CitiMortgage, Inc v. Parille
49 N.E.3d 869
Ill. App. Ct.2016Background
- Karyn and Anthony Parille owned a residence as tenants by the entirety and executed multiple mortgages and refinances between 2000–2003.
- In May 2003 Lehman made a $475,000 loan and recorded a mortgage listing Karyn as the borrower; both spouses had initialed and signed that instrument.
- In August 2003 Lehman refinanced with a $481,200 loan (Second Lehman Note/Mortgage) that named Karyn as sole borrower and sole mortgagor; Anthony signed a line accompanied by typewritten text (apparently inserted by the loan servicer) stating he was signing only to waive homestead rights.
- Lehman assigned the loan to CitiMortgage; after default CitiMortgage sued in 2010 to foreclose the Second Lehman Mortgage and pleaded alternative claims: reformation, equitable lien, unjust enrichment, and fraud.
- The trial court dismissed the foreclosure and unjust-enrichment claims with prejudice, dismissed the other claims without prejudice, then later dismissed the repleaded complaint with prejudice; CitiMortgage appealed and the Parilles cross-appealed limited postjudgment motions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of Second Lehman Mortgage / Foreclosure | Mortgage intended to encumber entire property; Anthony intended to be a mortgagor. | Mortgage language and typewritten qualifier show Anthony was not a mortgagor; tenancy-by-entirety requires both signatures. | Mortgage construed as executed solely by Karyn; foreclosure claim dismissed. |
| Reformation of mortgage | Parties (Lehman and both Parilles) intended mortgage to encumber both spouses; writing contains mutual mistake and should be reformed. | Writing is unambiguous; reformation cannot be pleaded when instrument shows contrary intent. | Reformation claim survives pleading stage; dismissal with prejudice reversed (parol evidence may be admissible; claim requires clear proof later). |
| Equitable lien / Equitable subrogation | Because proceeds paid off prior mortgage that encumbered Anthony, equity should impose lien or allow subrogation to protect lender. | No basis for duty or equitable lien: Lehman drafted mortgage and knew title; no improvements or contractual basis creating obligation by Anthony. | Equitable lien/subrogation not adequately pleaded; dismissal affirmed. |
| Statute of limitations on unjust enrichment and fraud | Discovery rule tolls limitations until CitiMortgage knew Parilles would assert invalidity. | Cause accrued in 2003 when First Lehman Mortgage was released and records put lender on notice; claims time-barred. | Unjust enrichment and fraud claims barred by 5-year statute; dismissal affirmed. |
| Motion to amend (leave to file 4th amended complaint) | Proposed new counts (equitable/conventional subrogation) would cure defects. | Proposed allegations are internally inconsistent and would not state a cognizable claim. | Trial court did not abuse discretion in denying leave to amend; denial affirmed. |
Key Cases Cited
- Vitro v. Mihelcic, 209 Ill. 2d 76 (Ill. 2004) (standard for section 2-615 dismissals)
- Gallagher v. Lenart, 226 Ill. 2d 208 (Ill. 2007) (contract interpretation: intent determined from instrument unless ambiguous)
- Burton v. Airborne Express, Inc., 367 Ill. App. 3d 1026 (Ill. App. Ct. 2006) (attachments to complaint control over conflicting allegations)
- W.E. Erickson Construction, Inc. v. Congress-Kenilworth Corp., 132 Ill. App. 3d 260 (Ill. App. Ct. 1985) (equitable lien where party improved property or expended funds expecting security)
- Ater v. Smith, 245 Ill. 57 (Ill. 1910) (discovery rule and duty to inquire; lack of inquiry bars tolling of statute of limitations)
- Alliance Syndicate, Inc. v. Parsec, Inc., 318 Ill. App. 3d 590 (Ill. App. Ct. 2000) (reformation requires strong, clear, and convincing proof)