2026 IL App (1st) 220306-U No. 1-22-0306
Order filed August 28, 2026 Fifth Division
NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1).
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS FIRST DISTRICT
______________________________________________________________________________
NICHOLAS A. KRISLOV, as Executor of the Estate of ) Appeal from the Clinton A. Krislov, ) Circuit Court of ) Cook County.
Plaintiff-Appellant, )
) No. 21 CH 3494
v. )
) Honorable
BMO HARRIS BANK, N.A., ) Neil H. Cohen, ) Judge, Presiding.
Defendant-Appellant, )
________________________________________ )
)
BMO HARRIS BANK, N.A., )
)
Petitioner-Cross-Appellant, )
)
v. )
)
KENNETH GOLDSTEIN, MYRON CHERRY, and ) JACIE ZOLNA, )
)
Respondents-Cross-Appellees, )
)
________________________________________ )
MYRON CHERRY and JACIE ZOLNA, )
)
Petitioners-Cross-Appellants, )
)
v. ) BMO HARRIS BANK, N.A., and ANDREW VAIL, )
)
Respondents-Cross-Appellees. )
JUSTICE ODEN JOHNSON delivered the judgment of the court.
Justices Mikva and Wilson concurred in the judgment.
ORDER
¶1 Held: (1) The circuit court’s dismissal is affirmed where the complaint was barred by res judicata; (2) the circuit court’s denial of sanctions against Krislov and his attorneys is affirmed; and (3) the circuit court’s denial of Rule 137 sanctions against BMO Harris and Attorney Vail was not an abuse of discretion and is affirmed.
¶2 This appeal consists of three parts. The first being initiated by plaintiff Nicholas A. Krislov, as Executor of the Estate of Clinton A. Krislov 1 (Krislov) appealing the February 3, 2022, dismissal of his consumer fraud complaint against defendant BMO Harris Bank, N.A. (BMO Harris). Krislov contends that the circuit court improperly found that, due to his prior status as the relator in a prior qui tam claim for the State against BMO Harris, res judicata barred him from subsequently pursuing a consumer class action for himself and other non-government parties against BMO Harris for wrongful charges imposed on accounts. For the following reasons, we affirm.
Attorney Clinton A. Krislov was the original named plaintiff in this action, however, he died
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during its pendency and the executor of his estate was substituted as the named plaintiff.
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¶3 Secondly, defendant-cross-appellant BMO Harris appeals from the circuit court’s May 26, 2023, order that vacated its prior September 28, 2022, award of Rule 137 sanctions against Krislov and Attorney Kenneth Goldstein. 2 On appeal, BMO Harris contends that the circuit court abused its discretion in rescinding the sanctions against Krislov 3 and Goldstein. BMO Harris also contends that the circuit court erred in finding that Rule 137 sanctions were unavailable against Attorneys Myron Cherry (Cherry) and Jacie Zolna (Zolna). For the following reasons, we affirm.
¶4 Lastly, Attorneys Cherry and Zolna appeal from the circuit court’s May 26, 2023, denial of their motion for Rule 137 sanctions against respondents BMO Harris and its attorney, Andrew Vail (Vail). On appeal, Cherry and Zolna contend that the circuit court erred in finding that Rule 137 sanctions were not available against BMO Harris and Vail because pursuing sanctions against non-signing attorneys was a “technical matter” that should not be considered actionable under the rule. For the following reasons, we affirm.
¶5 I. BACKGROUND
¶6 A. KRISLOV I
¶7 This is not Krislov’s first appeal in an action involving BMO Harris. We previously affirmed the circuit court’s grant of the State of Illinois’ motion to dismiss Krislov’s qui tam action as a proper exercise of the State’s prosecutorial discretion. Specifically, we found that the record failed to support a finding of bad faith by the State in filing the motion to dismiss, and the denial of leave to amend the complaint was not an abuse of discretion where Krislov did not file a proper motion to amend the pleadings and did not provide the circuit court with the proposed amendment.
2 That same order denied sanctions against Attorneys Myron Cherry and Jacie Zolna.
3 BMO Harris has since voluntarily dismissed Krislov from its cross-appeal.
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State of Illinois ex rel. Clinton Krislov v. BMO Harris Bank, N.A., 2021 IL App (1st) 192273-U, ¶ 1. (Krislov I).
¶8 The underlying facts of the case are taken from Krislov I and serve as the factual basis for the instant case. We restate only those facts that are relevant to our ruling herein.
¶9 On August 10, 2018, Krislov filed a qui tam action in the circuit court of Cook County under seal, as relator, on behalf of the State of Illinois against BMO Harris for alleged violations of the Illinois False Claims Act (740 ILCS 171/1 et seq. (West 2018)) under case number 2018 L 8650. The basic facts underlying Krislov’s qui tam action were that Krislov opened an account with BMO Harris’ predecessor, Harris Trust and Savings Bank 4, in 1973 with an initial deposit, and he continued to use the account until November 2007. At that time, the account had an approximate balance of $1631. Krislov did not communicate or otherwise interact with BMO Harris from November 2007 until about May 2, 2018, when Krislov went to a newly opened BMO Harris branch and inquired about resuming his banking services with BMO Harris. The bank employee was unable to find any account information for Krislov and indicated that further research would be necessary. In July 2018, Krislov returned to the branch and spoke to the bank manager, who indicated that the account was closed with a zero balance in April 2017, and that the bank charged a monthly $12 dormancy fee and maintenance fee each month until the balance reached zero and the account was then closed. Krislov alleged that “at some point,” BMO Harris adopted a policy of charging a maintenance fee on all checking accounts that did not meet certain waiver requirements, as well as a policy on dormant accounts. Krislov further alleged that the
4 Harris Trust and Savings Bank became BMO Harris after a merger in 2005.
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bank’s deposit agreement showed that BMO Harris was aware of its obligation to report and transmit abandoned funds to the State.
¶ 10 On July 15, 2013, BMO Harris mailed a statement to Krislov, indicating that the bank would be eliminating the dormant account fee. The statement also indicated a balance of $582.65 in the account. Krislov asserted that BMO Harris knew or should have known that he was no longer using the account and that it became abandoned under the statute, thus triggering the bank’s obligation to report the account. Instead, Krislov maintained that the bank intentionally charged the monthly maintenance fee to the account to avoid reporting it as abandoned and remitting the funds to the State. Krislov alleged that the bank relied on the application of the monthly fee as “activity” in order to treat the account as active, even after more than five years of inactivity. Further, Krislov alleged that despite BMO Harris’ asserted right to charge the monthly maintenance under the contract with its customers, it was still obligated to report and turn over to the State any abandoned property as defined by the statutes. As an alternate argument, Krislov alleged that BMO Harris’ policy of not reporting accounts, where the only transactions were the monthly maintenance fee and the account owner took no steps that would rebut the presumption of abandonment, was done in “deliberate ignorance or reckless disregard” of its duty to report and remit the remaining funds to the State. Specifically, Krislov alleged that after the 60th month of inactivity, BMO Harris had a duty to report the account to the State as abandoned, which would have resulted in an approximate $911 remittance to the State on Krislov’s behalf. 5
5 BMO Harris indicates that Krislov argued in the circuit court that his account was abandoned by November 2012, which made the account escheatable to the State as of June 30, 2017, and that the remaining funds in the account should have been tendered on October 31, 2017. Bank records indicated that the balance in Krislov’s account as of October 31, 2017, was $56.65. Additionally, BMO Harris ultimately refunded $100 of fees to Krislov.
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¶ 11 Krislov further alleged that BMO Harris continued to implement its policy as of the time of the case and reported collecting $121,570, 000 in service charges on accounts in its June 30, 2018, Consolidated Reports of Condition and Income for a Bank with Domestic and Foreign Offices, a portion of which were maintenance fees charged to accounts that should have been reported as abandoned to the State. Krislov asserted that this policy applied to numerous other accounts held at BMO Harris and its policy violated the Unclaimed Property Act (765 ILCS 1025/1 et seq. (West 2016)) and Revised Unclaimed Property Act (765 ILCS 1026/1 et seq. (West 2018)) (collectively the Unclaimed Property Act). Krislov sought judgment against BMO Harris for: the amount of the State’s damages multiplied three times as required by law; up to $11,000 for each violation of the Unclaimed Property Act as civil penalties; and attorney fees and costs in prosecution of the action. All documents filed in relation to the case were filed under seal by the circuit court.
¶ 12 On October 5, 2018, the State filed a motion for extension of time to elect to intervene and for extension of the seal, indicating that it required additional time to investigate the allegations raised in Krislov’s relator complaint. Several continuances ensued while the State conducted its investigation. On July 15, 2019, the State exercised its “prosecutorial discretion” and moved to dismiss Krislov’s qui tam complaint under section 4(c)(2)(A) of the False Claims Act (740 ILCS 175/4(c)(2)(A) (West 2018)), arguing that: (1) based on its investigation and determination, the action lacked merit, and (2) the costs to the State, BMO Harris and the judicial system far outweighed any benefits of permitting the action to proceed. The State argued that it had discretion to dismiss false claims cases at any time under the False Claims Act, and in support of its motion, the State asserted that after concluding its investigation, which included issuing a subpoena and
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obtaining relevant documents from BMO Harris as well as discussing the matter with the State Treasurer, the State concluded that the complaint suffered from “significant legal and factual defects” that did not justify continued expenditure of its litigation resources.
¶ 13 The circuit court issued a memorandum order on October 7, 2019, which granted the State’s motion to dismiss, noting that as found by our supreme court, the State is the real party in interest in qui tam actions; such plaintiffs acting as statutorily designated agents for the State may proceed only with the consent of the Attorney General and remain completely statutorily subordinate to the Attorney General at all times. Additionally, the court noted that the False Claims Act unambiguously allowed the State to dismiss the complaint over the objections of Krislov as relator. The court further noted that the State did its due diligence through reviewing the complaint, issuing a subpoena, reviewing BMO Harris’ documents and conferring with the State Treasurer, and subsequently concluded that the action lacked merit.
¶ 14 We affirmed the circuit court’s dismissal noting that, under section 4(b)(2) of the False Claims Act (740 ILCS 175/4(b)(2) (West 2018)), the relator in a qui tam action was a party to the action and was awarded a portion of the proceeds or settlement if the action resulted in a recovery. Krislov I, 2021 IL App (1st) 192273-U, ¶ 18. We rejected Krislov’s argument that the valid purpose test applied and noted that we have consistently rejected similar arguments since at least 2006. Id.
¶ 21. We also noted that section 4(c)(2)(A) of the False Claims Act did not require a court to second-guess the State’s decision to dismiss by conducting an inquiry into the State’s motivations. As such, we presumed that the State acted in good faith, and barring glaring evidence of fraud or bad faith by the State, it was the State’s prerogative to decide which case to pursue, not the court’s. Id. ¶ 25. We concluded that the State fully complied with the requirements of the False Claims Act
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and thus properly exercised its statutory prosecutorial discretion in dismissing Krislov’s qui tam complaint. Id. ¶ 27. We further noted that Krislov failed to support its argument that the definition of property under the Unclaimed Property Act did not include an unrelated credit card in violation of Rule 341(h)(7) (eff. May 25, 2018), and his argument was waived. Id. ¶ 28. With respect to Krislov’s contention that he should have been granted leave to replead, we found that he failed to file proper motion for leave to amend the complaint and thus the circuit court did not abuse its discretion in denying Krislov’s request to replead. Id. ¶ 33. We therefore affirmed the judgment of the circuit court on May 28, 2021. Krislov’s subsequent petition for leave to appeal (PLA) to the supreme court was denied on September 29, 2021. State ex rel. Krislov v. BMO Harris Bank, N.A., No. 127409 (September 29, 2021).
¶ 15 B. Instant Appeal Circuit Court Proceedings (Krislov II)
¶ 16 On July 16, 2021, while the PLA was pending, Krislov filed a consumer class action complaint 6 in the circuit court on behalf of himself and others similarly situated against BMO Harris. This complaint asserted that the bank’s wrongful charges to consumers’ accounts was actionable under a variety of statutes: the Illinois Uniform Disposition of Unclaimed Property Act (765 ILCS 1025/1 et seq. (West 2020)); the Revised Uniform Unclaimed Property Act (765 ILCS 1026/15 (West 2020)); and the Consumer Fraud Act (815 ILCS 505/1 et seq. (West 2020)). Krislov also alleged claims of deceptive trade practices, unfairness, unjust enrichment, and conversion (Krislov II).
¶ 17 On October 27, 2021, BMO Harris filed a motion to dismiss pursuant to section 2-619 of the Code (Code) (735 ILCS 5/2-619 (West 2020)) on the basis of res judicata, arguing that Krislov
6 The class was never certified in the circuit court prior to dismissal of the action.
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I was a final judgment on the merits, there was identity of the causes of action, and that the same parties were involved. BMO Harris also argued that dismissal was warranted based on the expiration of the statute of limitations and that the prior case constituted another pending action. On February 3, 2022, the circuit court granted the motion to dismiss based on res judicata.
¶ 18 C. BMO Harris Motion for Rule 137 Sanctions
¶ 19 Subsequent to the circuit court’s grant of its motion to dismiss, BMO Harris filed its timely motion for Rule 137 (eff. Jan. 1, 2018) sanctions against Krislov and his attorneys, Goldstein, Cherry and Zolna, on March 4, 2022. In its motion, BMO Harris contended that after Krislov II was filed, it made at least five attempts to resolve the action before incurring time and expense to unnecessarily defend against a lawsuit that was barred as a matter of law, to wit: (1) BMO Harris’ counsel (Andrew Vail) immediately phoned Attorney Goldstein to discuss res judicata; (2) On September 20, 2021, Attorney Vail sent a letter to all of Krislov’s attorneys asking them to dismiss the complaint and reminding them of their Rule 137 obligations, to which Attorney Goldstein responded that the claims were not barred; (3) On September 28, 2021, BMO responded to Attorney Goldstein, with copies to Cherry and Zolna, restating that the claims were barred; (4) On October 13, 2021, after the PLA was denied, Attorney Vail again wrote to Krislov’s attorneys seeking dismissal with no response; (5) On October 18, 2021, Attorney Vail requested a response to the October 13 correspondence to which Attorney Goldstein refused but stated that they believed the case could be settled quickly on a class basis; and (6) On October 22, 2021, Attorney Vail responded to Krislov’s attorneys that it would not agree to settle a case that should have never been filed and again encouraged dismissal of the case; there was no response.
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¶ 20 BMO Harris sought sanctions against Krislov and his attorneys for filing Krislov II when they knew or should have known that the action was barred by res judicata, noting that all three attorneys were included in the signature line to the complaint. In its motion, BMO Harris stated that the arguments that Krislov presented in opposition to BMO Harris’ motion to dismiss were not supported by existing law or grounded in fact; Krislov failed to cite any authority for several of the arguments made; Krislov’s res judicata arguments contravened applicable Illinois precedent and he misrepresented the record from Krislov I. BMO Harris also noted that Krislov and Attorney Goldstein had been previously sanctioned for filing a lawsuit that was plainly barred by res judicata and those sanctions were affirmed by the First District Appellate Court. Consequently, BMO Harris argued, Krislov and Goldstein were on “particular notice” of their ethical obligations, as well as the elements and import of the doctrine of res judicata and yet brought the action anyway.
¶ 21 Krislov and his attorneys responded to the motion, arguing without citation to authority, that Krislov II was filed in good faith and that no controlling law barred the claims. They also argued that Attorneys Cherry and Zolna were not subject to Rule 137 sanctions because they had not signed the sanctionable pleadings, even though their names appeared in the signature block.
¶ 22 On September 28, 2022, the circuit court partially granted BMO Harris’ motion for sanctions against Krislov and Attorney Goldstein. However, the circuit court denied the motion for sanctions as to Attorneys Cherry and Zolna.
¶ 23 On November 15, 2022, Krislov and Goldstein filed a motion to reconsider or alternately an interlocutory appeal under Supreme Court Rule 304 (eff. Mar. 8, 2016) or Rule 308 (eff. Oct. 1, 2019. In its response, BMO Harris expressed three bases for why the motion should be denied:
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(1) reconsideration of the sanctions order was inappropriate because it merely restated the arguments advanced in response to BMO Harris’ motion to dismiss based on res judicata and its Rule 137 motion, and it was untimely; (2) Rule 304(a) did not permit interlocutory appeal of either the sanctions or the dismissal order; and (3) certification of the res judicata order pursuant to Rule 308 was inappropriate as such certification was not warranted. Krislov and Goldstein’s reply did not address the untimeliness issue.
¶ 24 After several continuances, briefing schedules and status hearings, the circuit court held a hearing on May 24, 2023. The circuit court granted Krislov and Goldstein’s motion to reconsider, finding that it believed that reasonable minds could differ on the res judicata issue, especially since the State’s decision not to pursue the qui tam action in Krislov I appeared to be a case of first impression. The court stated that it was going to impose the rule of lenity because it was the “right thing to do.” The court further noted that while it believed that it made the right decision on the substance of the ruling, it had doubts about the Rule 137 findings. BMO Harris filed their appeal of the court’s reconsideration and denial of Rule 137 sanctions on June 15, 2023.
¶ 25 D. Cherry and Zolna Motion for Rule 137 Sanctions
¶ 26 Meanwhile, Attorneys Cherry and Zolna filed a motion for sanctions against BMO Harris and Attorney Vail on October 24, 2022, after BMO Harris’ motion for sanctions was denied against them. Their motion claimed that BMO Harris and Vail violated Rule 137 by arguing that they were subject to sanctions because their names appeared in the typed signature block of sanctionable filings.
¶ 27 The circuit court heard argument on Cherry and Zolna’s sanctions motion at the same May 24, 2023, hearing conducted on Krislov and Goldstein’s motion to reconsider. The court denied
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the sanctions motion, finding that their inclusion in BMO Harris’ sanction motion was a “technical matter and not worthy of Rule 137 considerations.” The court stated that it did not believe that Vail intended to violate the law and if he did, it was merely a technical violation and used its discretion to deny the sanctions motion. Cherry and Zolna filed their notice of appeal on June 20, 2023.
¶ 28 ANALYSIS
¶ 29 A. Krislov Appeal
¶ 30 Krislov appeals the circuit court’s grant of BMO Harris’ section 2-619 motion to dismiss on the basis of res judicata. On appeal, Krislov contends that the circuit court erred in finding that the Attorney General’s non-merits dismissal of a qui tam action bars the relator from subsequently pursuing a consumer class action for himself for the wrongful charges. He argues that the bank committed a two-fold wrongdoing: (1) converting the consumers’ money to the bank and (2) evading its obligation to report the unclaimed accounts and turn the money over to the State so that the rightful owners could learn of and recover their money. Krislov further contends that this is an issue of first impression.
¶ 31 We disagree with Krislov’s framing of the issue; the issue before us is whether the circuit court properly granted BMO Harris’ motion to dismiss under section 2-619 of the Code (735 ILCS 5/2-619 (West 2020).
¶ 32 Our standard of review of a motion to dismiss under section 2-619 of the Code is de novo. Power Dry of Chicago, Inc. v. Bean, 2022 IL App (2d) 210043, ¶ 21. A section 2-619 motion to dismiss admits the legal sufficiency of the complaint and raises defects, defenses, or other affirmative matters that appear on the face of the complaint or are established by external
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submissions that act to defeat the claim. Id. A section 2-619 proceeding permits a dismissal after the circuit court considers issues of law or easily proved issues of fact. Id. ¶ 22.
¶ 33 In ruling on a section 2-619 motion to dismiss, the circuit court may consider pleadings, depositions, and affidavits. Krilich v. American National Bank and Trust Co. of Chicago, 334 Ill. App. 3d 563, 570 (2002). The question on appeal is whether the existence of a genuine issue of material fact should have precluded the dismissal or, absent such issue of fact, whether dismissal is proper as a matter of law. Id. On appeal, a reviewing court may affirm the circuit court’s ruling for any reason supported by the record, regardless of the basis relied upon by the circuit court. Metzger v. Brotman, 2021 IL App (1st) 201218, ¶ 42.
¶ 34 As noted above, BMO Harris’ section 2-619 motion raised several sections in support of dismissal. Specifically, the motion raised res judicata (section 2-619(a)(4) (West 2020)); timeliness (section 2-619(a)(5) (West 2020)); and that Krislov I constituted a prior pending action (section 2-619(a)(3) (West 2020)). The circuit court granted BMO Harris’ motion to dismiss based on res judicata. After a review of the pleadings, we conclude that the Krislov II complaint was barred by res judicata.
¶ 35 Whether an action is barred by res judicata is a question of law that the reviewing court reviews de novo. Ward v. Decatur Memorial Hospital, 2019 IL 123937, ¶ 44.
¶ 36 Res judicata is an equitable doctrine that is designed to prevent a multiplicity of lawsuits between the same parties where the facts and issues are the same. Mular v. Ingram, 2016 IL App (1st) 152750, ¶ 15. In order for the doctrine of res judicata to apply, three requirements must be met: (1) a final judgment on the merits rendered by a court of competent jurisdiction; (2) identity of cause of action; and (3) identity of parties or their privies. Id. When these three factors are met,
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the final judgment rendered on the first cause of action bars any subsequent action between the same party or their privies involving the same claim, demand, or cause of action. Id.
¶ 37 With respect to the first requirement, Krislov contends that there was no final adjudication on the merits in Krislov I because the Attorney General exercised its prosecutorial discretion and dismissed the qui tam action before it could be decided on its merits. While Krislov attempts to frame this issue as an issue of first impression, our supreme court rules address such an issue. Illinois Supreme Court Rule 273 provides:
“Unless the order of dismissal or a statute of this State otherwise specifies, an involuntary dismissal of an action, other than a dismissal for lack of jurisdiction, for improper venue, or for failure to join an indispensable party, operates as an adjudication upon the merits.” Ill. S. Ct. R. 273 (eff. Jan. 1, 1967).
¶ 38 Krislov I was dismissed with prejudice on the Attorney General’s motion after its investigation found that the action had no merit. Under Illinois law, the dismissal of a complaint for failure to state a claim is an adjudication on the merits. River Park, Inc. v. City of Highland Park, 184 Ill. 2d 290, 303 (1998). Thus, the first requirement for res judicata is met here.
¶ 39 Next, we look at whether there is identity of the cause of action. A cause of action is defined by the facts that give rise to a right of relief. Mular, 2016 IL App (1st) 152750, ¶ 16. Even if several theories of recovery arise out of the same facts, there is a single cause of action because res judicata bars not only those matters that were actually decided in the prior action, but also those matters that could have been decided. Id.
¶ 40 The parties dispute whether the second requirement is met. Krislov contends that Krislov II and Krislov I were different because Krislov I was a qui tam action filed on behalf of the State
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of Illinois, while Krislov II was filed on his own behalf and others similarly situated, and also raised different theories of BMO Harris’ liability. On the other hand, BMO Harris contends that there is an identity of the cause of action because the instant case arises out of the same operative facts as Krislov I.
¶ 41 To determine whether there is an identity of cause of action, for res judicata purposes, the transactional test” is used. Id.¶ 18 (citing River Park, 184 Ill. 2d at 309-10). Under that test, differing claims are considered the same cause of action for purposes of res judicata if they arise from a single group of operative facts, regardless of whether they assert different theories of relief. Id. (citing River Park, 184 Ill. 2d at 311).
¶ 42 Under this test, we find that Krislov’s claims in Krislov I and Krislov II arise out of the same operative facts, namely, that BMO Harris zeroed out his checking account by charging maintenance and dormancy fees rather than turning the funds over to the State of Illinois Unclaimed Property Division. These facts framed the basis for Krislov’s qui tam action on behalf of the state in Krislov I, and also form the basis for his claims in Krislov II , specifically his claims under the Illinois Uniform Disposition of Unclaimed Property Act (765 ILCS 1025/1 et seq. (West 2020)), the Revised Uniform Unclaimed Property Act (765 ILCS 1026/15 (West 2020)), and the Consumer Fraud Act (815 ILCS 505/1 et seq. (West 2020)); as well as claims of deceptive trade practices, unfairness, unjust enrichment, and conversion. Therefore, we find that there is identity of the cause of action, despite the fact that each complaint asserts a different theory of recovery. As our supreme court has explained, although a single group of operative facts may give rise to the assertion of more than one kind of relief or more than one theory of recovery, assertions of different kinds of theories of relief arising out of a single group of operative facts constitute but a
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single cause of action. River Park, 184 Ill. 2d at 315. Here, our review of the pleadings convinces us that there is no material difference between the causes of action in Krislov I and Krislov II; the claims asserted in Krislov II were merely substituted labels for the same claims, facts, and relief.
¶ 43 We also reject Krislov’s assertion that the qui tam action precluded him from raising these claims individually and any notion that barring these claims is unfair. As we noted in Krislov I, Krislov’s attempt to raise some of these same claims failed because he did not properly seek leave to amend his pleadings. Additionally, we noted that this situation was created by Krislov himself as he chose not to assert his individual claims but rather elected to file a qui tam action. The purpose of res judicata is to promote judicial economy by requiring parties to litigate, in one case, all rights arising out of the same set of operative facts and also to prevent the unjust burden that would result if a party could be forced to relitigate what is essentially the same case. River Park, 184 Ill. 2d at 319.
¶ 44 The final requirement for res judicata is identity of parties or their privies. In order to be bound by a prior judgment in an action where it was not a party, the party in the subsequent lawsuit must have been in privity with one of the parties in the prior lawsuit. Agolf, LLC v. Village of Arlington Heights, 409 Ill. App. 3d 211, 220 (2011). Privity exists between a party to the prior suit and a nonparty when the party to the prior suit adequately represented the same legal interests of the nonparty. Id. It is clear that Krislov was in privity with the State of Illinois in Krislov I, where he brought the suit on the state’s behalf as the relator. See 740 ILCS 175/4(b)(1) (West 2024) (a private person, referred to as a relator, may bring a civil action in the name of the state for violation of the False Claims Act). A relator is also considered a party to the action. 740 ILCS 175/4(c)(1)
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(West 2024). Accordingly, the third requirement of identity of parties or privies is met for application of the doctrine of res judicata.
¶ 45 As all three requirements for the transactional test for res judicata have been met, we conclude that Krislov II is barred by res judicata and the circuit court did not err in granting BMO Harris’ motion to dismiss on that basis. Although Krislov may be dissatisfied with this outcome, Illinois courts have long held that a party cannot relitigate an issue merely because he is unhappy with the previous result, and Krislov’s attempts at reframing the issue in this appeal are without merit. The judgment is affirmed.
¶ 46 B. BMO Harris Appeal- Denial of Rule 137 Sanctions
¶ 47 BMO Harris 7 contends that: (1) the circuit court abused its discretion in rescinding the Rule 137 sanctions against Krislov and his counsel after they advanced a barred claim that was not well-grounded in the facts or law and was for an improper purpose and (2) the circuit court erred in finding that Attorneys Cherry and Zolna, who signed Krislov’s frivolous filings by voluntarily affixing their names and addresses to them, were not subject to sanctions under Rule 137. We note that on March 13, 2024, BMO Harris moved to dismiss Krislov from the cross-appeal after learning that Krislov had passed away. We granted the motion on March 18, 2024.
¶ 48 The circuit court rescinded the Rule 137 sanctions on Krislov and Goldstein’s motion to reconsider, which was purportedly brought to correct errors in the court’s previous application of existing law. Specifically, Krislov and Goldstein argued that the fundamental underlying issue was whether the Attorney General’s discretionary dismissal of the qui tam claim for the State
7 BMO Harris notes in its brief that its corporate name has changed to BMO Bank, N.A. in September 2023; however, for continuity sake, we will continue to refer to it as BMO Harris within the context of this appeal.
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constituted a res judicata bar against Krislov bringing and persisting with a subsequent consumer claim for damages from BMO Harris’ related wrongful charges to accountholders. They claim that there was no controlling Illinois authority for this issue, and therefore the circuit court erred in applying law that did not exist. We find it worthy of mention, that the motion did not cite any authority for its position.
¶ 49 A motion to reconsider brings to the court’s attention changes in the law, new evidence or errors in the court’s application of existing law. Papadakis v. Fitness 19 IL 116, LLC, 2018 IL App (1st) 170388, ¶ 13. Generally, a circuit court’s decision to grant or deny a motion to reconsider will not be reversed absent an abuse of discretion. In re Marriage of Heinrich, 2014 IL App (2d) 121333, ¶ 55. However, where the motion was based only on the circuit court’s application or purported misapplication of existing law, rather than on new facts or legal theories not presented at trial, a reviewing court reviews de novo the circuit court’s decision to grant or deny the motion. Id. We thus review the circuit court’s grant of the motion to reconsider de novo.
¶ 50 The original sanctions order of September 28, 2022, found that Krislov II was not barred by res judicata when it was initially filed because Krislov’s PLA was still pending before our supreme court, and thus the decision of Krislov I was not final. The order also indicated that the filing of [Krislov II] “was a transparent attempt to perform an end-run around the trial court and appellate court in Krislov I.” Once the supreme court denied Krislov’s PLA on September 29, 2022, the judgment in Krislov I became final, and the complaint was then barred by res judicata and Rule 137 required Krislov and his attorneys to dismiss the suit, which they did not do despite repeated requests by BMO Harris. The order further noted that Krislov and his attorneys persisted
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in making arguments that were unsupported by any applicable legal authority and misrepresented both the facts and the law. Sanctions were then levied against Krislov and Goldstein.
¶ 51 At the hearing on Krislov and Goldstein’s motion to reconsider, the circuit court stated that it did not really need to hear arguments as it had already reviewed the motion. The court noted that it seemed to be a case of first impression with regard to a qui tam situation and stated that it would impose the rule of lenity because it was “the right thing to do,” while also noting that “reasonable minds could differ.” The circuit court further noted that it took into consideration the fact that there was case law with regard to Krislov’s past behavior but it did not think that the case law should have a bearing on the court’s review of the present case. The court also indicated that it was concerned about the idea that it could have abused its discretion, although it did not think so. However, it felt that reasonable minds could differ as to whether Krislov and Goldstein’s assertions were either untrue or made without reasonable cause, so it reversed itself and rescinded the Rule 137 sanctions.
¶ 52 Rule 137 provides that any pleading, motion, or other document filed in court must be “well grounded in fact” and “warranted by existing law or a good-faith argument for the extension, modification, or reversal of existing law” and not brought for any improper purpose. Ill. S. Ct. R. 137(a) (eff. Jan. 1, 2018). “The rule allows for a court, on motion or on its own initiative, to impose sanctions against a party or its attorney for violating these requirements.” Lake Environmental, Inc. v. Arnold, 2015 IL 118110, ¶ 7. The party seeking sanctions bears the burden of proving that sanctions are warranted. Kotara, LLC v . Schneider, 2018 IL App (3d) 160525, ¶ 20.
¶ 53 “The primary purpose of the rule is to discourage attorneys and parties from filing frivolous or false matters and asserting claims without any basis in law or fact, by penalizing those who
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engage in such wrongful conduct.” Cook ex rel. Cook v. AAA Life Insurance Co., 2014 IL App (1st) 123700, ¶ 63. Rule 137 is designed to discourage frivolous filings, not to punish parties for making losing arguments. Lake Environmental, 2015 IL 118110, ¶ 15.
¶ 54 To satisfy Rule 137, a litigant is required to make a “reasonable inquiry” into the facts alleged in a pleading. Pritzker v. Drake Tower Apartments, Inc., 283 Ill. App. 3d 587, 590 (1996). Courts are instructed to use an objective standard in evaluating what was reasonable under the circumstances as they existed at the time of filing. Sterdjevich v. RMK Management Corp., 343 Ill. App. 3d 1, 19 (2003). It is not sufficient that the plaintiff “honestly believed” that the allegations raised were grounded in fact or law. Id.
¶ 55 Because Rule 137 is penal in nature, it will be strictly construed. Dowd & Dowd, Ltd. v. Gleason, 181 Ill. 2d 460, 487 (1998). The circuit court herein initially granted sanctions under Rule 137 but subsequently reconsidered and vacated its order. The determination of whether to impose Rule 137 sanctions is a matter within the discretion of the circuit court and should not be disturbed absent an abuse of discretion. Dowd, 181 Ill. 2d at 487. A circuit court abuses its discretion when no reasonable person could have taken the view it adopted. Sterdjevich, 343 Ill. App. 3d at 19. When reviewing a decision on a motion for sanctions, the primary consideration is whether the trial court’s decision was informed, based on valid reasoning, and follows logically from the facts. Technology Innovation Center, Inc. v. Advanced Multiuser Technologies Corp., 315 Ill. App. 3d 238, 244 (2000). There is no requirement for a circuit court to explain its reasons for denying a motion for sanctions. Rubin and Norris, LLC v. Panzarella, 2016 IL App (1st) 141315, ¶ 49.
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¶ 56 Courts should use an objective standard in determining what was reasonable under the circumstances as they existed at the time of filing. Davis v. Davis, 2019 IL App (3d) 170744, ¶ 24. A court should not impose sanctions on a party for failing to conduct an investigation of facts and law when the party presents objectively reasonable arguments for his or her position, regardless of whether those arguments are unpersuasive or incorrect. Patton v. Lee, 406 Ill. App. 3d 195, 202 (2010). As a reviewing court, our focus is whether the record provides an adequate basis for upholding the circuit court’s decision to deny sanctions rather than the circuit court’s specific reasons for doing so. Lake Environmental, 2015 IL 118110, ¶ 16.
¶ 57 Based on our review of the record, we find that the Krislov II complaint was not res judicata when it was filed because Krislov I was still pending before our supreme court. While we have concluded in this appeal that Krislov II was barred by res judicata, that particular question was not resolved at the time that the complaint was filed. Further, it cannot reasonably be argued that Krislov did not present objectively reasonable arguments for his position, regardless of their correctness or persuasiveness. The circuit court found that reasonable minds could differ as to whether the complaint was well grounded in fact and decided to give Krislov and Goldstein the benefit of the doubt. We cannot say that such decision was an abuse of discretion and we therefore affirm the circuit court’s denial of sanctions against Krislov and Goldstein.
¶ 58 We decline to address BMO Harris’ contention that the circuit court erred in finding that Attorneys Cherry and Zolna, who signed Krislov’s alleged frivolous filings by voluntarily affixing their names and addresses to them, were not subject to sanctions under Rule 137. BMO Harris’ response to Cherry and Zolna’s cross-appeal essentially conceded that they were not subject to Rule 137 sanctions as discussed below.
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¶ 59 C. Cherry and Zolna’s Appeal – Denial of Rule 137 Sanctions
¶ 60 Cross-Appeal II challenges the second part of the circuit court’s May 28, 2023, order that denied Cherry and Zolna’s motion for sanctions against BMO Harris and Vail. On appeal, Cherry and Zolna contend that the circuit court erred in finding that the pursuit of sanctions against non- signing attorneys was a “technical matter” that should not be considered sanctionable under Rule 137. As noted above, after its motion to dismiss was granted, BMO Harris pursued Rule 137 sanctions against all of Krislov’s attorneys, including Cherry and Zolna, who had not signed the complaint in Krislov II. Cherry and Zola assert that it is well settled under Rule 137 that moving for sanctions against non-signing lawyers is not warranted and is contradicted by the plain language of the rule. They argue that BMO Harris and Vail fundamentally violated the rule and created a “fictional signature block rule” that has no support in the rule or caselaw, and that they were included in the sanctions motion without any factual or legal support. Cherry and Zolna also contend that this court’s standard of review is de novo because the circuit court’s decision was based on interpretation of supreme court rules.
¶ 61 BMO Harris responds that the circuit court correctly denied Cherry and Zolna’s motion for sanctions against it and Vail because it is correct that attorneys whose typewritten names appear in a signature block of pleadings can be liable for violations of Rule 137. However, it also argues that even if this court concludes that BMO Harris’ reading of Rule 137 is incorrect, its position is well-grounded in existing law, therefore the circuit court was well within its discretion to conclude that BMO Harris’s position was not worthy of Rule 137 sanctions.
¶ 62 We disagree with Cherry and Zolna’s characterization of the issue on appeal. While they are correct that supreme court rules are interpreted in the same manner as statutes and that we
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review a lower court’s interpretation of them de novo (Lake Environmental, 2015 IL 118110, ¶ 12), that is not the issue before this court. Rather, the issue before us is the circuit court’s denial of a motion for sanctions, which is reviewed for an abuse of discretion. Id. ¶ 16. An abuse of discretion occurs when no reasonable person would agree with the court’s decision. Id.
¶ 63 As noted above, Illinois Supreme Court Rule 137 (eff. Jan. 1, 2018) provides that circuit court judges may impose sanctions when the rule is violated; they are not required to do so. Rubin and Norris, 2016 IL App (1st) 141315, ¶ 49. The rule is designed to discourage frivolous filings, not to punish parties for making losing arguments. Id. The purpose of the rule is to prevent parties from abusing the judicial process by imposing sanctions on those who file vexatious and harassing actions premised on unsupported allegations of fact or law. Id. Rule 137 is penal in nature and is strictly construed, reserving sanctions for the most egregious crimes. Id.
¶ 64 The party that requests the imposition of Rule 137 sanctions bears the burden of proof and must show that the opposing party made untrue and false allegations without reasonable cause for the mere purpose of invoking harassment or undue delay of the proceedings. Technology Innovation Center Inc. v. Advanced Multiuser Corp., 315 Ill. App. 3d 238, 243-44 (2000). On review, we ask whether the circuit court’s decision was informed, based on valid reasons, and followed logically from the circumstances of the case. Rubin and Norris, 2016 IL App (1st) 141315, ¶ 49. There is no requirement for a circuit court to explain its reasons for denying a motion for sanctions. Id.
¶ 65 As previously stated, courts should use an objective standard in determining what was reasonable under the circumstances as they existed at the time of filing. Davis, 2019 IL App (3d) 170744, ¶ 24. A court should not impose sanctions on a party for failing to conduct an investigation
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of facts and law when the party presents objectively reasonable arguments for his or her position, regardless of whether those arguments are unpersuasive or incorrect. Patton, 406 Ill. App. 3d 195, 202 (2010). As a reviewing court, our focus is whether the record provides an adequate basis for upholding the circuit court’s decision to deny sanctions rather than the circuit court’s specific reasons for doing so. Lake Environmental, 2015 IL 118110, ¶ 16.
¶ 66 Based on our review of the record, we find that BMO Harris and Vail had a reasonable basis for filing a motion for sanctions against Cherry and Zolna such that Rule 137 sanctions are not warranted here. It is undisputed that BMO Harris did not file its motion for sanctions until after the circuit court had already granted its motion to dismiss Krislov II based on res judicata. BMO Harris also made several attempts to settle the matter and have the case dismissed prior thereto. Cherry and Zolna were included in those communications, despite primary correspondence being with Goldstein. It is also undisputed that all of Krislov’s attorneys were listed in the signature block of the complaint, namely Attorneys Goldstein, Cherry and Zolna. We note that the complaint did not have a “wet” signature; rather the entire signature block was typewritten with “/s/ Kenneth T. Goldstein” above the signature block where each of the attorneys was listed. In its sanctions motion for Krislov and all of his attorneys, including Cherry and Zolna, BMO Harris presented and argued its position that all of the attorneys were subject to sanctions as they jointly represented Krislov and were listed on the pleadings. We cannot find that BMO Harris’ actions were so egregious that no reasonable person would have denied Rule 137 sanctions as the circuit court did here. It should also be noted that Cherry and Zolna successfully defended against BMO Harris’ sanction motion and it was only after the sanctions were denied that Cherry and Zolna sought Rule 137 sanctions against BMO Harris and Vail. We conclude that, based on the record before us, the
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trial court’s denial of Rule 137 sanctions against BMO Harris and Vail was not an abuse of discretion.. We therefore affirm the circuit court’s order denying Cherry and Zolna’s motion for Rule 137 sanctions against BMO Harris and Vail.
¶ 67 CONCLUSION
¶ 68 In conclusion, we find the following: (1) the circuit court’s dismissal of the Krislov II complaint is affirmed where the complaint was barred by res judicata; (2) the circuit court’s denial of Rule 137 sanctions against Krislov and his attorneys is affirmed; and (3) the circuit court’s denial of Rule 137 sanctions against BMO Harris and Vail was not an abuse of discretion and is affirmed.
¶ 69 Affirmed.