Election of Remedies vs. Alternative Pleading In Illinois

The election of remedies doctrine clashes with Illinois alternative pleading rules in Evashank v. Miller Brewing Company, 2013 IL App (1st) 112987-U, a case involving a dispute over a misread beer promotional ticket.

The plaintiff was given a promotional sticker at the Coach’s Corner bar that plaintiff thought read “win a million dollars”.  It actually said “this summer I want to win a million dollars.”  When the plaintiff tried to claim his big bucks prize, the bar and promotional staff said no and plaintiff sued the beer company and promotional group for fraud and breach of contract. 

Before trial, the court made the plaintiff to choose whether he was going to pursue his fraud or breach of contract claims against the bar.  Plaintiff chose the latter.  The court found for the tavern and plaintiff appealed.

Result: Reversed in part.

Election of Remedies

The election of remedies doctrine applies where a plaintiff elects inconsistent remedies for the same injury.  The rule provides that the prosecution of one remedy to judgment bars a second action stemming from the same transaction based on an inconsistent theory.  The prototypical example: a plaintiff can’t seek to recover breach of contract damages while at the same time  (or later) try to rescind that same contract.  The remedies are inconsistent.

Illinois courts confine the election of remedies rule to situations where (1) double compensation for the plaintiff is threatened, (2) defendant has been misled by the plaintiff’s conduct in choosing one remedy over another, or (3) where res judicata applies (final judgment on the merits, same parties, same cause of action). 

The election of remedies rule bars a plaintiff from recovering on one theory in a case and then later seeking a different remedy in a second case based on the same facts (as the first case). ¶¶ 50-51

But Illinois law does permit alternative pleading.  Code Sections 2-604 and 2-613 allow a plaintiff to plead inconsistent theories of recovery and allege contradictory facts at the pleading stage.  A plaintiff can also go to trial on inconsistent claims (e.g. fraud and breach of contract).  The proofs at that trial will determine which theory, if any, the plaintiff can recover on.  ¶¶47-49.

Here, there was only one case.  Plaintiff didn’t try to first recover on fraud and then, in a second action, try to recover for breach of contract.  While fraud and breach of contract have different pleading and proof elements and proving one (breach of contract) normally prevents proof of the other (fraud), a plaintiff can still proceed to trial on both legal theories; he just can’t recover damages on both. 

Since plaintiff should have been allowed to take both his breach of contract and fraud counts to trial, the trial court mistakenly made plaintiff choose his remedy at the pre-trial stage.  And while the First District viewed the plaintiff’s fraud claim as weak, it still reversed the dismissal of that count because the trial court misapplied the election of remedies rule.

The Breach of Contract Claim

The trial court properly directed verdict against plaintiff on the breach of contract count.  There was no meeting of the minds or consideration.  The plaintiff admitted he paid nothing for the “million dollar sticker” and had no expectation of winning a million dollars when he visited the bar.  This precluded a finding that there was an enforceable agreement.  The sticker was misread; plain and simple.  There was no enforceable contract.  ¶¶ 49-52.

Afterwords:

A case that features a deep analysis of some finer procedural points in a “fun” fact pattern.  Some key take-aways include:

1/ An absence of a meeting of minds will prevent enforcement of a contract; especially in the promotional setting;

2/ An advertisement or promotional “offer” is generally construed as an invitation to make an offer – not an offer that invites acceptance.

3/ While Illinois permits alternative pleading, it doesn’t allow recovery on inconsistent remedies (e.g. a plaintiff can’t recover for breach of contract while at same time seek rescission of the contract.);

4/ A plaintiff can’t recover for both fraud and breach of contract (he must choose one or the other), but he doesn’t have to make this choice until after trial.

 

Fraud Suit Dismissed Where Prior Corporate Dissolution Claim Pending Between Parties – IL Court

Illinois courts aim to foster efficiency and finality in litigation. One way they accomplish this is by protecting people from repetitive lawsuits and requiring plaintiffs to bring all their claims in a single case.  Consolidation of claims is encouraged while piecemeal “claim splitting” is discouraged.

Code Section 2-619(a)(3) is a statutory attempt to streamline litigation. This section that allows for dismissal of a case where there is another action pending between the same parties for the same cause.

Schact v. Lome, 2016 IL App(1st) 141931 provides a recent case illustration of this section in the context of an aborted medical partnership.

The defendant originally filed suit in 2010 against two of his former medical partners to void their attempt to dissolve a medical corporation operated by them. The parties litigated that case for over three years before the plaintiffs (who were the defendants in the 2010 case) filed suit in 2013 for fraud.

The 2013 fraud action alleged the defendant fraudulently induced the plaintiffs to agree to a distribution of the medical corporation’s assets knowing that he (defendant) was going to challenge the corporate dissolution.

According to the plaintiffs, the defendant received almost $50,000 in cash on top of some corporate equipment based on his promise to end the 2010 litigation. Plaintiffs claimed the defendant hoodwinked them into agreeing to the money and property disbursements based on the defendant’s assurance he would dismiss the prior lawsuit.

The trial court dismissed the fraud action based on the same parties, same cause rule.  Affirming dismissal, the appeals court provided content to the “same cause” element of a Section 2-619 motion to dismiss.

  • Illinois Code Section 2-619(a)(3) is a procedural device aimed at avoiding duplicative litigation. It applies where there is a pending case involving the same parties for the same cause.
  • Lawsuits present the same cause when the relief sought is “based on substantially the same set of facts”;
  • The salient inquiry is whether both cases arise from the same transaction or occurrence, not whether the two lawsuits have identical causes of action or legal theories;
  • If the relief requested in each lawsuit relies on substantially the same facts, the “same cause” is met and can present grounds for dismissal.

(¶¶ 35-36)

In finding the same cause test met, the Court noted the 2010 dissolution action and the 2013 fraud suit were “inextricably intertwined.” Both cases involved a challenge to the plaintiffs’ earlier attempted breakup of the medical corporation.  Both cases also centered on the defendant’s conduct in agreeing to a distribution of the corporate assets while at the same time contesting those distributions.  Another commonality between the two suits was the damages claimed by the plaintiffs in the fraud action equaled the defense costs they incurred in the 2010 dissolution action. (¶ 37).

Since both lawsuits involved the same underlying facts, had similar issues and were based on the same conduct by the parties, the 2013 fraud action was properly dismissed since the 2010 dissolution action was still pending when the fraud case was filed.

Take-aways:

Once again, considerations of judicial economy win out over opposing claims that two lawsuits are different enough to proceed on separate tracks.

Schact gives a broad reading to a somewhat nebulous basis for dismissal.  The case stresses that the legal theories advanced in two lawsuits don’t have to be identical to trigger the same cause element of Section 2-619.

Schact’s lesson is clear: Where two lawsuits between the same parties share common issues and stem from substantially similar facts, a defendant will have a strong argument that the later-filed case should be dismissed under the same cause Code section.

Denial of Motion for Judgment in Citation Proceedings Not Final – Appeal Dismissed (IL 1st Dist.)

While there are nuances and some exceptions to it, the general rule is that only “final” orders are appealable.  If a trial court’s order is final, the losing party can appeal it.  If the order isn’t final – meaning, the case is still going on – the losing party can’t appeal it.  Whether an order is final is often overlooked during the heat of trial battle.  However, as today’s feature case illustrates, the failure to appreciate the final versus non-final order distinction can doom an appeal as premature.

National Life Real Estate Holdings, LLC v. International Bank of Chicago, 2016 IL App (1st) 151446, the plaintiff judgment creditor won a $3MM-plus judgment against an individual and two LLC defendants. In trying to enforce the money judgment, the plaintiff issued a third-party citation to IBC, the respondent and defendant.

Upon learning that after IBC disbursed $3.5MM in loan funds to two businesses associated with the individual judgment debtor after it received the third-party citation, the plaintiff moved for judgment against IBC on the basis that it violated its obligations as a third-party citation respondent (to not transfer any of the judgment debtor’s property).

The circuit court denied the plaintiff’s motion.  It found that since the loan funds disbursed by IBC were not paid to and didn’t belong to the judgment debtor, IBC did not flout the citation’s “restraining provision” (which prevents a citation respondent from disposing of property belonging to a judgment debtor).  Affirming, the appeals court discussed the pertinent rules governing when orders entered in post-judgment proceedings can be appealed.

  • An appeal can only be taken from a “final order”‘
  • An order is final where it disposes of the rights of the parties, either upon the entire lawsuit or upon a separate and definite part of it;
  • A final order entered in a post-judgment proceeding is appealable, too;
  • A post-judgment order is deemed final when the judgment creditor is in a position to collect against the judgment debtor or third-party or the judgment creditor is prevented from doing so by court order;
  • A post-judgment order that does not (a) leave a creditor in position to collect a judgment or that (b) conclusively bars the creditor from collecting, is not final for purposes of appeal. 

(¶10); See 735 ILCS 5/2-1402; Ill. Sup. Ct. R. 304(b)(4).

The trial court’s order denying the judgment creditor’s motion for judgment wasn’t final as it didn’t end the lawsuit.  The appeals court noted the case is still pending and the judgment creditor may still have valid claims against IBC.  Since the trial court’s denial of the judgment creditor’s motion didn’t foreclose it from future collection efforts, the denial of the motion wasn’t a final and appealable order.  As a consequence, the creditor’s appeal was premature and properly dismissed.

Afterwords:

In hindsight, the plaintiff should have requested a Rule 304(a) finding that the order denying the motion for judgment was appealable.  While the court could have denied the motion, it would have at least give the creditor a shot at having an appeals court review the trial court’s order.

Going forward, the plaintiff should issue third-party citations to the loan recipients (the two business entities) and see if it can link the individual debtor to those businesses.  The plaintiff should also issue discovery to IBC to obtain specifics concerning the post-citation loan.  This information could give the plaintiff ammunition for future litigation against IBC relating to the loans.