Reallege It Or Waive It

A bank claimed defendants wrongfully sold a portfolio of loans. The bank sued the defendants under several equity theories. The complaint and an amended complaint were dismissed. When the bank filed a second amended complaint, it did not reallege or incorporate the dismissed legal theories from the first two complaints.

The second amended complaint was dismissed with prejudice. The bank’s appeal sought review of the orders that dismissed the first two complaints. The appellate court ruled that the bank had waived appeal of all issues except those raised in the second amended complaint.

“A plaintiff desiring to preserve for appeal the previous dismissal of claims either must stand on the dismissed counts and challenge the ruling at the appellate level or reallege or incorporate the dismissed counts in subsequent complaints.” … A party who files an amended complaint waives any objection to the trial court’s ruling on the former complaint … Where an amended pleading is complete and does not refer to or adopt the prior complaint, the earlier complaint ceases to be a part of the record, being in effect abandoned and withdrawn … Once an amended pleading has been filed, allegations of error in dismissing a prior pleading are waived.…

The bank argued for a rule like that observed in the 7th Circuit Court of Appeals, which does not require a plaintiff to replead a dismissed cause of action to preserve it for appeal. But the Second District Illinois Appellate Court rejected the argument and deferred to Illinois precedent that requires repleading.

Get the whole case, Ottawa Savings Bank v. JDI Loans, No. 2-06-0671 (6/25/07), by clicking here.