Sunday, March 17, 2019

FYI: 5th Cir Holds No "Detrimental Reliance" Exception to Unilateral Withdrawal of Acceleration Notice

The U.S. Court of Appeals for the Fifth Circuit recently held that Texas law contains no detrimental reliance exception to a lender's unilateral right to withdraw an acceleration notice.

 

A copy of the opinion is available at:  Link to Opinion

 

After a borrower defaulted on a Texas home equity fixed adjustable rate note secured by a Texas home equity security instrument. In 2010, the mortgagee through its then loan servicer sent the borrower notice of its intent to accelerate the note and demanded full payment of the debt. 

 

The mortgagee filed suit and obtained an agreement final judgment of foreclosure in 2011.  The borrower then vacated the property.

 

In 2012, the mortgagee's new loan servicer sent a new notice of default demanding less than the full amount of the debt to cure her default.  In 2015, the borrower conveyed her interest in the property to a third-party via special warranty deed.  In turn, the third-party transferred its interest in the property to a corporation (Corporation). 

 

The mortgagee's servicer re-initiated the prior foreclosure proceeding.  In response, the Corporation filed a state court action against the mortgagee and its servicer alleging that the lien on the property was void because the foreclosure was not filed within the four-year statute of limitation. 

 

The mortgagee and the servicer removed the case to federal court on diversity grounds.   The Corporation amended its complaint to allege that the borrower's detrimental reliance on the acceleration noticed barred the mortgagee and the servicer from abandoning the 2012 acceleration. 

 

The parties filed cross-motions for summary judgment.  The trial court found the Corporation could not show that it detrimentally relied on the acceleration notice and entered summary judgment in favor of the mortgagee and its servicer.

 

This appeal followed.

 

Initially, the Fifth Circuit noted that under Texas law, "[a] person must bring suit for . . . the foreclosure of a real property lien not later than four years after the day the cause of action accrues" or the lien becomes void.  Tex. Civ. Prac. & Rem. Code Ann. § 16.035(a); § 16.035(d).  Further, if the note contains an optional acceleration clause, then "the action accrues only when the holder actually exercises its option to accelerate".

 

The lender may abandon the acceleration," either by the lender's unilateral actions or by agreement, thereby suspending the limitations period until the lender exercises its option to re-accelerate the note." Requesting payment of less than the full debt owed after accelerating the full amount owed is "an unequivocal expression of the bank's intent to abandon or waive its initial acceleration".

 

In 1998, in Swoboda v. Wilshire Credit Corp., a Texas intermediate appellate court declared in dicta:  "Even if a creditor exercises the option to accelerate and makes a declaration to that effect, the election to accelerate can be revoked or withdrawn at any time, so long as the debtor has not detrimentally relied on the acceleration".  However, the Fifth Circuit observed that no Texas court "ever held detrimental reliance is an exception" to a lender's right to unilaterally withdraw an initial acceleration.  

 

In 2015, the Texas legislature passed the Texas Civil Practice and Remedies Code § 16.038; subsection (a) of which provides that:  "If the maturity date of a series of notes or obligations or a note or obligation payable in installments is accelerated, and the accelerated maturity date is rescinded or waived . . . before the limitations period expires, the acceleration is deemed rescinded and waived and the note, obligation, or series of notes or obligations shall be governed . . . as if no acceleration had occurred." 

 

This statute provides no exceptions to a lender's right to unilaterally withdraw the acceleration.   "A statute is presumed to have been enacted by the legislature with complete knowledge of the existing law and with reference to it."

 

The Texas legislature, "chose not to include in the statute any exception to the lender's right to unilaterally withdraw an acceleration notice."  The Fifth Circuit presumed it did this "with knowledge of the case law."  Thus, "it is unlikely the Texas Supreme Court would be willing to read such language into the statute."

 

Accordingly, held that "detrimental reliance is not an exception to the lender's right to unilaterally withdraw an acceleration notice under Texas law", and affirmed the trial court's order granting the mortgagee's motion for summary judgment

 

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

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Thursday, March 14, 2019

FYI: 7th Cir Holds Erroneously Recorded Satisfaction May Be Unilaterally Cancelled and Withdrawn

The U.S. Court of Appeals for the Seventh Circuit recently held that a mortgagee could unilaterally cancel an erroneously recorded satisfaction of the loan where the borrower had not yet detrimentally relied on the erroneous satisfaction.

 

A copy of the opinion is available at:  Link to Opinion

 

A company took out a loan from a bank secured by a mortgage.  The bank sold the loan to debt buyer (Debt Buyer).  The Debt Buyer used a debt collector to collect payments.  The debt collector inadvertently recorded a satisfaction of the debt releasing the mortgage before the company paid off the loan.  The Debt Buyer realized the mistake and recorded a document cancelling the satisfaction before the company relied on it to its detriment.

 

After the Debt Buyer recorded the document cancelling the satisfaction, the company defaulted on the loan and the Debt Buyer commenced a foreclosure action in Illinois state court.  The company then filed for bankruptcy in federal court which stayed the foreclosure action. 

 

The company filed an adversary proceeding against the Debt Buyer alleging that the release and satisfaction of the mortgage extinguished both the loan and the mortgage.  The bankruptcy court rejected this argument, finding that the Debt Buyer could unilaterally correct a unilateral error.

 

The trial court agreed with the bankruptcy court, and this appeal followed.

 

The Seventh Circuit initially addressed whether the appeal was moot because the bankruptcy court oversaw the sale of the property before it heard the appeal. 

 

The Debt Buyer argued that 11 U.S.C. 363(m) and In re River West Plaza Chicago, LLC, 664 F.3d 668 (7th Cir. 2011), which holds that section 363(m) precludes ordering the recipient to turn over a sale's proceeds to the bankruptcy estate, moots this appeal. 

 

As you may recall, section 363(m) provides that reversal or modification on appeal under this section "does not affect the validity of a sale or lease under such authorization to an entity that purchased or leased such property in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and such sale or lease were stayed pending appeal."

 

The Seventh Circuit disagreed with the Debt Buyer and disapproved of any decision to the contrary holding that section 363(m) does not make any dispute moot or prevent a bankruptcy court from deciding what shall be done with the proceeds of a sale or lease.  The Seventh Circuit so held because "a defense to payments concerns the merits, not mootness."  Thus, section 363(m) does not concern mootness and a live controversy remained over who should get the money generated by the sale. 

 

The Seventh Circuit then turned to the merits of the appeal.  The Seventh Circuit began by noting that the company obtained no rights from the mistaken satisfaction because it was "unilateral and without consideration."  Thus, "it was not a contract." 

 

Because the company did not rely upon the satisfaction to its determent, the Company could unilaterally rescind it under Illinois law where "a mistaken release of a mortgage is ineffective between the mortgagor and mortgage."

 

The company argued that the mortgage supports its position that the Debt Buyer irrevocably waived its rights under the mortgage by recording the signed satisfaction. To make this argument the company relied on the mortgage clause stating that the "Lender shall not be deemed to have waived any rights under this Mortgage unless such waiver is given in writing and signed by Lender."

 

The Seventh Circuit had little trouble rejecting this reading of the mortgage because to say "only A can accomplish B" does not say that "every A accomplishes B."  Instead, the "no-waiver clause negates oral waivers and waivers implied from conduct." 

 

For example, the Appellate Court noted, when the lender accepts a late payment, it does not waive the payment deadline.  As such, the mortgage "language does not mean that mistaken unilateral writings are beyond recall."

 

The Seventh Circuit therefore affirmed the lower court's ruling.

 

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

Alabama   |   California   |   Florida   |   Georgia  |   Illinois   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Texas   |   Washington, DC

 

 

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Monday, March 11, 2019

FYI: Ill App Ct (1st Dist) Holds Borrower's General Denial Insufficient to Avoid Summary Judgment in Foreclosure

The Appellate Court of Illinois, First District, recently held that a borrower's general denial that the mortgagee performed the conditions precedent of the mortgage contract prior to filing a foreclosure action was insufficient under Illinois Supreme Court Rules and therefore constituted a forfeiture of the issue. 

 

Accordingly, the Appellate Court affirmed the ruling of the trial court granting summary judgment in favor of the mortgagee.

 

A copy of the opinion is available at:  Link to Opinion

 

After the borrower ("Borrower") defaulted on her mortgage loan, the bank ("Bank") sent her a letter titled "Notice of Intent to Accelerate" ("Notice") contending that the Borrower was in default due to nonpayment. 

 

The Notice sought to comply with requirements of the mortgage agreement that required the Bank to provide certain notices to the Borrower prior to acceleration of her payment obligations and the initiation of a foreclosure.

 

The Borrower did no cure her default, and the Bank filed a foreclosure complaint which followed the form proscribed by the Illinois Mortgage Foreclosure Law ("IMFL"). 

 

Thus, the complaint was statutorily "deemed and construed to include" the allegations contained in section 15-1504(c) of IMFL, including the specific allegation "that any and all notices of default or election to declare the indebtedness due and payable or other notices required to be given have been duly and properly given." 

 

In the answer, the Borrower responded to the allegation by stating: "Defendants deny the above allegation." 

 

The parties filed cross-motions for summary judgment wherein the Borrower argued that the Bank did not comply with the conditions precedent to filing the foreclosure action because the mortgage required the Bank to provide notice to the Borrower that she had the "right to assert in the foreclosure proceeding the non-existence of a default or any other defense of Borrower to acceleration and foreclosure," but the Notice stated that the Borrower "may have the right to bring a court action to assert the non-existence of a default or any other defense you may have to acceleration and foreclosure." 

 

In response, the Bank argued that the Borrower waived the argument by failing to allege specific facts in the answer with respect to why the condition precedent had not been performed, in violation of Illinois Supreme Court Rule 133(c), which provides: "In pleading the performance of a condition precedent in a contract, it is sufficient to allege generally that the party performed all the conditions on his part; if the allegations be denied, the facts must be alleged in connection with the denial showing wherein there was a failure to perform." 

 

The trial court entered summary judgment in favor of the Bank and against the Borrower, as well as judgment of foreclosure in favor of the Bank, and ruled that there was no reason to delay the appeal. 

The Borrower then appealed. 

 

On appeal, the First District noted that "the parties agree that sending a proper 'notice of acceleration' was a condition precedent to [the Bank's] ability to file the instant foreclosure action." 

 

Thus, the Bank's "complaint and defendants' answer thereto were required to comply with Illinois Supreme Court Rule 133(c)."

 

The First District explained that "[i]n light of the requirements of Rule 133(c), courts have repeatedly recognized that mere general denial of the performance of the conditions precedent of a contract in a party's responsive pleading, without allegations of specific facts, results in forfeiture of the issue of the performance of the conditions precedent of a contract." 

 

Thus, "a general denial to an allegation of the performance of a condition precedent in a contract is treated as an admission of that performance."

 

Because the Borrower only generally denied the Bank complied with all conditions precedent and because "[n]o specific facts were alleged in defendants' answer to support this denial," the Borrower "forfeited the issue; indeed, their general denial stands as an admission that [the Bank] provided all proper notices." 

 

Thus, "in light of defendants' judicial admission . . ., the circuit court properly denied defendants' cross-motion for summary judgment." 

 

Accordingly, the First District affirmed the ruling of the trial court.

 

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

Alabama   |   California   |   Florida   |   Georgia  |   Illinois   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Texas   |   Washington, DC

 

 

NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.


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Friday, March 8, 2019

FYI: 3rd Cir Broadens Scope of FDCPA in Ruling Creditor is a Debt Collector

An entity whose principal business is to purchase debt, but did not itself collect the debt it purchased, was found to be a debt collector subject to the federal Fair Debt Collection Practices Act (FDCPA), even though the collection activity was undertaken by other entities.

 

The U.S. Court of Appeals for the Third Circuit reached this conclusion by expanding the scope of the statute's liability so far that it now falls into conflict with itself. Put another way, a creditor can be a debt collector of its own performing debt which it assigned to a third party to collect. But the third party that undertakes collection would not be a debt collector, even if its principal purpose was debt collection.

 

Sound confusing? It is, but the story on how the Court arrived there is worth the read.

 

A copy of the opinion is available at:  Link to Opinion

 

 

Who is an FDCPA "Debt Collector"?

 

The FDCPA defines "debt collector" in two ways. The first is an entity whose principal purpose is the collection of debts. The second is an entity that "regularly" collects debts, "directly or indirectly" that are alleged "to be owed or due or another."

 

In this action, the question was whether Greystone Alliance, LLC fit the "principal purpose" definition. The issue was critical to Greystone because if it obtained a finding that it was not a debt collector, it would not face FDCPA liability.

 

Greystone argued its principal business is to purchase charged off receivables, but it did not see itself as a debt collector because it did not collect the debt it purchased. Instead it engaged third-party collection agencies and a law firm for that purpose. Greystone also relied on earlier decisions holding that the FDCPA defined a creditor and debt collector as mutually exclusive, so it could not be both.

 

The Third Circuit's resolution of the issue did not end well for Greystone. The Court noted that its recent decision in Tepper v. Amos held that creditors can also be debt collectors for FDCPA purposes. But Tepper was a slightly different case.

 

Although the entity in Tepper also purchased charged off debt, it also collected that debt in-house. Greystone did not engage in in-house collection and so it set up a plausible argument that it was a creditor unlike the Tepper entity. After all, the definition of the FDCPA includes all types of creditors – those who "offer[] or extend[] credit creating a debt" are creditors. But you don't have to be a lender either, because the FDCPA includes within the creditor definition persons "to whom a debt is owed. . ." Greystone is such a creditor.

 

Creditors as Debt Collectors

 

Greystone was ultimately found to be a debt collector. But since Greystone is also creditor it was necessary for the Third Circuit to dispense with a prior ruling from its 2007 decision in FTC v. Check Investors, Inc. which supported Greystone's position. There, the Third Circuit concluded that ". . .as to a specific debt, one cannot be both a 'creditor' and a 'debt collector,' as defined in the FDCPA, because those terms are mutually exclusive."

 

To determine a person's status under the FDCPA, in FTC v. Check Investors, Inc., the Third Circuit introduced the "default" test that would exclude an entity from "debt collector" status if the debt it acquired was not in default at the time it was acquired. For 12 years, the default test served a clean way for courts to reconcile the debt collector/creditor distinction.

 

Both the Tepper and Barbato decisions concluded that the Supreme Court's 2017 decision in Henson v. Santander Consumer USA Inc. abrogated the "default" status test and, as a result, so too the understanding that the definitions of creditor and debt collector were "mutually exclusive."

 

A Messy End to the Default Status Test

 

But the death of the default status test does not support undoing the principle that one could not be both a creditor and debt collector with respect to the same debt, it only supports it. The test was created for the sole purpose of transforming a debt buyer creditor into a debt collector.

 

As the Third Circuit conceded in FTC v. Check Investors, Inc., the default test "overlooks the fact that the person engaging in the collection activity may actually be owed the debt and is, therefore, at least nominally a creditor." It was necessary to create the test because the Court believed "Congress has unambiguously directed our focus to the time the debt was acquired in determining whether one is acting as a creditor or debt collector under the FDCPA."

 

With the default test gone, the status of Greystone as a creditor would seem to be advanced. It was not the case.

 

Finding "New Ways" to Expand FDCPA Liability

 

Tepper and Barbato flavor their decisions with references to development of the debt buying industry since the 1978 enactment of the FDCPA. This development, according to the Third Circuit in Tepper, necessitated that "courts have had to find new ways to distinguish 'debt collectors' from 'creditors' to determine whether the FDCPA applies to a particular entity." Read another way, it was necessary to create a new way to keep debt buying subject to the FDCPA even though a debt buyer is "nominally a creditor."

 

If Henson ended the default status test, can we still overlook that the fact that a debt purchaser is a creditor? The Barbato decision says you can and pointed to its 2000 decision in Pollice v. National Tax Funding, L.P., where an entity like Greystone purchased defaulted property taxes and municipal sewer and water bills and then engaged others to collect the purchased debts.

 

While that decision too relied on the default status test, Barbato says that was only part of the reasoning. National Tax Funding was found to be a debt collector because "there [was] no question that the `principal purpose' of [the] business is the `collection of any debts,' namely, defaulted obligations which it purchases from municipalities." That is not much of a distinction since the focus in Pollice's rationale was still on the purchase of "defaulted obligations."

 

Perhaps recognizing this weakness, Barbato takes another route. Examining the two categories of the "debt collector" definition, the decision noted that the "principal purpose" definition focuses on "what" a business is collecting. "As long as a business's raison d'être is obtaining payment on the debts that it acquires, it is a debt collector."

 

Expansion of FDCPA Liability to Traditional Creditors and Performing Loans

 

There is a troubling problem in Barbato that is difficult to reconcile. By doing away with the default status test, the mere acquisition of debt is now the trigger, even if the debt is a performing loan.

 

Here lies the conflict. Persons who are collecting debt not in default at the time it was obtained by the collector are excluded from the definition of debt collector under 15 U.S.C. § 1692a(6)(F)(iii), provided they are collecting a debt "owed or due another . . ." But, when one is collecting a debt for itself, after Barbato and Tepper, the default status test is now gone and an entity whose principal purpose is "obtaining payment on the debts that it acquires" is now a debt collector, even when the debt is "not in default."

 

Some can now argue that an entity whose principal purpose is to acquire performing loans with the sole purpose of collecting on those loans is a debt collector under the FDCPA.  Suppose that same entity retains a third party to collect the performing debt. Under 15 U.S.C. § 1692a(6)(F)(iii), the third party is not a collector, even if their principal business is debt collection or they regularly engage in debt collection for another.

 

The internal conflict is created solely because entities like Greystone were intended to be treated as creditors. A creditor collecting its own debt does not need an exemption like that found in § 1692a(6)(F)(iii) because Congress did not contemplate courts would ever read the FDCPA as the Third Circuit did.

 

Perhaps the Third Circuit did not need to go as far as to kill off the default status test and could reason that the structure of the statute implies that the acquisition of defaulted debt as a principal purpose qualifies as the "collection of any debts." But it is hard to imagine the Court going back now after twice concluding that Henson "rejected the 'default' test."

 

The Cost of Barbato and Tepper

 

The debt buying industry has faced FDCPA risk for some time and has created its own standards through its trade organization RMAI, which not only requires FDCPA compliance, but self-imposes standards exceeding it. There is little if any impact on that sector.

 

The cost of Barbato and Tepper's expansion will be paid by indirect lenders, special purpose entities created solely to hold performing debt and the like. The decisions' "new way" of keeping debt buyers within the FDCPA do so by eviscerating the distinction between a creditor and debt collector and the cost for taking that route will be paid by disruption of the far larger consumer financial services industry.

 

In the eyes of the Third Circuit, if an entity's "raison d'être is obtaining payment on the debts that it acquires, it is a debt collector," even if the debt is a performing loan. While the suspect reasoning of Barbato and Tepper may limit their adoption outside the Third Circuit, their application to creditors will be tested often in the coming years.

 

 

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

Alabama   |   California   |   Florida   |   Georgia  |   Illinois   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Texas   |   Washington, DC

 

 

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Financial Services Law Updates

 

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Thursday, March 7, 2019

FYI: 7th Cir Holds Mortgagee's Deficiency Claim in Bankruptcy Was Precluded by Failure to Raise in Foreclosure

The U.S. Court of Appeals for the Seventh Circuit recently held that a mortgagee's failure to take a deficiency judgment against a borrower that filed bankruptcy in a concluded state foreclosure action precluded the mortgagee from making a deficiency claim in the borrower's bankruptcy proceeding.

 

A copy of the opinion is available at:  Link to Opinion

 

Two borrowers received a loan secured by a mortgage.  They defaulted on the loan and the mortgagee (Mortgagee) filed a two-count complaint in Illinois state court seeking relief under the mortgage and the note.

 

One of the borrowers and his wife later filed a bankruptcy proceeding.  The Mortgagee asked the bankruptcy judge to lift the automatic stay, which was granted with relief to proceed with the state foreclosure proceeding "with respect to the property."

 

The state court judge then put the property up for auction and confirmed the sale.  The Mortgagee asked for a deficiency judgment against the borrower that did not file bankruptcy, but not against the borrower who filed bankruptcy. 

 

The state court awarded an in personam judgment against the borrower who did not file bankruptcy, and an in rem judgment only against the borrower who filed bankruptcy.  The court retained jurisdiction, but just to enforce the decision and to confirm the sale. The Mortgagee did not appeal and the state litigation concluded with a final judgment in April 2015.

 

In the bankruptcy proceeding, the Mortgagee made a claim against the borrower for the same deficiency amount that the state court had awarded against the borrower who did not file bankruptcy.  The borrower objected arguing that the state court judgment extinguished the Mortgagee's claim under the claim preclusion doctrine because Illinois does now allow claim splitting. 

 

The bankruptcy judge overruled the borrower's objection and allowed the claim.  The borrower appealed to the trial court, which reversed holding that the Mortgagee's failure to take a deficiency judgment against the borrower in state court precluded the deficiency claim. 

 

This appeal followed.

 

The Seventh Circuit observed that Illinois law governs the effect of an Illinois judgment because state court judgments "shall have the same full faith and credit in every court within the United States and its Territories and Possessions as they have by law or usage in the courts of such State, Territory or Possession from which they are taken." 28 U.S.C. §1738.

 

Thus, the issue on appeal was whether the Mortgagee could file a new lawsuit in Illinois state court seeking to recover the deficiency amount against the who that filed bankruptcy.

 

Illinois litigants must present all their theories arising from single transaction "in a single proceeding." See, e.g., GE Frankona Reinsurance Co. v. Legion Indemnity Co., 373 Ill. App. 3d 969 (2007).  This holds true in the foreclosure context where "creditors who do not ask for deficiency judgments in the foreclosure actions cannot seek that relief later, in a different proceeding." See LSREF2 Nova Investments III, LLC v. Coleman, 2015 IL App (1st) 140184.

 

The Seventh Circuit found it unnecessary to anticipate how the Supreme Court of Illinois would rule "because all of the state's authorities agree that, if a litigant presents both the mortgage and the note in a single action, and fails to seek a deficiency judgment on the note, it cannot do so in a separate suit."  As such, because the Mortgagee could not now obtain a deficiency judgment in state court, "under §1738 it cannot get one in federal court either."

 

The Mortgagee argued that the state court judgment is not final and lacks any preclusive effect because it "left dangling" the complaint's request to enter a deficiency judgment against the borrower who filed bankruptcy. The Seventh Circuit rejected this argument because once the trial court enters the order approving the sale "Illinois treats a foreclosure action as finally decided."  The trial court entered the final judgment in April 2015 and there has been no activity since.  Thus, the Seventh Circuit held "that the decision is final."

 

The Seventh Circuit also rejected the Mortgagee's final argument that claim preclusion cannot apply because the automatic stay under § 362(a) divested the state court of "jurisdiction" necessary to enter the final judgment. 

 

Initially, the Court held, section 362(a) is not jurisdictional.  It merely provides that for certain matters filing a bankruptcy action "operates as a stay." Section 362(a) "does not establish exclusive federal jurisdiction over any of those matters."

 

Further, the Seventh Circuit note, even federal statutes like antitrust laws that provide for exclusive jurisdiction, "do not supersede §1738."  Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. 373 (1985). Instead, section 1738 and state-law preclusion rules "govern the defense of preclusion in the federal suit even though federal courts have exclusive jurisdiction" of certain claims.

 

The Mortgagee "had its chance in state court and did not use it."  Thus, the Seventh Circuit affirmed the trial court's judgment.

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

Alabama   |   California   |   Florida   |   Georgia  |   Illinois   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Texas   |   Washington, DC

 

 

NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.


Our updates and webinar presentations are available on the internet, in searchable format, at:

 

Financial Services Law Updates

 

and

 

The Consumer Financial Services Blog

 

and

 

Webinars

 

and

 

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