U.S. Bank Trust National Ass'n. v. Lopez
107 N.E.3d 859
Ill. App. Ct.2018Background
- U.S. Bank Trust, as owner trustee for Queen’s Park Oval Asset Holding Trust, sued to foreclose mortgages on property owned by Mario and Martha Lopez; complaint attached a copy of the note showing indorsements to Countrywide and then to HUD.
- Defendants pleaded affirmative defenses: plaintiff lacked standing (note was indorsed to HUD, not plaintiff), plaintiff violated Ill. S. Ct. Rule 113(b) by not attaching all indorsements/allonges at filing, and plaintiff failed to comply with HUD servicing requirement 24 C.F.R. § 203.604.
- Plaintiff amended the complaint and attached an undated allonge purporting to indorse the note from HUD to the trust; plaintiff also produced a pre-filing assignment of the mortgage from HUD to plaintiff (assignment did not include the note).
- Trial court struck defendants’ affirmative defenses (section 2-619.1), granted plaintiff summary judgment, entered a foreclosure judgment, and confirmed a judicial sale.
- On appeal, this court affirmed the striking of the standing and Rule 113(b) defenses but held there were factual issues as to compliance with 24 C.F.R. § 203.604; the court vacated the foreclosure judgment and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing at time of filing | Plaintiff was a nonholder in possession with rights of a holder (supported by pre-filing mortgage assignment and possession of note) | Plaintiff lacked standing because the note was indorsed to HUD, not plaintiff, when suit was filed | Struck defendants’ standing defense; plaintiff shown to have rights of a holder at filing |
| Compliance with Rule 113(b) (attach note as it currently exists) | Plaintiff attached all documents that existed when filing; allonge did not exist at filing so no violation | Failure to attach allonges/indorsements to show current note status at filing | No Rule 113(b) violation; order striking this defense affirmed |
| Compliance with 24 C.F.R. § 203.604 (HUD servicing: certified letter + property visit) | Plaintiff attempted substantial compliance: sent letter via FedEx and had field visits/meetings (supported by affidavits and FedEx label) | Plaintiff never sent certified letter and did not make required efforts; defendants denied receipt | Trial court erred striking this defense; factual dispute exists whether plaintiff satisfied the “attempt-by-letter” dispatch requirement — vacated and remanded |
| Use of post-filing allonge/assignment to cure defects | Amended complaint and allonge show plaintiff’s current right to enforce the note | Allonge/assignment post-date original filing and cannot cure lack of standing or Rule 113(b) violation | Post-filing allonge did not negate plaintiff’s asserted pre-filing status as nonholder in possession; standing defense properly struck |
Key Cases Cited
- Wexler v. Wirtz Corp., 211 Ill. 2d 18 (1994) (standing requires a real interest in the action and is assessed as of filing)
- King v. First Capital Fin. Servs. Corp., 215 Ill. 2d 1 (2005) (standard for a section 2-615 motion: well-pleaded facts taken as true)
- Illinois Graphics Co. v. Nickum, 159 Ill. 2d 469 (1994) (on a section 2-619 motion, affirmative matter may defeat a claim; review considers genuine issues of material fact)
- Lebron v. Gottlieb Mem’l Hosp., 237 Ill. 2d 217 (2010) (lack of standing is typically an affirmative defense and burden rests on the defendant asserting it)
- Village of Kildeer v. Village of Lake Zurich, 167 Ill. App. 3d 783 (1988) (party either has standing at filing or does not)