Opinion
03 C 50326
March 12, 2004
MEMORANDUM OPINION AND ORDER
Plaintiff, ATT Systems Co. et al, filed a nine count amended complaint against defendants, Vincent R. Tylman, Patricia B. Tylman and The Namlyt Trust. Federal question jurisdiction exists under 28 U.S.C. § 1331 as the complaint alleges violation of the federal securities laws, 15 U.S.C. § 77, among other claims. Defendants move to dismiss claiming res judicata and collateral estoppel bar the action. Defendants assert that the same parties litigated the same issues in Illinois state court in a case that was ultimately dismissed with prejudice based on a settlement agreement. In their motion, defendants rely on attached exhibit which is an order of dismissal with prejudice in a state court action captioned Sci-Tech Building Systems. LLC, and Investors v. Vince R. Tylman. Patricia B. Tylman. The Namlyt Co., a Business Trust, and Julie Vaughn and the statement by plaintiff in paragraph 8 of a brief filed with Plaintiff's' amended complaint in which counsel for plaintiff states "This present action in federal court is brought on the same merits and for the same fundamental reasons as those analyzed by Judge Glenn. . . . [T]he issues presented arose from the same set of operative facts precipitating the Sci-Tech investors' present RICO action" in this court.
Based on the information before the court at this time, it is not possible to conclude that either res judicata or collateral estoppel bar Plaintiff's' claims. The "preclusive effect of a state court judgment in a federal case is a matter of state rather than federal law." Brokaw v. Weaver. 305 F.3d 660, 669 (7th Cir. 2002). Under Illinois law, both res judicata and collateral estoppel require an identity of parties or their privies. Id. (applying Illinois law); Garcia v. Village of Mt. Prospect. No. 02-2869, 2004 WL 324903, * 3 (7th Cir. Feb. 23, 2004) (applying Illinois law). The Plaintiff's in the state court action ARB Sci-Tech Building Systems, LLC which is not a plaintiff in this action and "Investors" whose identities ARB not discernible from the state court order. It cannot be said at this point on this record that identity of parties or their privies exists. As such res judicata and collateral estoppel cannot be used to bar Plaintiff's' claims now.
Defendants also filed a motion for sanctions pursuant to 28 U.S.C. § 1927 asserting this action is a "vexatious and unreasonable multiplying" of the prior state court action. Based on the foregoing, this motion is premature and is also denied.
For the foregoing reasons, defendants' motion to dismiss and motion for sanctions ARB denied.