BMO Harris Bank National Association v. LaRosa
413 Ill. Dec. 519
| Ill. App. Ct. | 2017Background
- BMO Harris sued Joseph and Kelly LaRosa in January 2014 to foreclose a mortgage on a Chicago condo and sought a personal deficiency judgment.
- Defendants were defaulted; the court entered a foreclosure judgment and shortened the redemption period in April 2014.
- The property sold at sheriff’s sale in June 2014; the sale produced a large deficiency and, on July 14, 2014, the court entered an in personam deficiency judgment and recorded a deed vesting title.
- Defendants later received a Form 1099‑C (cancellation of debt) in January 2015 and claimed they first learned of the deficiency judgment in October 2015 when contacted by a collection agency.
- In November 2015 defendants filed a section 2‑1401 petition to vacate the personal deficiency judgment, alleging lack of notice, bank misconduct (cancelling debt then attempting collection), a meritorious defense (they did not abandon the property), and prompt filing after discovery.
- The trial court struck and dismissed the 2‑1401 petition, concluding 735 ILCS 5/15‑1509(c) barred the petition; defendants appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 735 ILCS 5/15‑1509(c) bars a 2‑1401 petition to vacate a personal deficiency judgment after title vests by deed | 15‑1509(c) bars all claims by parties to the foreclosure once title vests; therefore the 2‑1401 petition is barred | 15‑1509 concerns title/proceeds only and is silent as to vacatur of deficiency judgments; it should not bar a 2‑1401 attack on a deficiency | Held: 15‑1509(c) bars the petition; its plain language precludes all claims of parties to the foreclosure except limited exceptions (e.g., voidness for lack of personal jurisdiction or claims to sale proceeds) |
| Whether a 2‑1401 petition may rely on postjudgment events (e.g., issuance of a 1099‑C or later collection attempts) | Not necessary to decide; but petitioner relied on postjudgment events which courts sometimes reject as basis for 2‑1401 | 2‑1401 petition based on postjudgment conduct should be allowed if it shows fraud/misconduct and merits | Court noted split of authority and declined to rely on that issue because 15‑1509(c) independently barred relief |
| Whether statutory headings or other foreclosure provisions create an exception for deficiency judgments | 15‑1509(c)’s plain language is controlling; headings do not limit scope | Headings and other provisions (15‑1508, 15‑1511) show legislature meant to protect title only, not bar challenges to deficiency judgments | Held: Titles/headings and other sections do not override the unambiguous bar in 15‑1509(c) |
| Whether defendants pleaded meritorious defense and due diligence sufficient under 2‑1401 | Argued insufficiency of pleading and lack of diligence; also noted deed was recorded so 15‑1509(c) applies | Claimed meritorious defense (no abandonment), due diligence in filing upon discovering judgment, and misconduct by bank | Court did not reach merits because 15‑1509(c) barred the petition |
Key Cases Cited
- Smith v. Airoom, Inc., 114 Ill. 2d 209 (procedure and elements for 2‑1401 relief)
- Warren County Soil & Water Conservation Dist. v. Walters, 2015 IL 117783 (standard of review: fact‑dependent 2‑1401 is abuse‑of‑discretion; legal questions de novo)
- Home Star Bank & Financial Services v. Emergency Care & Health Organization, Ltd., 2014 IL 115526 (statutory‑construction de novo)
- U.S. Bank Nat’l Ass’n v. Prabhakaran, 2013 IL App (1st) 111224 (section 15‑1509(c) is clear and bars claims after vesting)
- MB Financial Bank, N.A. v. Ted & Paul, LLC, 2013 IL App (1st) 122077 (exception: challenge where judgment is void for lack of personal jurisdiction)
- Deutsche Bank Nat’l Trust Co. v. Brewer, 2012 IL App (1st) 111213 (same jurisdictional‑voidness principle)
- CitiMortgage, Inc. v. Sharlow, 2014 IL App (3d) 130107 (distinguishable: 2‑1401 claim to proceeds of sale is allowed under 15‑1509(c))