Background
Clinton A. Krislov first brought a sealed qui tam action for Illinois alleging that BMO Harris improperly depleted dormant checking accounts through fees rather than reporting and remitting abandoned funds to the State. The Attorney General investigated and moved to dismiss the action, concluding it lacked merit and that the costs of proceeding outweighed any benefit. The dismissal was affirmed in Krislov I.
While his petition for leave to appeal in Krislov I remained pending, Krislov filed this putative consumer class action against BMO Harris based on the same alleged depletion of his account. He asserted claims under Illinois unclaimed-property and consumer-fraud statutes, along with deceptive-trade-practices, unjust-enrichment, and conversion theories. The circuit court dismissed on res judicata. It later vacated Rule 137 sanctions previously imposed on Krislov and attorney Kenneth Goldstein, and denied dueling sanctions motions involving attorneys Myron Cherry, Jacie Zolna, BMO Harris, and BMO’s counsel Andrew Vail.
The Court’s Holding
The appellate court affirmed the dismissal. Krislov I was a final merits adjudication under Illinois Supreme Court Rule 273 because it was dismissed with prejudice after the Attorney General’s investigation found the action lacked merit. Both cases arose from the same operative facts: BMO Harris allegedly charged maintenance and dormancy fees until Krislov’s account reached zero instead of turning abandoned funds over to the State. Different legal labels and the shift from a qui tam action to an individual putative class action did not create a different cause of action, and Krislov was in privity with Illinois as the prior action’s relator.
The court also affirmed the denial of all Rule 137 sanctions. Although the consumer complaint was ultimately barred, it was filed while Krislov I was still pending before the Illinois Supreme Court, and the court held that Krislov and Goldstein had made objectively reasonable arguments. BMO Harris and Vail likewise had a reasonable basis to seek sanctions against Cherry and Zolna, whose names appeared in the complaint’s typewritten signature block, even though the sanctions request failed.
Key Takeaways
- Res judicata barred the later consumer action because it arose from the same transaction as the earlier qui tam case.
- A dismissal with prejudice following the Attorney General’s motion to dismiss a qui tam complaint operated as a merits judgment for res judicata purposes.
- Rule 137 does not punish every unsuccessful legal position; sanctions denials are reviewed for abuse of discretion.
Why It Matters
The decision applies Illinois’ transactional approach to res judicata across different litigation vehicles. A relator cannot recast the same facts underlying a dismissed qui tam action as individual or class claims simply by changing the asserted theories of liability.
It also underscores the narrow role of Rule 137: courts may deny sanctions where the challenged position had an objectively reasonable basis, even if the position ultimately fails.