JP Morgan Chase Bank, N.A. v. Bank of America, N.A.
2014 IL App (1st) 140428
Ill. App. Ct.2014Background
- Homeowners Jacek and Komila Wojtkowski granted multiple mortgages on 1807 Summerton Place; Chase held a prioritized 2003 mortgage and LaSalle Bank (successor BANA) held an earlier $400,000 mortgage.
- Chase filed a foreclosure in January 2012; BANA failed to appear and was defaulted on March 19, 2013, so its junior lien was not recognized in the foreclosure judgment.
- A judicial sale produced a large surplus ($459,857.53) after BCL (through an affiliate, AD Realty) purchased the property; BCL later intervened seeking the surplus.
- BANA subsequently sought to vacate the default and to prove up its lien to claim a portion of the surplus, but the circuit court denied relief and awarded the entire surplus to BCL; BANA appealed.
- The appellate court dismissed BANA's appeal as to the denial of its motion to vacate the default and its 2-1401 petition for lack of jurisdiction/timeliness, but retained jurisdiction over the surplus-distribution orders and affirmed the award of the surplus to BCL.
Issues
| Issue | Plaintiff's Argument (Chase/BCL) | Defendant's Argument (BANA) | Held |
|---|---|---|---|
| Whether appellate court has jurisdiction to review denial of BANA’s motion to vacate default | Postjudgment denial was final; no timely appeal available to BANA | Denial should be reviewable | Dismissed for lack of jurisdiction — BANA’s notice was untimely |
| Whether BANA was entitled to surplus proceeds despite default | BCL (owner of equity) and sale confirmation supported awarding surplus to BCL | Default did not extinguish BANA’s right to prove up its junior lien and receive surplus in priority | Affirmed: trial court did not abuse discretion; BANA’s default and lack of diligence barred recovery of surplus |
| Whether appellate court may review orders in surplus-distribution proceedings | Orders culminating in final January 15, 2014 distribution were appealable and interlocutory steps are reviewable on appeal from final order | BANA contended entitlement to review of related orders | Appellate court had jurisdiction over surplus-distribution orders (timely postjudgment motion made appeal effective) |
| Whether the case law BANA cited (Kankakee Federal) controlled | BCL argued the facts differ; BANA relied on Kankakee Federal to support junior lien recovery | BANA urged extension of Kankakee Federal | Court found Kankakee distinguishable and declined to extend it to these facts |
Key Cases Cited
- Kankakee Federal Savings & Loan Ass'n v. Mueller, 134 Ill. App. 3d 943 (Ill. App. 1985) (approved distribution to a junior mortgagee under that case’s specific facts)
- EMC Mortgage Corp. v. Kemp, 2012 IL 113419 (Ill. 2012) (judicial-sale confirmation is a final, appealable order)
- Lowenthal v. McDonald, 367 Ill. App. 3d 919 (Ill. App. 2006) (untimely notice of appeal does not confer jurisdiction)
- General Motors Corp. v. Pappas, 242 Ill. 2d 163 (Ill. 2011) (notice of appeal construed to fairly identify judgment complained of)
- Sarkissian v. Chicago Bd. of Educ., 201 Ill. 2d 95 (Ill. 2002) (a section 2-1401 petition begins a new proceeding; its rulings are separately appealable)
- Members Equity Credit Union v. Duefel, 295 Ill. App. 3d 336 (Ill. App. 1998) (trial court’s surplus distribution will not be reversed absent abuse of discretion)