Wells Fargo Bank, N.A. v. McCluskey
999 N.E.2d 321
| Ill. | 2013Background
- McCluskey defaulted on a mortgage and Wells Fargo obtained a default judgment of foreclosure in Oct. 2010; sale was set for Feb. 2011 (redemption period ended Feb. 20, 2011).
- On the original sale date McCluskey moved to stay the sale and to vacate the judgment; parties agreed to postpone the sale 75 days to permit loan modification negotiations.
- Negotiations failed; Wells Fargo purchased the property at the rescheduled judicial sale on May 12, 2011.
- Two weeks later McCluskey filed a motion under 735 ILCS 5/2-1301(e) to vacate the default judgment and set aside the sale, alleging pleading defects and lack of plaintiff’s standing.
- The circuit court denied the motion, confirmed the sale under the Foreclosure Law, and found McCluskey had waived objections by participating in proceedings and agreeing to the postponement; appellate court reversed and remanded to evaluate the 2-1301(e) motion.
- The Illinois Supreme Court allowed review and held that, after a motion to confirm the judicial sale is filed, the Foreclosure Law’s confirmation standards govern and are inconsistent with the broader 2-1301(e) standards; the circuit court’s denial was affirmed on the merits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a borrower may vacate a foreclosure default judgment after judicial sale under §2-1301(e) | McCluskey: §2-1301(e) remains available and permits vacatur after sale if diligence excuse and meritorious defense exist | Wells Fargo: §15-1508(b) of the Foreclosure Law governs confirmation and limits grounds to four, precluding §2-1301(e) at that stage | Held: Before a motion to confirm is filed, §2-1301(e) may apply; after a motion to confirm is filed, only §15-1508(b) objections are permitted |
| Standard required to vacate sale and underlying judgment after motion to confirm is filed | McCluskey: Meritorious pleading defenses and diligence should suffice to set aside sale and judgment | Wells Fargo: Vacatur must meet §15-1508(b) grounds (notice, unconscionability, fraud, or that justice was not done) and cannot be based solely on ordinary pleading defenses | Held: To vacate sale and judgment after confirmation motion, borrower must show §15-1508(b) relief — e.g., fraud or conduct that prevented earlier defense or other equitable injustice |
| Whether Barnes (Ill. App.) controls or can be rejected | McCluskey/app. ct.: Barnes should be rejected; Roberts supports §2-1301(e) relief post-sale | Wells Fargo: Barnes is correct; Foreclosure Law overrides inconsistent Code provisions | Held: Court adopts Barnes reasoning that Foreclosure Law governs once confirmation is sought; Roberts was distinguishable |
| Timeliness: does filing §2-1301(e) after sale but before confirmation suffice | McCluskey: motion filed two weeks after sale (before confirmation), so §2-1301(e) should be available | Wells Fargo: sale itself divests rights so §2-1301(e) should not be allowed after sale | Held: Filing §2-1301(e) before a motion to confirm is filed is permissible; only confirmed sale divests rights — confirmation triggers §15-1508(b) regime |
Key Cases Cited
- Mortgage Electronic Registration Systems, Inc. v. Barnes, 406 Ill. App. 3d 1 (Ill. App. 2010) (Foreclosure Law controls and §15-1508(b) limits grounds to refuse confirmation)
- Merchants Bank v. Roberts, 292 Ill. App. 3d 925 (Ill. App. 1997) (remanded for §15-1508(b) hearing; did not authorize unraveling judgment post-confirmation)
- Household Bank, FSB v. Lewis, 229 Ill. 2d 173 (Ill. 2008) (confirmation motion triggers court’s mandatory review under §15-1508(b))
- EMC Mortgage Corp. v. Kemp, 2012 IL 113419 (Ill. 2012) (order confirming sale, not the foreclosure judgment, is final and appealable where Rule 304(a) is absent)