Deutsche Bank National Trust Co. v. Iordanov
64 N.E.3d 147
Ill. App. Ct.2016Background
- Deutsche Bank filed a foreclosure complaint on Nov 25, 2008, attaching the mortgage and note (note had no indorsements or assignments). Defendant defaulted and the court entered judgment of foreclosure in 2009 after defendant failed to respond to a summary judgment motion.
- A recorded release of the mortgage by JPMorgan Chase (successor to Washington Mutual/Long Beach) was discovered; plaintiff amended the complaint (2010) to rescind the release and seek declaratory relief plus foreclosure; no assignment was attached to the amended complaint.
- Defendant later filed answers to the amended complaint (Jan/Feb 2012) but did not plead lack of standing as an affirmative defense; much of the litigation concerned whether JPMorgan had authority to record the release.
- Plaintiff obtained summary judgment (May 22, 2013) rescinding the release; the property was sold to plaintiff at a judicial sale on Jan 3, 2014; plaintiff moved to confirm the sale and defendant first challenged plaintiff’s standing in response to that motion.
- The trial court confirmed the sale (Aug 21, 2015); on appeal the sole issue was whether plaintiff lacked standing to bring the foreclosure, and whether defendant waived that defense by failing to plead it timely.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiff had standing to foreclose | Deutsche Bank alleged it was "the mortgagee" and attached note and mortgage; that pleading sufficed and plaintiff met Foreclosure Law requirements | Plaintiff lacked standing because no assignment was attached and available assignment was executed after suit was filed | Court held defendant waived standing by not pleading it as an affirmative defense and, on the merits, defendant failed to prove lack of standing when burdened to do so |
| Whether failure to attach assignment to complaint is fatal | Not required by Foreclosure Law or Rule 113; attaching mortgage and note is sufficient prima facie proof of ownership | Attachment of assignment (dated after suit) shows plaintiff did not own note when suit filed | Court held attachments were sufficient; Illinois law does not require assignments with the complaint and defendant bore burden to prove lack of standing |
| Whether an assignment executed after complaint shifts burden to plaintiff | Plaintiff: no; defendant must plead and prove lack of standing; assignment may be memorialization of prior transfer | Defendant: post-filing assignment shows plaintiff lacked standing when suit filed | Court followed precedent holding defendant bears burden; assignment alone did not prove when transfer occurred |
| Whether relief under 735 ILCS 5/15-1508(b)(iv) was warranted to disapprove the sale | Plaintiff: defendant waived defense and failed to show fraud or that justice was not done | Defendant: failure to show assignment before filing constituted injustice and misrepresentation | Court found no basis to disapprove sale; defendant waived the defense and did not meet burden to prove lack of standing |
Key Cases Cited
- Household Bank, FSB v. Lewis, 229 Ill. 2d 173 (Illinois 2008) (trial court must confirm judicial sale unless one of statutory exceptions applies)
- Glisson v. City of Marion, 188 Ill. 2d 211 (Illinois 1999) (standing doctrine prevents parties without real interest from suing)
- Greer v. Illinois Housing Development Authority, 122 Ill. 2d 462 (Illinois 1988) (lack of standing is an affirmative defense that is waived if not timely raised)
- Lebron v. Gottlieb Memorial Hospital, 237 Ill. 2d 217 (Illinois 2010) (affirmative defenses are the defendant’s burden to plead and prove)
- Wells Fargo Bank, N.A. v. McCluskey, 2013 IL 115469 (Illinois 2013) (to disapprove sale under §15-1508(b)(iv), borrower must show lender prevented timely assertion of meritorious defenses or that equitable defenses prevented protection of property interests)