JP Morgan Chase Bank, N.A. v. Bank of America, N.A.
43 N.E.3d 546
Ill. App. Ct.2016Background
- Chase filed a 2012 foreclosure against the Wojtkowskis; BANA (successor to LaSalle) was a named junior mortgagee but defaulted for failure to appear.
- A prior 2010 foreclosure by Northbrook Bank produced a confirmed sale to BCL (purchaser) and an in rem deficiency judgment against the property.
- Judicial sale in the 2012 Chase foreclosure (July 1, 2013) produced a $459,857.53 surplus after AD Realty (an affiliate of BCL) purchased the property for $627,057.
- BANA later sought to vacate its default and to prove up its lien to claim surplus funds; BCL intervened postsale and sought the surplus as owner of the equity of redemption.
- The circuit court denied BANA’s motion to vacate, found BANA had forfeited its lien by default and inactivity, and awarded the entire surplus to BCL.
- On appeal the court dismissed BANA’s challenge to the denial of the vacatur (untimely) and affirmed the award of surplus to BCL (no abuse of discretion).
Issues
| Issue | Plaintiff's Argument (Chase/BCL) | Defendant's Argument (BANA) | Held |
|---|---|---|---|
| Whether BANA was entitled to surplus proceeds after being defaulted in foreclosure | BCL: Surplus should be awarded to property owner/intervenor because BANA defaulted and lost its lien | BANA: Default admitted allegations including its junior mortgage; it should be allowed to prove up debt and receive surplus in lien priority | Court: BANA forfeited lien by default and lack of diligence; awarding surplus to BCL was within discretion |
| Whether the trial court abused discretion in surplus distribution | BCL: Trial court properly applied Foreclosure Law and equitable considerations | BANA: Kankakee precedent supports junior mortgage recovery despite default and purchase | Court: Distinguished Kankakee on facts (no responsive pleadings here); no abuse of discretion |
| Whether the denial of BANA’s motion to vacate default was reviewable | — | BANA: Appeals court should review denial of vacatur | Court: Appeal from that order was untimely; appellate jurisdiction lacking—dismissed |
| Whether the court erred in striking BANA’s section 2-1401 petition | — | BANA: Trial court improperly struck 2-1401 petition; appellate review warranted | Court: No notice of appeal from that order; appellate court lacks jurisdiction—dismissed |
Key Cases Cited
- EMC Mortgage Corp. v. Kemp, 2012 IL 113419 (judicial-sale confirmation is final appealable order)
- Sarkissian v. Chicago Bd. of Educ., 201 Ill. 2d 95 (a section 2-1401 petition begins a new proceeding; appealable)
- Lowenthal v. McDonald, 367 Ill. App. 3d 919 (untimely notice of appeal deprives reviewing court of jurisdiction)
- Members Equity Credit Union v. Duefel, 295 Ill. App. 3d 336 (surplus distribution reviewed for abuse of discretion)
- Kankakee Fed. Sav. & Loan Ass’n v. Mueller, 134 Ill. App. 3d 943 (discussed; awarding surplus to junior mortgagee who defaulted and purchased property in that distinct factual context)