U.S. Bank National Ass'n v. Hartman
2016 IL App (1st) 151556
| Ill. App. Ct. | 2017Background
- In 2008 U.S. Bank (as trustee) sued Joseph Hartman to foreclose a mortgage on his Chicago condominium; the complaint named MERS as mortgagee/nominee for MILA, Inc.
- The complaint attached the recorded mortgage and an unsigned "lost document affidavit" stating the note was missing; the note was later attached to plaintiff’s 2009 summary-judgment submission.
- An assignment dated April 30, 2008 (recorded July 2, 2008) assigned the mortgage from MERS (as nominee for MILA) to plaintiff; the assignment was attached to the summary-judgment materials.
- The trial court granted plaintiff’s motion for summary judgment in July 2009; after a judicial sale in 2014, the court confirmed the sale in April 2015.
- On appeal Hartman argued (1) plaintiff lacked standing because MERS was not licensed under the Residential Mortgage License Act when the mortgage was executed and (2) plaintiff committed blatant factual mischaracterizations warranting reversal under the plain-error doctrine.
- The appellate court affirmed: it held the License Act did not require MERS to be licensed for its nominal role, and Hartman’s allegations of mischaracterization did not meet the high threshold for plain-error relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiff lacked standing because MERS (mortgagee/nominee) was unlicensed under the License Act | MERS’s role as nominee does not constitute brokering, funding, originating, servicing, or purchasing such that licensing was required; MILA (the lender) was licensed | MERS was not licensed when the mortgage was signed; an unlicensed mortgagee makes the mortgage void and plaintiff thus lacked standing | Court held License Act did not apply to MERS’s nominee role; MILA (the entity performing lender functions) was licensed; standing challenge fails |
| Whether plaintiff’s pleadings and submissions contained blatant factual mischaracterizations requiring reversal under plain-error | Plaintiff argued that any defects (e.g., unsigned lost-affidavit initially) did not prejudice Hartman and plaintiff ultimately produced the note and assignment; no egregious misconduct shown | Hartman asserted plaintiff used an unsigned affidavit to fool the court, produced a suspicious assignment dated the day before suit, and offered no explanation for timing and recording delays | Court declined to apply plain-error: alleged mischaracterizations were not blatant or prejudicial; assignment and timing issues were not shown to be fraudulent and were legally irrelevant to standing |
Key Cases Cited
- Roth v. Illinois Farmers Ins. Co., 202 Ill. 2d 490 (Illinois 2002) (an affidavit must be sworn to and unsworn writings cannot be considered affidavits)
- Mortgage Electronic Registration Systems, Inc. v. Estrella, 390 F.3d 522 (7th Cir. 2004) (describing MERS as membership organization that records, trades, and forecloses loans for lender accounts)
- Klehm v. Grecian Chalet, Ltd., 164 Ill. App. 3d 610 (Ill. App. 1987) (assignment occurs when transfer of identifiable interest takes place)
- Federal Nat. Mortg. Ass'n v. Kuipers, 314 Ill. App. 3d 631 (Ill. App. 2000) (recording establishes lien and informs third parties of title status)
- Gillespie v. Chrysler Motors Corp., 135 Ill. 2d 363 (Illinois 1990) (plain-error doctrine applies in civil cases only for errors so egregious they impair integrity of the judicial process)