3432 West Henderson Building, LLC v. Gizynski
2017 IL App (1st) 160588
| Ill. App. Ct. | 2017Background
- Gizynski borrowed $1.4M in 2005 secured by a mortgage on commercial property; loan terms increased interest to 13.5% upon default. Gizynski defaulted in 2009. Henderson Building acquired the note and mortgage and prosecuted related claims.
- NEIU intervened and condemned the property, acquiring title for $5.2M; the condemnation and foreclosure matters were consolidated and proceeds deposited with the county treasurer.
- Henderson Building filed a petition for disbursement seeking payoff ~ $2.6M that included principal, advances (taxes/liens), late fees, attorney’s fees (initially $108,104.35) and accrued interest; it later supplemented the fee totals to $199,229.78 and sought disbursement of $2,885,837.14.
- The trial court allowed disbursement, held the mortgage and note authorized adding attorney’s fees to indebtedness and charging interest at the default rate (13.5%), and approved the supplemental fee submissions after review.
- Gizynski moved to reconsider, arguing (inter alia) that interest could not be charged on attorney’s fees and that an evidentiary hearing/time sheets were required; the court denied reconsideration. Henderson Building sought leave to file a fee petition for fees defending the reconsideration motion and for appellate fees; the trial court denied leave.
- On appeal, the appellate court affirmed most rulings (including addition of attorney’s fees to indebtedness with default interest and no need for an evidentiary hearing), but reversed the denial of leave to file a fee petition for fees incurred defending the motion to reconsider and remanded for further consideration (including fees for this appeal).
Issues
| Issue | Plaintiff's Argument (Henderson Bldg.) | Defendant's Argument (Gizynski) | Held |
|---|---|---|---|
| Whether attorney’s fees may be added to indebtedness and accrue default interest | Loan documents expressly make lender expenses, including attorney’s fees, part of "Indebtedness" and bear interest at the Note rate | Fees are not part of principal; Foreclosure Law/Eminent Domain Act do not permit interest on attorney’s fees | Court: mortgage/note language controls; attorney’s fees are part of indebtedness and accrue interest at 13.5% |
| Whether Henderson Building may recover attorney’s fees despite foreclosure not culminating in a successful foreclosure judgment | Note/mortgage permit recovery of fees whether or not there is a lawsuit or a successful foreclosure | Recovery limited because foreclosure was not completed or successful | Court: contractual fee provisions do not require a completed successful foreclosure; fees recoverable when incurred to protect lender’s interest |
| Whether an evidentiary hearing and production of time sheets was required before awarding fees | Trial court had detailed billing statements and supplemental exhibits; hearing not required absent disputed facts | Trial court should have held a hearing and required underlying time sheets to test reasonableness | Court: no per se hearing requirement; record (billing statements, affidavits) sufficed; issue forfeited where not raised below; no reversible error |
| Whether trial court erred in denying leave to file a fee petition for fees defending the motion to reconsider (cross-appeal) | Leave should be permitted; trial court must either award reasonable fees or state reasons for reductions/denial | Trial court summarily denied leave without explanation | Court: reversal of denial and remand for reconsideration and explanation; trial court abused discretion by denying without rationale |
Key Cases Cited
- Spangenberg v. Verner, 321 Ill. App. 3d 429 (Ill. App. Ct.) (declining to strike deficient appellate brief where violations did not hinder review)
- Chicago Title & Trust Co. v. Chicago Title & Trust Co., 248 Ill. App. 3d 1065 (Ill. App. Ct.) (deferential standard for attorney’s fees awards in foreclosure matters)
- Raintree Health Care Ctr. 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 on fee claimant to prove entitlement; hearing unnecessary when proof in pleadings/trial evidence suffices)
- Cambridge Eng’g, Inc. v. Mercury Partners 90 BI, Inc., 378 Ill. App. 3d 437 (Ill. App. Ct.) (issues not raised below are forfeited on appeal)
- Richardson v. Haddon, 375 Ill. App. 3d 312 (Ill. App. Ct.) (trial court must not summarily deny fee petitions; must state reasons or award reasonable amounts)
- Standard Bank & Trust Co. v. Callaghan, 215 Ill. App. 3d 76 (Ill. App. Ct.) (contractual fee provisions can encompass appellate attorney’s fees)