BMO Harris Bank National Ass'n v. LaRosa
2017 IL App (1st) 161159
Ill. App. Ct.2017Background
- BMO Harris filed foreclosure on a Chicago condominium on Jan 21, 2014, seeking foreclosure, sale, and a personal deficiency judgment; defendants Joseph and Kelly LaRosa were served.
- Court entered default, judgment of foreclosure and sale, and shortened redemption period; judgment recited BMO Harris was owed $235,232.90.
- Property sold at sheriff’s sale for $58,000; report showed a $180,697.22 deficiency. Court confirmed sale and entered an in personam deficiency judgment July 14, 2014; deed recorded July 17, 2014.
- Defendants filed a section 2-1401 petition (Nov 16, 2015) to vacate the personal deficiency judgment, alleging they never abandoned the property, did not receive notice of the deficiency judgment, and that BMO issued a Form 1099-C cancelling debt and later sought to collect.
- BMO Harris moved to strike/dismiss, arguing section 15-1509(c) of the Foreclosure Law bars any post-vesting claims by parties to the foreclosure; the circuit court granted the motion and dismissed the 2-1401 petition.
- On appeal the sole legal question was whether section 15-1509(c) bars a section 2-1401 petition seeking to vacate a personal deficiency judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 735 ILCS 5/15-1509(c) bars a section 2-1401 petition to vacate a personal deficiency judgment | 15-1509(c) bars all claims of parties to the foreclosure once title vests by deed, so defendants’ 2-1401 petition is barred | 15-1509(c) protects title only; it is silent about vacating personal deficiency judgments, so it does not bar a 2-1401 petition | Court held 15-1509(c) bars the 2-1401 petition; dismissal affirmed |
| Whether postjudgment events (e.g., issuance of 1099-C, later collection efforts) can support relief under section 2-1401 | N/A (BMO argued petition improperly relies on postjudgment events) | Petition relied largely on events after judgment (lack of notice, 1099‑C, later collection) to justify vacatur | Court did not decide this merits question because 15-1509(c) statutory bar was dispositive |
| Whether any statutory exception (proceeding to claim proceeds or challenge for lack of personal jurisdiction) saves defendants | No applicable exception here | Defendants argued Sharlow supports relief where claim concerns proceeds or tax consequences, not the deed itself | Court found exceptions (void-for-jurisdiction, and claiming proceeds) did not apply; Sharlow distinguished; bar remained effective |
| Whether courts should read an implied exception for deficiency judgments into 15-1509(c) | Statute’s plain language bars all claims by parties unless stated exceptions apply | Defendants urged construction that 15-1509(c) only protects title and not deficiency judgments | Court refused to read exceptions into clear statutory text; applied plain meaning to bar the petition |
Key Cases Cited
- Smith v. Airoom, Inc., 114 Ill. 2d 209 (explains the three-element standard for relief under section 2-1401)
- U.S. Bank Nat’l Ass’n v. Prabhakaran, 2013 IL App (1st) 111224 (construed section 15-1509(c) as a clear bar to claims by foreclosure parties after vesting)
- CitiMortgage, Inc. v. Sharlow, 2014 IL App (3d) 130107 (permits 2-1401 claims limited to asserting an interest in proceeds of sale; distinguishable on facts)
- People v. Howard, 363 Ill. App. 3d 741 (discusses whether section 2-1401 may be based on postjudgment events)