Bayview Loan Servicing, LLC v. Szpara
2015 IL App (2d) 140331
Ill. App. Ct.2016Background
- Defendants Szpara and Szarek obtained a mortgage in 2006 from Washington Mutual; plaintiff (JPMorgan Chase, later Bayview) acquired Washington Mutual assets under a Purchase and Assumption Agreement (PAA) with the FDIC.
- Defendants filed Chapter 7 bankruptcy on March 29, 2011; plaintiff obtained relief from the automatic stay and filed a foreclosure complaint August 17, 2011 for post-July 2010 delinquencies.
- Defendants asserted four affirmative defenses (failure to accelerate, violation of 735 ILCS 5/15-1502.5 grace-period notice, fraud in the inducement based on an allegedly conflicted broker/appraiser, and equitable estoppel) and a quiet-title counterclaim.
- The trial court struck the grace-notice defense and counterclaim with prejudice, struck fraud/estoppel without prejudice, allowed amendment, then struck the amended fraud and estoppel defenses with prejudice after taking judicial notice of the PAA.
- Plaintiff moved for summary judgment; defendants challenged the plaintiff’s prove-up affidavit as an insufficient business-record foundation under Rule 236/Rule 191. Trial court granted summary judgment, confirmed the sale, and this appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendants’ 15-1502.5 grace-period defense (and counterclaim) is reviewable on this appeal and whether notice was required | The November 7, 2012 order striking the defense/counterclaim is not included in the notice of appeal and not part of the procedural progression; plaintiff also argues no notice was required because foreclosure was filed after bankruptcy | The defense applies because plaintiff filed foreclosure March 23, 2011, before defendants’ March 29, 2011 bankruptcy, so 15-1502.5 exception for debtors in bankruptcy did not apply | Not reviewable on appeal (not in procedural progression). On the merits, record shows foreclosure filed August 17, 2011 (after bankruptcy), so no 15-1502.5 notice required |
| Whether amended fraud-in-the-inducement and equitable-estoppel affirmative defenses (and related counterclaim) survived pleading challenge and PAA bar | Plaintiff: amended defenses are conclusory and fail the heightened pleading standard for fraud/estoppel; the PAA expressly disclaims liability for borrower claims arising from the Failed Bank’s lending activities, so such claims/defenses are barred | Defendants: alleged broker-appraiser conflict, inflated appraisal/assets, language barrier and reliance; cite public-policy arguments to avoid forfeiture of defenses | Affirmed strike: PAA bars borrower claims/defenses arising from Washington Mutual’s origination conduct; pleadings were conclusory and failed to meet specificity required for fraud and estoppel |
| Whether plaintiff’s prove-up affidavit supported summary judgment (foundation for business records under Rule 236/Rule 191) | Affiant (vice president) averred she reviewed loan records, had access and personal knowledge of how records were maintained, that records were made in ordinary course and at or near time of events, and specified amounts due | Defendants: affidavit lacked foundation, relied on hearsay/information and belief, failed to show how/who created records so business-records exception inapplicable | Affidavit sufficient: averments met foundational Rule 236 requirements (records made in regular course and at/near time of events); trial court properly considered records and granted summary judgment |
Key Cases Cited
- Kean v. Wal-Mart Stores, Inc., 235 Ill. 2d 351 (de novo review of section 2-615/2-619 dismissals)
- Chatham Foot Specialists, P.C. v. Health Care Service Corp., 216 Ill. 2d 366 (de novo review of summary judgment)
- Jackson v. Graham, 323 Ill. App. 3d 766 (when a motion to strike a Rule 191 affidavit is made in conjunction with summary judgment, review is de novo)
- Connick v. Suzuki Motor Co., 174 Ill. 2d 482 (fraud pleading requires particularity: what, when, who, to whom)
- Geddes v. Mill Creek Country Club, Inc., 196 Ill. 2d 302 (elements of equitable estoppel)
- Lagen v. Balcor Co., 274 Ill. App. 3d 11 (fraud elements)
- Janowiak v. Tiesi, 402 Ill. App. 3d 997 (heightened specificity required for fraud pleadings)