Bank of America National Association v. Bassman FBT, L.L.C.
2012 IL App (2d) 110729
| Ill. App. Ct. | 2012Background
- Bassman executed two mortgages to Heller Financial, later foreclosed by BOA as successor by merger to LaSalle Bank.
- Mortgages were claimed to have been transferred to a trust under a pooling and services agreement (PSA) involving Morgan Stanley Capital I, Inc., as depositor and trustee.
- PSA required trust participation and limited the trustee’s ability to contribute assets unless a nondisqualification opinion was obtained.
- Berkadia Commercial Mortgage, the loan servicer under the PSA, engaged with Bassman but would discuss only if payments were three months in arrears; Bassman ceased payments.
- Issue rose whether the PSA transfers were valid and whether the plaintiff had standing to foreclose, plus whether any PSA breach defeats summary judgment.
- Illinois and New York law were debated for governing transfers; the court ultimately applied New York law to determine transfer validity and Illinois law generally otherwise.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to foreclose | Plaintiff has title via transfer to the trust under the PSA. | Noncompliant transfer undermines plaintiff’s title; defendants lack standing to challenge the PSA provisions. | Plaintiff had standing; defendants lack standing to challenge the transfer. |
| Choice of law for transfer validity | New York law governs the trust transfer under the PSA. | New York law controls transfer validity; Illinois law otherwise. | New York law governs the transfer validity for the trust, given contract language and participation. |
| Effect of PSA on third-party rights | PSA rights belong to parties and certificateholders; plaintiff is the proper forecloser. | Bassman and Maximum may be third-party beneficiaries with rights under the PSA. | Defendants are not third-party beneficiaries; PSA does not confer rights to them so as to prevent foreclosure. |
| Breach of contract as bar to foreclosure | PSA breaches alleged do not defeat foreclosure; lack of beneficiary status limits claims. | PSA requires corrective action before foreclosure; breach bars summary judgment. | PSA breach arguments do not bar summary judgment; defendants lack standing as beneficiaries. |
Key Cases Cited
- Liu v. T&H Machine, Inc., 191 F.3d 790 (7th Cir. 1999) (standing and lien challenges under assignment chains)
- Ocasek v. City of Chicago, 275 Ill. App. 3d 628 (1995) (standing and contract rights by nonparties)
- Khan v. BDO Seidman, LLP, 408 Ill. App. 3d 564 (2011) (choice-of-law provisions and application)
- Westchester Fire Insurance Co. v. G. Heileman Brewing Co., 321 Ill. App. 3d 622 (2000) (choice-of-law principles controlling when a provision exists)
- People v. Glenn, 363 Ill. App. 3d 170 (2006) (burden of persuasion in reviewing legal questions)