Court Error – Claim Preclusion

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7^th Circuit Court of Appeals

Case Name: Derick L. Berry v. Wells Fargo Bank, N.A., et al.

Case No.: 16-3544

Officials: POSNER, KANNE, and SYKES, Circuit Judges  

Focus: Court Error – Claim Preclusion

Berry argues that the district court erred by dismissing his suit on the basis of preclusion. Typically a defendant must specify claim preclusion as an affirmative defense in his answer, to be able to avail himself of it, then file a Rule 12(c) motion for judgment on the pleadings. But Berry’s state‐court filings gave the district court everything it needed in order to be able to rule on the defense, Walczak v. Chicago Board of Education, 739 F.3d 1013, 1016 n. 2 (7th Cir. 2014), and Berry presents no evidence that the district court neglected to consider regarding preclusion. See United States v. Rogers Cartage Co., 794 F.3d 854, 861 (7th Cir. 2015).

Berry argues that he had no chance to present in state court the matters advanced in his federal lawsuit. But he did present them in state court. His federal complaint and his state‐court filings describe the same “group of operative facts,” see Rose v. Board of Election Comm’rs for the City of Chicago, 815 F.3d 372, 375 (7th Cir. 2016). He also argues that the state court wrongly rejected his motion for leave to file an affirmative defense under the Fair Housing Act without a detailed written explanation. But if he was dissatisfied with the state court’s decision or justifications, his remedy was to appeal, not to start over with a new suit. In any event he can’t avoid his previous concession that the two lawsuits de‐ scribe the same “events and actions.” See Parungao v. Com‐ munity Health Systems, 858 F.3d 452, 458–59 (7th Cir. 2017).

Berry argues that claim preclusion should not apply because litigating his federal claims would not automatically nullify the foreclosure sale. See Ross Advertising, Inc. v. Heartland Bank & Trust Co., 969 N.E.2d 966, 975 (Ill. App. 2012). But it would, because the federal claims are designed to change the outcome of the state court proceeding. Berry alleges one set of facts in his second amended complaint that he did not allege in the state court: the search of his public‐housing unit. But these allegations describe conduct by third parties unconnected to Wells Fargo or HSBC, and Berry doesn’t argue that either defendant was responsible for those parties’ actions. Thus although these specific allegations may form the basis for a claim that would not be precluded by the foreclosure judgment, they fail to state a claim against either named defendant.

Affirmed

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.