Understanding the "Law of the Case" Doctrine
Any experienced lawyer is aware that when an appellate court overrules a trial court and returns the case to the trial court, generally speaking the appellate ruling is law of the case and binding on the lower court. Otherwise, issues would be litigated repeatedly. But general rules are for lawyers who don’t think.
Pleading Damages in Commercial Litigation
Damages in commercial litigation can be complicated. Knowledge of balance sheets, income statements, capitalization rates, and statistical projections is often helpful. Moreover, the damages theories must be adequately pleaded. Varying from your pleaded facts and theories can result in objections at trial, causing the exclusion of evidence.
Case Study: Stevens v. Newman
Consider this fact pattern. Plaintiffs Dan Stevens and Neil R. Thompson sued Robert and Terry Newman (the Newmans) for unpaid rent on a restaurant property. The Newmans, in turn, brought a third-party complaint against Peoples National Bank of McLeansboro (PNB), claiming it had improperly diverted proceeds from a $150,000 letter of credit meant to secure lease payments. Under a 2001 agreement, $81,000 from that letter of credit was to be maintained to cover rent obligations. Instead, the money was drawn down by PNB, which paid some unrelated debts owed by the tenant, Amigos Food Services. The Newmans according claimed that this money was converted. There was also a claim for breach of fiduciary duty.
The trial court initially found in the Newmans’ favor on liability and proceeded to a bench trial on damages. There, the Newmans advanced a new theory: that PNB’s failure to notify them of Amigos’ lease default violated a separate pledge agreement, which would have allowed the Newmans to retake control of the business and avoid damages. The trial court awarded substantial damages based on that theory. However, the appellate court reversed the damages award, holding that no allegations relating to the pledge agreement had been pled and that the trial court improperly made new liability findings during a damages-only proceeding. The case was remanded for a new trial limited to damages flowing solely from the misapplication of the letter of credit. This claim was not as valuable.
The Discretion to Amend Pleadings on Remand
On remand, therefore, the Newmans sought to amend their third-party complaint to include allegations involving the pledge agreement and a new count for breach of fiduciary duty under that agreement. Their opponents argued that the appellate court’s decision prevented this. Because the amendments arose from the same transaction, posed no prejudice to PNB, and cured the deficiencies noted in the prior appeal, and because the prior judgment on damages had been vacated and no final judgment existed, the circuit court ruled that the pleadings could be amended under section 2-616 of the Illinois Code of Civil Procedure.
The circuit court must not have been 100% confident of its ruling, and it therefore permitted an immediate appeal to decide whether the amendments were proper given the appellate court’s ruling in the first appeal. But the appellate court affirmed the trial court’s authority to permit such amendments. Emphasizing the discretion lodged with the trial court, it allowed amended pleadings as long as the amendments were proposed and proper under the statutory requirements. It noted that it was offering no opinion on the merits of the new pleadings.
Consult on Your Illinois Commercial Case
The case is Dan Stevens and Neil Thompson v. Robert L. Newman et al. v. People’s National Bank of McLeansboro v. Robin and Brandi Newman, 2025 IL App (5th) 230664-U. For a copy of it or to consult about appellate procedures, pleading requirements, or damages in commercial cases, get in touch with Tom Patterson at tpatterson@pattersonlawfirm.com.
The "law of the case" doctrine generally states that a ruling by an appellate court on a legal issue is binding on the trial court if the case is sent back (remanded) for further proceedings. This prevents the same issues from being re-litigated endlessly. However, as the discussed case shows, this doctrine has nuances, especially concerning procedural matters like amending pleadings.
It is very risky. As seen in the Stevens v. Newman case, introducing a new damages theory at trial that was not included in your initial pleadings can lead to objections and the exclusion of your evidence. An appellate court can reverse a damages award if it's based on unpleaded theories.
Often, yes. The Stevens v. Newman case affirmed that trial courts have the discretion to allow amendments to pleadings on remand, provided they meet the requirements of the Illinois Code of Civil Procedure (Section 2-616). The key factors include whether the amendments arise from the same transaction, do not prejudice the opposing party, and cure defects identified in the appeal.
