Saturday, May 12, 2012

FYI: Ill App Ct Holds Service by Publication Affidavit Inadequate, Voids Foreclosure and Sale

The Illinois Appellate Court, First District, recently held that the trial court lacked jurisdiction in a mortgage foreclosure action, thereby voiding the subsequent sale of the property, where the affidavits filed in support of service of process by publication failed to indicate that the affiants first took the steps required in attempting to personally serve process on the defendant. 
A copy of the opinion is available at: 
Defendant borrower defaulted on a residential mortgage loan on a condominium located in Cook County, Illinois.  In the ensuing foreclosure action against the borrower, plaintiff loan owner ("Loan Owner") sought to serve process on the borrower at her residence, the mortgaged condominium.  After making many repeated and unsuccessful attempts to serve process on the borrower through a special process server, the Loan Owner sought leave from the court to serve process on the borrower by publication. 
To support its motion, the Loan Owner submitted affidavits of employees of the special process server, stating among other things that "attempts were made" to serve the borrower at the condominium and that "it was discovered that no contact could be made" with the borrower even after "we attempted to locate the defendant by searching" various public and confidential databases for a current address.   The Loan Owner's attorney also supposedly signed an affidavit swearing that the borrower "on due inquiry cannot be found."
Relying on the affidavits, the trial court allowed publication service, and eventually entered a default judgment against the borrower.  Subsequently, the Loan Owner purchased the property at the foreclosure sale.  Following the court's approval of the sale, the borrower moved to quash the service of process by publication and void the judgment and sale of the condominium for lack of jurisdiction.  The trial court denied the motion. 
The borrower appealed, and the Appellate Court reversed, ruling in part that publication service was improper in this case, because the Loan Owner failed to show due inquiry in "strict compliance" with the circuit court's rule regarding affidavits in support of publication service in foreclosure cases. 
As you may recall, Illinois Code of Civil Procedure Section 2-206 provides in part:  "Whenever, in any action affecting property . . . within the jurisdiction of the court . . . plaintiff . . . shall file . . . an affidavit showing that the defendant . . on due inquiry cannot be found . . .  so that a process cannot be served upon him or her, and stating the place of residence of the defendant, if known, or that upon diligent inquiry his or her place of residence cannot be ascertained, the clerk shall cause publication to be made . . . ."  735 ILCS 5/2-206(a).
Expanding on Section 2-206, the Circuit Court of Cook County additionally requires that, in mortgage foreclosure actions, affidavits in support of publication service "must be accompanied by a sworn affidavit by the
individual(s) making such 'due inquiry' setting forth with particularity the action taken to demonstrate an honest and well directed effort to ascertain the whereabouts of the defendant(s) by inquiry . . ."   Cook Co. Cir. Ct. R. 7.3.
Moreover, Section 15-1509(c) of the Code of Civil Procedure provides in part that relief from an erroneous foreclosure judgment and sale is limited to a claim for the proceeds from the sale.  735 ILCS 5/15-1509(c).
Noting that Section 2-206 requires "strict compliance" with its requirements for publication service, and that the local Cook County Rule 7.3 adds on to those requirements by requiring affiants to set forth "with particularity" the actions they took to find and serve process on the defendant, the Court pointed out that the affidavits in this case failed to identify who attempted to serve process on the borrower or who took steps to locate her at other addresses.  In so doing, the Court remarked that the affidavits used the passive voice (e.g., "attempts were made"; the borrower "could not be served") and thus failed to indicate that the affiants personally undertook the requisite measures to serve process on or to locate the borrower.
Ruling that the submitted affidavits did not meet the local Cook County Rule 7.3's requirement that affiants swear that they personally undertook the actions listed in the affidavit, the Appellate Court concluded that the trial lacked jurisdiction to enter a default judgment.  
In so ruling, the Court rejected the Loan Owner's assertion that Illinois Civil Code Section 15-1509(c) barred any challenge to a foreclosure and sale, even where the court lacked jurisdiction over the defendant.  The Court explained that judgments entered without jurisdiction over the parties are void and of no legal effect, and ruled that Section 15-1509(c) applies only to valid judgments entered with jurisdiction, not to instances of improper publication service.    In so ruling, the Court stated, "nothing in section 15-1509 indicates that the legislature sought to make foreclosure judgments take effect and deprive owners of their properties when the trial court lacked personal jurisdiction over the owners."
The Appellate Court thus ruled that the default judgment, and the judgment approving the sale of the condominium, were void.

Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
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