First Mortgage Company v. Dina
92 N.E.3d 448
Ill. App. Ct.2018Background
- First Mortgage sued to foreclose a 2007 mortgage originally made by First Mortgage Company of Idaho, LLC (FMCI); First Mortgage later merged with FMCI.
- On summary judgment the trial court entered foreclosure and confirmed a sale; the Dinas appealed, arguing the lender lacked a license under the Residential Mortgage License Act (the Act).
- In First Mortgage Co. v. Dina (Dina I), the appellate court vacated the judgment and remanded, holding that a mortgage made by an entity lacking the Act’s required license could be void and that a factual question existed about FMCI’s licensure.
- While the case was pending on remand, the General Assembly enacted Public Act 99-113, amending the Act to provide that a mortgage shall not be invalidated solely because the lender was unlicensed and stating the amendment was “declarative of existing law.”
- On remand the trial court granted summary judgment for First Mortgage, concluding FMCI’s single loan in Illinois did not require licensure and that the legislature’s amendment created an exception to the law-of-the-case doctrine.
- On appeal the Dinas challenged the trial court’s statutory interpretation and argued the amendment was unconstitutional as retroactive, violative of separation of powers, and special legislation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Act required FMCI to be licensed given it made only one Illinois loan | First Mortgage: the Act applies only to entities doing business in Illinois; an isolated transaction does not trigger licensure | Dinas: the Act applies to any entity engaged in the covered activities and FMCI was not exempt; Dina I controls | The court held the Act does apply to FMCI (no isolated-transaction exemption in §1-3(a)); but affirmed judgment on other grounds (intervening legislative change) |
| Whether the legislature’s amendment is retroactive and constitutionally permissible | First Mortgage: amendment declarative of existing law; clarifies that mortgages are not void for lender’s lack of license | Dinas: amendment has retroactive effect and cannot overturn judicial construction—violates retroactivity and separation of powers | Court: amendment can be read as retroactive but the legislature cannot bind courts on prior judicial constructions; nevertheless an intervening-change-in-law exception to law-of-the-case permits departure from Dina I here |
| Whether the amendment violates separation of powers by effectively reversing Dina I | First Mortgage: legislature may clarify statutory meaning | Dinas: amendment attempts to nullify judicial interpretation (Dina I), violating separation of powers | Court: legislature cannot definitively control prior judicial construction, but courts may treat intervening statutory changes as a basis to revisit prior appellate rulings; no separation-of-powers violation barred application here |
| Whether the amendment violates the special-legislation clause by favoring unlicensed lenders | First Mortgage: amendment reasonably avoids harsh forfeiture and is rationally related to regulatory aims | Dinas: amendment grants unfair special treatment to unlicensed brokers | Court: no violation—classification is rationally related to legitimate legislative purpose (avoiding forfeiture where statutory penalties exist) |
Key Cases Cited
- Hoffmann v. Hoffmann, 125 Ill. App. 3d 548 (Ill. App. Ct.) (recognizing statute-change can be an exception to law-of-the-case)
- Roth v. Yackley, 77 Ill. 2d 423 (Ill. 1979) (legislature may not retroactively dictate prior judicial construction when it effectively reverses court decisions)
- Hamilton County Telephone Cooperative v. Maloney, 151 Ill. 2d 227 (Ill. 1992) (discusses limits on legislative power to override judicial interpretations)
- Avery v. State Farm Mut. Auto. Ins. Co., 216 Ill. 2d 100 (Ill. 2005) (statutes presumptively have no extraterritorial effect absent clear intent)
- Allegis Realty Investors v. Novak, 223 Ill. 2d 318 (Ill. 2006) (retroactivity analysis for Illinois statutes and the role of section 4 of the Statute on Statutes)