DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee for Long Beach Mortgage Loan Trust 2004-3 Asset-Backed Certificate Series 2004-3, Plaintiff-Appellee, v. PLAMEN IORDANOV, Defendant-Appellant.
No. 1-15-2656
Appellate Court of Illinois, First District, Fifth Division
September 23, 2016
2016 IL App (1st) 152656
JUSTICE REYES delivered the judgment of the court, with opinion. Justices Lampkin and Burke concurred in the judgment and opinion.
Appeal from the Circuit Court of Cook County, No. 08-CH-44283; the Hon. Pamela Meyerson, Judge, presiding. Judgment: Affirmed. Counsel on Appeal: Omar F. Uddin, of Chicago, for appellant. Jena Valdetero and Katharine F. Lessaris, both of Bryan Cave LLP, of Chicago, for appellee.
¶ 1 In this mortgage foreclosure action, defendant Plamen Iordanov (defendant) appeals follоwing the circuit court of Cook County‘s entry of an order approving the sale of the property in question in favor of plaintiff Deutsche Bank National Trust Company, as Trustee for Long Beach Mortgage Loan Trust 2004-3 Asset-Backed Certificate Series 2004-3 (plaintiff). Defendant‘s sole contention on appeal is that plaintiff lacked standing to bring the foreclosure action, and thus, the circuit court erred in entering the order approving sale. Because defendant failed to timely raise plaintiff‘s lack of standing as an affirmative defense in response to either the complaint or the amendеd complaint, we find the circuit court did not err when it approved the sale of the property in question and affirm the judgment of the circuit court.
¶ 2 BACKGROUND
¶ 3 Prior to reciting the facts in this matter, we observe that the litigation before the circuit court was quite extensive, proceeding over a seven-year period. Therefore, we will enumerate only those facts pertinent to this appeal.
¶ 4 The Initial Complaint
¶ 5 On November 25, 2008, plaintiff filed its complaint to foreclose the mortgage against defendant regarding the property located at 6540 North Washtenaw Avenue in Chicago (the property) pursuant to the
¶ 6 On May 13, 2009, plaintiff presented its motions for default and judgment of foreclosure. Defendant appeared in court and requested time to consult with аn attorney and to seek a possible loan modification. The court granted defendant 28 days to file an answer or otherwise plead to the complaint and continued plaintiff‘s motions to June 24, 2009. Thereafter, on June 9, 2009, defendant filed his pro se appearance and answer. In his answer, defendant stated he had insufficient information on which to admit or deny the allegations in the complaint and further stated as other affirmative matter, “I‘m in proces [sic] of Modification of the Loan[ ] I need more time to complete it.” Plaintiff then filed a motion for summary judgment and a briefing schedule was entered. Defendant, however, failed to respond to the motion. The circuit court thereafter granted plaintiff‘s request for summary judgment and judgment of foreclosure.
¶ 7 The Release
¶ 8 On December 29, 2009, a release of the mortgage on the property (the release) was executed by JPMorgan Chase Bank, N.A., successor in interest from the Federal Deposit Insurance Corporation, as receiver for Washington Mutual Bank, formerly Washington Mutual Bank, FA, s/b/m to Washington Mutual Home Loans, Inc., s/b/m to Long Beach Mortgage Company (JPMorgan), and filed with the Cook County recorder of deeds on January 12, 2010.
¶ 10 After the release was brought to plaintiff‘s attentiоn, on August 2, 2010, plaintiff filed a motion to amend its complaint in order to add two new counts: (1) a declaratory judgment that the release was invalid because the mortgage had not been paid off and (2) rescission of the release due to a mistake of fact. The amended complaint included a third count for foreclosure of the mortgage, which alleged the same facts as the original complaint. Attached to the amended complaint were copies of the mortgage, note, and release. No assignment was attached to the amended complaint. The circuit court granted plaintiff‘s motion to amend the complaint on September 14, 2010, and stayed the enforcement of the judgment of foreclosure until further order of court. Thereafter, defendant filed a number of motions that were stricken by the circuit court. Defendant, however, on November 18, 2011, was granted additional time to answer or otherwise plead to the amended complaint.
¶ 11 Defendant‘s Response to the Amended Complaint
¶ 12 On December 12, 2011, defendant, who was now represented by counsel, filed a motion to dismiss plaintiff‘s amended complaint pursuant to
Notes
¶ 13 Plaintiff‘s Motion for Default
¶ 14 On Mаy 8, 2012, plaintiff filed a motion to find defendant in default for failure to answer counts I and II of the amended complaint.2 In response, defendant asserted he filed an answer to the complaint in January 2012, and then again in February 2012, along with a counterclaim filed on February 28, 2012. Defendant attached a two-page answer to the amended complaint with an illegible file stamp, on which someone had written in handwriting the date “12 Jan 26.” This document was immediately preceded by a fax cover sheet from defendant‘s counsel to plaintiff‘s counsel, which indicated a two-page document was transmitted on January 27, 2012. Defendant also attached a three-page answer to the amended complaint, again with an illegible file stamp with handwriting to suggest it was filed “12 Feb 28” along with a fax cover sheet indicating a three-page document had been faxed to plaintiff‘s counsel on February 29, 2012. Neither of the answers filed with the circuit court included any affirmative defenses. Defendant also included a copy of his counterclaim that indicated it was filed on February 28, 2012. However, it is unclear from the record whether defendant notified plaintiff of this response since no certificate of service accompaniеd defendant‘s response in the record on appeal.
¶ 16 Defendant‘s Motion to Vacate and Emergency Motion to Stay the Sale
¶ 17 The following day, defendant filed а motion to vacate the order of July 10, 2012. Defendant argued that plaintiff incorrectly informed the court that he did not file an answer to the amended complaint. Defendant asserted he faxed his answer to the complaint to plaintiff‘s counsel prior to the filing of plaintiff‘s motion for default. The matter was scheduled for presentment on October 3, 2012.
¶ 18 On August 7, 2012, defendant presented an emergency motion to stay the sale of the property, which was scheduled for August 16, 2012. Defendant asserted he timely filed his answer in January 2012 and faxed the answer to plaintiff‘s counsel. Defendant requested the sale of the property be stayed until the motion to vacate could be heard.
¶ 19 The circuit court granted defendant‘s motion to stay as well as his motion to vacate the default judgment, finding the defendant filed an answer on or about January 26, 2012. The circuit court further ordered defendant to serve plaintiff with any future pleadings, motions, and discovery pursuant to the supreme court rules. The court also ordered all discovery was to be issued on or before September 25, 2012.
¶ 20 Plaintiff‘s Motion to Strike the Counterclaim and Motion for Summary Judgment
¶ 21 Thereafter, on August 29, 2012, plaintiff filed a motion to strike defendant‘s counterclaim. The countеrclaim against plaintiff alleged an order was entered in a municipal case relating to the property whereby plaintiff was dismissed based on the release. Plaintiff argued the counterclaim failed to state a cause of action and was improperly filed without seeking leave of court. After the matter was fully briefed and argued, the circuit court granted plaintiff‘s motion and, thereafter, denied defendant‘s motion for leave to file an amended counterclaim.
¶ 22 On March 13, 2013, plaintiff filed its motion for summary judgment on counts one and two of the amended complaint. Plaintiff argued the release was executed and recorded by JPMorgan in error. Plaintiff maintained that JPMorgan was not a party to the foreclosure complaint and did not hold the note, as it was plaintiff who was the holder of the note pursuant to an assignment of mortgage that was recorded on December 18, 2008. Plaintiff acknowledged that JPMorgan was a successor by merger to Washington Mutual Bank, which, in turn, was a successor by merger to Long Beach Mortgage Company, the original lender, but that “the subject loan had already been transferred to the trust years before the execution and recording of the release by JPMorgаn.” Plaintiff further argued that defendant failed to respond to its discovery request for documents or to answer interrogatories regarding the payment of the subject loan. Attached to the motion for summary judgment was an affidavit of Harris Whittaker (Whittaker), a contract management coordinator employed by Ocwen Loan Servicing, the entity that serviced the loan at issue in this matter. Whittaker averred, based on his personal knowledge and review of the computer-generated loan history attached to the affidavit, that the loan “is currently due for the June 1, 2008 monthly mortgage installment and each succеssive monthly installment. The Subject Loan has never been paid off.”
¶ 24 In reply, plaintiff argued defendant failed to demonstrate that there was a genuine issue of material fact in this case. Plaintiff maintained that the release of the mortgage was executed in error because the loan was never paid off. Plaintiff asserted that its affidavit, which indicаted the loan was never paid off, was not refuted, and defendant failed to produce any documents in response to plaintiff‘s discovery request demonstrating the loan was paid in full.
¶ 25 The circuit court, on May 22, 2013, granted plaintiff‘s motion for summary judgment on counts I and II of the amended complaint. The circuit court further ordered that (1) the release was to be rescinded, (2) plaintiff was permitted to enforce its judgment of foreclosure previously entered on August 5, 2009, and (3) the order staying the enforcement of that judgment is vacated.
¶ 26 On May 29, 2013, defendant filed a motion to reconsider the May 22, 2013, order arguing the court wrongfully found the release was prepared and recorded in error. Defendant further filed a “Petition to Clarify” the summary judgment order, in which he argued that the assignment to plaintiff was invalid and that the release was valid. After the matters were fully briefed and argued, on November 14, 2013, the circuit court denied defendant‘s motion to reconsider and petition to clarify. The circuit court further extended the redemption date and allowed plaintiff to proceed to sale on or after January 1, 2014, without further order of court.
¶ 27 The Motion to Confirm the Sale
¶ 28 The property was sold on January 3, 2014, to plaintiff as the highest bidder at a judicial sale. Thereafter, on June 29, 2014, plaintiff presented its motion to confirm the sale. In response, defendant (who was now represented by new counsel) argued plaintiff lacked standing as it failed to allege in its original and amended complaints that there was an assignment or proper negotiation of the mortgage and note. Plaintiff maintained in its reply that defendant had waived the affirmative defense of standing and impermissibly attempted to shift the burden of demonstrating standing onto plaintiff. On August 21, 2015, the circuit court entered the order approving the report of sale and distribution and confirmed the sale of the proрerty. This appeal followed.
¶ 30 Defendant‘s sole argument on appeal is that the circuit court erred in granting the order approving the sale where plaintiff had failed to demonstrate it had standing.4 In response, plaintiff asserts defendant waived his defense of lack of standing because he failed to assert it in response to either complaint. Plaintiff further maintains that even if defendant timely raised this affirmative defense, it established a prima facie case of standing, which defendant failed to rebut.
¶ 31 The standard of review of a circuit court‘s approval of a judicial sale is an abuse of discretion. Household Bank, FSB v. Lewis, 229 Ill. 2d 173, 178 (2008). “The circuit court abuses its discretion if it committed an error of law or where no reasonable person would take the view adopted by the court.” US Bank, National Ass‘n v. Avdic, 2014 IL App (1st) 121759, ¶ 18. The party opposing the foreclosure sale bears the burden of proving that sufficient grounds exist to disapprove the sale. Bayview Loan Servicing, LLC v. 2010 Real Estate Foreclosure, LLC, 2013 IL App (1st) 120711, ¶ 32.
¶ 32 Under the Foreclosure Law, the circuit court shall confirm the sale of the property unless it finds that one of four grounds exist to disapprove the sale: “(i) a notice required in accordance with subsection (c) of
¶ 33 For the first time on appeal, defendant challenges plaintiff‘s lack of standing under section 15-1508(b)(iv) of the Foreclosure Law (
¶ 35 We find Avdic to be instructive. In that case, the defendants answered the plaintiff‘s foreclosure complaint but did not set forth any affirmative defenses and did not challenge the plaintiff‘s standing in response to a motion for summary judgment. Avdic, 2014 IL App (1st) 121759, ¶¶ 5, 9. The circuit court ultimately granted the plaintiff‘s motion for summary judgment. Id. ¶ 12. Defendants raised the issue of standing for the first time in their motion to reconsider, which the trial сourt denied. Id. ¶ 13.
¶ 36 On appeal, the defendant challenged the plaintiff‘s standing to bring the foreclosure action. Id. ¶ 34. The reviewing court found the argument was waived as the defendant did not timely allege lack of standing as an affirmative defense, nor did the defendant raise the issue of standing in response to the motion for summary judgment. Id.
¶ 37 Here, plaintiff alleged in both the original and amended complaints that it was “the Mortgagee under
¶ 38 Defendant indicated in his initial answer that he had insufficient information with which to admit or deny the allеgations in the complaint. Defendant included as “other affirmative matter” that he was “in process [sic] of modification of the loan” and that he “need[ed] more time to complete it.” Thereafter, plaintiff moved for summary judgment against him and the circuit court entered a briefing schedule on plaintiff‘s motion. Defendant did not respond. Then, on August 5, 2009, the circuit court granted plaintiff‘s motion for summary judgment and entered the judgment of foreclosure. At no point during these proceedings did defendant raise plaintiff‘s lack of standing as an affirmative defense.
¶ 39 Subsequent to the entry of the judgment of foreclosure, the circuit court stayed enforcement of the judgment due to the discovery that the mortgage had been released. On September 14, 2010, plaintiff filed a three-count amended complaint which alleged counts for declaratory judgment, rescission, and judgment of foreclosure. In January and February 2012, defendant filed his answer to the amended complaint in which he denied each allegation. Again, defendant did not assert any affirmative matters.
¶ 40 While defendant had two opportunities in this matter to raise the affirmative defense of lack of standing in his answers, he failed to do so. Moreover, defendant partiсipated in litigating this matter over the course of seven years and, in so doing, received numerous benefits including an extension of the redemption period to January 1, 2014, and numerous stays of the sale of the property. See Barnes, 406 Ill. App. 3d at 6-7 (the defendant failed to timely raise the standing issue before the circuit court where she failed to answer the complaint, was defaulted, and thereafter participated in the proceedings by successfully petitioning the court for a continuation of the sale and raised the plaintiff‘s lack of standing in response to the motion to confirm the sale). While defendant maintains he raised the issue of standing during the underlying litigation, our review of the record reveals that defendant did not timely challenge plaintiff‘s standing as mortgagee. Instead, the majority of the dispute below involved the validity of the release with plaintiff contending JPMorgan did not have the authority to release the mortgage on defendant‘s property and with defendant asserting JPMorgan did have such authority. Accordingly, we conclude that defendant waived the affirmative defense of lack of standing as he (1) failed to raise it in either of his answers, (2) participated in the proceedings and received a benefit thеrefrom, and (3) did not raise plaintiff‘s lack of standing to foreclose until he presented that argument in his response to the motion to confirm the sale. See Avdic, 2014 IL App (1st) 121759, ¶ 34; Nationwide Advantage Mortgage Co. v. Ortiz, 2012 IL App (1st) 112755, ¶ 26.
¶ 42 We disagree and find Garner to be dispositive. In that case, the defendant argued on appeal that the foreclosure plaintiff lacked standing because, while it had filed its complaint against him on September 19, 2008, the assignment of the mortgage to the plaintiff was not executed until September 23, 2008, a few days later. Garner, 2013 IL App (1st) 123422, ¶ 22. The reviewing court held the defendant failed to prove his affirmative defense that the plaintiff lacked standing. Id. The reviewing court found the defendant failed to meet his burden of proof, as the defendant produced only “a document entitled ‘Assignment of Mortgage,’ which was dated September 23, 2008, four days after the complaint was filed in this cause.” Id. ¶ 25. The Garner court observed that “Illinois courts have long held that a mortgage assignment may be oral or written” and that “[e]ven when a written assignment exists, it may be a mere memorialization of an earlier transfer of interest.” Id. (citing Klehm v. Grecian Chalet, Ltd., 164 Ill. App. 3d 610, 616 (1987), Buck v. Illinois National Bank & Trust Co., 79 Ill. App. 2d 101, 105-06 (1967), and Gilbert, 2012 IL App (2d) 120164, ¶ 24). Thus, while the defendant produced the assignment, he did not establish when the interest in the property was transferred to the plaintiff. Id. According to the court, defendant “failed to show that the mortgage assignment he produced was not a mere memorialization of a previous transfer.” Id. The Garner court suggested that the defendant could have proven when the plaintiff obtained its interest in the mortgage through depositions or interrogatories but noted the defendant did not “[take] those steps.” Id. Similarly, defendant here produced an assignment of the mortgage, which was dated December 9, 2008, two weeks after the foreclosure complaint was filed. Defendant produced no other documentation evidencing plaintiff‘s lack of standing, despite having been provided with an ample opportunity to participate in discovery. Accordingly, defendant failed to establish when the interest in the property was transferred to plaintiff. See id.
¶ 43 Defendant relies solely on Gilbert, a Second District case, to support his position that “[p]laintiff has nоt sufficiently demonstrated that it received an assignment from the original lender prior to foreclosing.” The First District in Garner, however, criticized Gilbert as applying an inappropriate burden of proof. See Garner, 2013 IL App (1st) 123422, ¶ 28 (discussing Gilbert, 2012 IL App (2d) 120164, ¶ 17). In Gilbert, the Second District held that, after the defendant in that case had made a prima facie showing that the plaintiff lacked standing, the burden shifted to the plaintiff who failed to rebut the defendant‘s evidence. Gilbert, 2012 IL App (2d) 120164, ¶ 17. The Garner court noted that in support of “this burden-shifting scheme” the Gilbert court cited a case that concerned neither standing nor foreclosure proceedings, but rather addressed the return of a deposit and the “burden of persuasion on a motion for summary judgment.” (Emphasis in original.) Garner, 2013 IL App (1st) 123422, ¶ 28.
¶ 45 While defendant is correct that plaintiff “could have alleviated this entire situation by properly affixing the correct assignment of mortgage at the time the suit was filed,” that is not the law in Illinois. At the time the foreclosure action was filed, all plaintiff needed to attach to the complaint were copies of the mortgage and note. See Korzen, 2013 IL App (1st) 130380, ¶ 24;
¶ 47 For the reasons stated, we affirm the judgment of the circuit court of Cook County.
¶ 48 Affirmed.