Financial Services Law Developments: FYI: Ill App Ct Rejects Borrowers' Challenge to Service of Process and Publication Notice

Thursday, April 19, 2012

FYI: Ill App Ct Rejects Borrowers' Challenge to Service of Process and Publication Notice

The Illinois Appellate Court, First District, recently upheld a default judgment in a residential mortgage foreclosure action, ruling that: (1) a Cook County standing order appointing a special process server was valid, where such order was issued pursuant to a General Administrative Order allowing appointment of special process servers in foreclosure actions; and (2) service by publication was proper, where the supporting affidavit satisfied the requirements for publication service.

A copy of the opinion is available at:

http://www.state.il.us/court/opinions/AppellateCourt/2012/1stDistrict/1111187.pdf.

Plaintiff bank ("Bank") filed a complaint to foreclose. Through its attorneys, the Bank obtained a standing order for the appointment of a special process server in accordance with a General Administrative Order (GAO) allowing law firms in mortgage foreclosure cases in Cook County, Illinois to seek a standing order for the appointment of special process servers.

The special process server appointed through this process attempted to personally serve the borrowers with the summons and complaint on 14 different occasions. The Bank's attorneys therefore submitted an affidavit requesting leave for service by publication, stating that no other address for the Borrowers could be found. Based on the affidavit, the court granted approval for publication service. The borrowers never appeared, and the Bank eventually obtained a default judgment in the foreclosure action, the property was sold at a judicial sale, and the court later confirmed the sale.

A little over a year after the entry of the default judgment, the borrowers moved to quash service, arguing in part that the standing order appointing the special process server was invalid because the standing order did not follow the requirements of the GAO. The court denied both motions.

The borrowers appealed, and the Appellate Court affirmed.

Illinois law specifies that a summons must be issued upon plaintiff's request after the filing of a complaint. 735 ILCS 5/2-201 ("Section 2-201"). Illinois also allows service by publication whenever a plaintiff or plaintiff's attorney files an affidavit showing that the defendant on "due inquiry" cannot be found. 735 IlCS 5/2-206(a)("Section 2-206").

In addition, Cook County General Administrative Order 2007-03 ("GAO") permits law firms in foreclosure actions to request a standing order designating a special process server for a period of three months. The GAO specifies in pertinent part: "[e]ach Motion and Order for a standing process server order shall bear the heading '. . . Standing Order for the Appointment of a Special Process Server for the Quarter Ending [INSERT DATE].'"

In assessing the validity of the standing order appointing a special process server in this case, the Appellate Court rejected the borrowers' overall argument that the GAO was invalid because the lower court judge lacked the authority to issue the GAO. To support their argument, the Borrowers put forth various theories claiming that: (1) there was no authority under common or statutory law for issuing the GAO; (2) issuance of the GAO violated Illinois Supreme Court Rules; (3) the GAO conflicted with the Illinois Code of Civil Procedure governing the appointment of special process servers and commencement of civil actions; and (4) the GAO circumvented the statutory procedure for service of process and the court therefore lacked jurisdiction.

The borrowers asserted that, because the signature on the process server's affidavit was illegible and the affiant's name was not printed on the form permitting clear identification of the affiant, the affidavit failed to satisfy the requirements for publication service in Section 2-206.

Ruling that Section 2-206 did not require identification of the affiant by anything other than a signature, the Court concluded that the affidavit was "more than adequate" to support service by publication and complied with Section 2-206. In so ruling, the Court also noted that the affidavit contained all the elements of a valid affidavit, including one for service of process by publication.

Ralph T. Wutscher
McGinnis Tessitore 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@mtwllp.com

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 are available on the internet, in searchable format, at:
http://updates.kw-llp.com

PLEASE NOTE:

The editor and sponsoring law firm of this blog represent and serve banks, lenders, loan buyers, loan servicers, debt collectors, and other financial services companies. We do not represent consumers.

Any communications or information obtained may be provided to our clients, including for the purpose of debt collection.

The information in this blog and related updates is general in nature, and should not be considered legal advice.

Legal advice requires a full and complete understanding of a particular situation. Your situation may involve material facts that prevent the direct application of the information in this blog and related updates.

You will not become a client of the editor or sponsoring law firm simply by reading this blog.

In order to become a client of the editor or sponsoring law firm, the editor or sponsoring law firm must agree to represent you in writing.

Until we agree to represent you in writing, we are not prevented from representing any other party.

Until you are a client of the editor or sponsoring law firm, any communications with us will not be confidential.

The Editor's Bio

Ralph T. Wutscher
Maurice Wutscher LLP
20 N. Clark Street, 33rd Floor
Chicago, Illinois 60602
Direct: (312) 493-0874
RWutscher@MauriceWutscher.com
https://www.MauriceWutscher.com/

Ralph Wutscher's practice focuses primarily on representing depository and non-depository mortgage lenders and servicers, as well as mortgage loan investors, distressed asset buyers and sellers, loss mitigation companies, automobile and other personal property secured lenders and finance companies, credit card and other unsecured lenders, and other consumer financial services providers. He represents the consumer lending industry as a litigator, and as regulatory compliance counsel.

Ralph has substantial experience in defending private consumer finance lawsuits, including cases ranging from large interstate putative class actions to localized single-asset cases, as well as in responding to regulatory investigations and other governmental proceedings. His litigation successes include not only victories at the trial court level, but also on appeal, and in various jurisdictions. He has successfully defended numerous putative class actions asserting violations of a wide range of federal and state consumer protection statutes. He is frequently consulted to assist other law firms in developing or improving litigation strategies in cases filed around the country.

Ralph also has substantial experience in counseling clients regarding their compliance with federal laws, and with state and local laws primarily of the Midwestern United States. For example, he regularly provides assistance in connection with portfolio or program audits, consumer lending disclosure issues, the design and implementation of marketing and advertising campaigns, licensing and reporting issues, compliance with usury laws and other limitations on pricing, compliance with state and local “predatory lending” laws, drafting or obtaining opinion letters on a single- or multi-state basis, interstate branching and loan production office licensing, evaluations and modifications of new or existing products and procedures, debt collection and servicing practices, proper methods of responding to consumer inquiries and furnishing consumer information, as well as proposed or existing arrangements with settlement service providers and other vendors, and the implementation of procedural or other operational changes following developments in the law.

Ralph is a member of the Governing Committee of the Conference on Consumer Finance Law. He is also the immediate past Chair of the Preemption and Federalism Subcommittee for the ABA's Consumer Financial Services Committee. He served on the Law Committee for the former National Home Equity Mortgage Association, and completed two terms as Co-Chair of the Consumer Credit Committee of the Chicago Bar Association.

Ralph received his Juris Doctor from the University of Illinois College of Law, and his undergraduate degree from the University of California at Los Angeles (UCLA). He is a member of the national Mortgage Bankers Association, the American Bankers Association, the Conference on Consumer Finance Law, DBA International, the ACA International Members Attorney Program, as well as the American and Chicago Bar Associations.

Ralph is admitted to practice in Illinois, as well as in the United States Court of Appeals for the Seventh Circuit, the United States District Courts for the Northern and Southern Districts of Illinois, and the United States District Court for the Eastern District of Wisconsin, and has been admitted pro hac vice in various jurisdictions around the country.