U.S. Bank National Association v. Johnston
55 N.E.3d 742
Ill. App. Ct.2016Background
- The Johnstons executed a 2005 mortgage to MERS (nominee for BNC) and later VCB held earlier and later mortgages; MERS’s recorded mortgage stated it held legal title as nominee and could foreclose if necessary.
- VCB sued in 2009 to foreclose its 2006 mortgage and named as a defendant a nonstandard entity: "BNC MORTGAGE, INC. NOW OWED BY CHASE HOME FINANCE, LLC." Summons were served on C.T. Corporation for Chase Home Finance (CHF).
- A default judgment and later a consent foreclosure decree were entered in favor of VCB; VCB sold the property to Smith in 2010.
- U.S. Bank (holder by assignment of the BNC/MERS mortgage) filed a foreclosure complaint in 2014. Defendants moved to dismiss, arguing res judicata based on the VCB judgments; Smith also claimed bona fide purchaser status.
- The trial court granted dismissal on res judicata grounds, reasoning CHF was agent/privy of U.S. Bank and that U.S. Bank was estopped from contesting service; U.S. Bank and MERS appealed.
- The appellate court reversed, holding the VCB judgments were void as to U.S. Bank because the summons did not name the proper party (no personal jurisdiction), and therefore res judicata did not bar U.S. Bank’s foreclosure.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether VCB’s prior foreclosure judgment bars U.S. Bank’s subsequent foreclosure (res judicata) | Judgment was valid; res judicata bars U.S. Bank because prior decree extinguished subordinate liens | Prior foreclosure did not properly bind U.S. Bank because proper defendant (BNC/MERS/U.S. Bank) was not named or served | Reversed — res judicata does not apply because prior judgments are void as to U.S. Bank for lack of personal jurisdiction |
| Whether service on CHF or the caption naming constituted effective service/misnomer that conferred jurisdiction | U.S. Bank lacked service; thus judgment void | Defendants: CHF was agent/privy/served on behalf of noteholder (estoppel/agency/misnomer) | Held that summons did not name the correct party; misnomer and agency arguments failed to cure defective service; judgment void as to U.S. Bank |
| Whether Smith is a bona fide purchaser free of U.S. Bank’s lien | N/A (plaintiff) | Smith: purchased from VCB after decree and claims protection as bona fide purchaser | Not decided in defendants’ favor — bona fide purchaser status is a disputed factual issue, not a proper basis for dismissal |
Key Cases Cited
- Hudson v. City of Chicago, 228 Ill. 2d 462 (Illinois 2008) (elements of res judicata)
- Rein v. David A. Noyes & Co., 172 Ill. 2d 325 (Illinois 1996) (res judicata principle)
- Thill, 113 Ill. 2d 294 (Illinois 1986) (foreclosure judgment requires valid service)
- Schorsch v. Fireside Chrysler-Plymouth, Mazda, Inc., 172 Ill. App. 3d 993 (Illinois App. 1988) (a judgment without proper service is void)
- Theodorakakis v. Kogut, 194 Ill. App. 3d 586 (Illinois App. 1990) (summons must name an entity on its face)
- Ohio Millers Mutual Insurance Co. v. Inter-Insurance Exchange of the Illinois Automobile Club, 367 Ill. 44 (Illinois 1937) (summons that does not name a person is no summons for that person)
- Capital One Bank, N.A. v. Czekala, 379 Ill. App. 3d 737 (Illinois App. 2008) (distinction between misnomer and mistaken identity; judgments void where proper party not served)