Leow v. a & B Freight Line, Inc.

JUSTICE McMORROW,

specially concurring:

I agree that plaintiff’s complaint against A&B Freight should not be dismissed under the doctrine of res judicata, but not for the reasons offered by the majority. In my view, the majority’s analysis is flawed and likely to cause unnecessary confusion in future cases. I reach this conclusion for several reasons, and write separately to address each in turn.

I

A. Flawed Analysis

The dispositive issue in this appeal is whether an employer may assert the involuntary dismissal of its employee, obtained on statute of limitations grounds, as a basis for its own dismissal by virtue of the doctrine of res judicata. That doctrine provides that a final judgment on the merits bars a subsequent action between the same parties or their privies on the same cause of action. People ex rel. Burris v. Progressive Land Developers, Inc., 151 Ill. 2d 285, 294 (1992). Three requirements must be met for res judicata to apply: (1) there must be a final judgment on the merits rendered by a court of competent jurisdiction; (2) there must be an identity of causes of action (or defenses); and (3) there must be an identity of parties or their privies. Progressive Land, 151 Ill. 2d at 294.

In this case, the majority begins its analysis by noting that "the only element of res judicata in serious dispute is the first element concerning whether the granting of the involuntary dismissal in favor of [the employee] constitutes a final judgment on the merits barring the remaining claim against A&B Freight.” 175 Ill. 2d at 180. As to the final two elements, the majority concludes:

"The second element of res judicata is clearly present since [plaintiff] is suing both A&B Freight and [its employee] for the same injuries arising out of the same accident. Furthermore, [plaintiff’s] claim against A&B Freight is based on a theory of vicarious liability and under such a theory the employer and employee are considered to be ' "one and the same” defendant.’ ” 175 Ill. 2d at 180, quoting Downing v. Chicago Transit Authority, 162 Ill. 2d 70, 74 (1994).

Despite this early conclusion that the same claim and same party requirements have been satisfied, the majority later insists that "the matter before us involves a separate claim against a different defendant.” (Emphasis added.) 175 Ill. 2d at 184. The majority then uses this fact, i.e., the existence of a different defendant, to ultimately conclude that the first element of res judicata has not been satisfied. See 175 Ill. 2d at 186 ("where separate defendants are involved, we hold that *** only those types of involuntary dismissals that serve the policy behind Supreme Court Rule 273 should be treated as adjudications on the merits”). The majority supports this novel theory by further suggesting that Supreme Court Rule 273, which provides that all involuntary dismissals operate as adjudications on the merits unless the dismissal was for lack of jurisdiction, improper venue, or failure to join an indispensable party, should be interpreted differently depending upon the party which invokes the rule. According to the majority, "[wjhere a different defendant is involved, as in the present case, Rule 273 cannot be applied mechanically ***.” (Emphasis added.) 175 Ill. 2d at 184.

I do not believe that Rule 273 should be interpreted differently merely because a different defendant is involved. On the contrary, whether a judgment is or is not an adjudication on the merits under Rule 273 does not depend upon whether there is an identity of parties, as in the case of res judicata. Rather, it depends solely on whether the dismissal at issue falls within one of the three exceptions specified in the rule. See Towns v. Yellow Cab Co., 73 Ill. 2d 113, 122 (1978) (holding that involuntary dismissals for reasons other than those specified by Rule 273 are adjudications on the merits). Where, as here, none of the three exceptions apply, the dismissal operates as an adjudication on the merits. Rein v. David A. Noyes & Co., 172 Ill. 2d 325 (1996).

In Rein, we held that a dismissal of an action based on the running of a statute of limitations constituted an adjudication on the merits by virtue of Rule 273. Rein, 172 Ill. 2d at 335-36. In that case, plaintiffs filed an eight-count complaint against a securities dealer and its agents, seeking, inter alia, to rescind an agreement to purchase certain bonds. The circuit court dismissed the complaint pursuant to section 2 — 619(a)(5) of the Code of Civil Procedure (735 ILCS 5/2 — 619(a)(5) (West 1994)). The court held that the action was barred by the applicable statute of limitations. After an unsuccessful appeal, plaintiffs returned to the circuit court and attempted to replead the rescission counts. The court again dismissed the action, this time ruling that the claims were barred by the doctrine of res judicata. We affirmed that ruling on appeal, noting that the prior dismissal on statute of limitations grounds served as an adjudication on the merits. Justice Miller, writing for a unanimous court, held as follows:

"Supreme Court Rule 273 provides that, '[u]nless the order of dismissal or a statute of this State otherwise specifies, an involuntary dismissal of an action, other than a dismissal for lack of jurisdiction, for improper venue, or for failure to join an indispensable party, operates as an adjudication upon the merits.’ 134 Ill. 2d R. 273. As this court has previously stated, Rule 273 applies only to an involuntary dismissal of an action, such as that which occurs when a motion to dismiss under section 2 — 615 or 2 — 619 of the Code is granted. Downing, 162 Ill. 2d at 74-75. Therefore, under Rule 273, the trial judge’s decision to grant defendant’s motion to dismiss the rescission counts in Rein I based on the applicable statute of limitations is a final adjudication on the merits and operates as a final judgment on the merits for purposes of res judicata. See Downing, 162 Ill. 2d at 74-75.” Rein, 172 Ill. 2d at 335-36.

Our holding in Rein is wholly consistent with the plain language of Rule 273. That rule specifies that only involuntary dismissals based on (i) lack of jurisdiction, (ii) improper venue, or (iii) failure to join a necessary party shall not operate as adjudications on the merits, unless the order of dismissal or a statute states otherwise. 134 Ill. 2d R. 273. The rule does not exempt involuntary dismissals based on the running of the statute of limitations. Such dismissals, therefore, are adjudications on the merits. Towns v. Yellow Cab Co., 73 Ill. 2d 113, 122 (1978). That was the conclusion reached by this court in Rein, and that has been the unanimous conclusion reached by our appellate court. Greenfield v. Ray Stamm, Inc., 242 Ill. App. 3d 320, 327 (1993) (holding that dismissal based on statute of limitations constitutes an adjudication on the merits); Sankey Brothers, Inc. v. Guilliams, 152 Ill. App. 3d 393, 398 (1987); Mascare v. Voltz, 107 Ill. App. 3d 841, 843 (1982). Consequently, there can be no dispute over whether the type of dismissal involved in this case, i.e., a dismissal for failure to file a complaint within the applicable limitations period, constitutes an adjudication on the merits pursuant to Rule 273.

Notwithstanding the above, the majority asserts that "[u]nlike [Rein], the matter before us involves a separate claim against a different defendant.” 175 Ill. 2d at 184. The majority believes that this distinction is "critical” because "[w]here a different defendant is involved, as in the present case, Rule 273 cannot be applied mechanically, because doing so would yield absurd and unjust results.” 175 Ill. 2d at 184. Thus, from the majority’s point of view, the existence of a different defendant in this case is relevant because it purportedly aifects the way in which we should interpret Rule 273. I question the validity of the majority’s argument on this point.

Although I agree with the majority that the existence of a separate claim and a different defendant distinguishes the instant case from Rein, I do not think that this distinction is relevant in terms of how we should construe Rule 273. In my view, this distinction simply has nothing to do with that rule or its application. Rather, the existence of a separate claim and a different defendant is relevant in determining whether the final two elements of res judicata have been satisfied. After all, it is the doctrine of res judicata, and not Rule 273, which speaks in terms of separate claims and different defendants. Indeed, as noted above, three requirements must be satisfied before courts will apply the doctrine of res judicata: there must be a final judgment on the merits, an identity of causes of actions, and an identity of parties or their privies. People ex rel. Burris v. Progressive Land Developers, Inc., 151 Ill. 2d 285, 294 (1992). In contrast, the applicability of Rule 273 does not turn on whether separate claims or different parties exist. A review of the plain language of that rule reveals that the sole concern of Rule 273 is the determination of whether an order of dismissal will be treated as an adjudication on the merits. Nothing in the language of the rule supports the notion that the existence of different defendants should result in a different interpretation. Thus, there is no basis for the majority’s contention that our analysis of Rule 273 should vary, or that the rule should be less than "mechanically” applied, simply because a separate claim or a different defendant is involved.

Accordingly, to the extent that my colleagues view Rein as factually distinguishable from the instant case, I agree. I do not, however, believe that Rein is distinguishable in terms of construing Rule 273, as the majority erroneously posits. Unlike the majority, I think that Rein is distinguishable only in the context of the doctrine of res judicata. In Rein, we barred any further litigation between the parties because all three elements of res judicata were satisfied. In this case, not all of the elements of res judicata are present. As the majority repeatedly points out, the case at bar involves a separate claim and a different defendant; therefore, the doctrine of res judicata does not apply.

B. Inapposite Federal Precedent

Because of its insistence on deciding this case in terms of Rule 273 rather than on the basis of the final two elements of res judicata, the majority is forced to continue its analysis by relying on inapposite case law in an attempt to circumvent the plain language of Rule 273. Noting that our own rule shares a common heritage with Federal Rule of Civil Procedure 41(b), the majority cites to the United State’s Supreme Court’s decision in Costello v. United States, 365 U.S. 265, 5 L. Ed. 2d 551, 81 S. Ct. 534 (1961). Costello, however, did not involve a dismissal of an action based on the running of a statute of limitations. Instead, the Court in Costello merely held that a dismissal of a complaint in a denaturalization proceeding for the failure to file an affidavit of good cause did not constitute an adjudication on the merits under Rule 41(b). In reaching that conclusion, the Court specifically noted that such dismissals were equivalent to dismissals for "lack of jurisdiction.” Costello, 365 U.S. at 285, 5 L. Ed. 2d at 564, 81 S. Ct. at 544. The Supreme Court further observed that dismissals for lack of jurisdiction were expressly exempt from the effect of Rule 41(b), which, like our Rule 273, provides in pertinent part: " 'Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction or for improper venue, operates as an adjudication upon the merits.’ ” (Emphasis added.) Costello, 365 U.S. at 284, 5 L. Ed. 2d at 564, 81 S. Ct. at 544, quoting Fed. R. Civ. P. 41(b). Consequently, the Supreme Court had no difficulty in finding that the dismissal of a complaint for failure to file the requisite affidavit, which it likened to a dismissal for lack of jurisdiction, was not an adjudication on the merits.

I do not find Costello persuasive in resolving the precise issue presented in the case at bar. Indeed, the opinion in Costello contains not one reference to statutes of limitations, dismissals obtained through them, or their effect under Rule 41(b). Yet Costello is the sole federal case cited by the majority, and it is the majority which believes that federal case law, rather than state law precedent, is controlling. Even if federal precedent were controlling, my research reveals that the federal judiciary has uniformly held that an involuntary dismissal obtained on statute of limitations grounds constitutes an adjudication on the merits under Rule 41(b). See Murphy v. Klein Tools, Inc., 935 F.2d 1127 (10th Cir. 1991) (dismissal on limitations grounds constitutes an adjudication on the merits) (citing, inter alia, Steve D. Thompson Trucking, Inc. v. Dorsey Trailers, Inc., 870 F.2d 1044 (5th Cir. 1989), Rose v. Town of Harwich, 778 F.2d 77 (1st Cir. 1985), and Johnson v. Burnley, 887 F.2d 471 (4th Cir. 1989)); see also Schoup v. Bell & Howell Co., 872 F.2d 1178 (4th Cir. 1989) (citing Nilsen v. City of Moss Point, 701 F.2d 556 (5th Cir. 1983), PRC Harris, Inc. v. Boeing Co., 700 F.2d 894 (2d Cir. 1983), and Nathan v. Rowan, 651 F.2d 1223 (6th Cir. 1981)). In fact, the very analysis utilized by today’s majority was rejected by the Fourth Circuit Court of Appeals in Schoup v. Bell & Howell Co., 872 F.2d 1178 (4th Cir. 1989), where plaintiffs tried unsuccessfully to apply the Costello rationale to the statute of limitations question.

In sum, I do not agree with the majority that the proper resolution of the res judicata issue presented in this case turns upon the meaning of Rule 273. In my view, it is not the first element of res judicata (adjudications on the merits) which is at issue here, but rather the final two elements (identity of claims and parties). But even if I did agree with the majority in this respect, I would not be swayed by their citation to federal case law. For these reasons, I do not place any credence on the majority’s reliance on Costello.

II

At the outset, I pointed out the internal inconsistency in the majority’s analysis of the issue presented for our review. On the one hand, the majority holds that the final two elements of res judicata have been satisfied because (i) plaintiff is suing for the same injuries arising out of the same accident, and (ii) A&B Freight and its employee are considered to be " 'one and the same’ defendant.” 175 Ill. 2d at 180. On the other hand, the majority spends the remainder of its opinion arguing that this case actually involves a separate claim against a different defendant. I would now like to offer an explanation as to why I think that the majority, perhaps unwittingly, falls victim to its own analysis, and why my approach to resolving the res judicata issue merits future consideration by this court.

The record in the instant case reveals that plaintiff filed a timely complaint against A&B Freight on March 8, 1994. The complaint alleged that plaintiff suffered injuries as a result of certain negligent acts committed by one of A&B Freight’s employees. Plaintiff later filed an amended complaint in which he attempted to add the employee as a party defendant. Because this second complaint was not filed within the applicable limitations period, the employee moved to dismiss the complaint pursuant to section 2 — 619(a)(5) of the Code of Civil Procedure. The circuit court granted the motion to dismiss. Shortly thereafter, A&B Freight also moved to dismiss plaintiff's complaint. A&B Freight argued that it could no longer be liable under the theory of respondeat superior since its employee had been dismissed from the case. In support of this argument, A&B Freight relied upon what is now referred to as the Towns doctrine, named after the case in which it finds its most prominent expression. Towns v. Yellow Cab Co., 73 Ill. 2d 113 (1978). This doctrine may be summarized as follows:

"When an action is brought against a master based on the alleged negligent acts of his servant, and no independent wrong is charged on behalf of the master, his liability is entirely derivative, being founded upon the doctrine of respondeat superior. In this regard, it has been said that the liability of the master and servant for the acts of the servant is deemed that of one tortfeasor and is a consolidated or unified one. *** A judgment, therefore, adjudicating the master not liable, where a judgment to the contrary could have only resulted from a finding that the servant committed an actionable wrong against the plaintiff, is a judgment in legal effect that the servant is not liable.” Towns, 73 Ill. 2d at 123-24.

Relying on this doctrine, the circuit court granted A&B Freight’s motion to dismiss, ruling that the order dismissing the employee barred any further action against A&B Freight under the principles of res judicata. The appellate court affirmed, finding that all of the elements of res judicata had been met. 276 Ill. App. 3d 985. On appeal before this court, A&B Freight once again invokes the Towns doctrine. Unfortunately, the majority summarily accepts A&B Freight’s argument without fully considering the ramifications of that decision. As a result, the majority is compelled to hold that A&B Freight and its employee are deemed " 'one and the same’ defendant” (175 Ill. 2d at 180) despite the fact that the majority later realizes that this case actually involves different defendants.1 See, e.g., 175 Ill. 2d at 184-85.

In my view, however, the Towns doctrine does not apply to the facts of this case. In Towns, this court recognized the general principle that a prior judgment for an employee will ordinarily terminate the employer’s liability due to the fact that the latter’s liability is entirely derivative. Towns, 73 Ill. 2d at 123-25. In other words, if a trier of fact determines that an employee was not negligent, then the employer cannot be held liable under the theory of respondeat superior. On the other hand, if the judgment in favor of the employee is based solely on a defense that is personal to the employee, such as an expired statute of limitations, then the employee’s actual negligence has never been determined. Under these circumstances, the employer may still be found liable under the theory of respondeat superior. See, e.g., Restatement (Second) of Judgments § 51 (1982) (judgment against plaintiff based on defense personal to one defendant not given res judicata effect in subsequent litigation against another defendant who may be vicariously liable). In such a scenario, the Towns doctrine would not apply.2 To hold otherwise would lead to the unsound result that an employer who was timely sued would be dismissed from a case simply because its employee was sued after the statute of limitations had expired. The absurdity of that scenario stems from the fact that the employee is not even a necessary party to the employer’s litigation.3 The Nebraska Supreme Court recently utilized this very analysis when considering the same issue under principles identical to those found in Towns. Kocsis v. Harrison, 249 Neb. 274, 543 N.W.2d 164 (1996).

In Kocsis, plaintiffs brought a medical malpractice action against a doctor and his employer, the Omaha Primary Care Associate, P.C. (hereinafter the Clinic). The trial court granted summary judgment in favor of the doctor, ruling that plaintiffs’ complaint was barred by the applicable statute of limitations. Subsequently, the trial court granted the Clinic’s motion for summary judgment, concluding that under the doctrine of respondeat superior, the Clinic could no longer be liable because the plaintiffs’ complaint against the doctor was time-barred. In reversing the trial court, the Supreme Court of Nebraska acknowledged that "[i]f an employee is not liable, the employer cannot be liable under the doctrine of respondeat superior.” Kocsis, 249 Neb. at 280, 543 N.W.2d at 169. The court noted, however, that "it is also well established that a plaintiff is not required to join the employee when suing the employer under the doctrine of respondeat superior.” Kocsis, 249 Neb. at 280, 543 N.W.2d at 169. The court then stated:

"We hold that when a plaintiff initiates an action under the theory of respondeat superior against an employer before the statute of limitations has run as to the employee, the plaintiff need not sue both the employer and employee to prevent his action from being time barred. The controlling statute of limitations applicable to the employer is that which would apply to the employee. Therefore, if the action is brought within the limitations period that applies to the employee’s tortious conduct, the action is not time barred as to the employer whose liability is solely vicarious.” Kocsis, 249 Neb. at 280, 543 N.W.2d at 169.

I find the reasoning in Kocsis persuasive. Therefore, I would also hold that when a plaintiff files a timely suit against an employer and later seeks to join its employee as a party defendant, the plaintiff’s timely complaint against the employer should not be dismissed simply because the employee successfully raises the statute of limitations in his or her own defense. I would further hold that the Towns doctrine does not apply in that situation, and that the second and third elements of res judicata (identity of claims and parties) have not been satisfied. In this way, this court would not have to engage in a disingenuous interpretation of Rule 273 in a contrived attempt to characterize that which is an adjudication on the merits as not an adjudication on the merits.

For the foregoing reasons, I concur only in the judgment of the court.

JUSTICES MILLER and FREEMAN join in this special concurrence.

To support its contention that the employer and employee are one and the same "defendant,” the majority cites Downing v. Chicago Transit Authority, 162 Ill. 2d 70, 74 (1994), which in turn quoted from Towns v. Yellow Cab Co., 73 Ill. 2d 113, 125 (1978). However, the court in Towns merely stated that the employer and employee are considered one and the same "tortfeasor” (meaning simply that the acts of the employee will be attributed to the employer under the theory of respondeat superior) and not one and the same "defendant,” as suggested by the majority. Towns, 73 Ill. 2d at 124. The fact remains that the employer and the employee have always been treated as separate defendants for litigation purposes. Each must be served with a complaint, each may raise personal defenses, and each remains jointly and severally liable.

It is important to keep in mind that the court in Towns did not have occasion to pass upon the effect of a judgment obtained pursuant to a personal defense such as a statute of limitations. Accordingly, I do not suggest that Towns be overruled, but merely clarified with respect to such judgments.

As the majority points out, had the plaintiff in this case elected not to join the employee in his pending suit against A&B Freight, as is his prerogative under Illinois law (see McCottrell v. City of Chicago, 135 Ill. App. 3d 517, 519 (1985)), then the statute of limitations defense would never have been raised and his suit against A&B Freight would have continued uninterrupted in its normal course. It was only because plaintiff attempted to amend his complaint to add the employee as a party defendant that the statute of limitations issue arose at all. I do not think that the outcome of litigation should depend on such fortuitous events; rather, cases should be determined upon their facts in light of each party’s respective legal position.