BEFORE THE ILLINOIS POLLUTION CONTR~~?VED

PEOPLE OF THE STATE OF ILLINOIS,

)

CLERK’S orrrct

)

JUN1SZOO3

Complainant,

STATE OF IWNOIS

Pnflutáon Control Board

vs.

)

PCWNb. 00-104

(Enforcement)

THE HIGHLANDS, LLC, an Illinois limited

)

liability corporation, and

MURPHY

FARMS,

INC., (a division of MURPHY-BROWN, LLC,

)

a North Carolina limited liability corporation,

)

and SMITHFIELD FOODS, INC., a Virginia

corporation).

)

)

Respondents.

)

)

RESPONDENT THE HIGHLANDS, LLC

MOTION FOR SUMMARY JUDGMENT

ON COUNT I OF THE AMENDED COMPLAINT

COMES NOW the Respondent, The Highlands LLC, by its attorneys,

Harrington, Tock & Royse, and, pursuant to Title 35 Illinois Administrative Code

Section 101.516, respectfully moves the Pollution Control Board for entry of

summary judgment in favor of The Highlands, LLC and against the People of the

State of Illinois on Count I of the Amended Complaint and, in support thereof,

states as follows:

1. Count I of the Amended Complaint alleges that The Highlands has

allowed offensive odors to emanate from its hog facility and has

hereby caused air pollution in violation of Sec. 9(a) of the

Environmental Protection Act.

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2. “Air pollution” is defined, in part, as “the presence in the atmosphere

of one or more contaminants in sufficient quantities and of such

characteristics and duration as to

...

unreasonably interfere with the

enjoyment of life or property.” (415 ILCS 5/3.02.) If there is no

interference, there is no air pollution.

3. Whether or not an odor “unreasonably” interferes with the enjoyment

of life or property is to be determined by the Board pursuant to 415

ILCS 5/33(c).

4. Although the Illinois Attorney General has brought this action on

behalf of the People of the State of Illinois, the Complaint only

identifies one specific residence that is “experiencing odors at an

intensity and frequency that interfere with the enjoyment of their

home.” (Paragraph 82 of the Amended Complaint.) That residence is

the residence of Roy and Dianne Kell. (See paragraph 44 of the

Amended Complaint.)

5. The Kells filed a complaint against The Highlands and Murphy Family

Farms, Inc. in the Circuit Court of Knox County on October 22, 1999,

two months before this action was filed by the Attorney General. (The

first page of that Complaint showing the Circuit Clerk’s filed date

stamp of October 22, 1999 is attached as Exhibit “A-I”.) The Kells

alleged that, as a result of the noxious and offensive odors generated

by The Highlands hog facility, the Kells were no longer able to enjoy

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and live at their residence as they had before the facility began

operating. The Kells alleged that odors were anuisance because they

resulted from The Highlands negligent violation of the prohibition

against air pollution as set forth at 415 ILCS 5/9(a) and failed to utilize

or employ adequate odor control methods in the handling of the swine

waste and waste water so as to not cause air pollution in violation of 35

Illinois Administrative Code 501.402(c)(3). The Kells also alleged that

they suffered personal injury as a result of the odors from the hog

facility. Those personal injuries alleged to have been sustained by the

Kells included headaches, nausea, difficulty breathing, and “other

substantial and material annoyance and inconvenience”. The Kells

sought both money damages and an order that would require The

Highlands to abate the “generation and creation of noxious and

offensive odors which regularly and frequently permeate the air in and

around Plaintiff’s residence and yard.” A certified copy of the Kells

Second Amended Complaint is attached hereto and made a part hereof

Exhibit “A”.

6. Upon Joint Motion and Stipulation to Dismiss and upon entry of the

Order dated March 11, 2002, the Kells’ Second Amended Complaint

against The Highlands was dismissed with prejudice. Certified copies

of the Joint Motion and Stipulation to Dismiss and Order are attached

hereto and made a part hereof as Exhibits “B” and “C”, respectively.

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7. The Joint Motion And Stipulation To Dismiss (Exhibit “B”) states that

all issues among the parties have been fully resolved, compromised,

and settled.

8. This dismissal of the Kells’ Second Amended Complaint with

prejudice pursuant to a settlement agreement was an adjudication on

the merits.

9. The Illinois Attorney General is barred by

res judicata

from pursuing

this enforcement action against The Highlands based upon any alleged

unreasonable interference with the Kells’ enjoyment of life and

property arising out of odors originating from The Highlands’ hog

facility.

10. Alternatively, if the Attorney General is not so barred by

resjudicata,

hog odors that originate from The Highlands have not interfered with

the Kells’ enjoyment of life and property since March ii, 2002.

11. The Kells have not filed a complaint of any odor originating from The

Highlands that has interfered with their enjoyment of life or property

since January 2002.

12. Since March 11, 2002, the Kells have continued to live in the same

residence in which they resided when The Highlands commenced

operations in 1997. (See Affidavit of Douglas B. Baird attached hereto

and made a part hGsof.)

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13. Alternatively, if odors that originated from The Highlands have

interfered with the Kells’ enjoyment of life and property since March

11, 2002, that interference has notbeen unreasonable.

14. In order to determine if interference is not unreasonable, the Board

must consider the five factors set forth in Sec. 33(c) to determine if such

interference is unreasonable.

15. The first factor under 33(c) is the character and degree of injury to or

interference with the protection of the health, general welfare and

physical property of the people.

16. The only “people” identified in the Amended Complaint to be

“experiencing odors at an intensity and frequency that interfere with

the enjoyment of their home” are the Kells.

17. The Kells have settled their own action against The Highlands, they

have continued to reside in the same location since the settlement, and

they have made no complaints of odors originating from The

Highlands since January 2002.

18. There is no genuine issue of material fact that odors from The

Highlands have not interfered with the Kells health, general welfare

and physical property since January 2002.

19. The second factor to be considered under 33(c) is the social and

economic value of the pollution source.

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20. The Highlands employs 14 people full time. The Highlands paid

wages and salaries to its employees totaling $392,716.00 in 2002. (See

Affidavit of Douglas Baird.)

21. Most of the employees of The Highlands are local residents who reside

in Knox County. The wages and salaries that are paid to the

employees of The Highlands are spent locally by the employees and go

back into the county economy. (See Affidavit of Douglas Baird.)

22. The annual operating expenses for 2002 for The Highlands totaled

$1,354,915.00. Much of the annual operating expenses of The

Highlands are spent locally within the county and go into the county

economy. (See Affidavit of Douglas Baird.)

23. The Highlands will pay real estate taxes in Knox County this year

totaling $37,863.44 arising out of this facility. Of that amount,

$19,270.29 will be paid to the local school district. (See Affidavit of

Douglas Baird.)

24. This Board has established the following policy:

“a) It is the purpose of the General Assembly in adopting

the Environmental Protection Actto restore, maintain and

enhance the purity of the air and waters of Illinois in order

to protect health, welfare, property and the quality of life.

An adequate supply ofhealthy livestock is essential to the

well-being of Illinois citizens and the nation. They provide

the daily source of meat, milk and eggs. Their efficient,

economic production must be the concern of both producers

and consumers if we are to have a continued abundance of

high quality, wholesome food and of other livestock

products at reasonable prices. The policy shall be to

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establish regulations that will provide a balance between a

wholesome environment and the efficient production of

adequate livestock products.”

25. There is no social or economic value in closing The Highlands.

26. There is no genuine issue of material fact that the second factor favors

The Highlands.

27. The third factor to be considered under 33(c) is the suitability or

unsuitability of the pollution source to the area in which it is located,

including the question of priority of location in the area involved.

28. The Highlands is located in Elba Township, Knox County. The closest

community is Williamsfield, which is located three miles north of The

Highlands facility in Truro Township. (See Affidavit of Douglas

Baird.)

29. As shown on the residential directory for Elba Township and for Truro

Township, those townships are sparsely populated except for

Williamsfield. Within a two mile radius of The Highlands, there are

less than three residences per square mile. (See Affidavit of Douglas

Baird.)

30. As shown on the zoning map of Elba Township, the entire 36 square

miles of Elba Township is zoned “F” for farming exceptfor a portion

of Section 6 of that Township. (See Affidavit of Douglas Baird.)

31. As shown by the zoning map of Truro Township, almost the entire

township is zoned either “F” for farming or “C” for conservation along

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the Spoon River, exceptfor the community of Williamsfield. (See

Affidavit of Douglas Baird.)

32. The Galesburg/Knox County 1999 Comprehensive Plan contains

information as to the type of land use within the county. According to

that comprehensive plan, 95 of the county is in cropland, grassland

and forest and only 2 of the county is in urban or built-up land. (See

Affidavit of Douglas Baird.)

33. According to the Illinois Agricultural Statistics 2002 Annual Summary

prepared by the Illinois Agricultural Statistics Service, Knox County

produced 126,900 hogs in 2001. That volume of production ranked

Knox County sixth in the state in hog production. (See Affidavit of

Douglas Baird.)

34. There is no genuine issue of a material fact that the third factor favors

The Highlands.

35. The fourth factor under 33(c) is the technical practicability and

economic reasonableness of reducing or eliminating the emissions,

discharges or deposits resulting from such pollution source.

36. In paragraph 83 of the Amended Complaint, the Complainant suggests

various alternatives to reduce the odor intensity from the existing

facilities. Those suggested alternatives include the following: (a)

provide a cover for the first two lagoons; (b) capture and flare gas

from the entire waste management system; (c) provide a cover for the

$

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first three lagoons; (d) replace thefirst lagoon with an anaerobic

digester; (e) replace all three of the first lagoons with an anaerobic

digester; (f) provide for twice weekly draining of the under floor

manure storage pits and refilling with odor free water with a dissolved

oxygen concentration in excess of 2.0 mg/I; (g) provide adequate

filtration for exhaust air generated at the building; (h) reduce the

population of the hogs.

37. The Complainant has not alleged that any of the above alternatives is

either technically practicable or economically reasonable.

38. Mr. Doug Baird of The Higlands has reviewed the alternatives

suggested by the Complainant in paragraph 83. In Mr. Baird’s

opinion, none of the proposed alternatives are technically practicable

and economically reasonable. (See Affidavit of Douglas Baird.)

39. In the opinion of Mr. Doug Baird, The Highlands is doing all that it can

in the area of odor management that is technically practicable and

economically reasonable.

40. There is no genuine issue of material fact that the fourth factor favors

The Highlands.

41. The fifth factor to be considered under 33(c) is any subsequent

compliance.

42. Mr. Doug Baird has stated in his Affidavit the improvements that have

been made by The Highlands to reduce odors.

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43. The Kells settled their action against The Highlands and continue to

reside ¾mile from The Highlands without complaint.

44. There is no genuine issue of material fact that the fifth factor favors

The Highlands.

45. Not all five factors under Sec. 33(c) need be found in the movant’s

favor.

46. There is no genuine issue of material fact that most, if not all, of the

five factors favor The Highlands.

WHEREFORE, The Highlands prays that:

(1) This Board determine that the Complainant is barred by the doctrine

of

res judicatcz

from pursuing any complaint against The Highlands

arising out of complaints by either Roy Kell and/or Dianne Kell or

utilizing any testimony by either Roy and/or Dianne Kell in support

of any alleged violation of any statute or regulation pertaining to or

applicable to odors, whether past, present or future, originating from

The Highlands hog facility.

(2) This Board enter summary judgment in favor of The Highlands and

against the Complainant on Count I as a result of the Complainant

being barred by

res judicata

from pursuing Count I as pled.

(3) In the alternative, if the relief requested above is denied, this Board

enter partial summary judgment in favor ofThe Highlands on Count I

for that period of time commencing March 11, 2002 forward for the

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reason that either (a) no odor(s) that originated from The Highlands

has (have) interfered with the Kells’ enjoyment of their life or property

since March 11, 2002 or (b) if there has been interference since that

time, such interference has not been unreasonable.

The Highlands L.L.C. by its

attorneys, Harrington, Tock &

Royse

BY:

&ea

e YjTock

~Im2

Prepared by:

Jeffrey W. Tock

Harrington, Tock & Royse

201 W. Springfield Avenue, Suite 601

P.O. Box 1550

Champaign, IL 61824-1550

Telephone: (217) 3524167

vib/Complain.jeI/2003fHighlands-Mtnsunmijdgmt

11

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“EXHIBIT A”

Kell vs. The Highlands, L.L.C. and Murphy Family Farms

99-L-62

Second Amended Complaint

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IN THE CIRCUIT COURT OF THE NINTH JUDICIAL CIRCUIT OF ILLINOIS

KNOX COUNTY

ROY KELL and

DIANNE KELL,

Plaintiffs,

vs.

)

CaseNo. 99L62

THE HIGHLANDS, L.L.C.,and

)

F I L E D

MURPHY FAMILY FARMS, INC.

)

KNOXCO.,IL

Defendants.

)

JUN 0

MARY M. STEIN

SECOND ABENDED COMPLAINT

plaintiffs,

ROY KELL and DIANNE KELL, by their

attorneys,

KINGERY DURREE

WAKEMAN &

RYAN, ASSOC., for their cause of action

against the Defendant,

THE HIGHLANDS, L.L.C.

(hereinafter

“HIGHLANDS”),and MURPHY FAMILY FARI’4S, INC. (hereinafter “MURPHY”),

state as follows:

COUNT I

(Nuisance-Negligence-Civil Damages)

1. In 1990 Plaintiffs moved into the residence located at

1097 Knox Road 220 East in Knox County, Illinois, and have lived

there continuously to the present date.

2. In December 1997, Defendant began operating a large

scale, industrial hog-raising facility located approximately one—

quarter mile directly to the west of Plaintiff’s residence; said

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facility is also located in Knox

County,

Illinois.

3. In the spring of 1998, noxious odors and fumes began

entering and permeating the air in Plaintiffs’ yard, residence and

the land to the west of Defendant’s hog facility.

4. The noxious and offensive odors that emanate from

Defendant’s hog facility result from the substantial quantities of

fecal waste generated by the hogs therein and the chemicals

utilized by Defendant during the regular course of operation of the

facility.

5. That prior to the construction and beginning of operations

of Defendant’s large scale, industrial hog-raising facility, the

property upon which the facility was constructed had been used for

grain growing, specifically corn, hay and beans.

6. There are generally at least 3500 pigs present in

Defendant’s facility, which generate daily thousands of gallons of

fecal waste which is drained from the facility into four wastewater

lagoons adjacent to the buildings which house the hogs.

7. The lagoons are uncovered and allow the odors from the

swine waste and wastewater to enter the air and travel to

Plaintiffs’ residence downwind of the facility.

8. The building which houses the hogs has several vent fans

which point directly to the east, which operate to force the fumes

and odors from hogs into the air toward Plaintiffs’residence

downwind of the facility.

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9. By virtue of the number of hogs in Defendant’s facility,

extremely substantial quantities of solid swine waste sludge

accumulate in Defendant’s waste lagoon. That swine waste sludge is

transported by Defendant’s employees or agents from the facility to

other fields in close proximity to Plaintiff’s residence and

generates noxious dust, and noxious and offensive odors.

10. The swine waste water from the waste lagoons at

Defendant’s’s facility is sprayed via an irrigation unit on the

property immediately west of Defendant’s facility, which causes

noxious particles of the wastewater to accumulate on the windows of

Plaintiffs residence, their automobile and other possessions, in

addition to generating noxious and offensive odors.

11. In the late spring and summer months of 1998, the noxious

and offensive odors generated by Defendant’s hog facility began to

regularly and frequently permeate the air in and around Plaintiff’s

yard and residence, and have continued to do so to the present

date.

12. That as a result of the noxious and offensive odors

generated by Defendant’s hog facility Plaintiffs are no longer able

to enjoy and live at their residence as they had before the

facility began operating; Plaintiffs for example:

(a) cannot leave the windows in their residence open at

night;

(b) cannot leave the windows in their house open when they

leave the home;

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(c)

cannot hang clean clothes to dry on an outdoor line;

(d) do

not entertain friends or guests in their yard or at

their home;

Ce) cannot eat with windows open;

(f) must run their air conditioning in their house and

vehicle to remove odors; and

(g) have been required to alter and change numerous aspects

of the daily affairs of life.

13. That Plaintiffs’ furniture and curtains in their

residence, upholstery in their vehicle and clothes regularly and

frequently absorb the noxious and offensives odors generated by

Defendant’s hog facility, requiring that these items either be

cleaned or discarded.

14. That the noxious and offensive odors generated by

Defendant’s hog facility which permeate the air in and around

Plaintiff’s residence and yard constitute an unreasonable and

substantial invasion of Plaintiffs’ use and enjoyment of their

residence and

yard.

15. That

Defendant’s operation of the hog facility is

negligent in one or more of the following respects, in that it.

a. Causes the discharge or emission of contaminants into

the environment so as to cause or tend to cause air

pollution, in violation of 415 ILCS 5/9(a) (1998);

b. Fails to utilize or employ adequate odor control

methods in the handling of the swine waste, and

wastewater so as to not cause air pollution, in violation

of 35 Ill. Adrn. Code 501.402(c) (3) (1998);

c. Disregarded in construction regulatory set-back

requirements recommending at least one-half mile between

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the facility and in

residential homes, as Plaintiffs’

residence

is only one-quarter

(1/4)

mile from the

facility;

d. Maintains an extremely large number of hogs in the

facility which generate a substantial volume of waste in

a manner that cause the noxious and offensive odors to

permeate the air regularly in and around Plaintiffs’

residence and yard;

e. Was constructed, and operations undertaken though

Defendant knew, or in the exercise of reasonable care

should have known, that substantial and regular noxious

and offensive odors and fumes would be produced by the

thousands of hogs regularly raised and present in the

facility and their large volume of fecal waste and

wastewater.

16. That since noxious and offensive odors generated by

Defendant’s hog facility began regularly and frequently permeating

the air in and around Plaintiff’s residence and yard, Plaintiffs

have been forced to incur substantial additional utility costs for

the increased use of the air conditioning system in the residence,

additional costs for their furniture, curtains and the upholstery

in their residence, and will in the future be forced to incur

substantial additional costs for damage to their personal property

and for an alternative residence to their current home.

WHEREFORE, Plaintiffs, ROY KELL and DIANNE KELL, pray for

judgment against the Defendant, THE HIGHLANDS, L.L.C., in an amount

in excess of FIFTY THOUSAND DOLLARS ($50,000), plus their costs of

suit.

PLAINTIFFS DEMAND TRIAL BY JURY.

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COUNT II

(Nuisance- -Negligence- -Personal

Injury)

1-15.

Plaintiff, ROY KELL, repeats and realleges the

allegations of Paragraphs 1-15 of Count I as and for

Paragraphs

1-15 of Count II, as though fully set forth herein.

16.

That as a result of Defendant’s operation of the hog

facility,

Plaintiff, ROY

KELL

has suffered, and will in the

future suffer, personal injury, specifically pain and suffering,

including headaches, nausea, difficulty breathing, and other

substantial and material annoyance and inconvenience, as well as

the substantial impairment of their normal activities of daily

living.

WHEREFORE, Plaintiff, ROY KELL, prays for judgment against

the Defendant, THE HIGHLANDS, L.L.C., in an amount in excess of

FIFTY THOUSAND DOLLARS ($50,000), plus their costs of suit.

PLAINTIFF DEMAND TRIAL

BY

JURY.

couwr in

(Nuisance- -Negligence- -Personal Injury)

1-15.

Plaintiff, DIANNE KELL, repeats and realleges the

allegations of Paragraphs 1-15 of Count I as and for Paragraphs

1—is of Count III, as though fully set forth herein.

16. That as a result of Defendant’s operation of the hog

facility, Plaintiff, DIANNE KELL has suffered, and will in the

6

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future suffer, personal injury, specifically pain and suffering,

including headaches, nausea, difficulty breathing, and other

substantial and material annoyance and inconvenience, as well as

the substantial impairment of their normal activities of daily

living.

WHEREFORE, Plaintiff, DIANNE KELL, pray for judgment against

the Defendant, THE HIGHLANDS, L.L.C., in an amount in excess of

FIFTY THOUSAND DOLLARS ($50,000), plus their costs of suit.

PLAINTIFF DEMAND TRIAL BY JURY.

COUNT IV

(Nuisance-

-Negligence- -Abatement)

1-16. Plaintiffs repeat and reallege the allegations of

Paragraphs 1-16 of Count I as and for Paragraphs 1-16 of Count IV,

as though fully set forth herein.

17. Plaintiffs repeat and reallege the allegations of

Paragraphs 16 of Count II and III as and for the allegations of

Paragraph 17 of Count IV, as though fully set forth herein.

18. The Plaintiffs do not have an adequate remedy at law and,

therefore, abatement of the noxious and offensive odors generated

by Defendant’s hog facility is proper.

WHEREFORE, Plaintiffs, ROY KELIL and DIANNE KELL, pray for the

entry of an Order requiring Defendant, THE HIGHLANDS, L.L.C., to

abate the generation and creation of noxious and offensive odors

which regularly and frequently permeate the air in and around

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Plaintiffs’

residence and yard, and pray for their costs of suit.

PLAINTIFFS DEMAND TRIAL BY JURY.

Count

V

(Nuisance-Intentional- -Civil Damages)

1-14. Plaintiffs repeat and reallege Paragraphs 1-14 of

Count I as and for Paragraphs 1-14 of Count V.

15. That Defendant’s operation of the hog facility is

intentional in one or more of the following respects, in that

Defendant knew:

a. That due to the extremely large number of hogs to be

contained and raised at the facility, substantial

noxious and offensive odors and fumes would be

generated regularly by its operation;

b. That the operation of the venting system on the

facility would generate substantial and regular noxious

and offensive odors and fumes;

c. That the maintenance and handling of the swine

waste and wastewater lagoons would generate substantial

and regular noxious and offensive odors and fumes;

d. That spraying of swine wastewater and the

transporting and spreading of swine waste sludge would

generate substantial and regular noxious and offensive

odors and fumes.

16. That since noxious and offensive odors generated by

Defendant’s hog facility began regularly and frequently

permeating the air in and around Plaintiff’s residence and yard,

Plaintiffs have been forced to incur substantial additional

utility costs for the increased use of the air conditioning

system in the residence, additional costs for their furniture,

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curtains and the upholstery in their residence, and will in the

future be forced to incur substantial additional costs for damage

to their personal property and for an alternative

residence to

their current home.

WHEREFORE, Plaintiffs, ROY 1CELL and DIANNE KELL, pray for

judgment against the Defendant, THE HIGHLANDS, L.L.C., in an

amount in excess of FIFTY THOUSAND DOLLARS ($50,000), plus their

costs of suit.

PLAINTIFFS

DEMAND TRIAL

BY

JURY.

COUNT

VI

(Nuisance- -Intentional- -Personal Injury)

1-15.

Plaintiff, ROY KELL, repeats and realleges the

allegations of Paragraphs 1-15 of Count V as and for Paragraphs 1-

15 of Count VI, as though fully set forth herein.

16. That as a result of Defendant’s operation of the hog

facility,

Plaintiff,

ROY KELL has suffered, and will in the future

suffer, personal injury, specifically pain and suffering, including

headaches, nausea, difficulty breathing, and other substantial and

material annoyance and inconvenience, as well as the substantial

impairment of their normal activities of daily living.

WHEREFORE, Plaintiff, ROY KELL, pray for judgment against the

Defendant, THE HIGHLANDS,

L.L.C., in an amount in excess of FIFTY

THOUSAND DOLLARS ($50,000), plus their costs of suit.

PLAINTIFF

DEMAND TRIAL

BY

JURY.

9

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COUNT

VII

(Nuisance- -Intentional- -Personal

Injury)

1-15.

Plaintiff,

DIANNE KELL, repeats and realleges the

allegations

of Paragraphs 1-15 of Count V as and for Paragraphs 1-

15 of Count VII, as though fully set forth herein.

16. That as a result of Defendant’s operation of the hog

facility, Plaintiff, DIANNE KELL has suffered, and will in the

future suffer, personal injury, specifically pain and suffering,

including headaches, nausea, difficulty breathing, and other

substantial and material annoyance and inconvenience, as well as

the substantial impairment of their normal activities of daily

living.

WHEREFORE, Plaintiff, DIANNE KELL, pray for judgment against

the Defendant, THE HIGHLANDS, L.L.C., in an amount in excess of

FIFTY THOUSAND DOLLARS ($50,000), plus their costs of suit.

PLAINTIFF DEMAND TRIAL BY JURY.

Count VIII

(Nuisance-Intentional- -Abatement)

1-16. Plaintiffs repeat and reallege Paragraphs 1-16 of

Count V as and for 1-16 of Count VIII.

17. Plaintiffs repeat and reallege the allegations of

Paragraph 16 of Counts VI and VII as and for the allegations of

Paragraph 17 of Count VIII, as though fully set forth herein.

18. The Plaintiffs do not have an adequate remedy at law

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and, therefore, abatement of the noxious and offensive odors

generated by Defendant’s hog facility

is proper.

WHEREFORE, Plaintiffs,

ROY KELL and

DIANNE KELL, pray for

the entry of an Order requiring Defendant, THE HIGHLANDS, L.L.C.,

to abate the generation and creation of noxious and offensive

odors which regularly and frequently permeate the air in and

around Plaintiffs’ residence and yard, and pray for their costs

of suit.

PLAINTIFFS DEMAND TRIAL BY JURY.

COUNT

IX

(Nuisance-Negligence-Civil Damages)

1. In 1990 Plaintiffs moved into the residence located at

1097 Knox Road 220 East in Knox County, Illinois, and have lived

there continuously to the present date.

2. In December 1997, HIGHLANDS began operating a large

scale, industrial hog-raising facility located approximately one-

quarter mile directly to the west of Plaintiff’s residence; said

facility is also located in Knox County, Illinois. The hogs raised

at the facility are owed and supplied by MURPHY and raised by

HIGHLAND exclusively for MURPHY.

3. In the spring of 1998, noxious odors and fumes began

entering and permeating the air in Plaintiffs’ yard, residence and

the land to the west of HIGHLAND hog facility.

4. The noxious and offensive odors that emanate from

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HIGHLANDS’ hog facility result from the substantial quantities of

fecal waste generated by the MURPHY hogs therein and the chemicals

utilized by HIGHLANDS during the regular course of operation of the

facility.

5. That prior to the construction and beginning of operations

of HIGHLANDS’ large scale, industrial hog-raising facility, the

property upon which the facility was constructed had been used for

grain growing, specifically corn, hay and beans.

6. There are generally at least 3500 hogs present in the

facility, which generate daily thousands of gallons of fecal waste

which is drained from the facility into tour wastewater lagoons

adjacent to the buildings which house the hogs.

7. The lagoons are uncovered and allow the odors from the

swine waste and wastewater to enter the air and travel to

Plaintiffs’ residence downwind of the facility.

8. The building which houses the hogs has several vent fans

which point directly to the east, which operate to force the fumes

and odors from hogs into the air toward Plaintiffs’ residence

downwind of the facility.

9. By virtue of the number of hogs in the facility, extremely

substantial quantities of solid swine waste sludge accumulate in

HIGHLANDS’ waste lagoon. That swine waste sludge is transported by

HIGHLANDS’ employees or agents from the facility to other fields in

close proximity to Plaintiffs’ residence, and generates noxious

12

---

dust, and noxious and offensive odors.

10. The swine waste water from the waste lagoons at the

facility is sprayed via an irrigation unit on the property

immediately west of the facility, which causes noxious particles of

the wastewater to accumulate on the windows of Plaintiffs’

residence, their automobile and other possessions, in addition to

generating noxious and offensive odors.

11. In the late spring and summer months of 1998, the noxious

and offensive odors generated by HIGHLANDS’ hog facility began to

regularly and frequently permeate the air in and around Plaintiff’s

yard and residence, and have continued to do so to the present

date.

12. That as a result of the noxious and offensive odors

generated by MURPHY’s hog at the HIGHLANDS’ facility Plaintiffs are

no longer able to enjoy and live at their residence as they had

before the facility began operating; Plaintiffs for example:

(a) cannot leave the windows in their residence open at

night;

(b) cannot leave the windows in their house open when they

leave the home;

Cc) cannot hang clean clothes to dry on an outdoor line;

Cd) do not entertain friends or guests in their yard or at

their home;

(e) cannot eat with windows open;

(f) must run their air conditioning in their house and

vehicle to remove odors; and

13

---

(g) have been required to alter and change numerous aspects

of the daily affairs of life.

13. That Plaintiffs’ furniture and curtains in their

residence, upholstery in their vehicle and clothes regularly and

frequently absorb the noxious and offensives odors generated by the

MURPHY hogs at the HIGHLANDS facility, requiring that these items

either be cleaned or discarded.

14. That the noxious and offensive odors generated by the

MURPHY hogs at the HIGHLAND facility which permeate the air in and

around Plaintiff’s residence and yard constitute an unreasonable

and substantial invasion of Plaintiffs’ use and enjoyment of their

residence and yard.

15. That MURPHY’s location, supply and provision of the

thousands of hogs to the HIGHLAND facility is negligent in one or

more of the following respects, in that it:

a. Causes the discharge or emission of contaminants into

the environment so as to cause or tend to cause air

pollution, in violation of 415 ILCS 5/9(a) (1998);

b. Prevents the utilization or employment of adequate

odor control methods in the handling of the swine waste,

and wastewater so as to not cause air pollution, in

violation of 35 Iii. Adm. Code 501.402(c) (3) (1998);

d. Causes an

extremely large number of hogs to be

present in the facility which generate a substantial

volume of waste in a manner that cause the noxious and

offensive odors to permeate the air regularly in and

around Plaintiffs’ residence and yard;

e. Was done when MURPHY knew, or in the exercise of

reasonable care should have known, that substantial and

regular noxious and offensive odors and fumes would be

14

---

produced by their thousands of hogs regularly raised and

present in the facility and their large volume of fecal

waste and wastewater.

16.

That since noxious and offensive odors generated by the

MURPHY hogs at HIGHLANDS’ facility began regularly and frequently

permeating the air in and around Plaintiffs’ residence and yard,

Plaintiffs have been forced to incur substantial additional utility

costs for the increased use of the air conditioning system in the

residence, additional costs for their furniture, curtains and the

upholstery in their residence, and will in the future be forced to

incur substantial additional costs for damage to their personal

property and for an alternative residence to their current home.

WHEREFORE, Plaintiffs, ROY KELL and DIANNE KELL, pray for

judgment against the Defendant, MURPHY FANILY FARMS, INC., in an

amount in excess of FIFTY THOUSAND DOLLARS ($50,000), plus their

costs of suit.

PLAINTIFFS DEMAND TRIAL BY JURY.

couwr

x

(Nuisance-

-Negligence- -Personal

Iniury)

1-15.

Plaintiff, ROY CELL, repeats and realleges the

allegations of Paragraphs 1-15 of Count IX as and for the

allegations of Paragraphs 1-15 of Count X, as though fully set

forth herein.

16. That as a result of Defendant’s

hogs at the HIGHLANDS

facility, Plaintiff, ROY

KELL has suffered, and will in the

15

---

future suffer, personal injury, specifically pain and suffering,

including

headaches, nausea,

difficulty breathing, and other

substantial and material annoyance and inconvenience, as well as

the substantial impairment of their normal activities of daily

living.

WHEREFORE, Plaintiff, ROY KELL, prays for judgment against

the Defendant, MURPHY FAMILY FARMS, INC., in an amount in excess

of FIFTY THOUSAND DOLLARS ($50,000), plus their costs of suit.

PLAINTIFF DEMAND TRIAL BY JURY.

COUNT XI

(Nuisance--Negligence- -Personal Injury)

1-15.

Plaintiff, DIANNE ICELL, repeats and realleges the

allegations of Paragraphs 1-15 of Count IX as and for the

allegations of Paragraphs 1-15 of Count XI, as though fully set

forth herein.

16. That as a result of Defendant’s hogs at the HIGHLANDS

facility, Plaintiff, DIANNE KELLI has suffered, and will in the

future suffer, personal injury, specifically pain and suffering,

including headaches, nausea, difficulty breathing, and other

substantial and material annoyance and inconvenience, as well as

the substantial impairment of their normal activities of daily

living.

WHEREFORE, Plaintiff, DIANNE KELL, pray for judgment against

the Defendant, MURPHY FAMILY FARMS, INC., in an amount in excess

16

---

of F±FTYTHOUSAND DOLLARS ($50,000), plus their costs of suit.

PLAINTIFF DEMAND TRIAL BY JURY.

COUNT XII

(Nuisance- -Negligence- -Abatement)

1-16. Plaintiffs repeat and reallege the allegations of

Paragraphs 1-16 of Count IX as and for Paragraphs 1-16 of Count

XII, as though fully set forth herein.

17. Plaintiffs repeat and reallege the allegations of

Paragraphs 16 of Count X and XI as and for the allegations of

Paragraphs 17 of Count XII, as though fully set forth herein.

18. The Plaintiffs do not have art adequate remedy at law and,

therefore, abatement of the noxious and offensive odors generated

by MURPHY’s hogs is proper.

WHEREFORE, Plaintiffs, ROY KELL and DIANNE KELL, pray for the

entry of an Order requiring Defendant, MURPHY FAMILY FARMS, INC.,

to abate the generation and creation of noxious and offensive odors

from their hogs which regularly and frequently permeate the air in

and around Plaintiffs’ residence and yard, and pray for their costs

of suit.

PLAINTIFFS DEMAND TRIAL BY JURY.

Count XIII

(Nuisance-Intentional- -Civil

Damages)

1-14. Plaintiffs repeat and reallege Paragraphs 1-14 of

Count IX as and for Paragraphs 1-14 of Count XIII.

15. That MURPHY’s supply, location and provision of the

17

---

hogs at the HIGHLAND facility is intentional

in one or more of

the following respects, in that Defendant knew:

a. That due to the extremely large number of hogs to be

contained and raised at the facility, substantial

noxious and offensive odors and fumes would be

generated regularly by its operation;

b. That the operation of the venting system on the

facility would generate substantial and regular noxious

and offensive odors and fumes;

c. That the maintenance and handling of the

substantial volume of swine waste and wastewater

lagoons would generate substantial and regular noxious

and offensive odors and fumes;

d. That

spraying

of swine wastewater and the

transporting and spreading of swine waste sludge would

generate substantial and regular noxious and offensive

odors and fumes.

16. That since noxious and offensive odors

generated by the

MURPHY

hogs at the HIGHLANDS’ facility began regularly

and

frequently permeating

the air in and around Plaintiffs residence

and

yard, Plaintiffs have been forced to incur substantial

additional utility costs for the increased use of the air

conditioning system in the residence, additional costs for their

furniture, curtains and the

upholstery in

their residence, and

will in the future be forced to incur substantial additional

costs for damage to their personal property and for an

alternative residence to their current home.

WHEREFORE, Plaintiffs, ROY KELL and DIANNE KELL, pray for

judgment against the Defendant, MURPHY FAMILY FARMS, INC., in an

18

---

amount in excess of FIFTY THOUSAND DOLLARS ($50,000), plus their

costs of suit.

PLAINTIFFS DEMAND TRIAL BY JURY.

Count XIV

(Nuisance-Intentional- -Personal

Injury)

1-15.

Plaintiff, ROY KELL, repeats and realleges the

allegations of Paragraph 1-15 of Count XIII as and for the

allegations of Paragraph 1-15 of Count XIV, as though fully set

forth herein.

16. That as a result of the foregoing conduct of MURPHY,

Plaintiff, ROY KELL has suffered, and will in the future suffer,

personal injury, including headaches, nausea, difficulty

breathing, and other substantial and material annoyance and

inconvenience, pain and suffering, as well as the substantial

impairment of their normal activities of daily living.

WHEREFORE, Plaintiff, ROY KELL, prays for judgment against

the Defendant, MURPHY FAMILY

FARMS, INC., in an amount in excess

of FIFTY THOUSAND DOLLARS ($50,000), plus their costs of suit.

COUNT XV

(Nuisance-Intentional-

-

Personal Injury)

1-15.

Plaintiff, DIANNE KELL, repeats and realleges the

allegations of Paragraph 1-15 of Count XIII as and for the

allegations of Paragraph 1-15 of Count XV, as though fully set

forth herein.

16. That as a result of the foregoing conduct of MURPHY,

19

---

Plaintiff, DIANNE KELL has suffered, and will in the future

suffer, personal injury, including headaches, nausea, difficulty

breathing, and other substantial and material annoyance and

inconvenience, pain and suffering, as well as the substantial

impairment of their normal activities of daily living.

WHEREFORE, Plaintiff, DIANNE KELL, prays for judgment

against the Defendant, MURPHY FAMILY FARMS,

INC.,

in an amount in

excess of FIFTY THOUSAND DOLLARS ($50,000), plus their costs of

suit.

Count XVI

(Nuisance-Intentional- -Abatement)

1-16. Plaintiffs repeat and reallege the allegations of

Paragraphs 1-16 of Count XIII as and for Paragraphs 1-16 of Count

XIV, as though fully set forth herein.

17. Plaintiffs repeat and reallege the allegations of

Paragraphs 16 of Counts XIV and XV as and for the allegations of

Paragraph 17 of Count XVI, as though fully set forth herein.

18. The Plaintiffs do not have an adequate remedy at law

and, therefore, abatement of the noxious and offensive odors

generated by MURPHY’s hogs at the HIGHLANDS’ facility is proper.

WHEREFORE, Plaintiffs, ROY KELL and DIANNE KELL, pray for

the entry of an Order requiring Defendant, MURPHY FAMILY FARMS,

INC., to abate the generation and creation of noxious and

offensive odors from their hogs which regularly and frequently

20

---

permeate the air in and around Plaintiffs’ residence and yard,

and pray for their costs of suit.

PLAINTIFFS DEMAND TRIAL BY JURY.

PHILIP M. O’DONNELL

KINGERY

DURREE WAKEMAN

&

RYAN, ASSOC.

416 Main Street, Suite 915

Peoria, IL 61602

(309) 676-3612

I

hereby certify this

to,.~

a

true and correct

copy.

Dated

QWln-L’

2’

20 03

KELL’~tHEESMAN

Ckurk qf4he CircuitCourt, j(nox County, illinois

By

(.-kj4tJ~

£ (7y7(I_flgp

Deputy

(-I

(SEAL)

ROY

KELL and DIANNE KELL,

Plaintiffs

By:

One of Their Attorneys

21

---

EXHIBIT “A-I”

First page of Kell vs. The Highlands, L.L.C. Complaint

Case No. 99-L-62 showing date stamp of October 22, 1999

---

IN

THE

CIRCUIT COURT OF

THE

NINTH

JUDICIAL CIRCUIT

OF ILLINOIS

KNOX COUNTY

ROY KELL and

)

DIANNE KELL,

)

Plaintiffs

F~LED

)

KNOX CO.

IL

vs.

)

Case No. 99L

________

z is~y

)

THE HIGHLANDS,

L.L.C.,

)

MARY

M.STL1U

Clerk ol

the Circuit Court

)

Deputy

Defendants.

)

.~•

..

Plaintiffs, ROY KELL and DIANNE KELL, by their Attorneys, K~NGERYDURREE

WAKEMAN & RYAN, ASSOC., for their cause of action against the Defendant,.

THE

HIGLANDS, L.L.C., state as follows:

COIJNTJ

(Nuisance/Property Damage)

1.

In 1990 Plaintiffs moved into the residence located at~1097 Knox Road 220 East

in Knox County, Illinois, and have lived here continuously to the present date.

2,

In December, 1997, Defendant began operating a large scale, industrial hog

raising facility located approximately one-quarter mile directly to the west of Plaintiff’s

residence; said facility is also located in Knox County, Illinois.

3.

In

the spring of 1998, noxious odors and fumes began entering

and permeating the

air in

Plaintiffs’ yard, residence and the land to the west ofDefendant’s hog facility.

4,

The noxious and offensive odors that emanate from Defendant’s hog facility result

from the substantial quantities of fecal waste generated by the hogs therein and the chemicals

utilized by Defendant during the regular course of operation of the facility.

---

EXHIBIT “B”

Kell vs. The Highlands, L.L.C., Case No. 99-L-62

Joint Motion And Stipulation To Dismiss

---

IN THE CIRCUIT COURT OF THE NINTH JUDICIAL CIRCUIT

DIANNE KELL,

Plaintiffs,

vs.

THE HIGHLANDS, L.L.C., and

MURPHY FAMILY FARMS,

INC.

Defendants.

)

)

)

)

)

)

Case No. 99 L 62

)

)

)

)

)

1

FILED

KNOX CO IL

KELLY cHEESMAN

•tcotjrt

~jj~t__D6Pt~tY

JOINT MOTION AND STIPULATION TO DISMISS

Plaintiffs and defendants, by their respective attorneys of record hereby stipulate and

jointly move that the Second Amended Complaint in

this matter be

dismissed in its entirety, with

prejudice and without costs, all issues among the parties having been filly resolved,

compromised,

and settled.

Respectfixlly submitted,

By~

Philip M. O’Donnell, Esq.

Kingery, Durree, Wakeman & Ryan, Assoc.

416 Main Street, Suite 915

Peoria, IL 61602

Counselfor Roy and Dianne Kell

I hereby certify this to

true and correct copy.

Dated

~ 2O’~

KELLY

EESMAN

Ck3rk ?f~1e

CircuIt

9304

Knox Coun

,

Illinois

8y /?~nzt

7

Deputy

C)

By:

Charles M. Gering, Esq.

McDermott, Will & Emery

227

West Monroe Street

Chicago, IL 60606-5096

Counselfor Murphy Farms, Inc.

/2

cee&/)

Brian P. Thielen, Esq.

Thielen Law Offices

207

West Jefferson Street

Suite 600

~SEAL)

Bloomington, Illinois 61701

Counselfor Highlands, L.L.C.

---

EXHIBIT “C”

Kell vs. The Highlands, L.L.C.,

Case No. 99-L-62

Order

---

IN THE CIRCUIT COURT OF THE NINTH JUDICIAL CIRCUIT

DIANNE KELL,

Plaintiffs,

THE HIGHLANDS, L.L.C.,

and

MURPHY

FAMILY

FARMS, INC.

Defendants.

ORDER

)

)

)

)

)

)

CaseNo. 99 L 62

)

)

)

)

)

This cause coming to be heard on the parties’ Joint Motion and Stipulation to Dismiss

and the Court being filly advised in the premises, it is hereby ordered that the Second

Amended

Complaint in

this matter is dismissed in its entirety, pursuant

to the parties’ stipulation,

with

prejudice

and without costs to any party.

ENTER:

~bó

.

/1,

.2

cea~

Date

Prepared by:

Charles M. Gering

McDermott, Will & Emery

227 West Monroe Street

Chicago, IL 60606-5096

FILED

KNOX CO., IL

t,

p

4

KELLY CHEESMAN

C’erk

of the Cirn~UCourt

4flL~,WoL*

Deputy

this lob

atnreand

correct copy.

limp ~

20 03

KELLY CHEESMAN

Cisd’~of t CircuitCourt, Knox ~~s1ty,Illinois

By

AI4tJ

P~D1(!23

;~Peputy

(SEAL)

vs.

thereby

Dated

(1

---

AFFIDAVIT OF DOUGLAS BAIRD

---

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

PEOPLE OF THE STATE OF ILLINOIS,

)

)

Complainant,

)

vs.

)

PCB No. 00-104

)

(Enforcement)

THE HIGHLANDS, LLC, an Illinois limited

)

liability corporation, and MURPHY FARMS,

INC., (a division of

MURPHY-BROWN, LLC,

a North Carolina limited liability corporation,

and SMITHFIELD FOODS, INC., a Virginia

)

corporation).

)

)

Respondents.

)

AFFIDAVIT OF DOUGLAS BAIRD

I, Douglas B. Baird, being first duly sworn under oath, depose and state as

follows:

1. I am a member/manager of The Highlands, LLC.

2. The Highlands, LLC is an Illinois limited liability company. The

member/managers of The Highlands, LLC in addition to me are my

parents, James and Patricia Baird.

3. The Highlands, LLC was formed for the purpose of owning and

operating a farrow to wean hog facility on family owned ground in

Knox County, Illinois. The Baird family has been farming in Elba and

Truro Townships in Knox County, Illinois since 1852.

1

---

4. The farrow to wean facility was constructed in 1997 and 1998 at a cost

of approximately $2,900,000.00. The facility first started receiving hogs

in December of 1997.

5. The facility first started farrowirig pigs in the spring of

1998. The

facility has a population of approximately 3,600 guts and sows that

produce approximately

80,000 weaned pigs annually. Young pigs are

weaned at an average age of 14 to 21 days at which time they are

trucked to

other contract hog production facilities in which The

Highlands, LLC has

no

ownership interest.

6. Even before construction started on the facility and before the facility

commenced operation, there was a

concerted effort

by a group known

as FARM to prevent the facilityfrom being consthicted. Litigation

generated by that opposition

group

resulted in an ultimate decision by

the Illinois Supreme Court that approved the siting and zoning of The

Highlands facility as originally proposed.

7. From the time the facility opened, I have worked hard as the manager

of the facility to try to respond to any odor complaints by neighbors

and, to the extent technically feasible and economically reasonable,

modifications have been made in the operation and management of

the facility to reduce offensive odors.

8. Changes that The Highlands have made since 1998 include the

following:

2

---

(a) The original manure management system was a BION system

that utilized a four cell lagoon system. In response to objections

to that system by the Illinois EPA, The Highlands switched

from the BION sytem to a BlO SUN system on July 17, 2000. It

took until approximately June of 2001 to get the new BIO SUN

system to achieve biological

maturity and work properly. BlO

drained once a week and flushed out with water from the

cleaner of the

two

confinement buildings and at the exhaust fans. The purpose of

3

---

the enzyme spray is to neutralize the odors caused by pig

approximately every 2½months.

(1)

The finisher pens are sprayed daily with an enzyme that

neutralizes ammonia

from

the pig manure and reduces odor.

(j) The feed used

in

the

farrowing

alternatives suggested are either technologically not feasible or not

4

---

economically reasonable. Each alternative suggested by the EPA and

my response to each alternative is as follows:

(a)

Provide a cover

for

the first

two lagoons of the existing lagoon

system to prevent the escape of odorous gases and provide

sufficient aeration to avoid anaerobic conditions in the third

arid fourth lagoons.

RESPONSE:

This suggestion applied to

the

four

lagoon system that

was

part of the original BION system. Covers reduce the

solid organic material. Although The Highlands only actively

utilizes

two

lagoons at this time, a cover for the first of those

two

annually from the bottom of the lagoon. It would be difficult to

remove solids from the lagoon

if

it were covered. Covers are not an

effective means of solving waste odor problems.

This

applies to all alternatives that suggest the use of covers.

5

---

(b) Capture and flare gas from the entire waste management

system.

RESPONSE:

See response to (a). Also, additional LP gas would be

required to maintain a flare at all times, thereby increasing

operating expense.

(c)

Provide a cover for the first three lagoons and provide sufficient

aeration to maintain the fourth lagoon in an aerobic condition.

RESPONSE: The response concerning covers is the same for

this

alternative as for prior alternatives. Additionally, the aeration

required to maintain thefourth lagoon in an

aerobic

condition

would cause a substantial increase in electrical energy

that would

be economically unreasonable.

(d) Enclose the first lagoon on the existing lagoon system with an

enclosed, temperature controlled anaerobic digester and

provide sufficient aeration to the second

and subsequent

‘agoons to maintain aerobic conditions.

RESPONSE: Such digesters have not been proven to be effective.

The cost of maintaining an elevated temperature year round to

support microbial activity would be cost prohibitive. There are no

economical insulated covers of a size to fit the

first

lagoon. The

present technology for such digesters requires that the effluent

contain 8 solids. The effluent from these two buildings contain

6

---

2

or

less solids. In order

for

this

technology to work, The

Highlands would either have to use a mechanical separation

method, which is not currently feasible for hog waste or completely

redesign the manure handling system using pit scrapers in the

building pits. This alternative is not economically reasonable,

(e) Replace all three of the first lagoons with an enclosed,

temperature controlled, anaerobic digester and maintain the

fourth lagoon in an aerobic state.

RESPONSE: See the response to (a) and (d).

(f) Provide for twice weekly draining of the underfoot manure

storage pits and refilling with odor free water with a dissolved

oxygen concentration in excess of 2.0 mg/i.

RESPONSE:

The manure pits are presently drained once a week

and refilled with water from the cleaner of the two lagoons. To

require “odor free

water”

would mean fresh water being pumped

into the pits every week and then flushed every week. The lagoon

storage system that is in place at The Highlands

was

not designed

to receive this additional volume of fresh water and would require

the construction of an additional lagoon to accommodate the

increased volume. This alternative is not economically reasonable.

(g) Provide adequate filtration for exhaust air generated at the

swine confinement buildings.

7

---

RESPONSE: An air filtration system could only be placed on the

breeding and the gestation buildings. Due to design constraints, no

other buildings could be fitted with an air filtration system. The

net effects on odor

reduction by air

filtration systems

is

doubtful.

(It) Reduce organic loading on the treatment system by reducing

the population ofhogs in the facility.

RESPONSE: This is not

an

economically reasonable alternative.

10. None of the above alternatives are techically feasible and economically

reasonable. The Highlands has taken all measures to reduce the odors

that I feel are technically feasible and economically reasonable, with

the exception of growing trees as wind breaks. From the time that the

facility opened in 1997, most of the complaints received by The

Highlands pertaining to the odor have come from Roy and Diane ICell.

The Kells live approximately one-quarter mile east of The Highlands.

The Kells do not own their home; they have rented their present

residence for approximately 20 years.

11. The Kells residence is a farmstead that, until the late 1970s, was used

by the tenant of the property to raise hogs. Some

of

the buildings that

were used at the farmstead to raise hogs are still in existence today.

12. On October 22, 1999, the Kells filed suit against The Highlands due to

the odors that were being generated by the hog facility.

8

---

13. On March 11, 2002, the complaint brought by the Kells against The

Highlands was settled and the case was dismissed. Since that date, the

Kells have not filed any complaint against The Highlands.

14. Since March 11, 2002, the Kells have continued to reside in the same

residence in which they have resided for over

twenty

years.

15. Whenever I have passed the Kells on the road since March 11, 2002, the

Kells

have smiled and waved to me.

16. The Highlands presently employs 14 people full

time. The payroll for

wages

and salaries for 2002

was

$392,716.00. The total operating

expenses for 2002 were $1,354,915.00. The Highlands will pay real

estate taxes in 2003 in the total amount of $37,863.44, $19,270.29 of

which will be paid to the local school district. A copy of that real estate

tax bill is attached to my Affidavit as an Exhibit.

17. Of the 14 people employed by The Highlands, 12 of them live in Knox

County.

18. Of

the $1,354,915.00 in operating expenses paid

by The Highlands in

2002, most of that is paid to people and other businesses

within Knox

County.

19. Attached to this Affidavit is a copy of a directory that shows Truro and

Elba Townships with the names and

locations

of the rural residents

within those two townships. The location of The Highlands is also

marked in order to show its position relative to other rural residents

9

---

within the

two township area.

I

am personally

familiar with the

location of each of the residences shown on the directory and the

information contained on the directory is true and correct.

20.

As a result of the zoning dispute that went to the Illinois Supreme

Court concerning The Highlands, I am

familiar with the zoning in Elba

and Truro Townships. Attached to my Affidavit are copies of the

zoning

maps

for each of those

townships.

The zoning maps are

produced by the Knox County

Department

of Planning

and

Zoning

and,

to

my

knowledge, are true

and

accurate.

21. Also attached to

my

Affidavit is a copy of the cover of the

Galesburg/ Knox County 1999

Comprehensive

Plan along with page 11

of that Plan. Page 11 contains a chart that shows the land

use in

Knox

County. That chart shows that

61

of

the

county

is cropland, 20 is

grassland, 14 is forest/woodland, and 2 of the county is

urban/built-up land. These documents were obtained directly from

the Knox County Office of Planning and Zoning and, to my knowledge

are true and correct.

22. Also attached to my Affidavit is a copy of the cover page from the

Illinois Agricultural Statistics 2002 Annual Summary and page 130

therein which shows highlights of Knox County. That publication is

prepared by the Illinois Agricultural Statistics Service and is issued co-

operatively by the Illinois Department of Agriculture and the United

10

---

Jun-13-03 14~OO BAIRD SEeD FARM

309 639 4224

P.02

States

Department

of

Agriculture.

That

publication shows that Knox

County produced 126,900 head of

hogs

in

2001

and

that

production

ranked Knox County

sixth

in the State

of Illinois. 10 my knowledge,

the

copies of the pages of this publication attached as an exhibit are

true

and correct

FIJRIF

ER

AFFIANT

SAYETH NO’L

B. Baird

Subscribed and sworn before me

tIilS~..

JEFFREY W.TOCK

Public

NOTARY PJSLC. STATE OF

ILLiNOIS

MY COMMISSION EXP?RES W25!06

v1L/(~atpIain4eIf2(U3/

Highlands-

thitdMf

•1 1.

---

KNOX COUNTY 2002 REAL ESTATE

TAX

BILL

---

May-28-QS 14:12 BAIRD SEED FARM

309 639 4224

KNOX COUNTY

?002 REAL ESTATE TAXES

~ORINE. DAVIS, COUNTY TREASURER

(fox County Courthouse

?OO S. Cherry Street

3alesburg, IL 61401

ROLLtNG

MEADOWS tNC

BAIRD JAMES ft

1122 1O~OX HWY 19

WXLL~IA14$FIEW,

iL

63.489-0000

~

NORMAL BILl.. *+*ttS

RECEIPT PORTION

-

KEEP FOR YOUR RECORDS

2002 KNOX COUNTY REAL ESTATE TAX

PAY TQ; KNOX COUNTY COLLECTOR

ron

lAX

ttALCULAT~ON ~OO2

-

LaND LOT

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FARM

11100.

~APM LAND

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SlATE EQUALIZED I!M.UE

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HOME IMPROVEMD4T ~EMP1ION

-

OWNER OCCUPIED EMMP11ON

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4TEM$

EXEMPflO$

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SEMQ~ASSSESSMENT

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FOR FARM LAND

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527240

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VALU~

2002

PLEASE READ the instructions

on the

back ci this

bill regarding when to pay anc

where

to

pay

your taxes. Adthtional

Information

is

provided for changing your

ma~Uni

address and lax exemptions ~nwhich you might be

entitled.

The County Treasurer only collects your

taxas

and is not responsible lot the amount c

your

a~se6smant

or the amount of your lax bit We

WI!!

be happy to

assist

you or direc

you to the

propor

authority reg8rding

questions about

your ta DIII.

~OI~LING MEIDOWS

INC

AbSESSED 0.

00025724

BILL NUMBER:

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37863.44

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ROLLING

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1122 KNOX hWY lB

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KNOX

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61489-0000

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---

TRURO TOWNSHIP DIRECTORY

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ELBA TOWNSHIP ZONING DISTRICT MAP

---

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LOCAL BUSINtSS

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It

---

by agriculture. Over

79°/o

of the County is

either crop land or grass land Nearly 14

of

the County is covered by forest and woodlands.

Much of this wooded area is along the Spoon

River and other streams within the County.

Interestingly, there is more land consumed by

open water and wetlands than there is

developed urban area. Contributing to the

open water category are several private lakes,

Galesburg’s Lake Storey, and various streams

and rivers.

In addition, former strip-mined

areas in the eastern part of the County now

Land use and development trends occurring in

Galesburg since 1967 are illustrated on Figure

3. Several significant trends are evident. There

has been significant commercial development

activity

along North Henderson Street near the

interchange with U.S. Highway 34. Substantial

industrial development has occurred on the

southwest side of Galesburg including Maytag

1967, including the Henry Hill Correctional

Center and Carl Sandburg College. A detailed

existing land use survey was completed in

Knox County

Land Cover

Cropland

281,024

61

Grassland

91,759

20

Forest/Woodland

64,243

14°/o

Wetland

6,601

1

Urban/Built-up

Land

10,883

2

Open Water

9,364

2°Io

Other

37

.1

Total

463,911

Type

of Cover

Acres

of

County

Several new multi-family developments have

occurred near

Sandburg Mall.

Major

institutional uses have also developed since

Galesburg Existing Land Use

____

1965-1997 1965-1997

1965

1965

1997

1997

Acre Percent

Acres Percent

Acres Percent

Change

Change

Sin~e-FamUyDwellings

1,986.9

29.9

2,575.0

23.1

588.1

29.6

Manufactured Homes

7.0

0.1

91.9

0.8

84.9

1,212.9

Two-Family Dwellings

174.6

2.6

76.6

0.7

(98.0)

-56.1

Multi-Family Dwellings

43.6

0.7

247.7

2.2

204.1

468.1

Commercial

138.0

2.1

544.0

4.9

406.0

294.2

Light Industry

96.4

1.5

224.1

2.0

127.7

132.5

Heavy Industry

195.9

2.9

468.2

4.2

272.3

139.0

Parks and Playgrounds

599.7

9.0

714.5

6.4

114.8

19.0

Public and Semi-Public

531.0

8.0

1,315.4

11.8

784.4

147.7

Streets & Railroads

1,433.3

21.6

1,600.0

14.3

166.7

11.6

Total Developed Area

5,206.4

78.4

7,857.4

84.9

2,651.0

50.9

VacantArea

1,440.6

21.6

1,681.3

15.1

240.5

16.7

Total Area

6,647.2

100.0

9,538.7

100.0

2,891.5

43.5

Ga!esburglKnox County Comprehensive Plan

Page

11

---

ILLINOIS AGRICULTURAL STATISTICS

ILLINOIS

STATISTICS

---

Illinois County Highlights

census of Agriculture

(

19911

Average Age of Farm Operator

Number of Farms:

By Value of Sales:

Less than $10,000

$tO,000- $99999

$100,000

or more

By Size:

1

-

49

Acres

50

-499

Acres

500 or more Acres

Land in Ferms,

Acres

Avg. Value of Land & Bldgs./Acre

Avg. Value of Ag Products Sold/Farm

Avg.

Farm Prod. Expenses/Farm

Avg. Net Gash Return from Sales/Farm

Census of Aquiculture ( 1997)

Average Age of

Farm Operator

Number of Farms:

By Value of Sales:

Less than

$10,000

$10,000- $99999

$100,000

or more

By Size:

1

-

49 Acres

50

.

499 Acres

500

or more Acres

Land in Farms, Acres

Avg. Value of Land & BldgsiAcre

Avg. Value of Ag Products Sold/Farm

Avg. Farm Prod.

Expenses/Farm

Avg. Net Cash

Return

from Sales/Farm

Value

Rank

Crops (2001)

53.9

Corn, Ba.

441

80

Soybeans,

Wheat, Ba.

91

Sorghum, Ru.

195

All

Hay, Tons

155

Oats, Ru.

103

224

114

167,486

$3,994

$133,238

$95,491

$40,342

Value

54.3

928

Rank Crops (2001)

Corn, Ba.

26

Soybeans,

Wheat, Ba.

263

Sorghum,

Bu.

337

AU

Hay, Tons

328

Oats,

Ba.

Acres

Harv.

78,500

72,500

1,800

N/A

N/A

N/A

Yield

Prod.

Rank

133 10440,500

67

42 3,045,000

72

78

140,400

61

Ne. of

Head

25,300

1,500

N/A

as

Cash Receipts

(2001)

,

26

Crops

37,927

62

1

44

Livestock

7,347

75

Acres

Han.

Y~d f~

Rank

143,800

166 23,870,800

21

135,200

48 6,489,600

23

.

‘~

1,700

74

125,800

68

N/A

13,300

3.62

48,090

13

.

~,

.

206

N/A

No.ot

.

Livestock

128,900

6

29,400

12

12,700

5

-..

ct1

Cash Receipts (20011

$1,000

Crops

79,205

22

Livestock

35,395

14

,‘

ILLINOJS AGJ?JCLJL TUL4L 5Th TIS

TICS

-

C

468

254

369,776

$1,923

$140,413

$89,246

$44,292

Hogs & Pigs

(12/01/01)

Cattle &

CaNes (01/01/02)

18

Beef Cows (01/01/02)

53

33

31

35

Kendall

County

Livestock

Hogs&Pigs

(12/UI/al)

Cattle & Calves (01/01/02)

82

Beef Cows (01/01/02)

4

Rank

56

99

Knox

County

7/1

---

BEFORE THE ILLINOIS POLLUTION CONTROL B~MCtIVflD

CLER’(’S OFFICE

PEOPLE OF THE STATE OF ILLINOIS,

)

JUN

1

6

2003

Complainant,

STATE OF IWNOIS

)

Pollution Control Board

vs.

)

PCB

No. 00404

)

(Enforcement)

THE HIGHLANDS, LLC, an Illinois limited

)

liability corporation, and MURPHY FARMS,

)

INC., (a division of MURPHY-BROWN, LLC,

)

a North Carolina limited liability corporation,

and SMITHFIELD FOODS, INC., a Virginia

)

corporation).

)

)

Respondents.

)

)

ITS MOTION FOR SUMMARY JUDGMENT

A.

RES JUDICATA

“Under the doctrine of

res judicata, a

final judgment on the merits

rendered by a court of competent jurisdiction is conclusive as to the rights of the

parties and their privie&”

People vs. Progressive Land Developers, Inc.

(1992), 151

Ill.2d 285, 602 N.E.2d 820,176

lll.Dec. 874

citing

Kinzer vs. City of Chicago

(1989),

128 Ill.2d 437, 446, 132 Ill.Dec. 410, 539 N.E.2d 1216;

Catlett vs. Novac

(1987), 116

Ill.2d 63,

106

IIl.Dec. 786, 506

N.E.2d 586. “That judgment is an absolute barr to

subsequent actions involving the same claims or demands

by the same parties or

their privies.”

People vs. Progressive Land Developers, Inc.,

151 I1I.2d at 294;

Kinzer

vs. City of Chicago,

128 Ill.2d at

446; Catlett vs. Novac,

116 Ill.2d at 67. “The

doctrine extends not

only to what actually was decided in the original action, but

1

---

also to matters which could have been decided in that suit.”

People vs. Progressive

Land Developers, Inc.,

151 IIl.2d

at

294;

LaSalle National Bank vs. County Board of

School Trustees

(1975), 61 Ill.2d 524, 529, 337 N.E.2d 19. The essential elements of

res judicata

are:

(1)

A final judgment on the merits rendered by a court of competent

jurisdiction;

(2)

An identity of cause of action; and,

(3)

An identity of parties or their privies.

People vs. Progressive Land Developers, inc., 151

Ill.2d at 294.

1. A final judgment on the merits rendered by a court ofcompetent jurisdiction.

On October 22, 1999, Roy and Dianne Kell filed a complaint in the Circuit

Court of Knox County against The Highlands and Murphy Family Farms, Inc..

The Kells eventually filed a Second Amended Complaint on June 8, 2000, a

certified copy of which is attached to The Highlands’ Motion for Summary

Judgment. On March 11, 2002, the parties in that litigation filed a Joint Motion

And Stipulation To Dismiss which stated that all issues among the parties had

been fully resolved, compromised, and settled. A certified copy of that Motion is

attached to The Highlands’ Motion for Summary Judgment as Exhibit “B”. On

March 11, 2002, the Circuit Court of Knox County entered an Order dismissing

the case with prejudice pursuant to the Motion And Stipulation. A certified copy

2

---

of that

Order is attached to The Highlands’ Motion for Summary Judgment as

Exhibit “C”.

When a case is dismissed “with prejudice”, that means that the plaintiff

(the Kells) are not permitted to plead over and the litigation is terminated.

Perkins vs. Collette

(2nd Dist, 1989), 179 Ill.App.3d 852, 534 N.E.2d 1312, 128

IIl.Dec. 707. When a suit is dismissed with prejudice pursuant to a settlement

agreement, all claims and causes of action are merged with that dismissal, which

acts as an adjudication on the

merits.

Glassberg vs. Warshawsky

(2nd Dist., 1994)

266 Ill.App.3d 585, 202 Ill.Dec. 881, 638 N.E.2d 749. The counts set forth in the

Kells’ Second Amended Complaint alleged a number of different theories of

recovery against both defendants. Those theories of recovery included:

nuisance, personal injury and abatement of the nuisance.

The Kells were and are residents of Knox County, The Highlands

principal place of business is in Knox County and Murphy Family Farms did

business in Knox County. Consequently, the Knox County Circuit Court had

jurisdiction over the parties and all of the theories of recovery.

2. An identity of cause of action.

“A cause of action is defined by the facts which give the plaintiff a right to

relief. While one group of facts may give rise to a number of different theories of

recovery, there remains only a single cause of action. If the same facts are

essential to the maintenance of both proceedings or the same evidence is needed

3

---

to sustain both, then there is identity

between the allegedly different causes of

actions asserted

and

res judicata

barrs the latter action.”

People vs. Progressive Land

Developers, inc.,

151 Ill.2d at 295

quoting

from

Morris vs. Union Oil Co.

(1981),

96

Ill.App.3d 148, 157, 51 Ill.Dec. 770, 421 N.E.2d 278. The single group of operative

facts common to both the Kells’ action filed in the Circuit Court of Knox County

and this present action before the Illinois Pollution Control Board is that the hog

facility owned and operated by The Highlands has emitted hog odors that

have

unreasonably

interfered with the Kells’ enjoyment of their life and property.

Since the same facts are necessary for the maintenance ofboth proceedings, the

causes of action are identical.

People vs. Progressive Land Developers, Inc.,

151 Ill.2d

at 296.

3. An identity of parties or their privies.

“Privity is said to exist between parties who adequately represent the

same legal interests. It is the identity of interest that controls in determining

privity, not the nominal identity of the parties.”

People vs. Progressive Land

Developers, Inc.,

151 Ill.2d at 296. The issue under this requirement is whether the

Attorney General’s interests were adequately represented by counsel for the

Kells in the Knox County Circuit Court proceedings. “A non-party may be

bound if his own interests are so closely aligned to a party’s interest that the

party is his virtual representative.”

People vs. Progressive Land Developers, Inc.

(1St

Dist., 1991), 216 Ill.App.3d. 73, 80, 159 Ill.Dec. 545, 576 N.E.2d 214.

4

---

In the Knox County case, the attorney for the Kells prepared and filed

several versions of a complaint against The Highlands and Murphys. The final

version that withstood the legal challenges of the defendants was the Second

Amended Complaint. That complaint consisted of 16 counts, half of which were

direct against each defendant. Those counts were based upon the alleged odor

nuisance caused by The Highlands/Murphy Family Farms either negligently or

intentionally designing and operating The Highlands hog facility so as to permit

offensive hog odors that invaded the Kells’ property and residence and thereby

interfered with their enjoyment of life and property. There were also counts that

alleged that the Kells suffered personal injuries including headache, nausea,

difficulty breathing and other pain and suffering caused by the hog odors that

emanated from The Highlands facility and entered the Kells’ property. The Kells

also sought the closure of the facility in a count to abate the source of the

nuisance. Counsel for the Kells adequately represented the Kells’ position on all

16 of those counts to the point that the litigation was settled between the parties

and the cause dismissed on March 11, 2002.

The Kells appear to be satisfied with the terms of that settlement and the

current level of emission of hog odors from The Highlands facility because the

Kells continue to reside in the same residence that they alleged was so badly

affected by the hog odors and they now smile and wave at Doug Baird when

they pass each other on the road. (See Mr. Baird’s Affidavit.)

5

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Although the Illinois Attorney General filed the current Board action

against The Highlands and Murphy Family Farms, Inc. ostensibly for the benefit

of the People of the State of Illinois, the true parties in interest are actually those

residents in close proximity to the source of air pollution who receive direct

benefit from the reduction or elimination of that source of air pollution. The only

residents identified in the Complainant’s Amended Complaint who have been

adversely affected by odors emanating from The Highlands are the Kells. If the

Attorney General were to be successful in this action before the Board in

reducing or eliminating odors emanating from The Highlands, the recipients

who would benefit the most would be the Kells. The Kells, who took it upon

themselves to pursue their own private cause of action against The Highlands,

certainly do not seem to have any regrets in taking matters into their own hands

and not relying upon the office of the Illinois Attorney General.

The interests of the Kells and of the State of Illinois were both well

represented by the attorney for the Kells in the Knox County action that resulted

in a settlement with which the Kells seem to be very pleased. Privity existed

between the Attorney General and the

Kells as to the Knox County complaint

and settlement.

B. ARGUMENT

All

three of the essential elements

of

res judicata

are present. The doctrine

of

res judicata

constitutes an absolute barr to this matter which involves the same

cause of action as the Knox County case, but

this time brought

by the office of the

6

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Illinois Attorney General against The Highlands.

People vs. Progressive Land

Developers, Inc.,

216 Ill.App.3d at 79. This barr extends to any effort

made by the

Illinois Attorney General to pursue a claim against The Highlands for the benefit

of either Roy Kell and/or Dianne Kell, whether directly or indirectly, and any

attempt by the Illinois Attorney General to solicit any testimony from either Roy

Kell and/or Dianne Kell

concerning their former complaints against The

Highlands for the emission of offensive odors that may be sought by the Illinois

Attorney

General to support its complaint against The Highlands for the benefit

of the People of the State of Illinois other than Roy and Diane Kell.

The Illinois Attorney General could have intervened in the Knox County

action brought by the Kells against The Highlands and Murphy Family Farms in

order to pursue in circuit court the same alleged violations of the prohibition

against air pollution that the Attorney General is now pursuing in this matter

before the Board. The Illinois Attorney General failed to do so. The purpose of

res judicata

is to

avoid repetitive litigation of the same issue by giving conclusive

effect to a prior judgment.

The Illinois Attorney General is bound by the effect of

the prior judgment on the merits entered in the Knox County case and is barred

from proceeding in

this matter on any

issue involving

the Kells.

The Highlands L.L.C. by its

attorneys, Harrington, Tock &

Royse

BY:

7

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Prepared by:

Jeffrey W. Tock

Harrington, Tock & Royse

201 W. Springfield Avenue, Suite 601

P.O.

Box 1550

Champaign, IL 61824-1550

Telephone: (217) 352-4167

v1b/Comp1ain.jef/2OW/H1g1.Mem0~PPMSJ2

8

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Courtesy copies of the following cases are attached:

People vs. Progressive Land Developers, Inc.

(1992), 151 IIl.2d 285, 602 N.E.2d 820,

176 Ill.Dec. 874

Glassberg vs. Warshawsky

(2nd

Dist., 1994) 266 Ill.App.3d 585, 202 Ill.Dec. 881, 638

N.E.2d 749

People vs. Progressive Land Developers, Inc.

(1st Dist., 1991), 216 I1I.App.3d. 73, 80,

159 Ill.Dec. 545, 576 N.E.2d 214

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Citation: 116 illaec 874

151

III. 2d 285,

*;

602 N.E.2d 820,

**;

1992 III.

LEXIS 148,

***;

176 III. Dec. 874

THE PEOPLE OF THE

STATE

OF

ILLINOIS

ex rel. ROLAND BURRIS, Attorney General of

Illinois, Appellant,

v.

PROGRESSIVE

LAND

DEVELOPERS, INC., et al., Appellees

No. 72519

Supreme

Court of Illinois

151 III. 2d 285; 602 N.E.2d 820; 1992 III. LEXIS 148; 176 III. Dec. 874

October 15, 1992, Filed

PRIOR HISTORY:

(***1

Appeal from the Appellate Court for the First District; heard in that court on appeal from the

Circuit Court of Cook County, the Hon. Richard

3. Curry, Judge, presiding.

DISPOSITION:

Affirmed.

CASE SUMMARY

PROCEDURAL POSTURE: Appellant attorney general challenged the order of the

Appellate Court for the First District (Illinois), which dismissed his action filed against

appellee land developer to recover charitable assets on the theory of unjust enrichment.

OVERVIEW: The

attorney general sought to impose a constructive trust on the assets

titled to the land developer. Land developer filed a motion to dismiss, asserting, inter

alia, that he was barred from suing by the ruling of the probate court in an earlier

petition proceeding both as an actual party thereto and as a privy of one of the religious

movement. The probate court determined that the land developer was formed in large

part with funds from the bank account of the religious movement and that the monies in

the account belonged to the religious leader. The court held that the prerequisites for the

application of res judicata had been met. First, the probate court in the petition

proceeding fully addressed the merits and determined that it was the religious

movement’s funds that were used to purchase the land developer’s assets. Second, the

single group of operative facts common to both cases was that the monies used to form

the land developer came from the religious movement. Finally, the attorney general’s

interests in demonstrating the land developer’s assets were funded by the religious

movement were adequately represented in the petition proceeding.

OUTCOME:

The judgment of the appellate court was affirmed and the doctrine of res

judicata barred the attorney general’s action.

CORE TERMS: judicata, charitable, constructive trust, probate, privy, privity, used to

purchase, laches, religious, donations, lawsuit, titled, cause of action, final judgment,

ownership, unjust enrichment, chancery, large part, consisted, treasury, adequately

represented, competent jurisdiction, personal property, causes of action, res judicata, former

suit, new trial, conclusive, same cause of action, bankruptcy petition

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LexisNexis(TM) HEADNOTES

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Core Concepts

-, Hide Conceøts

I~iCivil Procedure

Preclusion & Effect of Judgments

Res Judicata

flNljIJnder the doctrine of res judicata, a final judgment on the merits rendered by a

court of competent jurisdiction is conclusive as to the rights of the parties and their

privies. That judgment is an absolute bar to subsequent actions involving the same

claims or demands by the same parties or their privies. The doctrine extends not

only to what actually was decided in the original action but also to matters which

could have been decided in that suit.

~ çj~lProcedurePreclusion

& Effect of Judgments

Res Judicata

HN2±Theessential elements of res judicata are: (1) a final judgment on the merits

rendered by a court of competent jurisdiction; (2) an identity of cause of action;

and (3) an identity of parties or their privies. In other words, if the first suit

involved the same cause of action, the judgment in the former suit is conclusive

not only as to all questions actually decided but as to all questions which might

properly have been litigated and determined in that action. The decision in the

former suit estops the parties and all parties in privity with them from relitigatlng

the issue in a subsequent proceeding.

Civil Procedure

Preclusion & Effect of Judgments

Res Judicata

HN3±Themerits of an adjudication for purposes of the application of res judicata refer to

the substantive rights of the parties.

~1

Civil Procedure

Preclusi

ct of Judgments

Res Judicata

~m4±Acause of action is defined by the facts which give the plaintiff a right to relief.

While one group of facts may give rise to a number of different theories of

recovery, there remains only a single cause of action. If the same facts are

essential to the maintenance of both proceedings or the same evidence is needed

to sustain both, then there is identity between the allegedly different causes of

action asserted and res judicata bars the latter action.

Ovil ProcedurePreclusion & Effect of Judgment~~ResJj~dicata

HN5±

For purposes of the application of res judicata, privity is said to exist between

parties who adequately represent the same legal interests. It is the identity of

interest that controls in determining privity, not the nominal identity of the parties.

COUNSEL: Roland

W. Burns, Attorney General, of Springfield (Rosalyn B. Kaplan, Solicitor

General, and Floyd 0. Perkins, Matthew D. Shapiro and Thomas P. James, Assistant

Attorneys General, of Chicago, of counsel), for appellant.

Rufus Cook, of Cook Partners Law Offices, Ltd., of Chicago, for appellees.

JUDGES: Justice Clark

delivered the opinion of the court.

OPINION: (*286

(**821 JUSTICE CLARK delivered the opinion of the court:

Appellant, the Illinois Attorney General, appeals the dismissal of an action filed against

appellee, Progressive (*287 Land Developers, Inc. (Progressive), attempting to recover

charitable assets on a theory of unjust enrichment. The chancery lawsuit was brought in the

circuit court of Cook County to impose a constructive trust on the assets titled to Progressive.

Progressive filed a section 2-619 motion (Ill. Rev. Stat. 1989, ch. 110, par, 2-619) to dismiss

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the Attorney General’s action ***2

alleging that the unjust enrichment suit was barred

by

res judicata, Iaches,

estoppel and the statute of limitations. The trial court granted the

motion, and the appellate court affirmed on the grounds of

resjudicata

and

ladies. 1216

III.

App. 3d

73.) We granted the Attorney General’s petition for leave to appeal (134 III. 2d R.

315). We conclude that since the prerequisites of

res judicata

are present, the doctrine

applies and bars this action. We do not reach and intimate no view upon the appellate court’s

conclusion with respect to

laches

and accordingly confine our recitation of the facts to those

relevant to disposition of the issue

of resfudicata.

The following facts were alleged in the verified complaint filed in the unjust enrtchment suit.

Elijah Muhammad was the leader of the charitable religious movement known as the Nation

of Islam (the Nation)

until his death in 1975. Muhammad’s Mosque No. 2 (the Mosque) is an

Illinois not-for-profit corporation. Its several affiliated unincorporated entities devoted to

charitable and religious purposes include the Council of Imans of the American Muslim

Mission (the Council

(***3 of Imans) and the World Community of Al-Islam in the West

(Al-Islam).

According to the complaint, a substantial portion of Progressive’s assets consisted-of

**822

funds that were transferred from the bank accounts and treasury funds of the

Nation during Elijah Muhammad’s lifetime. The funds were composed of charitable

contributions solicited from the Nation’s members and its affiliated entities and consisted in

large part of donations from a treasury known

*288

as “Elijah Mohammad’s Number Two

Poor Fund Treasury.” By these actions, funds and monies of the Nation were commingled

with Progressive’s assets, which were in turn used to purchase real estate titled to

Progressive.

The complaint alleged that Progressive had no equitable nights to the assets and was being

unjustly enriched by possession of them. Among other equitable relief, the lawsuit sought to

impose a constructive trust on the assets held by Progressive.

Elijah Muhammad died intestate in 1975 and a probate estate was opened that year. On

October 24, 1980, several of Elijah Muhammad’s heirs filed a 12-count petition for recovery

citations to recover property for the estate. (Ill. Rev. Stat. 1989, ch. 110 1/2, par. ***4

16-1 et

seq.)

A central issue bearing on all of the claims was whether certain funds held by

Elijah Muhammad during his lifetime, and purchases made in part with those funds,

constituted assets which belonged to his estate or to the religious group which he led. Count

I sought a citation to recover assets from the First Pacific Bank of Chicago for the transfer of

the Poor Fund Treasury account to persons other than the estate. The amount sought by the

estate was in excess of

$

3 million.

The trial of count I commenced on October 5, 1981. The First Pacific Bank of Chicago filed

counterclaims and third-party complaints for indemnification against the Nation and named

the Attorney General as a party on the theory that the People of the State of Illinois were the

ultimate beneficiaries and parties in interest of the charitable assets held in the various bank

accounts. Summons was served on the Attorney General on May 5, 1981.

On May 27, 1981, the Attorney General filed a general appearance In the probate

proceedings. On July

7, the Attorney General filed an answer to the Bank’s complaint

(*289 and subsequently participated fully in the count I litigation. The trial resulted

(***5

in an entry of judgment for the estate. The judgment was reversed by the appellate

court and remanded for a new trial.

In re Estate of Muhamm?4J19~4J,j~3

Ill. App. 3d 756,

79 III. Dec. 178, 463 N.E.2d

732.

A new trial commenced in 1986 which resulted in a judgment for the estate. Again, the

appellate court reversed the judgment and held that the monies in the Poor Fund Treasury

account were not the personal property of Elijah Muhammad, but were in fact charitable

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assets.

In re Estate of Muh~rnni&iJ1987).

165 III. App~4 890,_fl7jj11_Qec,_444, 520

N.E.2d_795.

At the time litigation in count I was proceeding, other action was being taken by the estate

with respect to the disputed Progressive assets. On January 11, 1983, Progressive, by action

of Emanuel Muhammad, acting as a shareholder of Progressive and in his capacity as

administrator of the estate, filed the administrator’s first petition for recovery citation as a

supplemental proceeding for citation (the petition). The Attorney General was not served with

a copy of the petition, nor was he joined as a respondent. He did, however, receive copies of

the petition in the mail.

The petition alleged that Elijah Muhammad had been ***6

a shareholder of Progressive

and sought recovery of the stock of Progressive from, among others, the Nation, the Mosque,

and Al-Islam. It further recited that at the time of his death, Elijah Muhammad and his sons

owned all of Progressive’s stock and that the Nation had improperly seized control of

Progressive, sold substantial portions of its assets and misappropriated the proceeds. The

petition sought the return of funds and assets which had been distributed or misused as well

as the ouster of various persons whom the Nation had purported to name as Progressive’s

officers and directors following Elijah Muhammad’s death.

(*290 On July 22, 1983, the respondents filed an amended answer to the petition. The

answer alleged that Progressive was * *823 formed by Elijah Muhammad “with the sole

intent of furthering the Nation’s growth.” It further alleged that “the Nation was intended to

be the sole shareholder of Progressive. Money to form, finance, and operate Progressive

came from the members of The Nation who lived throughout the United States.”

A copy of the amended answer was mailed to the Attorney General. The petition was

subsequently amended three times prior to trial in ***7

1984. The Attorney General did

not receive copies of the amended petition, including a copy of the third-amended petition on

which the trial was based. Further, the Attorney General did not receive copies of any of the

filings in the matter after September 21, 1983, including the post-trial filings and motions.

At trial, during cross-examination of one of Progressive’s witnesses, respondents attempted

to establish that the accounts of the various religious groups which consisted of charitable

donations were the soupce of the monies which Elijah Muhammad used to purchase

Progressive’s assets. Progressive objected to the line of questioning. Arguments were made

by both parties on the objection, with the respondent making clear that its theory of the case

was that the assets titled to Progressive were held by Progressive in a resulting or

constructive trust for the benefit of the religious charities.

The trial court concluded, however, that the respondent’s pleadings were defective with

respect to arguing as a defense the creation of a constructive trust. Specifically, the court

noted that the respondents’ pleadings were conclusory and failed to plead facts

demonstrating a constructive ***8

trust:

(* 291 “COURT: A constructive trust defense may be argued provided that

proper pleadings have been filed. There have been no affirmative defenses to it.

And basically the question before the Court is the ownership of these properties;

legal title to the properties, not the equitable ownership.

You may have a good theory but there is nothing in the pleadings to indicate that

you assert that as a defense.

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Counsel, make an amendment. Look up our Code of Civil Procedure. It’s section

2-619, 617, right in there. And look at the amendments and pleadings. And if you

come in with a theory of your cause of action, the Court will entertain It then.”

The court then sustained Progressive’s objection to the respondent’s line of cross-

examination. At this point, however, Progressive withdrew its relevancy objection. Thus,

testimony concerning the source of the funds used to purchase the properties titled to

Progressive was presented and litigated during the petition trial.

According to the testimony of two former Nation officials, the money used to purchase

Progressive’s assets came in large part from donations from Nation members. One of the

former officials (***9

testified that some of Progressive’s properties had been purchased

with the Nation’s own funds and that the funds used by Elijah Muhammad were in fact from

the Poor Fund Treasury account.

The following day, before the trial resumed, respondents again requested the court to

consider its pleadings sufficient to plead a constructive or resulting trust as a defense. The

court remarked that the respondents’ pleadings were “too broad an allegation,” but then

reconsidered and made the following ruling:

“COURT: I am not saying that you cannot proceed on your theory, all I am saying

is that you need some facts (*292 which will support your theory. I, now

directed you to that section which says about amendment to pleadings --

*4*

Let me tell you what you do, Counsel,

you present your evidence,

and the Court

will consider what Counsel’s objection is and the Court will make a ruling.

But I am not saying you don’t have a right to show a resulting trust because the

case law without you even showing * *824 me I know what the case law Is

the intent of the parties at the time of the transfer was made.” (Emphasis

added.)

On November 21, 1986, final judgment for the estate was entered (***10 in the petition

litigation. The court specifically found that Progressive was formed in large part with funds

from the Poor Fund Treasury account and that the monies in the account were the personal

property of Elijah Muhammad. For instance, the court’s findings included the following:

“6. In 1961, * * * the National Secretary of the religious corporation, organized

the Temple No. 2 Poor Fund as a treasury to which persons wishing to make

donations to Elijah Muhammad personally could contribute. * * * The fact that

funds so contributed were contributed to Elijah Muhammad) personally, were

both communicated in the publications of the religious group, * *

7. In early 1972, Elijah Muhammad directed officials to open an account at

the First Pacific Bank of Chicago, to hold his personal funds. * * *

8. From 1963 to February 25, 1975, properties acquired by Progressive) were

purchased with funds from the Poor Fund Treasury account, from the bank

account known as the Elijah Muhammad Poor fund, and with funds supplied by

Elijah Muhammad from other sources. * * * The preponderance of the credible

evidence was to the effect that there was no comingling of funds or use

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***11

of Respondents’ funds to purchases Progressive assets.”

The notice of appeal filed by the respondents was dismissed as untimely and the petition for

appeal was denied. *293

Progressive moved to enforce its judgment in February 1987,

but on March 6, 1987, the Mosque filed a Chapter 11 bankruptcy petition. Seventeen months

later, the bankruptcy case was dismissed for want of equity and dissipation of assets.

Subsequent to the dismissal of the bankruptcy petition, and after the Mosque and

Progressive executed a settlement agreement, the verified complaint was filed in the instant

matter. On February 14, 1989, Progressive filed a section 2-619 motion to dismiss the

Attorney General’s action contending that (1) the Attorney General was barred by the

probate court ruling in the count I litigation as both an actual party thereto and as a privy of

the Nation; (2) the pleadings in the petition proceedings that the Attorney General received

in the mail were sufficient to notify him that the issue of equitable as well as legal title to

Progressive’s assets would be adjudicated in that proceeding; and (3) the Attorney General

was guilty

of/aches

for not seeking to assert charity’s ***12

interest while the litigation

in the petition proceeding was still in the probate court.

In an order dated May 19, 1989, the trial court granted Progressive’s motion and dismissed

the cause. The Attorney General filed a motion to reconsider on June 19, 1989, which was

denied in an order entered on May 4, 1990.

In an opinion filed on June 20, 1991, the appellate court affirmed the dismissal on the

grounds of both

res judicata

and

laches.

With respect to the doctrine of

res judicata,

the

court concluded that the defense presented by “the Nation of Islam in the petition

proceeding and the claim made by the Attorney General in the instant litigation are the

same, i.e., that monies used to form Progressive came from the members of the Nation and

therefore constituted charitable asesets. Thus, both lawsuits arose out of the same group of

operative facts and (*294 involved the same claim or demand regarding the ownership of

Progressive.” ~j~j~l.,_App~Adat80.

On appeal, the Attorney General argues that the trial and appellate courts incorrectly

concluded that

resjudicata

applies to bar his lawsuit. The Attorney General argues

(***13 that he was not a privy of the Nation; that he was not a party to the petition

proceeding; and that his chancery action did not embody the same cause of action as the

petition proceeding.

HNltfunder the doctrine of

res judicata,

a final judgment on the merits rendered by a court of

competent jurisdiction is conclusive as to the rights of the parties and (**825 their

privies. (

Kirizer v. City of Chicao

1989 128 III. 2d

437.

446. 132 Ill. Dec. 410, 539 N.E.2d

flit

Catlett

v._NQI@kJ 1987). 116 III. 2d 63, 106 III. Dec. 785~Q6N.E.Zd 586;

People v.

Kidd

(1947J,393111. 405, 408, 75 N.E.2d 851.) That judgment is an absolute bar to

subsequent actions involving the same claims or demands by the same parties or their

privies. (

~

Catlett v. Novak,

116 III. 2d at 67

e~qp/ev.

KiOd,

398 IlLg408j The doctrine extends not only to what actually was decided

in the original action but also to matters which could have been decided in that suit.

La Salle

National Bank v. Coji~y~par~pfSchool Trustees

1975 61111. 2d 524, 529, 337 N.E.2d

19

(***14

The rule deducible from these decisions is that HN2~theessential elements of

resjudicata

are: (1) a final judgment on the merits rendered by a court of competent jurisdiction; (2) an

identity of cause of action; and (3) an identity of parties or their privies. (Accord

Hartke v.

Chicago Board of Election Commissioners

(N.D. III. 1986). 651j1$~Qp.86, 88.) In other

words, if the first suit involved the same cause of action, the judgment in the former suit is

conclusive not only as to all questions actually decided but as to all questions which might

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properly have been litigated and determined in that action. (

La Salle National Bank,

61 III.

2~29J The decision in the (*295 former suit estops the parties and all parties in

privity with them from relitigating the Issue in a subsequent proceeding.

The first requirement of the doctrine is met here. ~“3?The merits of an adjudication refer to

the substantive rights of the parties. A simple reading of the probate court’s opinion in the

petition proceeding shows that it fully addressed the merits. The court discussed in detail the

origin of the monies used to purchase (***15 Progressive’s assets, which respondents

argued was traced to donations from the Nation’s members. Although there was some

testimony at trial to support this argument, the probate court concluded that the

“preponderance of the credible evidence” demonstrated that the Nation’s funds were

maintained separately from those of Elijah Muhammad’s personal accounts and that it was

funds from the latter source which were used to purchase Progressive’s assets. Whether the

probate courts findings were in fact supported by the evidence is not a proper consideration

for our review. Rather, we consider simply whether the court rendered a final judgment on

the merits for purposes of

res

judicata

and, as we conclude that it did, we find that the first

requirement of the doctrine is satisfied.

The second requirement, identity of causes of action, is also met.

HN4TA

cause of action is

defined by the facts which give the plaintiff a right to relief. While one group of facts may

give rise to a number of different theories of recovery, there remains only a single cause of

action. “If the same facts are essential to the maintenance of both proceedings or the same

evidence is needed to sustain both, (***16 then there is identity between the allegedly

different causes of action asserted and

resjudicata

bars the latter action.”

Morris v. Union Oil

~

Lee_y,Q~of Peoria

(7th Cir. 1982), 685 ~j9~j99.

(*296 As was noted by the appellate court in this matter, the single group of operative

facts common to both cases is that monies &ised to form Progressive came from the members

of the Nation and therefore constituted charitable assets. (216 III. App. 3d a~~pjSince the

same facts are necessary for the maintenance and proof in both cases, the causes of action

are identical. Accord N

tke

651 F. Su

.

t89~see also

City of Elmhurst v. Kegerreis

(1945), 392 III. 195, ZQ~4j~f12~450.

The final requirement for the application of

resjudicata

is that there be an identity of parties

or privity. HNSTPrivity is said to exist between “parties who adequately represent the same

legal interests.” ( ~

e 651 F. Su

at 90 quoting

Donovan

v.

Estate of Fitzsimmons

(7th

~1nA9~5778F.24i98301.J

**826

(***j7

It is the identity of interest that

controls in determining privity, not the nominal identity of the parties (

~

U2,~61ll~2dA344A40187N~.2d217(Schaefer, 3., dissenting).) Referring to the

dissent in

Smith,

many appellate court decisions discussing privity for purposes of

res

judicata

have relied on the definition found in the Restatement of Judgments:

“Privity is a word which expresses the idea that as to certain matters and in

certain circumstances persons who are not parties to an action but who are

connected with it in their interests are affected by the judgment with reference to

interests involved in the action, as if they were parties.” (Restatement of

Judgments

5

83, Comment

a,

at 389 (1942).)

(Johnson

v. Nationwide Business Forms, Inc.

(198fl, 103 Ill. App. 3d 631. 634. 59 lIt. Dec.

~4flj~1E.2d109G~

Country Mutual Insurance Co. v. R~gffiSHomes Corp.

(1978), 64111.

ADD. 3d 666. 670, 20 Ill. Dec. 538, 380 N.E.2d ~J

On the other hand, certain authorities,

including the Restatement (Second) of Judgments, have abandoned the term “privy”

altogether.

Montana v. United States

*a97Lj1979), 440 U.S. 147. 154 n.5, 59 L. Ed. 2d

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210. 217 n.5, 99

S.

Ct. 970,

974 n.5. (*~*18

The issue under this requirement is whether the Attorney General’s interests were adequately

represented by the Nation in the petition proceeding. Did the Nation vigorously urge the

probate court that the assets of Progressive were deposited by the members of the Nation

and that Progressive merely held them in a constructive trust for the benefit of the Nation?

Simply because the trial court rejected the Nation’s arguments cannot be evidence of

Inadequate representation. (L~#/cc,6.~kF.Supp. at ~

The arguments were rejected only

after the Nation “briefed and argued at length and with competent counsel” the alleged illegal

ownership of Progressive’s assets. The extensiveness of the pleadings and the briefing all

demonstrate that the Attorney General’s interests in demonstrating the Progressive’s assets

were funded by the members of the Nation were adequately represented.

The three elements of

res judicata

are therefore present in the Instant matter. By our

conclusion, we reject the Attorney General’s arguments that he was not a privy of the Nation

and that his chancery action does not embody the same cause of action as the petition

proceeding. ***19

For these reasons, we conclude that the requirements of

res

judicata

are met and the

doctrine applies to bar the Attorney General’s action. The judgment of the appellate court is

affirmed.

Affirmed.

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Citation: 202 illdec 881

266 III.

App.

3d 585,

*;

638 N.E.2d 749, ~

1994 III.

App.

LEXIS 1132,

***;

202 III. Dec. 881

NORMAN GLASSBERG, Plaintiff-Appellee, v. IRA, TED AND LEROY WARSHAWSKY,

Defendants, and JORDAN AND LLOYD STEIN, THE 1030 BUILDING PARTNERSHIP and

AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, not personally but as

Trustee under Trust Agreement dated September 10, 1985, and known as Trust No. 65480,

Defendants-Appellants. IRA WARSHAWSKY, TED WARSHAWSKY AND LEROY WARSHAWSKY,

Third-Party Plaintiffs, and THE 1030 BUILDING PARTNERSHIP, Third-Party Plaintiff-Appellant,

v. WILLIAM KRITT d/b/a WILLIAM KRITT & COMPANY, Third-Party Defendant-Appellee.

No. 1-92-3561

APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FIRST DIVISION

266 III. App. 3d 585; 638 N.E.2d 749; 1994 III. App. LEXIS 1132; 202 III. Dec. 881

August 8, 1994, Decided

SUBSEQUENT HISTORY: (***1

Released for Publication September 13, 1994.

PRIOR HISTORY: APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. HONORABLE

JOHN HOURIHANE, JUDGE PRESIDING.

DISPOSITION:

Affirmed.

CASE SUMMARY

PROCEDURAL POSTURE: Plaintiff potential buyer sued defendants, sellers, partnership,

and buyers, alleging that the sellers breached an oral agreement to extend the closing

date of a real estate contract by declaring the potential buyer default, that the buyers

interfered, and seeking specific performance of the contract. The Circuit Court of Cook

County (Illinois) granted judgment on the pleadings to third-party defendant broker. The

buyers and partnership appealed.

OVERVIEW: A potential buyer of real estate orally agreed with the sellers to extend the

closing date of a previous contract. The sellers nevertheless sold the parcel to buyers.

The potential buyer brought suit against the sellers, buyers, and partnership, alleging

that the buyers tortiously interfered with the previous contract and for specific

performance of the contract. The trial court initially found for the potential buyer against

the buyers, but, after those parties settled, the trial court dismissed the case. A broker

filed motions to vacate the dismissal and for a broker’s commission allegedly due from

the sellers, attaching an indemnity agreement between the buyers and sellers. The trial

court awarded judgment on the pleadings to the broker, entitling the broker to a

commission directly from the buyers. The buyers and partnership appealed, contending

that no commission was due because no sale occurred and the parties settled their

dispute, thereby rescinding the contract. On appeal, the court held that the readiness,

willingness and ability of the buyer and the enforceability of the contract had been

adjudicated by the trial court. That adjudication was binding on the parties.

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OUTCOME:

The judgment granting judgment on the pleadings to the broker was

affirmed.

CORE TERMS: third-party, prejudgment interest, broker, modify, beneficiary, earnest

money, breached, specific performance, closing date, indemnification, sales contract,

unspecified, settlement agreement, notice of appeal, requesting, settlement, vacate, entering

judgment, buyer, triable issue of fact, tortious interference, granting judgment, leave to file,

third party, Illinois Interest Act, legal capacity, final judgment, progression, adjudicated,

incidental

LexisNexis(TM) HEADNOTES

-

Core Concepts

-

. Hi~Cpnc.~jts

~l Civil Procedure Appeals ReviewabJijt~NoticeofAppeat

HNI±Ill.Sup.

Ct. R. 303 provides that the notice of appeal shall specify the judgment or

part thereof appealed therefrom

and

the relief sought from the reviewing court.

134 III. 2d R. 303(c)(2). However, the notice of appeal is to be liberally construed

as a whole. An appeal from an unspecified judgment is not waived where: (1) the

deficiency is one of form rather than substance; or (2) the unspecified judgment is

a step in the procedural progression leading to the judgment specified in the notice

of appeal.

Civil Procedure

.Ao ealsReve w bili’ ~ ~

Noticeof ApøeaI

‘~‘2±InIllinois, an appeal from a final judgment draws into issue all prior non-final

orders which produced the final judgment. An unspecified order may be reviewed

where the specified order directly relates back to the judgment or order sought to

be reviewed.

Civil Procedure

_~dy

Pretrial 3udgments Judgment on th~f~dlngj

HNSSIn

Illinois, when considering a motion for judgment on the pleadings, the trial court

must determine whether the pleadings, construed most favorably against the

movant, present a material question of fact that may prevent entry of judgment in

favor of the movant.

Civil Procedure

Pleading & Practice

Pleadings

Impleader

I~1Civil Procedure

SettlementsSettlement Agreements

HN4±InIllinois,

generally, when a suit is dismissed with prejudice pursuant to a

settlement agreement, all claims and causes of action are merged with that

dismissal, which operates as an adjudication on the merits. A trial court may enter

an order that approves a settlement without precluding a third-party claim. Thus, a

trial court may modify an order to the same effect.

Civil Procedure Preclusiq~ ff~ctof3udgnierits Law of the Case Doctrine

HN5±fn

Illinois, absent a denial of participation and due process, it is a “fundamental

rule” that an issue, once resolved, is binding on the parties to the proceeding.

Thus, a denial of a party in a pleading cannot create a triable issue of fact once the

issue has been adjudicated.

Real & Personal Propertvjaw

Brokers

Commissions

~~6±In Illinois, it is well established that a broker’s commission is earned once a ready,

willing and able buyer Is produced. Once a seller enters Into an enforceable sales

contract with a purchaser procured by a broker, the broker’s right to a commission

accrues regardless of whether the sale is completed.

I~i

Contracts Law Third Parties

Beneficiaries Claims & Enforcement

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HN7±In

Illinois, in order to recover as a third-party beneficiary of a contract, a party

must show that he or she is a direct, rather than Incidental, beneficiary of the

contract. A third party is a direct beneficiary when the contracting parties have

manifested an intent to confer a benefit on the third party.

~ ~lProcedureJurisdiction~sflty3risdiction

HNB±A

court acting in equity may enter a decree adjudicating all matters in controversy

so as to avoid multiple litigation and do full and complete justice.

COUNSEL: Beermann, Swerdlove, Woloshin, Barezky, Becker, Genin & London, of Chicago

(Alvin 1k. Becker and Timothy M. Kelly, of counsel), for appellants.

Burke, Warren & MacKay, P.C., of Chicago (Richard W. Burke and Andrew D. James, of

counsel), for appellee Norman Glassberg.

Tenney & Bentley, of Chicago (Richard). Cochran, of counsel), for appellee William Kritt.

)UDGES: CAMPBELL O’CONNOR, JR., MANNING

OPINIONBY: CAMPBELL

OPINION: *586

(**751

PRESIDING JUSTICE CAMPBELL delivered the opinion of the

court:

Defendants Jordan and Lloyd Stein and the American National Bank and Trust Company as

trustee under a trust agreement dated September 10, 1985, known as Trust No. 65480 (“the

Stein defendants”) and the 1030 Building Partnership (“1030”) appeal orders of the circuit

court of Cook County granting judgment on the pleadings to third-party defendant William

Kritt d/b/a William Kritt & Company (“Kritt”), thereby entitling Kritt to a broker’s commission

in a real estate transaction that formed the basis of underlying litigation involving plaintiff

Norman Glassberg, defendants Ira, Ted and Leroy Warshawsky and the 1030 Building

Partnership (“the Warshawsky defendants”), and the Stein defendants.

The record on appeal indicates the following facts. On October 2, 1985, Glassberg filed a

complaint alleging (***2 that the Warshawsky * 587 defendants agreed to sell

Glassberg an improved property located at 1030 North Avenue; a copy of said contract was

attached as an exhibit to the complaint. On February 18, 1986, Glassberg filed an amended

complaint that also named the Stein defendants. The amended complaint alleged that while

the contract between Glassberg and the Warshawsky defendants contained a closing date of

September 1, 1985, the parties orally agreed to extend the closing date to October so that

Glassberg could finance the purchase with industrial revenue bonds. Glassberg alleged that

the Warshawsky defendants breached the oral agreement by declaring Glassberg in default

on September 7, 1985. Glassberg further alleged that the Warshawsky defendants sold the

property to the Stein defendants in September 1985. Glassberg sought specific performance

of the contract with the Warshawsky defendants and sought damages from the Stein

defendants for tortious interference with contract.

The defendants filed their answers, denying the material allegations of the amended

complaint. On March 24, 1986, the Warshawsky defendants filed a third-party complaint

against Kritt, the broker that represented the ***3

Warshawsky defendants in their

dealings with Glassberg. The Warshawsky defendants alleged that the Kritt’s agent violated

instructions by granting an extension of the closing date. The Warshawsky defendants also

alleged that Kritt refused to remit earnest money held in connection with the Glassberg

contract. Kritt later filed an answer denying that it had violated instructions or exceeded

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authority regarding the closing date.

On November 10, 1988, the trial court entered an order finding against Glassberg on the

claim of tortious interference with contract, but granting Glassberg specific performance of

his contract with the Warshawsky defendants. The trial court also found in favor of Kritt on

the third-party complaint. The trial court further ruled that the Stein defendants were entitled

to a credit from Glassberg in the amount of the fair market value of improvements to the

property less the fair market value of rent. The parties then continued to dispute the amount

of the Stein defendants’ credit until June 1990, when the parties agreed to settle the case.

The parties attempted to effectuate a like-kind exchange, but were unsuccessful In reaching

an agreement. The parties ultimately (***4 agreed that the Stein defendants would pay

Glassberg 1.4 million dollars by January 2, 1991. Glassberg filed a motion to enforce the

settlement agreement on January 9, 1991. The trial court entered orders on January 23,

1991, indicating that the case had been settled and that Glassberg and the Stein defendants

agreed to dismissal of the case with prejudice.

(*588

(**752 On January 28, 1991, Kritt filed a petition to modify or vacate the order

of dismissal. Kritt claimed that it was entitled to a broker’s commission based on the trial

court’s November 10, 1988, order granting Glassberg specific performance of the contract.

On January 30, 1991, the trial court entered an agreed order granting Kritt leave to file a

petition for payment of the commission. On January 31, 1991, Kritt filed a petition for

payment of the commission, requesting a disposition of the earnest money as well as

judgment against plaintiff and defendants for the amount of the commission.

Glassberg filed a response that denied that the property had been conveyed under the

November 10, 1988, order. The Stein defendants filed a motion to dismiss Kritt’s petition,

arguing that: (1) Kritt was not a party to the action; (2) Kritt did ***5

not file its petition

until after the case had been dismissed with prejudice; and (3) the petition asserted no basis

for collecting from the Stein defendants. On June 12, 1991, Kritt filed an amended petition

that claimed the Stein defendant were liable for the commission under an indemnity

agreement between the Stein defendants and the Warshawsky defendants; the

indemnification agreement was attached as an exhibit to the amended petition.

On September 4, 1991, Kritt moved for judgment on the pleadings against the Warshawsky

defendants, arguing that they had not denied the allegations of the petition for payment. The

Warshawsky defendants filed a response that denied they breached the real estate contract

and argued that the November 10, 1988, order was a nullity. On October 30, 1991, the trial

court entered judgment in favor of Kritt and against the Warshawsky defendants in the

amount of

$

51,000, but reserved the issue of prejudgment interest and stayed execution of

the judgment pending further order of the court.

On December 16, 1991, the Warshawsky defendants filed a petition for indemnification from

the Stein defendants. Relying on the settlement agreement, the Stein defendants ***6

responded that if any commission was due, it should be paid from the earnest money, with

the balance going to the Warshawsky defendants. The Stein defendants’ response indicates

that the amended settlement agreement, entered into following the Stein defendants’ initial

failure to pay the settlement, expressly excluded claims involving Kritt and the disposition of

the earnest money, but stated that this portion of the amended agreement was not

bargained for nor expressly disclosed (though the Stein defendants also indicated that they

were not impugning the motive of Glassberg’s counsel, who drafted the amended

agreement).

On April 7, 1992, the trial court Issued a memorandum opinion (*5893 and order indicating

that Glassberg was entitled to the earnest money and that the Stein defendants were

required to indemnify the Warshawsky defendants for the full amount of the commission due

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to Kritt. On April 14, 1992, Kritt filed a motion to modify the April 7, 1992, order, requesting

prejudgment interest and requesting that judgment for the commission be entered directly

against the Stein defendants. The Stein defendants responded that judgment was improper

because they were not in privity with Kritt

***7

and because the judgment rested on the

November 10, 1988, which the Stein defendants claim merged with the January 23, 1991,

order by operation of law. The Stein defendants also contended that an award of

prejudgment interest was not warranted by contract or statute.

On October 5, 1992, the trial court denied Kritt’s request for prejudgment Interest, but

entered judgment in favor of Kritt and against the Stein defendants in the amount of $

51,000. The Stein defendants filed a timely notice of appeal from the April 7, 1992, and

October 5, 1992, orders; Kritt filed a timely notice of cross-appeal.

Given the nature of the arguments presented by both sides on appeal, it may be useful at

this juncture to briefly summarize the basic chronology of the case In tabular form:

10/2/85: Glassberg complaint filed.

2/18/86: amended complaint naming Stein defendants filed.

3/24/86: Warshawsky defendants file third party complaint against Kritt.

**753

11/10/88: trial court enters order against Glassberg on tortious

interference claim, but grants specific performance; trial court finds in favor of

Kritt on third-party claim; credit due the Stein defendants and other issues

remained unresolved.

***8

1/23/91: trial court enters orders approving settlement and dismissing the case

with prejudice.

1/28/91: Kritt files petition to vacate or modify the order of dismissal.

1/30/91: trial court enters agreed order granting Kritt leave to file petition for

payment of commission.

1/31/91: Kritt files petition for payment of commission.

9/4/91: Kritt moves for judgment on the pleadings.

10/30/91: trial court enters judgment In favor of Kritt as against the Warshawsky

defendants.

12/16/91: Warshawsky defendants file petition for indemnification from the Stein

defendants.

(*590 4/7/92: trial court rules that Glassberg is entitled to earnest money and

that Stein defendants must indemnify Warshawsky defendants for amount of

commission due Kritt.

4/14/92: Kritt files motion to modify 4/7/92 order, requesting prejudgment

interest and for judgment directly against the Stein defendants.

10/5/92: trial court denies Kritt’s request for prejudgment interest, but enters

judgment directly against the Stein defendants.

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I.

Initially, the Stein defendants and Kritt argue that this court lacks jurisdiction to hear each

other’s appeal. Relying on

~JtQn

Evening Telegraph v. Doak (1973), 11 III. App. 3d381.~96

NE,Z4~Q5L(***9 the Stein defendants argue that Kritt lacked standing to seek post-

judgment relief because “William Kritt & Company” is an assumed business name and is not

an entity with the legal capacity to sue. However, in Alton Evening Telegraph, there were no

facts properly before the court identifying the plaintiff as an entity with legal capacity to sue.

(Alton Evening Telegraph, 11j~pp~dat 382, 296 N.E.2d at 605.) In this case, Kritt was

a third-party defendant properly identified and brought into the proceedings as an individual

doing business under an assumed name. Thus, the proceedings in this case were not a

nullity.

The Stein defendants also argue that the jurisdiction of the trial court lapsed because Kritt’s

motion to vacate or modify the January 23, 1991, dismissal of the case did not attack the

judgment. (See ~

232 579 N.E.2d 824, 162 III. Dec. lQj

Andersen v. Resource Economics Corp. fl9~QLj3~Ill. 2d 342. 549 N.E.2d 1262. 140 III.

Qcci39~r1

In Beck, a letter (***10 to a judge was deemed not a proper post-trial motion.

Becjc,j,.44jll. 2d at 24 579 4.E.2d at 829.) In Andersen, a request for leave to file a third

amended complaint was deemed not a proper post-trial motion. (Andersen. 133 III. 2d at

346-47, 549 N.E.2d at 1264.) This case involves a petition to modify or vacate the trial

court’s order and thus is not governed by Beck or Andersen,

Kritt argues that this court lacks jurisdiction to entertain the Stein defendants’ argument that

Kritt was not entitled to a commission because the notice of appeal filed by the Stein

defendants and 1030 does not specify the October 30, 1991, order granting judgment In

favor of Kritt against the Warshawsky defendants. HN1?Illinois Supreme Court Rule 303

provides that the notice of appeal “shall specify the judgment or part thereof appealed

therefrom and the relief sought from the reviewing court.” (134 III. 2d R. 303(c)(2).)

(*59j

However, the notice of appeal is to be liberally construed as a whole. (Jewel

Companie~jj~c.v. Serfecz (1991). 220 III. App. 3d 543,

547,

5~j4f.2d 186 189. 163 III.

P~ci2i5ri (***11 An appeal from an unspecified judgment is not waived where: (1) the

deficiency is one of form rather than substance; or (2) the unspecified judgment is a step in

the procedural progression leading to the judgment specified in the notice of appeal. (Jewel

cpjies22pjllr~pp. 3d at 547~48~5flJ4~E.2datfl*754 1891) Kritt maintains that

the order entering judgment against the Warshawsky defendants was a substantive element

of its claim against the Stein defendants, but was not a step in the procedural progression

leading to that judgment.

Kritt’s argument proves too much. Our supreme court has stated that HN2Tan appeal from a

final judgment draws into issue all prior non-final orders which produced the final judgment.

Burtell v. First Charter Servic~ptpLL1979 76111. 2d_4Z7,333, 394 N.E.2d 380.80

382. 31

flLPecL 1781) Burtell also suggests that an unspecified order may be reviewed where the

specified order directly relates back to the judgment or order sought to be reviewed. (See

~

N.E.2d at 3831) ***121 In this case, the orders specified

in the notice of appeal refer to and are based on the prior, unspecified order. Moreover, even

though the individual Warshawsky defendants are not parties to this appeal, the Stein

defendants’ liability is predicated on the judgment against the Warshawsky defendants and

therefore may be challenged by the Stein defendants as a judgment adverse to their interest.

Cortesv.Rv4ç Truck Rental, Inc. (1991, 220 III. App. 3d 632. 637. 581 N.E.2d 1, 3, 163

III. Dec. 5Q~appeal dismissed, ~4~jjl. 2d 637 587 N.E.2d 1013, 167 Ill. Dec. 398.

II.

We therefore turn to the challenge to the order entering judgment in favor of Kritt against

the Warshawsky defendants. The October 30, 1991, order was entered pursuant to Kritt’s

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motion for judgment on the pleadings, filed pursuant to section 2-615(e) of the Illinois Code

of Civil Procedure (

735

ILCS ~LZ-615(e)).HN3?when considering a motion for judgment on

the pleadings, the trial court must determine whether the pleadings, construed most

favorably against the movant, present a material question (***13 of fact that may

prevent entry of judgment in favor of the movant. See Daymon v. Hardin CounttGeneral

Hospital (1991). 210 III. App. 3d 927. 932. 569 N.E.2d 316. 3194j55 Ill. Dec. 316.

Kritt’s petition alleged that: the trial court ordered specific performance of the Glassberg

contract on November 10, 1988; the Glassberg contract provided for a commission of “6 of

the sale price;” that the Warshawsky defendants breached the Glassberg contract; and that

Glassberg, the Warshawsky defendants and the Stein defendants settled and dismissed their

case on January 23, 1991. On appeal, the Stein defendants rely on the Warshawsky

defendants’ denial that *592

they breached the contract or owed Kritt a commission. The

Stein defendants also point to the Warshawsky defendants’ contention that the January 23,

1991, dismissal order superseded the November 10, 1988, order. The Stein defendants

further point to Glassberg’s response to Kritt’s motion for judgment on the pleadings, which

stated that no sale occurred pursuant to the contract or the November 10, 1988, order.

HN4Tcenerally, when a suit is dismissed with prejudice pursuant to a settlement ***14

agreement, all claims and causes of action are merged with that dismissal, which operates as

an adjudication on the merits. (See, e.g., Brandenberg Park East Ap~jtrn~pt~_y.Zale (1978),

63 III. APP. 3d 253, 259. 379 N.E.2d 674, 679. 19 III. Dec. 802.) However, in this case, Kritt

moved to have the orders approving the settlement and dismissing the case vacated or

modified. A trial court may enter an order that approves a settlement without precluding a

third-party claim such as that presented here. (See Granvllle Beach Condominium Assoc. v.

Granville. Beach Condominiums, Inc._(1992), 227 III. App. 3d 71.5 720-21. 592 N.E.2d 160

163-64, 169 III. Dec.~7~jThus, a trial court may modify an order to the same effect. That

the trial court did not formally do so here is a defect of form, rather than substance, and

does not warrant a reversal in this case.

The question remains whether Kritt may rely on the November 10, 1988, order to establish

that the Warshawsky defendants breached the contract or whether the denial made by the

Warshawsky defendants may preclude judgment (***15 on the pleadings. As noted

above, the purpose of a motion for judgment **755

on the pleadings is to determine

whether there is a triable issue of fact. Whether the Warshawsky defendants breached the

contract was a triable issue of fact, but the November 10, 1988, order, which was attached

as an exhibit to Kritt’s petition, indicates this issue had been tried. The November 10, 1988,

order was not final and appealable because ancillary matters remained pending, but the trial

court’s adjudication of the case was the status quo prior to the January 23, 1991, dismissal

order that Kritt sought to vacate or modify.

The Stein defendants, by relying on the Warshawsky defendants’ denial of a breach of

contract, essentially seek to relitigate an issue decided in a proceeding In which the Stein

defendants were participating parties. Our supreme court has indicated that, HNSTabsent a

denial of participation and due process, it Is a “fundamental rule” that an issue, once

resolved, is binding on the parties to the proceeding. ( Central Illinois Public Service Co. v.

Allianz Underwriters Insurance Co. (1994), 158 III. 2d 218, 225-26, 633 N.E.2d 675, 678-79.

198 III. Dec. 834.) (***16 Thus, a denial of a party in a pleading cannot create a triable

issue of fact once the issue has been adjudicated.

*593

The trial court did not err in relying on Its prior determination of November 10,

1988, but there remains the question of whether it could grant judgment on the pleadings

regarding Kritt’s alleged entitlement to a commission. The real estate sales contract at Issue

is attached as an exhibit to Kritt’s petition to modify or vacate; thus, It is part of the

pleadings. (See, e.g., Bond v. Dunmire (1984). 129 III. ~pp. 3~i96.804, 473 N.E.2d 78. 84.

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~4jfl.Dec,862j

This contract provides that Kritt is to receive six percent of the sale price as

a commission. The Stein defendants maintain that no commission is due because no sale

occurred and the parties settled their dispute, thereby rescinding the contract.

HN6~It

is well established that a broker’s commission is earned once a ready, willing and able

buyer is produced and once a seller enters into an enforceable sales contract with a

purchaser procured by a broker, the broker’s right to a commission accrues regardless of

whether the sale is completed. ( Hallmark & Johnson Properties. Ltd~y.~j~ior(1990). 201

Ill. Affi 3d

512, 5j

559 N.E.2d 14jj44-45. 147 Ill. Dec. 141.)

***j7

Moreover, the

readiness, willingness and ability of the buyer and the enforceability of the contract had been

adjudicated at trial. Thus, given the record on appeal, the trial court did not err in granting

judgment on the pleadings on this issue.

III.

The final issue on appeal is whether the pleadings entitled lcritt to a judgment in the amount

of the commission directly against the Stein defendants. The Stein defendants claim the trial

court erred in ruling that Kritt was a third-party beneficiary of the indemnification agreement

between the Stein defendants and the Warshawsky defendants. UN7TIn order to recover as a

third-party beneficiary of a contract, a party must show that he or she is a direct, rather than

incidental, beneficiary of the contract. (See 155 H~.rborDrive Condominium Assoc. v. Harbor

Point, Inc. (1991L2~9jJl.Ap~.

3d 631.

646, 568 N.E.2d 365, 374, 154 III. Dec. 365.) A third

party is a direct beneficiary when the contracting parties have manifested an intent to confer

a benefit on the third party. 155 Fj~rk~rDilve 209 Ill.A ,3dat 646, 568 N.E.2d at 374.

(***18

In

this case, the technical rules regarding third-party beneficiaries would appear to render

Kritt an Incidental beneficiary to the Indemnification agreement. The mere fact that the

agreement mentions the possibility of a claim raised by Kritt does not mean that the parties

intended to directly benefit Kritt. However,

HN8?a

court acting in equity may enter a decree

adjudicating all matters in controversy so as to avoid multiple litigation and do full and

complete (*594 justice. (E.g., ~

1983119 III. App. 3d 290, 456 N.E.2d

~

The Stein defendants could not have raised their objection if the trial

court had merely entered an order directing them to pay the Warshawsky defendants and

directing the Warshawsky defendants to pay Kritt. Thus, any error in entering judgment

directly

**756

against the Stein defendants in this case does not warrant reversal on

appeal.

Iv.

Kritt cross-appeals the decision of the trial court denying Kritt prejudgment interest on the

commission, pursuant to section

2

of the Illinois Interest Act ( 815 ILCS 205/2 (West 1992)).

Kritt relies on Emerich

v.

Leviton

(19831

117 111._App d832,454 N.E.2d 45, 73 III. Dec.

301. ***19

However, in Emerich, the seller, buyer and broker all initialled a provision of

the sales contract regarding the commission, which rendered it an “instrument in writing”

evidencing indebtedness within the scope of section 2 of the Illinois Interest Act. In this case,

there is no such mutual assent. The sales contract was not signed by either Kritt or the Stein

defendants. Moreover, Kritt urges that prejudgment interest be measured from the date that

the sale would have closed, but for the breach. However, it is apparent that the closing date

in this case would be the date created by the oral modification of the contract, which

presents problems in establishing a claim based on an “instrument in writing.” Consequently,

the trial court did not err in refusing to award Kritt prejudgment interest.

For all of the aforementioned reasons, the judgment of the circuit court of Cook County is

affirmed.

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Affirmed.

O’CONNOR, JR., 3.,

and MANNING, 3., concur.

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Citation: 159 Hldec 545

216111. App. 3d73,

*;

576 N.E.2d 214,

**;

1991

1/I.

App.

LEXIS 1053,

***;

159

1/1.

Dec. 545

THE PEOPLE ex rel. NEIL F. HARTIGAN, Attorney General, Plaintiff-Appellant, v.

PROGRESSIVE LAND DEVELOPERS, INC., et al., Defendants-Appellees

No. 1-90-1006

Appellate Court of Illinois, First District, Fourth Division

216 III. App. 3d 73; 576 N.E.2d 214; 1991 III. App. LEXIS 1053; 159 III. Dec. 545

June 20, 1991

June 20, 1991, Filed

SUBSEQUENT HISTORY: ***1

Rehearing Denied August 14, 1991.

PRIOR HISTORY:

Appeal from the Circuit Court of Cook County; the Hon. Richard L. Curry, Judge, presiding.

DISPOSITION: Affirmed.

CASE SUMMARY

PROCEDURAL POSTURE: Plaintiff Illinois Attorney General sought review of a judgment

from the Circuit Court of Cook County (Illinois), which dismissed the attorney general’s

lawsuit against defendants for recovery of charitable assets on a theory of unjust

enrichment. The lawsuIt also sought a constructive trust. The lawsuit was dismissed on

the basis of res judicata and the theory of laches.

OVERVIEW: The litigation involved the estate of a leader of a religious organization and

funds collected from the members of the organization. The estate claimed that the funds

were gifts to the leader rather than charitable assets of the organization. The attorney

general filed an appearance in the estate’s suit and obtained a ruling that the funds were

charitable assets. The estate thereafter filed a suit against defendant corporation,

alleging that the corporation’s assets were part of the estate. Members’ contributions

were also used to form the corporation. Although the attorney general was aware of this

lawsuit, it did not file an appearance. Nearly two years after the estate obtained a

judgment in its favor, the attorney general filed his unjust enrichment claim against the

corporation. The court affirmed the circuit court’s judgment dismissing the attorney

general’s unjust enrichment suit. First, the court held that the suit was barred by the

doctrine of res judicata. Second, the court held that although mere nonactlon by

government officials was insufficient to justify invoking laches against the state, the

attorney general induced the corporation to act to its detriment.

OUTCOME: The court affirmed the judgment of the circuit court dismissing the attorney

general’s action against defendants alleging unjust enrichment and seeking a

constructive trust.

CORE TERMS: laches, charitable, ownership, unjust enrichment, judicata, lawsuit, res

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judicata, equitable, privity, constructive trust, mailed, general appearance, cause of action,

participated, nonparty, probate, charitable purposes, motion to dismiss, source of Income,

personally, leader, stock, repetitive litigation, general proposition, unreasonable delay,

probate proceeding, inattention, nonaction, virtual, aligned

LexisNexis(TM) HEADNOTES - Core Concepts

-.

Hide Concepts

I~i

Civil Procedure

Preclusion & Effect of Judgments

Res Judicata

HNI±Thedoctrine of res judicata provides that a final judgment on the merits rendered

by a court of competent jurisdiction is conclusive as to the rights of the parties and

their privies and, as to them, constitutes an absolute bar to a subsequent action

involving the same claim, demand or cause of action. The doctrine of res judicata

applies not only to what actually was decided in the original action but also to

matters which could have been decided in that suit. In determining whether two

lawsuits involved the same claim, demand or cause of action for purposes of

applying res judicata, Illinois courts examine whether the suits arise out of “a single

group of operative facts.” in determining whether the party in the subsequent

litigation was in privity with a party to the earlier litigation, Illinois courts look to

the following definition of privity: Privity is a word which expresses the idea that as

to certain matters and in certain circumstances persons who are not parties to an

action but who are connected with it in their interests are affected by the judgment

with reference to interests involved in the action, as if they were parties. Under this

definition, a nonparty may be bound if his own interests are so closely aligned to a

party’s interests that the party is his virtual representative.

Civil Procedure

Pleading & Practice

Defenses, Obiections & Demurrers Affirmative

Defenses

flN2±Lachesis an equitable principle which operates to bar an action when, because of

the plaintiff’s unreasonable delay in bringing suit, the defendant has been misled or

prejudiced or has taken a course different from what he would have otherwise

taken. No absolute rule governs when laches should apply, and what facts will

combine to constitute laches depends upon the circumstances of each case. To

establish unreasonable delay, the plaintiff must show that the defendant failed to

seek prompt redress after acquiring knowledge of the fact supporting his claim.

However, it is not necessary that the plaintiff have actual knowledge of the specific

facts upon which his claim is based. If the circumstances are such that a

reasonable person would make inquiry concerning these facts, the plaintiff will be

charged with laches if he fails to ascertain the truth through readily available

channels.

Civil Procedure

Pi~p~jn& Practice

Defenses, Objections & Demurrers

Affirmative

Defenses

Governments State & Territorial Governments Clai~~~y

& Against

HN3j

Mere nonaction by government officials is insufficient to justify invoking laches

against the state; there must be some positive act which induced the defendant to

act to his detriment. The question to be answered is whether the reasons

underlying the reluctance to extend doctrines of estoppel and laches to

governmental bodies outweigh the mischief which may result from the state’s

conduct.

COUNSEL: Neil F.

Hartigan, Attorney General, of Springfield (Floyd 0. Perkins, Matthew 0.

Shapiro, and Thomas P. James, Assistant Attorneys General, of counsel), for appellant.

Rufus Cook, of Cook Partners Law Offices, Ltd., of Chicago, for appellees.

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JUDGES: Presiding Justice Jiganti delivered the opinion of the court. Linn and McMorrow,

33.,

concur.

OPINIONBY: JIGANTI

OPINION: *75

(**215 PRESIDING JUSTICE JIGANTI delivered the opinion of the

court:

The plaintiff, the Illinois Attorney General, filed suit against the defendant, Progressive Land

Developers, Inc., attempting to recover charitable assets on a theory of unjust enrichment.

The suit also sought the imposition of a constructive trust. Progressive Land Developers

made a motion to dismiss on the grounds of

resfudicata, Iaches,

estoppel and the statute of

limitations. The trial court dismissed the lawsuit on the basis of

res judicata,

expressing

reasoning that would also support the theory of

laches.

This litigation involves the estate of Elijah Muhammad, the leader of a religious organization

(***2 known as the Nation of Islam (Nation). The Nation itself is not a legal entity, but is

administered by a not-for-profit corporation called Muhammad Mosque No. 2, Inc. (Mosque).

Funds collected from the members of the Nation were placed into an account denominated

the Poor Fund Account, which was controlled by Elijah Muhammad. Funds from the Poor Fund

Account were used for the purposes of the Nation and were also used by Elijah Muhammad

personally. According to the Attorney General’s complaint, money from the Poor Fund

Account was used to establish Progressive Land Developers. The ownership of the Poor Fund

Account at the time of Elijah Muhammad’s death and the use of that money to establish

Progressive Land Developers provides the focus of this appeal. The relationship between the

estate of Elijah Muhammad, the Poor Fund Account and Progressive Land Developers will be

developed at some length, along with the actions of the Attorney General.

(*76 Elijah Muhammad died in 1975, survived by several children (the Estate). In 1980,

(**216 the Estate filed a 12-count citation petition seeking to recover property allegedly

belonging to the Estate. Counts I and III ***3

of the citation petition are pertinent to the

instant lawsuit. In count I, the Estate sought to recover a balance in the Poor Fund Account

in excess of $ 3 million. Count III was directed against Progressive Land Developers. Count

III

asserted that Progressive was Incorporated but that no stock was ever issued and that

Elijah Muhammad made all of the capital contributions to Progressive from his own personal

and individual funds. It further alleged that following ElIjah Muhammad’s death, Progressive

allowed the management and operation of its assets “by other than the ESTATE.” Among the

relief requested was an accounting.

Although count I Is not directly involved in this lawsuit, a brief history of the litigation

involving that count is essential to an understanding of the Issue before us. In count I, the

Estate sued First Pacific Bank to recover funds remaining in the Poor Fund Account which the

bank had turned over to the new leader of the Nation. The Estate’s theory was that the funds

constituted gifts made to Elijah Muhammad personally and should not have been given to the

Nation. The bank filed a third-party claim against the Nation seeking indemnity and served

the Attorney (***4 General on May 5, 1981, on the basis that the funds constituted

charitable assets held for the poor and needy and that the Attorney General had a duty to

safeguard such assets.

On May 27, 1981, the Attorney General filed a general appearance in the probate proceeding

and subsequently participated fully in the litigation involving the Poor Fund Account. The

litigation involved two trials and two appeals to this court.

(In re Estate of Muhammad

(1984), 123 III. App. 3d 756, 463 N.E.2d 732

(Muhammad

I); In re Estate

of

Muhammad

(1987),

165 III. App. 3d 890, 520 N.E.2d 795

(Muhammad II).)

In a “Statement of Position”

filed in the first trial, the Attorney General, arguing that the Poor Fund Account constituted

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charitable assets, stated as follows:

“Absent a showing that the Honorable Elijah Muhammad had a source of income

other than monies received by virtue of being the leader of the Nation of Islam, it

must be presumed that the sole source of income of the Honorable Elijah

Muhammad was as the Leader of the Nation of Islam. Such monies were thus

given to further the causes and charitable (***5 purposes expressed by Elijah

Muhammad.” (*77

The trial court in July of 1986 held that the monies in the Poor Fund Account were gifts to

Elijah Muhammad and that he was the equitable owner of the account. In his brief before this

court in

Muhammad II,

the Attorney General represented that he had “intervened in the

original proceedings under his common-law power and authority to safeguard charitable

assets and preserve charitable trusts.” The litigation over the Poor Fund Account was

ultimately resolved against the Estate and in favor of the position taken by the Attorney

General when this court held in 1987 in

Muhammad II

that monies in the account, having

been solicited in the name of charity, constituted charitable assets rather than personal

property of Elijah Muhammad.

On January 11, 1983, while the litigation was proceeding through the courts, the Estate filed

the “Administrator’s First Petition for Recovery Citation” against the Mosque, the Nation and

certain individual defendants (hereinafter collectively referred to as the Nation). Essentially,

like count III of the 1980 citation petition, the petition sought to recover funds and assets

held by Progressive. (***6 The petition recited that at the time of his death, Elijah

Muhammad and his sons owned all of Progressive’s stock and that the Nation had improperly

seized control of Progressive, sold substantial portions of its assets and misappropriated the

proceeds. Although the Attorney General was not served a summons in this proceeding, he

was mailed a copy of the petition. On July 22, 1983, the Nation flied an amended answer to

the petition alleging that Progressive was formed in 1963 by Elijah Muhammad aided by

three of the Nation’s trustees “with the sole intent of furthering The Nation’s financial

(**217

growth.” The answer alleged that “The Nation was intended to be the sole

shareholder of Progressive Land.

Money to form, finance, and operate Progressive Land came

from the members of The Nation who lived throughout the United States.

* * * Elijah

Muhammad was never a shareholder in Progressive Land, but only acted as an official to

operate Progressive Land on behalf of all the members of The Nation.” (Emphasis added.)

The Attorney General was mailed a copy of the amended answer.

The Attorney General was mailed several other pleadings in the Progressive litigation,

(***7 including a motion for a preliminary injunction filed by the Estate to enjoin the

Nation from selling Progressive’s assets “until such time as there has been a final

adjudication by this court relative to the equitable ownership of Progressive Land Developers,

Inc.” The mailings stopped on September 21, 1983, and the Attorney General did not receive

the third-amended petition on which the trial was based or any of the post-trial filings and

motions.

(*78 The trial involving the ownership of Progressive began in March of 1984 and lasted

approximately one month. The trial court initially refused the Nation the opportunity to

present evidence showing that Progressive was formed with contributions to Elijah

Muhammad from members of the Nation. It was the court’s position that the theory of a

constructive trust was not sufficiently pleaded by the Nation. However, when the court

indicated that the Nation need only amend the pleadings to include that theory, counsel for

Progressive withdrew his objection and the issue of equitable ownership of Progressive was

fully litigated.

In November of 1986, while the litigation involving the Poor Fund Account was pending on

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appeal, the trial

(***8

court entered a judgment in favor of the Estate and against the

Nation in the amount of $

12,975,907.50.

The court specifically found that Progressive was

formed in large part with funds from the Poor Fund Account and that the monies in the

account were the personal property of Elijah Muhammad. An appeal by the Nation was

dismissed by this court as untimely, and the supreme court denied leave to appeal. Following

the dismissal of the appeal, the Estate and the Nation conducted extensive negotiations and

entered into a settlement agreement on August 31, 1988.

On October 20, 1988, nearly two years after the judgment in the Progressive case and

almost one year after our decision in

Muhammad II,

the Attorney General filed his unjust

enrichment claim against Progressive. The complaint alleged that Elijah Muhammad used

money from the Poor Fund Account to purchase real estate and then placed the title to the

real estate in Progressive. The complaint further alleged that Elijah Muhammad completely

controlled Progressive and used its assets for the charitable purposes of the Nation. In the

dispute between the Estate and the Nation over ownership of Progressive’s stock after Elijah

(***9 Muhammad’s death, the trial court held that Progressive was funded with Elijah

Muhammad’s personal assets and that equitable ownership of Progressive therefore rested in

the Estate. The complaint alleged that this finding was erroneous in light of this court’s

opinion in

Muhammad II,

which held that monies in the Poor Fund Account were charitable

assets. The Attorney General requested the court to impose a constructive trust on the

charitable assets placed in Progressive by Elijah Muhammad.

Progressive filed a section 2 -- 619 motion to dismiss (Ill. Rev. Stat. 1989, ch. 110, par. 2 --

619) alleging that the unjust enrichment suit was barred by

res judicata, laches,

estoppel

and the statute of (*79 limitations. The trial court granted the motion to dismiss. In

denying reconsideration, Judge Curry made the following statements:

“The Attorney General here was barred in this action by res judicata, as simple

and straightforward a case of res judicata as could be imagined, set In a

convoluted and complex fact situation, but res judicata as Illinois case law

describes it, pure and simple.

The issue before the trial judge was resolved in a fashion that the Attorney

(**218

***1O

General does not agree with. The issue and the resolution

by the probate court was never appealed. Whether the determination by the

probate court was right or wrong is irrelevant because It’s final.

The Attorney General then says well, I wasn’t a part of that. I didn’t participate.

No one expected me to participate. No one invited me to participate. I didn’t

participate. I’m not bound. When the Attorney General files a general

appearance, the law is clear that he’s in the case for all reasons and is bound by

all determinations.

So when I say that this is a classic case of res judicata, that’s exactly what it is.

The extensive briefing, the convoluted proceedings and the zeal to have a

different result do not detract from the realities that simple law, well-established

law in Illinois dictates the result that was delivered by this court in May of last

year.”

On appeal, the Attorney General contends that the instant unjust enrichment suit is not

barred by

res judicata

because it involves different issues than the earlier citation

proceeding. The Attorney General also contends that he was neither a party nor In privity

with a party to the citation proceeding. ***11

Essentially,

HNI?fthe

doctrine of

resjudicata

provides that a final judgment on the merits

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rendered by a court of competent jurisdiction is conclusive as to the rights of the parties and

their privies and, as to them, constitutes an absolute bar to a subsequent action involving the

same claim, demand or cause of action. (

spiller v. Continental Tube Co.

(1983),

95 III. 2d

4i4~Z~44ZN12d~34~The doctrine is designed to protect litigants from the burden of

retrying an identical cause of action or issue with the same party or privy and to enhance

judicial economy by prohibiting repetitive litigation. (

People v. Bone

(198W. 82 III. 2d 282,

~4~2N2~zg44.41

cert. denied

(1981),

4ã4~$4~397QL. Ed. 2d 12Q,.jfl~~t.145~j

The doctrine of

resjudicata

applies “not only to what actually was decided in the original

action but also to matters which could have been decided in that (*80 suit.”

La Salle

National Sank v. County Board of School Trustees

(1975), 61 Xli. 2d 524, 529. 337 N.E.2d

19J2L

(***12

cert. denied (1976),

425 U.S. 936,48 L.

Ed.

2d 177, 965. Ct. 1668.

In determining whether two lawsuits involved the same claim, demand or cause of action for

purposes of applying

res judicata,

Illinois courts have examined whether the suits arise out of

“a single group of operative facts.” ( p

qstav.ChrslercprLfl982),

110 III. Ap_p.~jj~6

~

673.In determining whether the party in the subsequent litigation

was in privity with a party to the earlier litigation, Illinois courts have often looked to the

following definition of privity provided in the Restatement of Judgments:

“Privity is a word which expresses the idea that as to certain matters and in

certain circumstances persons who are not parties to an action but who are

connected with it in their interests are affected by the judgment with reference to

interests involved in the action, as if they were parties.” (Restatement of

Judgments § 83, Comment a, at 389 (1942).)

(Johnson v.Nationwide Businessfpnyj~,Inc.

(1981hj.23j11.

App. 3d 631, 634, 431 N.E.2d

1096 (***13

Country Mutual Insurance Co. v. Regent Homes C~p~fl.978).64

III. App.

3~67Q,380N.f~2d516~

Upper Lakes Shipping Ltd. v. Seafarers’ International Union of

~

In

Nationwide Business Forms,

the court interpreted this definition as meaning that “a nonparty may be bound if his own

interests are so closely aligned to a party’s interests that the party is his virtual

representative.”

P/~tionwide~

634,_431 N.E.2d at 1098.

Applying these principles to the case at bar leads us to conclude that the trial court was

correct in ruling that the Attorney General’s unjust enrichment suit Is barred by

resjudicata.

The defense made by the Nation in the citation proceeding **219

and the claim made by

the Attorney General in the instant litigation are the same,

i.e.,

that monies used to form

Progressive came from the members of the Nation and therefore constituted charitable

assets. Thus, both lawsuits arose out of the same group of operative ***14

facts and

involved the same claim or demand regarding the ownership of Progressive.

With regard to the “same party” requirement, we believe that the facts showed that the

Attorney General was in privity with the Nation. As stated above, a nonparty may be bound

by a judgment if its interests were so closely aligned to a party’s interests that the party was

the nonparty’s virtual representative. (

Nationwide Business Forms,

103 Ill. APL 3d 631, 431

N.E.2d 1096.) The Nation in *81

the citation proceeding took the position that assets

held by Progressive constituted charitable assets, thereby asserting the public interests in

preserving those assets. The Attorney General in the unjust enrichment suit took an identical

position. Although the Attorney General argues that he was not aware of the citation

proceeding and was therefore not able to fully present his position, the record does not

support this argument. To allow the Attorney General’s action to proceed now would be to

undermine the purpose of the doctrine of

res judicata,

which is to avoid repetitive litigation of

the same issue by giving conclusive effect to a prior (***15 judgment.

The doctrine of

laches

also operates to bar the Attorney General’s claim.

“t12TLaches

is an

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equitable principle which operates to bar an action where, because of the plaintiff’s

unreasonable delay in bringing suit, the defendant has been misled or prejudiced or has

taken a course different from what he would have otherwise taken. (

Hippert v. O’Grady

(1981). 97 III. APP. 3d 310, 312, 423 N.E.2d 228.) No absolute rule governs when

laches

should apply, and what facts will combine to constitute

laches

depends upon the

circumstances of each case. (

Eckberg v. Benso

(1989), 182 III. App. 3d 126, 132, 537

N.E.2d 967.) To establish unreasonable delay, the plaintiff must show that the defendant

failed to seek prompt redress after acquiring knowledge of the fact supporting his claim.

(Eckberg v. Benso,

182 III.

App.

3d 126, 537 N.E.2d 967j However, it is not necessary that

the plaintiff have actual knowledge of the specific facts upon which his claim is based. If the

circumstances are such that a reasonable person would make Inquiry ***16

concerning

these facts, the plaintiff will be charged with

laches

if he falls to ascertain the truth through

readily available channels.

Eck~jp

V.

Benso.

182 III. App. 3d 126.537 N.E.2d 967.

In the case at bar, the Attorney General argues that his delay in filing the unjust enrichment

suit is not unreasonable because he did not know until early in 1988 that there was a dispute

concerning the equitable ownership of Progressive’s assets. We are not persuaded by this

argument. The record reveals that in 1980 the Estate filed a 12-count citation proceeding

seeking to recover funds and assets allegedly belonging to the Estate. The Attorney General

was made a party to count I, involving the Poor Fund Account, and filed a general

appearance in the probate proceeding. The Attorney General participated fully in the litigation

over the Poor Fund Account and specifically adopted the position that unless It could be

shown that Elijah Muhammad had a source of income other than contributions from the

Nation, the monies were “given to further the causes and charitable purposes expressed by

Elijah Muhammad.”

*82

Progressive was named as (***17 a citation respondent in count III of the 1980

petition. Although that count was abandoned, the Estate in 1983 filed a complaint against the

Nation claiming that the Nation had improperly seized the assets of Progressive. The Attorney

General was mailed a copy of the original complaint as well as the Nation’s answer, which

stated that “mjoney to form, finance and operate Progressive Land came from the members

of The Nation” and that Elijah Muhammad operated Progressive “on behalf of all the

members of The Nation.” These pleadings were filed during the pendency of the Poor Fund

Account litigation, which involved a dispute over the equitable ownership of funds contributed

to Elijah Muhammad by the members (**220 of the Nation. In light of this knowledge, we

believe that it was incumbent upon the Attorney General to investigate the dispute involving

Progressive’s funds and assets and decide whether the facts were sufficient to warrant a

claim that they constituted charitable assets.

The Attorney General then maintains that even if the delay was unreasonable, the doctrine of

laches

does not apply to the instant claim for unjust enrichment because the claim was

brought (***18 by the State in the discharge of its governmental actions. It is true as a

general proposition that

laches

will not be applied against the State when acting in its

governmental capacity. (

Hickey v. Illinois Central Ri?. Co.

(1966). 35 III. 2d 427. 448~220

N.E.2d 415,

cert. denied

(1967), 386 U.S. 934, 17 L. Ed. 2d 806. 87 S. Ct. 957.) The reason

supporting this general proposition is that application

of/aches

could result in valuable public

interests being jeopardized or lost by the negligence or Inattention of public officials.

(Hickey,

35 Ill. 2d 427. 220 N.E.2d 4j~j It has therefore been stated that HNz~mere

nonaction by government officials is insufficient to justify invoking

/aches

against the State;

there must be some positive act which induced the defendant to act to his detriment. In

Ilickey,

the court stated that “the question to be answered is whether the reasons underlying

the reluctance to extend doctrines of estoppel and

laches

to governmental bodies outweigh

the mischief which may result from the ***19

State’s conduct.”

Hickey,

35 III. 2d at

449, 220 N.E.2d at 426-27.

In our view the instant fact situation shows more than mere nonaction or inattention on the

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part of the State. As stated earlier, the Attorney General had knowledge as early as 1981

when it was made a party to the original citation proceeding that there was a dispute over

whether funds held by Elijah Muhammad at his death belonged to him personally or the

Nation under the theory of constructive trust. The Attorney General intervened in the probate

(*83 proceedings and participated fully in the litigation concerning the Poor Fund Account.

Yet, the Attorney General did not make any claim to Progressive’s assets despite knowledge

that the Nation was claiming ownership of the assets on the theory that the money used to

purchase them came from contributions by the Nation’s members. By actively pursuing the

Poor Fund litigation while ignoring the controversy over Progressive, the Attorney General led

Progressive to believe that the State did not consider Progressive’s assets to be charitable in

nature. Progressive thus fully litigated the issue of ownership with the (***20 Nation, won

a judgment in its favor and entered into a settlement agreement fully resolving all of the

issues between the parties. Considering all of the circumstances set forth above, we believe

that the Attorney General’s lawsuit was barred by the doctrine of

laches.

Accordingly, the judgment of the circuit court is affirmed.

Affirmed.

LINN and McMORROW, JJ., concur.

Service:

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BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

RECEIVED

CLERK’S OFFICE

PEOPLE OF THE STATE OF ILLINOIS,

JUN 162003

Complainant,

)

STATE OF ILLINOIS

)

Pollution Control Board

vs.

)

PCB

No. 00404

)

(Enforcement)

THE HIGHLANDS, LLC, an Illinois limited

)

liability corporation, MURPHY FARMS, INC.,

)

a/k/a MURPHY FAMILY FARMS, a North

)

Carolina corporation, and

NON

)

TECHNOLOGIES, INC., a Colorado

)

corporation,

)

)

Respondents.

)

RESPONDENT’S ANSWER TO COUNT II OF

COMPLAINANT’S AMENDED COMPLAINT

COMES NOW the Respondent The Highlands, LL.C. by its attorneys,

Harrington, Tock

&

Royse, and as its answer to Count

II

of the Complainant’s

Amended Complaint, states as follows:

1. Respondent admits the allegations contained in paragraph 1.

2. Respondent admits the allegations contained in paragraph 2.

3. Respondent denies knowledge and information sufficient to form a

belief as to the truth of the matters contained therein and demand

strict proof thereof.

4. Respondent admits that it operates a swine facility located three miles

south of Willian-isfield in the Northeast Quarter of Section

10,

Township

10 North, Range 4 East, Elba Township, Knox County,

Illinois (“the facility”) and that the facility’s offices are located at 1122

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Knox Highway 18, Williams Field, IL 61489. Respondent admits that

it owns the buildings and operates the waste water treatment facility

and provides labor for operation of the facility, but denies all other

allegations contained in this paragraph.

5. Respondent denies it owns the land on which The Highlands is

located.

6. Respondent admits that the allegations contained in this paragraph

were true as ofJune 18, 2002, but affirmatively states that said

allegations are not true today.

7. Respondent admits the allegations contained in paragraph 7.

8. Respondent admits the allegations contained in paragraph 8.

9. Respondent admits the allegations contained in paragraph 9.

10. Respondent denies the conversion began in April 2000, denies any

allegations that the two smaller lagoons have not been “properly

closed”, and denies that such smaller lagoons have been permanently

taken out of operation, but admits the remaining allegations of

paragraph 10.

11. Respondent admits the allegations contained in paragraph 11.

12. Respondent admits the allegations contained in paragraph 12.

13. Respondent admits the allegations contained in paragraph 13.

14. Respondent admits the allegations contained in paragraph 14.

15. Respondent admits the allegations contained in paragraph 15.

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16. Respondent admits the allegations contained in paragraph 16.

17. Respondent admits the allegations contained in paragraph 17.

18. Respondent admits the allegations contained in paragraph 18.

19. Respondent admits the allegations contained in paragraph 19.

20. Respondent admits the allegations contained in paragraph 20.

21. Respondent denies any knowledge that a neighbor noticed the color of

the discharge from the field tiles at approximately 2:00 p.m. on June 18,

2002, but admits all other allegations contained in this paragraph.

22. Respondent admits the allegations contained in paragraph 22.

23. Respondent denies any knowledge of what the EPA inspectors

observed.

24. Respondent denies any knowledge as to what was observed by the

EPA inspectors. Respondent admits all other allegations contained in

paragraph 24.

25. Respondent denies any knowledge as to when the Illinois EPA

received notification from IEMA and denies any knowledge as to what

the Illinois EPA inspectors found when they inspected the site on June

19th and whether or not the inspectors contacted IDNR. The

Respondent admits all other allegations contained in paragraph 25.

26. Respondent denies any knowledge of the findings of the IDNR

fisheries biologist.

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27. Respondent denies any knowledge of the allegations contained in

paragraph 27.

28. Respondent denies the allegations contained in paragraph 28.

29. Respondent admits the allegations contained in paragraph 29.

30. Respondent denies knowledge and information sufficient to form a

belief as to the allegations contained in paragraph 30.

31. Respondent admits the allegations contained in paragraph 31.

32. Respondent admits the allegations contained in paragraph 32.

WHEREFORE, the Respondent acknowledges violations of certain statutes

and regulations as aforesaid and is prepared to meet with the Attorney General

and Illinois EPA to discuss remediation of the stream by restocking the stream

with representative species as to those that were killed and to discuss any

penalty that may be appropriate.

f

.

ock, Attorney

Prepared by:

Jeffrey W. Tock

Harrington, Tock & Royse

201 W. Springfield Avenue

P.O. Box 1550

Champaign, IL 61824-1550

Telephone: (217) 352-4167