3432 West Henderson Building, LLC v. Gizynski
81 N.E.3d 94
| Ill. App. Ct. | 2017Background
- Defendant Gizynski borrowed $1.4M in 2005 secured by a first mortgage on commercial property; loan terms allowed a 13.5% default interest rate and contractually authorized recovery of attorney’s fees and expenses as part of the indebtedness.
- Gizynski defaulted in 2009; foreclosure was filed and later consolidated with an NEIU condemnation proceeding that resulted in NEIU acquiring the property for $5.2M; Henderson Building succeeded to the lender’s note and mortgage.
- Henderson Building petitioned for disbursement (Nov. 2014), seeking payoff (~$2.6M initially) that included attorney’s fees and accrued interest; it later filed multiple supplements increasing the claimed fees to $199,229.78 and a final disbursement payment of $2,885,837.14 was ordered.
- Gizynski moved to reconsider, arguing (inter alia) that default interest should not run on attorney’s fees, that post-petition fees lacked written findings and required an evidentiary hearing; the trial court denied reconsideration and declined Henderson Building’s later request for leave to file a fee petition for fees defending the motion to reconsider.
- On appeal, Gizynski challenged the award/interest calculation, the amount and documentation of fees, and absence of an evidentiary hearing; Henderson Building cross-appealed the denial of leave to file a fee petition and sought fees for this appeal.
Issues
| Issue | Plaintiff's Argument (Henderson Building) | Defendant's Argument (Gizynski) | Held |
|---|---|---|---|
| Whether attorney’s fees can be added to indebtedness and accrue default interest | Loan docs permit fees to be part of “Indebtedness” and to bear interest at the Note rate from expenditure until paid | Fees are not principal; Foreclosure Law/Eminent Domain Act preclude interest on attorney’s fees | Fees are contractually part of indebtedness and properly bore default interest (13.5%) |
| Whether lender is entitled to attorney’s fees despite foreclosure/condemnation outcome | Note/mortgage allow recovery of fees “whether or not there is a lawsuit” and in connection with condemnation | Foreclosure effectively ended with condemnation; lender abandoned foreclosure so should not recover fees | Contract language controls; lender may recover reasonable fees incurred protecting its mortgage interest, including during condemnation |
| Adequacy of fee documentation, amount awarded, and need for evidentiary hearing | Submitted billing statements and supplements showing incremental fees; trial court reviewed reasonableness | Fees lacked underlying time sheets; trial court should have held an evidentiary hearing | Trial court did not abuse discretion: supplementation and billing statements sufficed; no evidentiary hearing required absent disputed facts; defendant forfeited time-sheet argument by not raising it below |
| Denial of leave to file a fee petition for defending motion to reconsider; fees for this appeal | Requested leave to file fee petition for fees defending reconsideration motion and for appellate fees per mortgage | Trial court denied leave without explanation | Trial court’s denial of leave to file a fee petition was an abuse of discretion; remand for reconsideration and explanation and for consideration of appellate fees |
Key Cases Cited
- Spangenberg v. Verner, 321 Ill. App. 3d 429 (Illinois App. Ct.) (declining to strike brief for non‑material rule defects)
- Raintree Health Care Center v. Illinois Human Rights Comm’n, 173 Ill. 2d 469 (Ill.) (courts may award attorney’s fees without evidentiary hearings)
- Fried v. Barad, 187 Ill. App. 3d 1024 (Ill. App. Ct.) (burden of proof on fee petitioner; hearings unnecessary where pleadings/trial evidence suffice)
- Cambridge Engineering, Inc. v. Mercury Partners 90 BI, Inc., 378 Ill. App. 3d 437 (Ill. App. Ct.) (arguments not raised below are forfeited)
- Richardson v. Haddon, 375 Ill. App. 3d 312 (Ill. App. Ct.) (trial court should either award reasonable fees or explain reductions; summary denial can be abuse of discretion)
- Standard Bank & Trust Co. v. Callaghan, 215 Ill. App. 3d 76 (Ill. App. Ct.) (note’s fee provision can encompass appellate and post‑judgment collection fees)
- Chicago Title & Trust Co. v. Chicago Title & Trust Co., 248 Ill. App. 3d 1065 (Ill. App. Ct.) (standard of review for fee awards and deference to trial court)