Cartwright v. Moore

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Cartwright v. Moore

State: Illinois

Court: 1st District Appellate

Docket No: 1-07-1651 Rel

Case Date: 08/10/2009

Preview:FIRST DIVISION AUGUST 10, 2009

No. 1-07-1651 JAY CARTWRIGHT, as Special Representative of the Estate of Mary K. Cartwright, Deceased, Plaintiff-Appellee and Cross-Appellant, v. C. TUCKER MOORE, as Trustee of the Bethine W. Alberding 1989 Trust, Defendant-Appellant and Cross-Appellee. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Appeal from the Circuit Court of Cook County.

No. 00 CH 16248 The Honorable David R. Donnersberger and The Honorable Mary Anne Mason, Judges Presiding.

JUSTICE GARCIA delivered the opinion of the court. This appeal and cross-appeal arise from a suit filed by Mary K. Cartwright, one of three daughters of Bethine W. Alberding and one of three beneficiaries of Alberding's 1989 trust (Alberding trust), against C. Tucker Moore, the named trustee. In her third

amended complaint, Cartwright alleged, among other claims, that Moore wasted trust assets by refusing to distribute the stock in the Occidental Hotel Company (Occidental) to the beneficiaries

No. 1-07-1651 upon Alberding's death as directed by the Alberding trust. complaint also alleged that Moore sold another trust asset, Alberding's former residence, at substantially less than market value, without the beneficiaries' approval. The complaint sought The

reimbursement from Moore for any compensation received as trustee and for the legal fees paid by the trust on behalf of Moore, based on a claim that he breached his fiduciary duty. While litigation was ongoing, Cartwright joined a lawsuit filed by her co-beneficiary and sister Beth Ann Mohr (Mohr suit) against trustee Moore, which came to a conclusion before this case, the Cartwright suit. The Mohr suit, which was filed

subsequent to the Cartwright suit, sought injunctive relief against Moore plus an award for damages. On February 17, 2005,

judgment was entered in the Mohr suit on the injunctive claim. The court dismissed the damages claim without prejudice. The

court's order included Supreme Court Rule 304(a) (210 Ill. 2d R.304(a)) language to provide for an immediate appeal. On

December 21, 2007, Mohr refiled her damages claim in a verified complaint. On November 25, 2008, Judge Dennis D. Burke granted

trustee Moore's motion to dismiss Mohr's verified complaint as barred by res judicata. Judge Burke rejected Mohr's contention

that the release signed by the parties, pursuant to the 2005 judgment, permitted her to split her claim against trustee Moore. 2

No. 1-07-1651 No appeal from Judge Burke's order was filed. On November 15, 2005, trustee Moore filed an "Amended Answer and Affirmative Defenses" to Cartwright's third verified complaint, in which Moore raised the affirmative defense of res judicata based on the final judgment entered in the Mohr suit. Cartwright filed answers to Moore's affirmative defenses in which she contended res judicata had a limited affect on her suit. "[Cartwright] admits that the judgment in [the Mohr suit] does in fact bar certain elements of this case based upon the Doctrine of Res Judicata, since the claims involving any delay in distribution and failure to distribute the assets of the Trust have already been adjudicated by final judgment. However, [Cartwright] denies that [Moore] has accurately set forth the impact of the final judgment since the impact would be a finding of liability in favor of [Cartwright]." On November 28, 2006, Judge David R. Donnersberger entered a surcharge judgment of $1.9 million in favor of Cartwright and against trustee Moore, plus prejudgment interest, on Cartwright's claim regarding Occidental, and a surcharge judgment of $135,000 regarding the sale of Alberding's personal residence. 3 In

No. 1-07-1651 postjudgment proceedings, following Judge Donnersberger's retirement, Judge Mary Ann Mason vacated the surcharge against trustee Moore regarding the sale of the residential property, but granted trustee Moore no further relief. Moore appeals from the $1.9 million judgment. Cartwright

cross-appeals the order vacating the surcharge regarding the sale of the residential property and the denial of her other claims. We conclude that the order entered in the Mohr suit, which predated the Cartwright suit judgment triggered res judicata, barring Cartwright from recovery in this case. We therefore

vacate the circuit court's surcharge of $1.9 million, plus the corresponding award of interest. judgment in all other respects. BACKGROUND In 1989, Bethine Alberding created the trust naming her three daughters--Cartwright, Mohr, and Melissa A. Moore --as beneficiaries and her son-in-law C. Tucker Moore as the Trustee. The trust's terms required C. Tucker Moore to "distribute the trust estate, as then constituted," to the beneficiaries upon Alberding's death. The trust also granted Moore the power to We affirm the circuit court's

"make full distribution or division of the trust in cash or in kind or in both." When Alberding died on December 23, 1993, the trust's assets 4

No. 1-07-1651 included approximately 50 commercial properties across the country. Nearly all of the properties were owned by closely held The various

corporations whose stock was also held by the trust.

corporations in the trust made a series of loans to each other during Alberding's lifetime, creating a complex web of debts. The parties do not contest that Moore was required to begin closing out the estate in May 1997, when the Internal Revenue Service (IRS) issued a closing letter, indicating that the trust's estate taxes had been paid. The trust's corpus included the Occidental stock. Occidental's only asset was the Captain Bartlett Inn, located in Fairbanks, Alaska. Although the Captain Bartlett was appraised

at $8 million near the time of Alberding's death, it was not producing cash flow and had more than $3 million in long-term debt. While Moore distributed most of the trust's assets in a The

timely fashion, he did not distribute Occidental's stock. Captain Bartlett's value began to decline sharply.

When Moore

attempted to sell the hotel in 2004, he could only secure a purchase offer of $3.8 million. because Cartwright objected. Another asset in the trust was Alberding's former home. a letter dated May 15, 1997, Moore informed the beneficiaries that he would sell Alberding's home at the earliest opportunity. 5 In The sale was not completed

No. 1-07-1651 None of the beneficiaries responded to the letter. Alberding's home in June 1998 for $690,000. The Cartwright Suit Cartwright filed this suit in 2000 and filed a third amended complaint on March 14, 2002. In count I of her third amended Moore sold

complaint, Cartwright alleged that Moore breached his duty of loyalty by collecting a salary from many of the trust's closely held corporations and exacting excessive trustee fees, and sought recovery of that compensation. In count II, Cartwright alleged

that Moore wasted the trust's assets in violation of its terms by refusing to immediately distribute them upon Alberding's death. Count II included allegations that Moore refused to distribute the Occidental stock or sell the Captain Bartlett upon Alberding's death, allowing those assets to decline in value. Count II further alleged that Moore sold Alberding's home without the beneficiaries' approval for substantially less than its fair market value. Cartwright alleged that Moore's actions

constituted a breach of his fiduciary duty, which entitled her to recoup any legal fees collected by Moore's attorneys from the trust in connection with the defense of this suit. When

Cartwright died in 2003, her son Jay Cartwright was substituted as plaintiff as a special representative of her estate. The Mohr Suit 6

No. 1-07-1651 While the Cartwright suit was pending, beneficiary Beth Anne Mohr filed a two-count complaint against Moore on October 11, 2001. In count I of her amended complaint, Mohr alleged that

Moore breached the trust's terms by failing to distribute the trust's assets "as then constituted" upon Alberding's death and sought a mandatory injunction directing Moore to distribute the assets, including specifically the Occidental stock. In count

II, Mohr alleged that Moore breached his fiduciary duty to exercise reasonable business acumen by failing to renegotiate the interest rate on the Captain Bartlett's mortgage, causing damages. Sometime in late 2004, Cartwright joined the Mohr suit

as a coplaintiff and from that point forward fully participated in the litigation. On February 17, 2005, a judgment order was entered in the Mohr suit, directing Moore to distribute the trust's assets, including the Occidental stock, to the beneficiaries. The order

also granted Mohr's oral motion to dismiss without prejudice count II, the breach of fiduciary duty claim for which damages were sought. Additionally, in its order, the court retained

jurisdiction to adjudicate "the remainder of relief sought by the plaintiff Mohr *** including specifically her request that the Trustee C. Tucker Moore and his attorneys be barred from reimbursement of attorneys' fees, costs and expenses." 7 The order

No. 1-07-1651 contained a Supreme Court Rule 304(a) finding that there was no just cause for delay in an appeal. See 210 Ill. 2d R. 304(a).

Moore distributed the shares of Occidental in March 2005. On December 29, 2006, an agreed settlement order was entered in the Mohr suit settling the amount of legal fees to be paid from the Alberding trust's assets to the parties' attorneys. The

settlement order, while not included in the record, is attached to Cartwright's cross-appeal reply brief, which we take judicial notice of because it "fall[s] within the category of readily verifiable facts 'which are capable of "instant and unquestionable demonstration." ' [Citation.]" Hermesdorf v. Wu, In successive

372 Ill. App. 3d 842, 850, 867 N.E.2d 34 (2007).

paragraphs in the settlement order, the parties, including Cartwright, mutually released each other from any obligations arising from the Mohr suit "but excluding the claims asserted in Count II" (paragraph 11) and excluding "any liabilities or claims arising out of or in connection with the [Cartwright suit]" (paragraph 12). Judgment in the Cartwright Suit Although Moore raised res judicata arguments based on the Mohr suit in his amended answer to Cartwright's third amended complaint, and in a later motion for a directed finding, the circuit court proceeded to judgment on the merits. 8 On November

No. 1-07-1651 28, 2006--nearly two years after the Mohr court found that trustee Moore was required to distribute the trust's assets in its February 17, 2005, order--the circuit court in the Cartwright suit entered a judgment order also finding that Moore was required to distribute the trust's assets, an obligation triggered by a May 1997 IRS closing letter indicating that the trust's estate taxes had been paid. For his failure to

distribute the Occidental stock, the court found Moore liable for a surcharge of $1.9 million. The surcharge was based upon the

decline in value of the Captain Bartlett from $5.7 million, as measured by the appraisal nearest in time to the IRS closing letter, to $3.8 million, the amount of the 2004 purchase offer. The circuit court also found Moore liable for a surcharge of $135,000 for his "unauthorized distribution" of Alberding's home, the difference between the sale price and an expert opinion of its fair market value. The circuit court awarded prejudgment The court denied

interest to Cartwright on both awards.

Cartwright's claims seeking reimbursement of the salary and legal fees paid to Moore and his attorneys from the trust. Moore filed a posttrial motion to vacate the judgment. On

June 14, 2007, the circuit court modified its November 28, 2006, order and vacated the surcharge based on the sale of Alberding's home. However, the circuit court upheld the $1.9 million Captain 9

No. 1-07-1651 Bartlett award plus prejudgment interest. Cartwright timely cross-appeals. ANALYSIS Moore's Appeal In his appeal, Moore asserts a number of challenges to the surcharge judgment entered against him. His first contention is Moore timely appeals;

that the judgment order entered in the Mohr suit on February 17, 2005, bars subsequent litigation between the same parties on res judicata grounds. If res judicata was triggered by the Mohr

judgment, then the judgment order in this case of November 28, 2006, was barred. We agree. Because we find this dispositive of

all issues Moore raises on appeal, we address this issue only. Under the doctrine of res judicata, "a final judgment on the merits by a court of competent jurisdiction acts as a bar to a subsequent suit between the parties involving the same cause of action." River Park, Inc. v. City of Highland Park, 184 Ill. 2d "Res judicata promotes judicial

290, 302, 703 N.E.2d 883 (1998).

economy by requiring parties to litigate in one case all claims arising out of the same group of operative facts. [Citation.]

The doctrine applies to not only what was decided in the first actions, but also 'those matters that could have been decided in that suit.' " Mann v. Rowland, 342 Ill. App. 3d 827, 834, 795

N.E.2d 924 (2003), quoting River Park, Inc., 184 Ill. 2d at 302. 10

No. 1-07-1651 Three requirements must be met to trigger res judicata: (1) a final judgment on the merits rendered by a court of competent jurisdiction; (2) an identity of parties or their privies; and (3) an identity of cause of action. 2d at 302. River Park, Inc., 184 Ill.

While River Park, Inc. speaks in terms of a bar to a

"subsequent suit between the parties" (184 Ill. 2d at 302), Cartwright does not dispute that her pending suit at the time is the equivalent of a "subsequent suit." Nor can a credible

argument be made for a contrary position because the controlling issue is whether the two causes of action are the same for res judicata purposes. For that determination, we look to whether

the three requirements of the doctrine of res judicata have been satisfied. See Schnitzer v. O'Connor, 274 Ill. App. 3d 314, 323,

653 N.E.2d 825 (1995) (shareholder derivative suit barred by earlier shareholder derivative suit against the same defendants alleging the same breach of duties; petition seeking to vacate dismissal of second suit did not allege meritorious claim where first suit, pending on appeal, "acted as res judicata as to the plaintiff's complaint"). Res Judicata Requirements The obvious being recognized, the parties do not dispute that the third requirement of res judicata, identity of the parties, has been met in this case. 11

No. 1-07-1651 Given that there is identity of the parties and in light of the nature of the complaints filed by sisters and cobeneficiaries of the Alberding trust against trustee Moore, each contesting the manner in which he carried out his duties as trustee, it would seem difficult, if not impossible, to avoid a conclusion that the second requirement of res judicata has also been met. Nonetheless, Cartwright contends, according to her

brief, that "the claims and relief sought do not arise out of the same operative facts." Rather than address how the operative facts differ that gave rise to the two complaints, Cartwright asserts in her brief "the damage claim [voluntarily dismissed] in Mohr related only to the damages arising out of the trustee's breach of fiduciary duty with respect to one specific asset in the trust, whereas the damages claim in the [Cartwright] case is based on the damages caused by the failure of the trustee to distribute all assets in the trust, which were substantially greater than the one asset at issue in the Mohr proceeding." While the claims and relief sought in each suit may have differed in scope, we find no credible basis for Cartwright to carve out a distinct and independent cause of action given the central contention that the Cartwright and Mohr suits necessarily shared: trustee Moore's alleged mishandling of the Alberding 12

No. 1-07-1651 trust. "A cause of action consists of a single group of facts

giving the plaintiff a right to seek redress for a wrongful act or omission of the defendant. [Citation.] Although a single

group of operative facts may give rise to the assertion of more than one kind of relief or more than one theory of recovery, assertions of different kinds or theories of relief arising out of a single group of operative facts constitute but a single cause of action. [Citation.]" Torcasso v. Standard Outdoor

Sales, Inc., 157 Ill. 2d 484, 490-91, 626 N.E.2d 225 (1993). That the second requirement has been met here is beyond question. Finally, according to Cartwright, the first requirement of a final judgment on the merits cannot be shown because the date and language in the Mohr judgment preclude such a finding. As made

clear at oral argument by counsel for Cartwright, because the damages claim set out in count II in the Mohr suit was voluntarily dismissed without prejudice in the order of February 17, 2005, granting injunctive relief to Mohr and Cartwright, and that order left unresolved the issue of "reimbursement of attorneys' fees, costs and expenses incurred in defending this action," it necessarily follows that "there was never a final judgment on the damages claim in Mohr." According to Cartwright,

"those claims were still pending as of the date of the judgment on the instant 2000 Cartwright case [when it] was entered [on 13

No. 1-07-1651 November 28, 2006]." position. There is no "race to judgment" consideration to preclude a finding of a "final judgment on the merits" in assessing the first requirement of res judicata. This is so because the reach Once again, we reject Cartwright's

of res judicata extends not only to the claims that were adjudicated, but to " 'those matters that could have been decided in that suit.' " Mann, 342 Ill. App. 3d at 834, quoting River We understand Cartwright to

Park, Inc., 184 Ill. 2d at 302.

concede as much in her answer to trustee Moore's affirmative defense of res judicata: "[Cartwright] admits that the judgment in [the Mohr suit] does in fact bar certain elements of this case based upon the Doctrine of Res Judicata, since the claims involving any delay in distribution and failure to distribute the assets of the Trust have already been adjudicated by final judgment." The Cartwright suit began a year before the Mohr suit was filed. Each sister's suit, seeking to enforce the terms of The

trust, would necessarily impact the other beneficiaries. benefit to Cartwright that would flow from a successful

prosecution of the Mohr suit became a matter of her own control when she intervened in Mohr's suit as co-plaintiff. Once

Cartwright became a plaintiff in Mohr's suit, res judicata 14

No. 1-07-1651 compelled Cartwright, no less so than Mohr herself, to litigate all her claims against trustee Moore in that same suit.1 "Res

judicata *** requir[es] parties to litigate in one case all claims arising out of the same group of operative facts." Mann, 342 Ill. App. 3d at 834. We have already determined that the Mohr suit and the Cartwright suit shared the same group of operative facts. We are

presented with no authority that supports the proposition that the unresolved damages count in the Mohr suit, allows Cartwright to avoid the third requirement, "final judgment on the merits," on the reasoning that a judgment order is not rendered "final" because the plaintiff chooses to voluntarily dismiss a count, while a final judgment is entered on another count. We read our

supreme court's decision in Rein barring "a litigant from splitting a single cause of action into more than one proceeding," to apply whether the litigation be successive or

1

When Cartwright joined Mohr in her suit, it would appear

the Cartwright suit was subject to dismissal under section 2619(3) of the Code of Civil Procedure. 735 ILCS 5/2-619(3) (West

2002) ("another action pending between the same parties for the same cause"). Because neither party informs us how this section

might impact the issue before us, we offer nothing further. 15

No. 1-07-1651 concurrent. Rein v. David A. Noyes & Co., 172 Ill. 2d 325, 339,

665 N.E.2d 1199 (1996). We discern no difference between a plaintiff attempting to split his claims into separate suits to be adjudged in succession, and an intervening plaintiff, proceeding to judgment on co-plaintiff's count of choice while voluntarily dismissing the remaining count, seeking to avoid the res judicata bar based on a claim that the settled suit left certain claims unresolved. We conclude a party is prohibited from pursuing still pending litigation, when earlier litigation and the still pending litigation constitute, for purposes of res judicata, the same cause of action. Rein, 172 Ill. 2d at 339. The first

requirement for res judicata has also been met here. Exceptions to Res Judicata That the February 17, 2005, judgment order entered in the Mohr suit meets all three requirements for res judicata application does not end our analysis. Cartwright contends the

doctrine of res judicata may be avoided here based on two of the six exceptions to res judicata noted by our supreme court in Rein. "[T]he rule against claim-splitting does not apply to bar an independent claim of part of the same cause of action if: (1) the parties 16

No. 1-07-1651 have agreed in terms or in effect that plaintiff may split his claim or the defendant has acquiesced therein; and (2) the court in the first action expressly reserved the plaintiff's right to maintain the second action ***." Rein, 172 Ill. 2d at 341,

citing Restatement (Second) of Judgments,

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