3432 West Henderson Building, LLC v. Gizynski
2017 IL App (1st) 160588
| Ill. App. Ct. | 2017Background
- Defendant Gizynski defaulted on a $1.4M note secured by a mortgage; lender Citizens Bank (succeeded by 3432 West Henderson Building, LLC) pursued foreclosure.
- NEIU intervened and condemned the property; NEIU paid $5.2M into court and foreclosure and condemnation were consolidated.
- Henderson Building filed a petition for disbursement seeking payoff (~$2.6–2.9M) that included principal, advances (taxes/liens), late fees, attorney’s fees, and accrued interest; it submitted multiple supplemental exhibits increasing the claimed attorney’s fees to $199,229.78.
- The trial court granted disbursement, held the mortgage and note permitted attorney’s fees to be added to indebtedness, and applied the agreed default interest rate (13.5%) to those fees; the Treasurer was directed to disburse $2,885,837.14.
- Gizynski moved to reconsider (arguing interest on fees was improper, insufficient written findings, and need for evidentiary hearing); trial court denied the motion and denied Henderson Building leave to file a fee petition for fees defending the motion to reconsider.
- On appeal, court affirmed most rulings (including interest on attorney’s fees and sufficiency of fee documentation/no hearing required), but reversed and remanded the denial of leave to file a fee petition regarding fees incurred defending the motion to reconsider and directed consideration of appellate fees.
Issues
| Issue | Plaintiff's Argument (Henderson Building) | Defendant's Argument (Gizynski) | Held |
|---|---|---|---|
| Whether attorney’s fees incurred by lender may be added to "indebtedness" and accrue interest at the contract default rate | Loan documents expressly make lender’s expenses and attorney’s fees part of "Indebtedness" and subject to note rate/default rate | Fees are not part of principal indebtedness; section 15-1510(b)/Eminent Domain Act prohibit interest on fees | Held for Henderson: mortgage/note unambiguously permit adding fees to indebtedness and charging interest at the note/default rate |
| Whether the Eminent Domain Act bars interest on attorney’s fees after condemnation title transfer | Contractual mortgage provision allows fees from net proceeds and fees are incurred protecting lender’s mortgage interest | Once title transferred / condemnation governed, Eminent Domain Act controls and disallows interest on fees | Held for Henderson: condemnation did not eliminate lender’s contractual rights; nothing in Eminent Domain Act precluded contractual interest on fees |
| Whether trial court erred by awarding >$108k in fees without detailed time sheets or an evidentiary hearing | Supplementals and detailed billing statements provided; hearings are discretionary; no hearing required absent contested factual issues | Trial court should have required underlying time sheets, a hearing, and stricter proof | Held for Henderson on documentation/hearing: supplemental billing was sufficient; evidentiary hearing not required where record supports reasonableness; issue forfeited where not timely raised |
| Whether trial court abused discretion by denying Henderson leave to file a fee petition for fees defending motion to reconsider and whether appellate fees are recoverable | Entitled to ask for fees for defending the motion to reconsider and for fees on appeal under contract | Trial court properly denied leave | Held partly for Henderson: denial to file petition was unexplained—reversed and remanded for reconsideration and explanation; appellate fees should be considered on remand |
Key Cases Cited
- Spangenberg v. Verner, 321 Ill. App. 3d 429 (Ill. App. Ct.) (declining to strike a noncompliant brief where deficiencies did not hinder review)
- Raintree Health Care Ctr. v. Illinois Human Rights Comm’n, 173 Ill. 2d 469 (Ill. 1996) (courts may award attorney’s fees without an evidentiary hearing)
- Fried v. Barad, 187 Ill. App. 3d 1024 (Ill. App. Ct.) (burden of proof on fee requester; proof may be made from pleadings/trial evidence)
- Richardson v. Haddon, 375 Ill. App. 3d 312 (Ill. App. Ct.) (trial court must either award reasonable fees or state reasons for reductions; abuse where petition summarily disregarded)
- Standard Bank & Trust Co. v. Callaghan, 215 Ill. App. 3d 76 (Ill. App. Ct.) (contractual fee provisions can encompass appellate and collection-related attorney’s fees)