Case Information
*1 I LLINOIS O FFICIAL R EPORTS Appellate Court
MB Financial Bank, N.A. v. Ted & Paul, LLC
,
NONRECORD CLAIMANTS, Defendants-Appellants.
District & No. First District, Fourth Division
Docket No. 1-12-2077
Filed May 2, 2013
Held The trial court’s denial of defendants’ petition for relief from a default judgment entered for plaintiff in a mortgage foreclosure action was ( Note: This syllabus reversed, notwithstanding the fact that plaintiff mortgagee had already constitutes no part of the opinion of the court purchased the property and sold it to a third party and service of process but has been prepared on two individual defendants appeared to be proper, since the return of by the Reporter of service showing that the mortgagor, a corporation, was served by service Decisions for the on the corporation’s agent was challenged by affidavits asserting that the convenience of the person served was not an agent for receipt of service but the trial court reader. ) failed to conduct an evidentiary hearing to resolve that factual issue;
therefore, the cause was remanded for such a hearing.
Decision Under Appeal from the Circuit Court of Cook County, No. 09-CH-26861; the Hon. Jean Pendergast Rooney, Judge, presiding. Review Judgment Reversed and remanded.
Counsel on Wesley E. Johnson, of Goodman Law Offices, LLC, of Chicago, for appellants. Appeal
Eric S. Rein and Megan M. Mathias, both of Horwood, Marcus & Berk, Chtrd., of Chicago, for appellee.
Panel JUSTICE FITZGERALD SMITH delivered the judgment of the court,
with opinion.
Presiding Justice Lavin and Justice Pucinski concurred in the judgment and opinion.
OPINION
Following the entry of a default judgment in a mortgage foreclosure action against defendants-appellants Ted & Paul, LLC, Florin Lela and Tudor Berce (defendants or as named), as obtained by plaintiff-appellеe MB Financial Bank, N.A. (plaintiff), the subject property was eventually sold to a third party and confirmed by court order. In response, defendants filed a petition for relief from judgment, which was denied. Defendants appeal, contending that the trial court erred in denying their petition due to lack of personal jurisdiction, and ask that we reverse the trial court’s order. For the following reasons, we reverse and remand. BACKGROUND On August 4, 2009, plaintiff filed a “Complaint to Foreclose Commercial Mortgage and
For Other Relief” against defendants regarding commercial property located at 5351 North Damen Avenue in Chicago. This cause, which is the underlying cause in the instant appeal, was assigned case number 09 CH 26861 (the 61 case). On the same date, plaintiff filed a second, similar complaint to foreclose against defendants regarding a different property. That cause, which is not subject to the instant appeal, was assigned case number 09 CH 26866 (the 66 case). Plaintiff then filed a motion to appoint E. L. Johnson Investigations as a special process server. The trial court granted plaintiff’s motion and appointed E. L. Johnson Investigations to be the special process server for both cases. Regarding the 61 case, which, again, is the underlying cause in the instant appeal, on
March 5, 2010, plaintiff filed a “Motion for Order of Default,” seeking an оrder of default against defendants for their failure to appear, answer or respond to the complaint. To this motion, plaintiff attached three separate documents each entitled “Summons and Complaint Affidavit.” The first was for defendant Ted & Paul, LLC; it was signed by Vince Soto from E. L. Johnson Investigations, dated September 11, 2009, and stated that corporate service was completed upon Mariana Berce, a 56-year-old white female, as that corporation’s agent. The *3 second was for defendant Tudor Berce; it was again signed by Soto, dated September 11, 2009, and stated that abode service was completed upon Mariana Berce, with the same physical description. And, the third summons and complaint affidavit was for defendant Florin Lela; it, too, was signed by Soto and dated September 11, 2009, and stated that personal service was completed on defendant Lela, a 40-year-old white female. On March 24, 2010, the trial court granted plaintiff’s motion and entered an order for default against defendants. The court found that defendants “were served with Summons and Complaint on September 11, 2009; and, therefore, [they] are now in default for failure to timely appear, answer or otherwise plead to [p]laintiff’s Complaint.” The trial court then entered a judgment of foreclosure and sale, stating that it “specifically [found] service of process in each instance was properly made in accordance with the [Illinois] Code of Civil Procedure,” and that it had “jurisdiction over all the parties hereto and the subject matter presented herein.” The court noted that the total balance due on the property was $2,832,708.17, and that defendants could be personally liable for any deficiency, which plaintiff had the right to seek. The court gave defendants until June 22, 2010 to redeem the property. Defendants did not redeem the property. Accordingly, a judicial sale was held and
plaintiff purchased the property for $700,000, leaving a deficiency of $2,196,969.57. The trial court entered аn order approving the report of sale and distribution and, per plaintiff’s decision not to pursue collection, no deficiency judgment was entered. Then, on October 19, 2010, plaintiff sold the property to Ballina Development, Inc. [1] On April 2, 2012, defendants filed a petition for relief from judgment pursuant to section 2-1401 of the Illinois Code of Civil Procedure (Code) (735 ILCS 5/2-1401 (West 2010)), seeking relief from the trial court’s March 24, 2010 order of default and judgment of foreclosure and sale. To their petition, defendants attached copies of the three “Summons and Complaint Affidavits” from the underlying 61 case, as well as copies of three “Summons and Complaint Affidavits” from the 66 case. Among the summonses frоm the 66 case, the first was for defendant Ted & Paul, LLC; it was signed by Vince Soto from E. L. Johnson Investigations, dated August 29, 2009, and stated that corporate service was completed upon defendant Berce, a 50-year-old white male, as that corporation’s agent. The second was for defendant Berce, personally; it was signed by Soto, dated August 31, 2009, and stated that personal service was completed upon him, with the same physical description. And, the third summons and complaint affidavit in the 66 case was for defendant Lela; it, too, was signed by Soto and dated August 31, 2009, and stated that personal service was completed on defendant Lela, this time described as a 38-year-оld Hispanic female. In addition to the six summons and complaint affidavits, defendants also attached three
affidavits to their section 2-1401 petition. Defendant Berce provided an affidavit stating that he was not served with a summons or complaint in the 66 case, and that he did “not believe” he was ever served in the 61 case. He also attested that Mariana Berce, his wife, has never *4 been an agent of defendant Ted & Paul, LLC. Mariana Berce provided an affidavit stating that she was not served with a summons or complaint in the 61 case, that she has never been an agent of defendant Ted & Paul, LLC, and that she was 44 years old in September 2009. And, defendant Lela provided an affidavit stating that he is male and that he was nоt served with a summons or complaint in either the 61 or the 66 case.
¶ 9 Based on all this, defendants asserted that, as evidenced by “significant inconsistencies
and errors in the affidavits” of service, they “were not actually served” and, thus, the trial court’s order of default and judgment of foreclosure and sale were void ab initio since the court lacked personal jurisdiction over them due to improper service. In its response to defendants’ petition, plaintiff attached a copy of the real estate sale and purchase agreement for the sale of the property (in the underlying 61 case) by plaintiff to Ballina Development, [2] Inc., dated October 19, 2010 for the аmount of $700,000, as well as a copy of the special warranty deed for the property identifying it as the grantor and Ballina Development, Inc., as the grantee, with a stamp showing this deed had been recorded with the Cook County recorder of deeds. Via these documents, plaintiff argued that, because the property had been sold to a bona fide purchaser, defendants’ petition was barred by section 2-1401(e) and, because defendants filed their petition more than two years after the court’s March 24, 2010 orders from which they now sought relief, the petition was also barred by section 2-1401(c). Upon consideration of defendants’ petition for relief from judgment and plaintiff’s response, the trial court denied defendants’ petition, stating that it based its decision “on the briefs and § 401(e).” ANALYSIS As a threshold matter, the parties agree that the appropriate standard of review here is de
novo
. They are correct. When a trial court enters either a judgment on the pleadings or a
dismissal in a section 2-1401 proceeding, that order is reviewed on appeal
de novo
. See
People v. Vincent
,
limitations of section 2-1401(c) are really only secondary matters. Instead, the primary issue is that raised by defendants at the trial level in their section 2-1401 petition, namely, whether they were properly served by plaintiff, thereby permitting the trial court to have the necessary jurisdiction over them to effectuate the orders it issued herein. Again, the trial court found as much, but based solely on the pleadings before it. Because, upon review of the circumstances of the instant appeal as well as the facts in the recоrd before us, we feel that this was questionable, at least with respect to one of the defendants, we must conclude that reversal of the trial court’s denial of defendants’ section 2-1401 petition and remand for an evidentiary hearing are required. Section 2-1401 of the Code provides a mechanism for a party to belatedly challenge and
avoid a trial court’s final judgment. That is, it creates an exception to the general rule that
a court cannot review its own judgment after the expiration of 30 days from the date of entry.
See
Malkin v. Malkin
,
court’s order of default and judgment of foreclosure and sale more than 30 days from the date
of their entry. The basis of their petition was their claim that they were never served by
plaintiff with the required summonses and thus, the court lacked personal jurisdiction over
them and its orders were void. Essentially, then, defendants’ petition comprises a motion to
quash service. A motion to quash for lack of jurisdiction that is made more than 30 days after
final judgment seeks relief similar to that of a regular section 2-1401 petition–to belatedly
undo, or avoid, the final judgment. See
OneWest Bank, FSB v. Topor
, 2013 IL App (1st)
120010, ¶¶ 12-15 (discussing the relationship between a motion to quash service and a
section 2-1401 petition).
In
Sarkissian v. Chicago Board of Education
,
supreme court held that a pleading to challenge a void judgment based on invalid service
must be brought under section 2-1401. See also
Topor
,
v. Brewer
,
her when it entered its final judgment, the plaintiff argued that the reviewing court did not
need to address this because section 15-1509 of the Illinois Mortgage Foreclosure Law barrеd
any challenge to the foreclosure and sale. See
Brewer
,
the plaintiff bank adequately served the defendant mortgagor in order to effectuate personal
jurisdiction over her? The trial court had found that the plaintiff met the requirements for
service by publication (the chosen method of service in that cause); this is why it had denied
the defendant’s motion to quash. See
Brewer
,
Brewer . Having already discussed that we are to treat defendants’ section 2-1401 petition for relief from judgment due to lack of personal jurisdiction as a motion to quash, the fact pattern and legal argument are virtually identical: plaintiff bank sought to foreclose on defendants’ mortgage; it claimed it properly served the defendants; and, when they did not respond, the trial court entered a default judgment and ordered a judicial sale of the property, which was sold to plaintiff. Thereafter, just as the defendant in Brewer , defendants here sought relief from these orders, arguing that they were not properly served and, thus, the court never acquired рersonal jurisdiction over them and its orders were void, while plaintiff argued that defendants’ claims were barred since the property had been sold. And, just as the trial court in Brewer , the trial court in the instant cause, without more, denied relief. In light of the strikingly similar factual circumstances and legal arguments, we find no reason to depart from the judicial reasoning and framework we developed in Brewer . *8 Applying the principles we established in that cause, we note that, because a judgment entered without jurisdiction over the parties is void ab initio , plaintiff’s argument here does not hold water; not even the fact that the property in question has been sold–first, to plaintiff and later, to Ballina Devеlopment, Inc.–protects plaintiff if the underlying default judgment and foreclosure and sale order were void because defendants were never properly served. Accordingly, just as in Brewer , we are left with the question of propriety of service. As we noted at the outset of our discussion, it all comes down to this: did plaintiff adequately serve defendants in order to effectuate personal jurisdiction over them? In the instant cause, the record reflects that plaintiff allegedly served each of the three
defendants here differently: defendant Ted & Paul, LLC, the listed mortgagor, through
corporate service via Mariana Berce, whom plaintiff insists was its agent; defendant Berce
through abode service via Mariana Berce as his wife; and defendant Lela through personal
service. As such, each situation involves its own different, and critical, implications.
For example, beginning with defendant Lela, we note that, in the context of personal
service, return of summons is
prima facie
proof of proper service. See
Winning Moves, Inc.
v. Hi! Baby, Inc.
,
personally served on Lela. In opposition, defendants assert that this is clearly incorrect and,
essentially, fraudulent because the summons in the 61 case differs from that in the 66 case
since the former lists Lela as a white femalе and the latter lists Lela as an Hispanic female,
and because Lela is not a female at all; he is a male. However, the only evidence of this
presented by defendants is Lela’s affidavit–his uncorroborated, incredibly brief affidavit
stating, conclusorily, that he was not served in the 61 case and he is male. His evidence
consisted of nothing else but his flat denial that plaintiff, via Soto, served him. Again, in the
context of personal service, without more, Lela’s bare affidavit is simply insufficient to set
aside the trial court’s determination that plaintiff properly served him. Therefore, we find that
the trial court had personal jurisdiction over defendant Lela and, thus, its default judgment
and ordеr of foreclosure and sale regarding the property, as to him, was properly entered.
Next, we examine plaintiff’s alleged service of defendant Berce via abode service on
Mariana Berce (as his wife). Unlike with personal service, abode service, also referred to as
substitute service, does not carry the same presumption of validity since it is not the
defendant himself being served, but someone in his stead living at his abode. See
State Bank
of Lake Zurich v. Thill
,
when serving defendant Berce with abode service via Mariana Berce, investigator Soto
recited the three mandatory requirements of abode service. Under this type of service, then,
defendants had an opportunity to attack Soto’s service as improper with an affidavit. In this
way, Soto’s return of service alone, without a counteraffidavit from plaintiff to address
defendants’ challenge in this regard, would not have been enough for plaintiff to prevail on
the service issue, since the affidavit would have been taken as true and service quashed.
Defendants did attach affidavits to their section 2-1401 petition regarding Soto’s abode
service on defendant Berce: one from Berce himself and one from Mariana. And, there was
no counteraffidavit provided from Soto or plaintiff to аddress defendants’ challenge.
However, upon examination of the affidavits defendants provided, any court would be hard-
pressed to say that they sufficiently attacked the propriety of the abode service that occurred
here with any credible merit. Instead, in another unbelievably short affidavit submitted by
defendants, while Berce unequivocally states that he was not served with a summons or
complaint in the 66 case, he does not say the same regarding service in the case at issue.
Rather, he states only that he does “not believe” he ever received a summons in the mail for
the 61 case. In addition to this less-than-compelling statement, he never affirmatively rebuts
аny of the three elements of abode service that the return verified. For example, Berce does
not rebut that Soto properly left a copy of the summons or complaint at Berce’s usual abode
with Mariana, a family member over the age of 13; he does not challenge that Soto properly
informed Mariana of the content of the summons; and he never denies that Soto sent a copy
of the summons in a sealed envelope with postage fully paid and addressed to him at his
home. Moreover, even considering Mariana’s affidavit, this, too, does little to attack
plaintiff’s abode service as improper. While Mariana doеs state that
she
was not served with
a summons or complaint in the instant case, this is all she asserts. Just like Berce’s,
Mariana’s extremely limited affidavit does not address, let alone attack, any of the
*10
requirements of abode service. For example, she does not claim that Soto did not properly
serve
Berce
pursuant to abode service
via her
. Nor does she aver that Soto did not leave a
copy of the summons in the instant case at their home, that this was not Berce’s usual abode,
that she was not his family member, that Soto did not inform her of the content of the
summons, or that Soto did not send a copy of the summons in a sealed envelope with postage
fully paid and addressed to the defendant at his home. Clearly, both Berce’s and Mariana’s
affidavits are simply insufficient to effect any real challenge to Soto’s return of abode
service. Based on our review of this return, which is contained in the record, and in light of
defendants’ failure to provide any challenge to it via at least one substantive and challenging
affidavit from the person or persons served, we must hold that plaintiff properly served
defendant Berce via abode service. See
Thill
, 113 Ill. 2d at 310, 312 (where return or
affidavit of service affirmatively states the three abode service requirements, and since
certificate of process server that he sent copy of summons is evidence that he did sо, it is
assumed, without contradiction, that abode service was proper). Accordingly, then, the trial
court here had personal jurisdiction over defendant Berce and, thus, its default judgment and
order of foreclosure and sale regarding the property, as to him, was also properly entered.
Although we have just concluded that plaintiff properly served defendant Lela via
personal service and defendant Berce via abode service and, thus, that the trial court properly
had personal jurisdiction over them, there is one last defendant in this cause: Ted & Paul,
LLC. Just as plaintiff chose to serve defendant Lela differently than it served defendant
Bercе, plaintiff served defendant Ted & Paul, LLC, in yet another manner: via corporate
service. A private corporation may be served by leaving a copy of the process (
i.e.
, the
summons or complaint) with its registered agent or any officer or agent of the corporation
found anywhere in the state. See
Dei v. Tumara Food Mart, Inc.
,
Ted & Paul, LLC. It names defendant Berce as the corporation’s registered agent, but states that service was upon Mariana, whom Soto lists as “agent.” While this return would generally be enough proof that service was properly completed on defendant Ted & Paul, LLC, defendants clearly challenged the question of Mariana’s agency in their section 2-1401 petition, specifically denying that she had the necessary actual authority to accept service on behalf of the corporation. In her affidavit, Mariana states not only that she was never served *11 with a summons or complaint in this cause (in any capacity), but also that she has never been a director, officer, agent or registered agent of defendant Ted & Paul, LLC. In addition, defendant Berce states in his affidavit that he is the president of that corporation and confirms that Mariana has never been a director, officer, agent or registered agent of it.
¶ 31 We find ourselves in a precarious position here. While there is a return of service
showing that defendant Ted & Paul, LLC, was served via corporate service upon Mariana
as its agent, we have two affidavits challenging Mariana’s capacity as that corporation’s
agent. Under these circumstances, the return is not conclusive and, thus, plaintiff’s service
of defendant Ted & Paul, LLC, has now been placed into question. Moreover, whether
someone is a corporate agent is a factual question. See
Island Terrace
,
we find that a question of fact remains with respect to the propriety of plaintiff’s service of defendant Ted & Paul, LLC. Thus, while the trial court properly had personal jurisdiction over the former two defendants upon which to enter its judgment of default and order of foreclosure and sale, it is unclear whether it did so regarding this last defendant. The trial court never addressed the matter of the propriety of corporate service on defendant Ted & Paul, LLC, with respect to the question of Mariana’s agency. Because, in light of the circumstances, this is a question of fact, we find that the trial court must do so via an evidentiary hearing discussing all the pertinent matters regarding the question of agency. This is particularly critical due to the fact that, of all the defendants in this matter, it is defendant Ted & Paul, LLC, that is listed as the mortgagor of the property at the center of this appeal. CONCLUSION In conclusion, then, we find that the trial court’s denial of defendants’ section 2-1401 petition was in error as a question of fact remains and, thus, that a further hearing is required as described herein. Reversed and remanded.
Notes
[1] Ballina Development, Inc., which bought the property for $700,000, is not a party to this appeal.
[2] Plaintiff is identified in this document, as well as in the special warranty deed, as MB841, LLC.
[3] We recognize that the recent case of
U.S. Bank National Ass’n v. Prabhakaran
, 2013 IL
App (1st) 111224, held that section 2-1401 petitions are generally barred by section 15-1509 of the
Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1509 (West 2008)) after judicial confirmation
of the sale of the property. However,
Prabhakaran
did not involve a section 2-1401 petition based
solely on a lack of jurisdiction concerning service of process, as did defendants’ section 2-1401
petition did herein. This critical contrast makes
Prabhakaran
distinguishable and inapplicable to the
instant cause. See
Topor
,