Sunday, March 10, 2013

FYI: Ill App Ct Dismisses Borrower's Challenge of Service Process for Lack of Final Order

The Illinois Appellate Court, First District, recently dismissed an appeal of a "denial" of a motion to quash service in a foreclosure action after entry of the final order in the case, ruling that it lacked jurisdiction where the lower court had actually "struck" the motion to quash and merely ordered a different proceeding to challenge service, thereby rendering no final, appealable order. 



After plaintiff bank ("Bank") obtained a default foreclosure judgment against defendants borrowers ("Borrowers") and the foreclosure court confirmed the sale of Borrowers' property, Borrowers appeared to challenge service of process in the foreclosure action.    


Although affidavits from a special process server indicated that Borrowers were each personally served in the foreclosure action, Borrowers never appeared to defend against the foreclosure despite Bank's sending Borrowers notices advising them of Bank's upcoming motions.  Accordingly, the lower court entered a default order of judgment and sale against Borrowers.  Almost a year after initiation of the foreclosure action, the lower court entered an order confirming the sale of the property and directing the Sheriff to evict Borrowers.   


Around three months after entry of the order confirming the sale, Borrowers' attorney filed an appearance and a motion to quash based on improper service of process, attaching affidavits attesting to Borrowers' whereabouts at the time they were supposedly served in the foreclosure action.  In response, Bank argued that because more than 30 days had passed since the final judgment order, Borrowers had to serve the motion to quash on Bank itself rather than simply mail it to Bank's counsel.   Bank also argued, moreover, that the affidavits accompanying the motion to quash were insufficient for purposes of quashing service.


The lower court "denied" Borrowers' motion to quash, and ordered them to file a petition under 735 ILCS 5/2-1401 and to serve it on Bank.   Borrowers asked for reconsideration of that ruling, which the court denied, reasoning that a "Section 2-1401 petition is the proper procedural vehicle to bring a motion to quash 30 days after final judgment."  Borrowers appealed.  The Appellate Court dismissed the appeal, concluding in part that it lacked jurisdiction. 


As you may recall, Section 2-301(a-5) of the Illinois Code of Civil Procedure provides that a party waives jurisdictional arguments if it first files a responsive pleading or motion other than an appearance or motion for extension of time and then later files a motion to quash.  See 735 ILCS 5/2-301(a-5)("Section 2-301(a-5)").


In addition, Section 2-1401 of the Illinois Code of Civil Procedure provides a method for challenging final orders and judgments over 30 days old by way of a new cause of action.  Specifically, Section 2-1401 provides that a petition to vacate a judgment or order must be supported by affidavit and that "[n]othing contained in this Section affects any existing right to relief from a void order or judgment. . . ."  See 735 ILCS 5/2-1401(b), (f)("Section 2-1401").


First addressing Bank's strategy of attacking both the service of Borrowers' motion and the merits of their affidavits, the Appellate Court noted that making substantive arguments while simultaneously attacking service or process previously risked waiver of any objections based on personal jurisdiction, but that Section 2-301(a-5) now provides for waiver of such objections only if a party files a responsive pleading before filing a motion asserting a jurisdictional objection.  Accordingly, the Appellate Court ruled that because Bank challenged Borrowers' Section 2-1401 petition and the affidavits simultaneously, Bank had not waived its jurisdictional objection to service of process. 


Next, noting the confusion reflected in the record below as to the relationship between a motion to quash service and a Section 2-1401 petition, the Appellate Court observed that a challenge to a void judgment based on invalid service, supposedly as in Bank's foreclosure action against Borrowers, must be in the form of a Section 2-1401 petition.  See Sarkissian v. Chicago Board of Education, 201 Ill.2d 95, 104-05 (2002)(noting that regardless of the label given to the motion to quash, the motion was in substance a Section 2-1401 petition).    The Court thus treated Borrowers' motion to quash as a Section 2-1401 petition.


Further, noting that the lower court ordered Borrowers to file a Section 2-1401 petition and to "serve" it on Bank, the Appellate Court stressed that, although there was no transcript of the hearings, the lower court's use of the word "serve" suggested that it found Bank's jurisdictional arguments to be persuasive. 


Accordingly, concluding that the lower court had not ruled on the merits of the Section 2-1401 petition or "denied" the motion to quash, but instead had in fact struck it and ordered the filing of a Section 2-1401 petition, the Appellate Court ruled that there was no final, appealable order on a Section 2-1401 petition.  See Picardi v. Edwards, 228 Ill. App. 3d 905 (1992)(retaining jurisdiction where court invited a refiling); Romo v. Allin Express Service, Inc., 219 Ill. App. 3d 418 (1991)(ruling there was a right to file second Section 2-1401 petition where court invited refiling); Belluomimi v. Lancome, 207 Ill.  App.  3d 583 (1990)(holding that where motion was stricken, there was no adjudication of the merits). 


Finally, the Appellate Court also concluded that the lower court lacked jurisdiction over Borrowers' motion, given that Borrowers had served the motion to quash by mail upon Bank's attorneys rather than on Bank itself.  See 735 ILCS 5/2-1401(b)(party seeking relief under Section 2-1401 must follow Illinois Supreme Court rules as to providing notice to opposing parties); Ill. Sup. Ct. R. 105(b)(providing that notice by moving party be directed to opposing party and must be served either by summons, prepaid registered mail, or publication).  See also, e.g., Armis Construction Co. v. Cosmopolitan Nat'l Bank, 134 Ill. App. 3d 177, 180 (1985)(invalid notice deprives trial court of jurisdiction rendering its subsequent orders invalid). 


Accordingly, determining that it lacked jurisdiction to hear the appeal in this matter, the Appellate Court dismissed it, urging the parties to work out an agreement as to service of process so as to allow a hearing on the merits of Borrowers' motion.





Ralph T. Wutscher
McGinnis Wutscher LLP
The Loop Center Building
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Chicago, Illinois 60602
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