745 ILCS 10/2-201 (West 2010)) barred
plaintiffs’ claims.

¶ 23 Lloyd’s sought dismissal of the claims against it because no recovery could be had on the
bond, where Beckwith was not liable for failing to faithfully discharge the duties of his office.
Knutte moved for dismissal of Lutkauskas’s claims against it on the ground that they were
barred by the doctrine of res judicata.

¶ 24 The circuit court found that the complaints were deficient because they failed to allege
sufficient facts to support a violation of the School Code and because the recovery sought by
plaintiffs would constitute an impermissible “windfall.” The court further found that plaintiffs’
claims were barred by the Tort Immunity Act because the actions attributed to the District
defendants were discretionary, not ministerial, in nature. Accordingly, the court dismissed the
claims against the District defendants with prejudice and similarly dismissed the claims
against Lloyd’s that were predicated on Beckwith’s alleged liability. In addition, the circuit

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 court ordered that Lutkauskas’s claims against Knutte be stricken on the ground that they were
barred by the doctrine of res judicata.

¶ 25 Plaintiffs appealed, and a divided panel of the appellate court affirmed, holding, inter alia,
that plaintiffs could not recover against the District defendants based on the assertion that
money from the Working Cash Fund had been “unlawfully diverted.” 2013 IL App (1st)
121112, ¶¶ 29-34. This conclusion was premised on the determination that an unlawful
diversion occurs where money is used for a purpose that is not allowed by statute. Id. ¶¶ 30-32.
The appellate court held that, because plaintiffs did not allege that money transferred from the
Working Cash Fund was used for an improper purpose, plaintiffs could not show any loss to
the School District as a result of defendants’ actions. Id. ¶ 32. The appellate court concluded
that, absent such allegations, “plaintiffs do not otherwise have standing” to seek recovery, on
behalf of the district, of money that was transferred from the Working Cash Fund without a
board resolution. Id. ¶ 34. The appellate court further held that plaintiffs’ breach of fiduciary
duty claims failed for a similar reason. Id. ¶ 35. The appellate court also affirmed the dismissal
of the claims against Lloyd’s (id. ¶ 36) and the finding that Lutkauskas’s claims against Knutte
were barred by res judicata (id. ¶¶ 39-49).

¶ 26 The dissenting justice expressed the opinion that, considering the dearth of precedent
analyzing the relevant School Code provisions, plaintiffs should be allowed to amend their
complaints and move forward with discovery. Id. ¶¶ 55, 79-81 (Pucinski, J., dissenting). This
appeal followed.

¶ 27 ANALYSIS

¶ 28 I. Dismissal of the Claims Against the District Defendants and Lloyd’s

¶ 29 Plaintiffs first contend that the circuit court erred in dismissing their statutory violation and
breach of fiduciary duty claims against the District defendants. The District defendants’
motions to dismiss were brought pursuant to section 2-619.1 of the Code of Civil Procedure,
which allows a party to move for dismissal under both sections 2-615 and 2-619. 735 ILCS
5/2-619.1 (West 2010). A section 2-615 motion to dismiss attacks the legal sufficiency of a
complaint. Carr v. Koch, 2012 IL 113414, ¶ 27. A motion brought pursuant to section 2-619
admits the sufficiency of the complaint, but asserts an affirmative defense or other matter that
avoids or defeats that claim. Id. This court’s review of a dismissal under either section 2-615 or
section 2-619 is de novo. Id. Also, because resolution of this issue involves statutory
construction, our review is de novo. Nelson v. Kendall County, 2014 IL 116303, ¶ 22.

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¶ 30 Plaintiffs argue that, based on the plain language of section 20-6, their claims against the
District defendants adequately alleged violations of article 20 of the School Code and should
not have been dismissed for insufficient pleading. Defendants respond by arguing that
plaintiffs lack standing to sue derivatively on behalf of the School District because it is
undisputed that the School District has not suffered any injury in fact.

¶ 31 In resolving this issue, we initially observe that, because a plaintiff can sustain a cause of
action only where he or she has suffered some injury to a legal right, harm caused by the
defendant’s conduct is an essential element of every cause of action. Williams v. Manchester,
228 Ill. 2d 404, 426 (2008); Reuter v. MasterCard International, Inc., 397 Ill. App. 3d 915, 927
(2010); 1A C.J.S. Actions § 59 (2005). As a consequence, an allegation that the plaintiff has
suffered an injury resulting from the defendant’s action is both a pleading requirement (Reuter,
397 Ill. App. 3d at 928; 71 C.J.S. Pleading § 116 (2005)) and a prerequisite of standing (Powell
v. Dean Foods Co., 2012 IL 111714, ¶ 35). In this case, regardless of whether a failure to
satisfy this requirement is characterized as a lack of standing or a pleading deficiency, the
relevant question presented is whether section 20-6 obligated plaintiffs to assert that the money
transferred from the Working Cash Fund had been used for an improper purpose and resulted
in an actual loss to the School District.

¶ 32 A taxpayer derivative suit is brought for the benefit of a governmental entity to enforce a
cause of action belonging to that entity. Scachitti v. UBS Financial Services, 215 Ill. 2d 484,
494 (2005). In such an action, the claimed loss is not personal to the taxpayer, but is the injury
sustained by the governmental entity for whose benefit the action is brought. Id. In the absence
of resultant damage, there can be no cause of action premised on the violation of a statute. 1A
C.J.S. Actions § 59 (2005).

¶ 33 As noted above, plaintiffs’ claims that asserted statutory violations were brought pursuant
to section 20-6 of the School Code and sought to impose personal liability on the District
defendants for improper transfers from the Working Cash Fund. Section 20-6 of the School
Code provides, in relevant part, as follows:

“Any member of the school board of any school district to which this Article is
applicable, or any other person holding any office, trust, or employment under such
school district who wilfully violates any of the provisions of this Article *** shall be
liable for any sum that may be unlawfully diverted from the working cash fund or
otherwise used, to be recovered by such school district or by any taxpayer in the name
and for the benefit of such school district in an appropriate civil action ***.” 105 ILCS
5/20-6 (West 2010).

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¶ 34 On appeal, plaintiffs contend that the phrase “unlawfully diverted” in section 20-6 refers to
any sum that has been transferred from the Working Cash Fund without the passage of a board
resolution and subsequent reimbursement, as required by sections 20-4 and 20-5. According to
plaintiffs, the failure to follow the procedural mechanisms detailed in those sections renders a
Working Cash Fund transfer unlawful and necessarily means that the transferred money has
been “unlawfully diverted.” Plaintiffs argue that a civil action brought pursuant to section 20-6
need not allege that the transferred money was used for an improper purpose.

¶ 35 In response, the District defendants argue that the dismissal of plaintiffs’ claims against
them was proper in light of the fact that plaintiffs did not, and could not, allege that the
transferred funds had been used for an improper purpose. According to the District defendants,
the failure to comply with the procedural requirements for Working Cash Fund transfers is
insufficient to allege a cause of action under section 20-6, unless the plaintiff has also alleged
that the transferred money was used for an unauthorized purpose. Therefore, the narrow
question presented here, is whether the terms of section 20-6 require a plaintiff to allege that
improperly transferred funds were used for an invalid purpose in order to plead a violation
under that section.

¶ 36 Our primary objective in construing a statute is to ascertain and give effect to the intent of
the legislature. Nelson, 2014 IL 116303, ¶ 23. The best evidence of legislative intent is the
language of the statute itself, which must be given its plain, ordinary and popularly understood
meaning. Id. Clear and unambiguous language will be enforced as written. Hines v.
Department of Public Aid, 221 Ill. 2d 222, 230 (2006). In addition, a court may consider the
reason for the law, the problems sought to be remedied, the purposes to be achieved, and the
consequences of construing the statute one way or another. Chicago Teachers Union, Local
No. 1 v. Board of Education of the City of Chicago, 2012 IL 112566, ¶ 15. Moreover, courts
will presume that the legislature did not intend to enact a statute that leads to absurdity,
inconvenience, or injustice. Land v. Board of Education of the City of Chicago, 202 Ill. 2d 414,
422 (2002).

¶ 37 According to the terms of section 20-6, the board members, officials, and employees of a
school district who willfully violate the provisions of article 20 of the School Code “shall be
liable for any sum that may be unlawfully diverted from the working cash fund.” 105 ILCS
5/20-6 (West 2010). Although the phrase “unlawfully diverted” is not defined in the statute,
this court’s long-standing precedent demonstrates that phrase has a settled meaning. As
observed by the appellate court, we have consistently held that “unlawful diversion” of funds
contemplates that such funds have been used for an improper purpose that is not authorized by
statute. In Gates v. Sweitzer, 347 Ill. 353 (1932), we held that “[m]unicipal officers have no
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 right to divert moneys from one fund to another and different fund for which it was not
appropriated. But the word ‘divert’ is used in the sense of turning such fund permanently from
its purpose or the final appropriation of it to some other use.” Id. at 359; see also Michaels v.
Barrett, 355 Ill. 175, 185-86 (1934). Based on this reasoning, we held in People ex rel. Brenza
v. Gilbert, 409 Ill. 29 (1951), that an improper diversion of funds occurred where funds were
used for a different purpose than that allowed by statute. Id. at 37. We further noted, however,
that a plaintiff who seeks to recover funds that have been “unlawfully diverted” must have
suffered damage. Id. at 38 (stating that the objection to a tax was properly overruled “in view
of the fact that [tax objector] is not and cannot be damaged”). We reached the same conclusion
in People ex rel. Redfern v. Penn Central Co., 47 Ill. 2d 412 (1971). At issue in Redfern was
the validity of the transfer of money from a school district’s education fund to the Illinois
municipal retirement fund. Id. at 414. Relying on the cases cited above, we held that the
transfer constituted an “unlawful diversion” because the statute did not authorize loans
between the two funds. Id. at 416-18. Yet, we repeated our admonition in Gilbert that recovery
should not be permitted unless the plaintiff has sustained an injury. See id. at 418 (citing
Gilbert, 409 Ill. at 38 (holding that an objection to a tax levy should disclose that the taxpayer
has been injured)). Accordingly, we stated, “we do not judge that [the] absence of authority to
transfer, standing by itself, was sufficient to support the defendant’s objections to the tax levy.”
Id.

¶ 38 Based on this precedent, we conclude that in order to seek recovery under section 20-6 for
the unlawful diversion of funds, a plaintiff must allege that money improperly transferred from
the Working Cash Fund was used for an improper purpose, resulting in an actual loss to the
school district. As noted by both the appellate and circuit courts, the statutory construction
advanced by plaintiffs would result in an impermissible “windfall” by forcing a school district
official, employee or board member to reimburse the district for funds that were spent on
legitimate district expenses. This result cannot be what the legislature intended. Although
plaintiffs have requested that the District defendants be required to “make the [School District]
whole,” there is no indication in plaintiffs’ complaints that the School District has sustained
any actual loss. Consequently, the dismissal of the statutory violations asserted against the
District defendants was proper.

¶ 39 Plaintiffs’ breach of fiduciary duty claims against the District defendants suffer from the
same defect. Those claims were based on the same factual assertions underlying the statutory
violations and also failed to allege that the funds transferred from the Working Cash Fund had
been used for any purpose other than legitimate school district expenses. As a result, plaintiffs
have not sufficiently claimed that the District defendants’ alleged breaches of their fiduciary
duties resulted in a loss suffered by the School District. See Bernstein & Grazian, P.C. v.
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 Grazian & Volpe, P.C., 402 Ill. App. 3d 961, 976 (2010) (recognizing that a party seeking to
recover for breach of fiduciary duty must establish the existence of a fiduciary duty, breach of
that duty, and damages proximately caused by the breach).

¶ 40 Further, because plaintiffs cannot recover against defendant Beckwith, the treasurer of the
school district, their claim against Lloyd’s, as surety of his conduct, was properly dismissed.
See Village of Rosemont v. Lentin Lumber Co., 144 Ill. App. 3d 651, 668 (1986) (recognizing
that if a principal and surety are sued jointly and the action against the principal fails, the surety
is discharged). Accordingly, the appellate court correctly held that the claims against the
District defendants and Lloyd’s were properly dismissed.

¶ 41 II. Dismissal of Lutkauskas’s Claims Against Knutte

¶ 42 A. Whether the Doctrine of Res Judicata Applies

¶ 43 We next address Lutkauskas’s argument that the circuit court erred in dismissing his claims
against Knutte on the ground of res judicata. As noted above, our review of a dismissal under
section 2-619 is de novo. DeLuna v. Burciaga, 223 Ill. 2d 49, 59 (2006). Also, the
determination of whether a claim is barred under the doctrine of res judicata is a question of
law, which we review de novo. Hayashi v. Illinois Department of Financial & Professional
Regulation, 2014 IL 116023, ¶ 45; Arvia v. Madigan, 209 Ill. 2d 520, 526 (2004).

¶ 44 Res judicata is an equitable doctrine designed to prevent multiple lawsuits between the
same parties where the facts and issues are the same. Murneigh v. Gainer, 177 Ill. 2d 287, 299
(1997). Under the doctrine, a final judgment on the merits rendered by a court of competent
jurisdiction operates to bar a subsequent suit between the same parties and involving the same
cause of action. River Park, Inc. v. City of Highland Park, 184 Ill. 2d 290, 302 (1998); Rein v.
David A. Noyes & Co., 172 Ill. 2d 325, 334-35 (1996). In addition to the matters that were
actually decided in the first action, the bar also applies to those matters that could have been
decided in the prior suit. River Park, Inc., 184 Ill. 2d at 302; La Salle National Bank v. County
Board of School Trustees, 61 Ill. 2d 524, 529 (1975). Three requirements must be satisfied for
res judicata to apply: (1) the rendition of a final judgment on the merits by a court of competent
jurisdiction; (2) the existence of an identity of cause of action; and (3) identity of the parties or
their privies. River Park, Inc., 184 Ill. 2d at 302; Downing v. Chicago Transit Authority, 162
Ill. 2d 70, 73-74 (1994).

¶ 45 In this case, Lutkauskas seeks to challenge the existence of all three elements. With regard
to the first requirement, Lutkauskas asserts that the dismissal of the original plaintiffs’ claims
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 against Knutte did not constitute an adjudication on the merits because that ruling was based on
a lack of standing. Yet, Lutkauskas did not raise this argument in the circuit court. Moreover,
he specifically conceded in the appellate court that “a final judgment was rendered,” and that
court’s opinion noted his agreement that the first element was satisfied. 2013 IL App (1st)
121112. Accordingly, Lutkauskas has forfeited any argument that the dismissal with prejudice
of the original plaintiffs’ claims against Knutte was not a final judgment on the merits, and we
need not address it here. See Vine Street Clinic v. HealthLink, Inc., 222 Ill. 2d 276, 301 (2006)
(recognizing that arguments not raised in either the circuit or appellate court are forfeited).

¶ 46 Lutkauskas next contends that the second prerequisite of res judicata has not been
satisfied. Lutkauskas argues that there is no identity of cause of action because he asserted
additional claims against Knutte that were not included in the original plaintiffs’ complaints.
This argument is without merit.

¶ 47 In River Park, this court adopted the transactional test to determine identity of causes of
action. River Park, Inc., 184 Ill. 2d at 310-11. There, we held that “separate claims will be
considered the same cause of action for purposes of res judicata if they arise from a single
group of operative facts, regardless of whether they assert different theories of relief.” Id. at
311. Under this principle, the dismissal of a single theory of recovery against a particular
defendant operates as a final adjudication of all claims based on other theories of recovery that
could have been brought as part of the initial action, as long as they arise from the same core of
operative facts. Therefore, simply alleging a new theory of recovery is insufficient to assert a
different cause of action, where multiple theories of recovery are predicated on the same core
of operative facts.

¶ 48 In this case, Lutkauskas’s complaint included a count against Knutte for accountant
negligence, as well as additional counts seeking recovery for professional malpractice, breach
of fiduciary duty, and aiding and abetting illegal conduct. Although these counts were based on
different theories of recovery, they were predicated on the same underlying facts that were
alleged by the original plaintiffs—that Knutte issued “clean” audit reports for the years 2007
through 2009, despite its knowledge of the District defendants’ alleged wrongdoing.
Therefore, Lutkauskas’s additional claims against Knutte arose from the same core of
operative facts that formed the basis for the original plaintiffs’ claims and could have been
adjudicated in the prior action. The dismissal of the original plaintiffs’ claims with prejudice
was a final resolution of the cause of action against Knutte. Id. Lutkauskas’s argument that res
judicata does not apply because he has raised different theories of recovery fails because it is in
direct conflict with the principles articulated in River Park.

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¶ 49 Lutkauskas also claims that the third element of res judicata has not been met because
there is no identity of parties or their privies. In making this argument, Lutkauskas points to the
fact that he was not a party to the prior action, and he further asserts that he is not in privity
with the original plaintiffs. We disagree that there is a lack of privity.

¶ 50 In considering whether res judicata applies, “[p]rivity is said to exist between parties who
adequately represent the same legal interests.” (Internal quotation marks omitted.) People ex
rel. Burris v. Progressive Land Developers, Inc., 151 Ill. 2d 285, 296 (1992). For purposes of
res judicata, “[i]t is the identity of interest that controls in determining privity, not the nominal
identity of the parties.” Id. Moreover, adequate representation does not mandate that the
litigant in the prior suit be successful. Id. at 297 (recognizing that rejection of the arguments
advanced by a party to a previous action “cannot be evidence of inadequate representation”).

¶ 51 In this case, Lutkauskas did not bring suit in his own right to enforce a claim that was
personal to him. Rather, he filed his action on behalf of the District, which was the real party in
interest. As a consequence, his claims against Knutte were those of the District, as was true of
the claim asserted in the earlier action. Also, though Lutkauskas asserted different theories of
recovery, the conduct that formed the basis for his claims was the same as that underlying the
original plaintiffs’ claims, and he sought the same relief. Accordingly, Lutkauskas was in
privity with the original plaintiffs, and the final requirement of res judicata is satisfied.

¶ 52 Lutkauskas further contends that the doctrine of res judicata cannot be applied in this case
because it would result in a denial of due process. In support, he relies on three United States
Supreme Court cases: Taylor v. Sturgell, 553 U.S. 880 (2008); South Central Bell Telephone
Co. v. Alabama, 526 U.S. 160 (1999); and Richards v. Jefferson County, 517 U.S. 793 (1996).
Yet, as the appellate court observed, these decisions do not govern the instant case. 2013 IL
App (1st) 121112, ¶¶ 45-49.

¶ 53 In Taylor v. Sturgell, the Supreme Court considered whether an adverse judgment against a
party seeking disclosure of documents under the Freedom of Information Act (FOIA) (5
U.S.C. § 552 (2006)) would preclude a subsequent action by another person who sought the
same documents. Taylor, 553 U.S. at 885. In resolving this question, the Supreme Court
observed that the right to request records under the FOIA statute is granted to individual
persons, not the public at large. Id. at 885, 903. The Court also observed that the doctrine of
res judicata is subject to due process limitations, which serve to protect the rights of
individuals who were not parties to a prior adjudication. Id. at 891, 901. Yet, the Court noted
that there are several recognized exceptions to the general rule against nonparty preclusion,
including where privity exists between the parties to the actions. Id. at 884, 893-95. In rejecting

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 the doctrine of preclusion by “virtual representation,” the Supreme Court held that the question
of whether a subsequent action is barred by a prior judgment must be decided according to the
established grounds for nonparty preclusion. Id. at 904.

¶ 54 We find that Taylor is factually distinguishable because it did not involve successive
taxpayer derivative actions, in which multiple plaintiffs filed identical actions to protect the
same interests of a governmental entity. Rather, the two plaintiffs in Taylor brought suit to
enforce their own individual rights to request disclosure of federal records, and any relief
afforded under the FOIA statute would accrue to them personally. Id. at 885, 903. Here, the
original plaintiffs and Lutkauskas brought suit in a representative capacity to protect the
interests of the School District. In both actions, the School District was the real party in
interest, and the relief sought would accrue to the School District, not the named plaintiffs.
Because the interests of the School District were represented in both actions, the due process
concerns that were recognized and pivotal to the result reached in Taylor are not implicated.

¶ 55 In Richards v. Jefferson County, 517 U.S. 793 (1996), the Supreme Court considered
whether an action challenging the validity of an occupation tax was barred by a judgment
upholding the validity of the tax in a previous suit brought by different taxpayers. Id. at 794-96.
The Richards Court held that application of res judicata was inconsistent with the principles of
due process because the plaintiffs in the original action “did not sue on behalf of a class; their
pleadings did not purport to assert any claim against or on behalf of any nonparties; and the
judgment they received did not purport to bind any *** taxpayers who were nonparties.” Id. at
801. Based on these circumstances, the Court concluded that the second action by different
taxpayers was not barred by the earlier judgment. Id. at 801-02. In reaching this conclusion, the
Supreme Court particularly noted that the underlying right asserted by the plaintiff taxpayers
was “personal in nature.” Id. at 802 n.6. Thus, the case presented was distinguishable from the
type of case in which a taxpayer brings suit “to complain about an alleged misuse of public
funds, [citations] or about other public action that has only an indirect impact on his interests,
[citations].” Id. at 803. The Court also observed that res judicata may be applied where the
party bringing a second action is in privity with a party to the earlier judgment. Id. at 798.

¶ 56 In South Central Bell Telephone Co. v. Alabama, 526 U.S. 160 (1999), the Supreme Court
again considered whether the doctrine of res judicata applied to bar a suit challenging a tax that
had been upheld in prior litigation brought by different taxpayers. Id. at 167-68. Finding that
the case presented was indistinguishable from Richards, the Court reiterated its primary
holding in that decision and concluded that the earlier judgment did not have preclusive effect
because the successive tax challenges involved different plaintiffs and different tax years;

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 neither was a class action; and there was no claim of privity between the two sets of plaintiffs.
Id.

¶ 57 Thus, Taylor, Richards, and South Central Bell establish that the requirements of due
process prohibit the application of res judicata to bar an action by a different plaintiff, where
the right sought to be enforced is personal in nature and none of the recognized grounds for
nonparty preclusion apply. In this case, however, the original plaintiffs and Lutkauskas
brought suit in a representative capacity on behalf of the School District. Lutkauskas’s claim
was not personal in nature, and the interests of the School District that he sought to protect
were identical to those advanced in the previous action by the original plaintiffs. As a
consequence, the due process concerns underlying the decisions in Taylor, Richards, and
South Central Bell are not at issue here, and those cases do not support Lutkauskas’s due
process argument. For all of the foregoing reasons, we conclude that the doctrine of res
judicata applies in this case, and Lutkauskas is precluded from pursuing his claims against
Knutte.

¶ 58 B. Whether Supreme Court Rule 304(a) Requires Amendment

¶ 59 As a final matter, we briefly dispose of Lutkauskas’s assertion that Supreme Court Rule
304(a) (eff. Feb. 26, 2010) requires clarification and should be amended. According to
Lutkauskas, the language of Rule 304(a) indicates that an appeal brought under its terms is
permissive, and the wording of the rule should be changed to clearly reflect that the
requirements of the rule are mandatory. This assertion is without merit.

¶ 60 As Lutkauskas acknowledges, Rule 304(a) provides as follows:

“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. Such a finding may be made
at the time of the entry of the judgment or thereafter on the court’s own motion or on
motion of any party. The time for filing a notice of appeal shall be as provided in Rule
303. In computing the time provided in Rule 303 for filing the notice of appeal, the
entry of the required finding shall be treated as the date of the entry of final judgment.
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

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 adjudicating all the claims, rights, and liabilities of all the parties.” (Emphasis added.)
Ill. S. Ct. R. 304(a) (eff. Feb. 26, 2010).

¶ 61 The terms of Rule 304(a) explicitly state that the time for filing the appeal is governed by
Rule 303 and that the entry of the required finding shall be treated as the date of the entry of
final judgment. Id. Rule 303, in turn, specifically provides that a notice of appeal must be filed
within 30 days after the entry of the final judgment appealed from. Ill. S. Ct. R. 303(a) (eff.
June 4, 2008). Pursuant to the clear and unambiguous language in these rules, an appeal that
seeks to challenge a final judgment following a Rule 304(a) finding must be filed within 30
days of the entry of that finding. No amendment or clarification is required.

¶ 62 CONCLUSION

¶ 63 For the reasons set forth above, we conclude that the appellate court correctly held that the
dismissal of all of the plaintiffs’ claims against the District defendants and Lloyd’s was proper.
We also find that the doctrine of res judicata precludes Lutkauskas from pursuing his claims
against Knutte. Accordingly, we affirm the judgment of the appellate court.

¶ 64 Affirmed.

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