The Illinois Appellate Court for the Second District recently affirmed a trial court’s rejection of a borrower’s post-judgment petition challenging a judgment of foreclosure for supposed lack of subject matter jurisdiction over the instant matter.
Specifically, the Court held the foreclosure plaintiff’s alleged failure to plead standing did not deprive the trial court of subject matter jurisdiction to enter a foreclosure judgment.
A copy of the opinion is available at: https://www.state.il.us/court/R23_Orders/AppellateCourt/2014/2ndDistrict/2130607_R23.pdf
On March 25, 2010, the plaintiff mortgagee (“Mortgagee”) filed a complaint to foreclose on property owned by the borrower (“Borrower”). Borrower appeared pro se and did not file a formal answer. Instead, Borrower wrote a letter to the judge explaining her circumstances. On December 20, 2011, the Court granted Mortgagee’s motion for summary judgment.
On January 18, 2012, Borrower moved to vacate the summary judgment order arguing she was the victim of “predatory lending.” The Court denied the motion and the foreclosure sale took place on January 24, 2013. The sale was confirmed on February 4, 2013.
On March 5, 2013, Borrower, now represented by counsel, filed a motion to vacate the sale’s confirmation arguing the original lender misrepresented the terms of the mortgage. The Court denied Borrower’s motion.
On April 19, 2013, Borrower filed a pro se 2-1401 petition seeking to vacate the confirmation of the foreclosure sale. Borrower argued for the first time the Mortgagee lacked standing to file the complaint because there was no evidence that Mortgagee had any relationship with the original mortgagee. Borrower also argued it was fraudulent for Mortgagee to allege it was the mortgagee.
On May 2, 2013, Mortgagee filed a notice of motion stating it would “present” Borrower’s petition on May 9, 2013. On May 9, 2013, the Court denied Borrower’s petition. There was no indication that Borrower was present during the May 9, 2013 hearing. Borrower filed a notice of appeal on June 10, 2013.
On appeal, Borrower asserted two arguments. First, Borrower argued the denial of her post-judgment petition was premature before Mortgagee had responded. Borrower also argued the trial court lacked subject matter jurisdiction to hear the foreclosure action, due to alleged pleading defects in the foreclosure complaint.
The Court began its analysis by examining Borrower’s argument that the trial court’s judgment was premature because it was entered before the 30 day response period ran.
In People v. Laugharn, 233 Ill. 2d 318, 323 (2009), the trial court entered a sua sponte dismissal of a defendant’s post-judgment petition before the 30 days in which the plaintiff could file a response ran. The Illinois Supreme Court held the dismissal “short circuited the proceedings and deprived the [plaintiff] of the time it was entitled to answer or otherwise plead.” Here, Mortgagee and Borrower agreed the 30 day period had not run.
Mortgagee argued that under Foutch v. O’Bryan, 99 Ill.2d. 389, 391-92 (1984), the Court must presume the dismissal was not sua sponte because the appeal’s record did not contain a transcript of the May 9, 2013 hearing. Borrower countered by stating she was not present at the May 9, 2013 hearing, and due to no motion being on file, the trial court must have acted sua sponte.
The Court stated “at first glance, it appeared [Borrower] has the right side of the procedural point” – according to the Appellate Court, if the trial court entered judgment then it violated Laugharn, and if the initiative was by Mortgagee, it would be an impermissible unscheduled motion.
However, the Court held there is a possibility of a proper sua sponte dismissal. The Court explained this is possible if Mortgagee made a full waiver of its response rights. Specifically, if a respondent gave up its rights to respond, the trial court can, without procedural impropriety, properly dismiss a petition sua sponte as allowed by the rule created in People v. Vincent, 226 Ill.2d 1, 11-12 (2007). The Court noted this is a “risky” position because the respondent is left with very few options if a court rules in the petitioner’s favor.
The Appellate Court held the above is the procedure that “best matches plaintiff’s notice to defendant stating that on May 9, 2013, it would present Defendant’s petition.” This is what the Court presumed occurred, and thus under Foutch, rejected Borrower’s claim that the judgment was premature.
Borrower next argued that the trial court lacked subject matter jurisdiction due to the defects in Mortgagee’s pleading. Mortgagee cited City National Bank of Hoopeston v. Langley, 161. Ill. App.3d 266, 276-77 for the proposition that an “omission in the complaint of any facts specified in the section 15-1504 of the Code (735 ILCS 5/15-1504) deprives the court of subject matter jurisdiction to decide the matter.”
The Appellate Court overruled rejected Mortgagee’s argument because Langley is no longer good law. Specifically, in Nationstar Mortgage LLC v. Canale, 2014 Ill. App. (2d) 130676, the Court held that “to invoke the court’s subject matter jurisdiction, an initial pleading need only state a justiciable matter” and a claim for foreclosure “even if defectively stated, presents a justiciable matter.” Thus, the Court held the trial court had subject matter jurisdiction over the foreclosure action and overruled Borrower’s argument.
Accordingly, the Appellate Court affirmed the trial court’s ruling.
Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
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