The Illinois Appellate Court, First District, recently upheld the trial court's approval of a judicial foreclosure sale, where a default judgment had been entered and defendants failed to: (1) raise any objections in connection with the sale confirmation hearing; (2) show that the foreclosure sale price was grossly inadequate; or (3) present any evidence as to why the judicial sale should not be approved.
A copy of the opinion is available at:
The trustee of a land trust obtained a commercial loan that was secured by property located in Chicago, Illinois. The loan went into default and the lender eventually commenced foreclosure.
The trustee of the land trust and the other defendants (collectively "Defendants") were served with summons and complaint pursuant to the Cook County Circuit Court's General Administrative Order 2007-03 ("GAO"), which permits law firms to serve process in foreclosure cases using special process servers approved by blanket order.
The trustee of the land trust and the other defendants (collectively "Defendants") were served with summons and complaint pursuant to the Cook County Circuit Court's General Administrative Order 2007-03 ("GAO"), which permits law firms to serve process in foreclosure cases using special process servers approved by blanket order.
Defendants failed to appear, answer, or file a responsive pleading within 30 days of service, but later moved to quash service. Following the denial of their motion, Defendants failed to file an answer or other responsive pleading.
The trial court repeatedly granted Defendants extensions of time to file an answer or other responsive pleading, and eventually entered a default judgment against them.
Following the default judgment, the lender assigned its interest in the mortgage loan to plaintiff ("Plaintiff Purchaser"), which made the only -- and thus winning -- bid at the ensuing judicial sale in the form of a credit bid. The purchase price covered less than half of the balance due on the mortgage loan.
A month after the sale, Plaintiff Purchaser filed a motion to be substituted as the plaintiff, and further moved for orders approving the judicial sale and granting Plaintiff Purchaser possession of the property. In response, Defendants filed a motion to quash service, arguing that the circuit court lacked jurisdiction over them due to improper service of process. Defendants also moved to void the default and foreclosure judgments and the foreclosure sale.
Subsequently, requesting another extension of time in order to file a response to Plaintiff Purchaser's motion to confirm the sale, Defendants sought to void the various judgments against them, this time asserting that the sale price was below the property's appraised value. In support of their request, Defendants attached a two-page summary from a purported 90-page appraisal report. Nevertheless, although Defendants did file a response to Plaintiff Purchaser's motions to substitute as plaintiff and for possession, Defendants never filed any written objections to the motion to confirm the judicial sale.
The circuit court entered orders confirming the judicial sale, substituting Plaintiff Purchaser as the plaintiff, and granting the petition for possession of the property.
Defendants filed a motion for rehearing and reconsideration, alleging in part that Plaintiff Purchaser's bid was inadequate, supporting their assertion with the same documentation used in its prior request for an extension of time.
The circuit court entered orders confirming the judicial sale, substituting Plaintiff Purchaser as the plaintiff, and granting the petition for possession of the property.
Defendants filed a motion for rehearing and reconsideration, alleging in part that Plaintiff Purchaser's bid was inadequate, supporting their assertion with the same documentation used in its prior request for an extension of time.
The trial court denied the motion. Defendants appealed.
The Appellate Court affirmed, ruling that service of process and the confirmation of the judicial sale were both proper.
The Appellate Court affirmed, ruling that service of process and the confirmation of the judicial sale were both proper.
As you may recall, the Illinois Mortgage Foreclosure Law provides that a trial court must confirm a judicial sale unless the court finds that (1) proper notice was not given, (ii) the terms of sale were unconscionable, (iii) the sale was conducted fraudulently or (iv) justice was otherwise not done. The Illinois Mortgage Foreclosure Law also specifies that "no sale . . . shall be held invalid or be set aside because of any defect . . . except upon good cause shown in a hearing . . . ." 735 ILCS 5/15-1508(b), (d).
Noting, first, that the First District twice previously addressed the issue of service of process by special process servers, the Appellate Court reiterated that "a mortgagor has no liberty or property interest in who serves him with process in a foreclosure action," and that there is no procedural due process violation where service of process in foreclosure cases is carried out by private detectives rather than the Cook County Sheriff. See U.S. Bank, N.A. v. Dzis, 2011 IL App (1st 102812; Onewest Bank, FSB v. Markowicz, 2012 IL App (1st) 111187. Observing that Defendants' arguments in this case were identical to those made in the earlier two cases that upheld service by special process servers, the Court concluded that service in this case was also proper.
Turning to the lower court's approval of the judicial sale, the Appellate Court pointed out that for over a year between the filing of the foreclosure action and the judicial sale, Defendants failed repeatedly to file any defense to the mortgage foreclosure action or to take any other steps to refinance or procure a better price at the foreclosure sale. The Appellate Court pointed out that when the Plaintiff Purchaser filed its properly supported motion to confirm the sale and noticed it for hearing, the burden shifted to the Defendants to prove that grounds existed for the trial court not to enter an order approving the sale, and that the Defendants never raised any objections in connection with the sale confirmation hearing.
Unwilling to allow Defendants to raise objections for the first time after the judicial sale had been approved because of their opportunity to do so at the hearing, the Appellate Court ruled that Defendants had waived all objections to the four enumerated statutory exceptions in Section 15-1508(b).
Unwilling to allow Defendants to raise objections for the first time after the judicial sale had been approved because of their opportunity to do so at the hearing, the Appellate Court ruled that Defendants had waived all objections to the four enumerated statutory exceptions in Section 15-1508(b).
In so doing, the court noted Defendants' dilatory behavior after each extension of time, and the lack of substantive evidence Defendants offered supporting their assertion that the sales price was grossly inadequate. The Court ruled that inadequacy of sales price alone was an insufficient basis to not confirm a judicial sale and that other factors not present in this case, such as fraud, mistake, or violation of the duty of the officer conducting the sale, could afford relief. See Resolution Trust Corp. v. Holtzman, 248 Ill. App. 3d 105, 113-14 (1993); Illini Fed. Sav. & Loan Ass'n v. Doering, 162 Ill App. 3d 78, 771-72 (1987).
Finally, the Appellate Court also ruled that Plaintiff Purchaser's credit bid and purchase of the property at the judicial sale was proper because, as the assignee of the lending bank's judgment, Plaintiff Purchaser acquired all of lending bank's rights to enforcement of and collection on the judgment.
Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
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Chicago, Illinois 60602
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Email: RWutscher@mtwllp.com
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