The Illinois Appellate Court, Third District, recently held that the lower court's denial of a borrower's motion for release and satisfaction of a deficiency judgment was not a final and appealable prior to a wage deduction hearing when the validity of the underlying judgment would be finally decided. In ruling that the borrower's appeal was merely interlocutory, the Court explained that the denial of the Borrower's motion contesting the validity of the foreclosure deficiency judgment prior to the wage deduction hearing was not final because "the same attack could later be made at the wage deduction hearing."
A copy of the opinion is available at: http://www.illinoiscourts.gov/Opinions/AppellateCourt/2013/3rdDistrict/3120578.pdf.
Defendant ("Borrower") obtained a loan from plaintiff savings bank ("Bank") that was secured by a mortgage on a commercial office building. Borrower simultaneously executed an assignment of rents in favor of Bank which provided that Bank could use the rents collected to pay Bank's costs and expenses "in connection with the Property," and that rent not applied to such costs and expenses were to be applied to the loan.
Having made no payments on the loan, Borrower defaulted, and Bank accordingly filed a mortgage foreclosure action against Borrower and petitioned for possession of the property as mortgagee in possession. The lower court entered an order of possession allowing Bank to, among other things, operate the property and collect rents.
Borrower never answered or responded to the foreclosure complaint. Bank moved for default, which the lower court granted. The lower court entered a judgment of foreclosure and sale, and, after the foreclosure sale, entered a deficiency judgment against Borrower for just over $40,000.
Bank sought to garnish Borrower's wages in an attempt to satisfy the deficiency judgment. Arguing in part that the deficiency judgment should be satisfied from the rental payments made from a tenant occupying the property, Borrower filed a motion for entry of release and satisfaction of judgment. The lower court denied Borrower's motion, and scheduled the wage deduction hearing for several weeks later. Borrower appealed the denial of his motion for release and satisfaction prior to the wage deduction hearing.
The Appellate Court dismissed the appeal for lack of jurisdiction.
As you may recall, the Illinois Wage Deduction Act allows for enforcement of a judgment by levying against a judgment debtor's wages. See 735 ILCS 5/12-801, et seq. At the wage garnishment hearing, the court, the garnishee or judgment debtor may challenge the amount or validity of the underlying judgment. See Id.; 735 ILCS 5/12-808.5(4).
Pointing out that the lower court's denial of Borrower's motion for release and satisfaction prior to the wage deduction hearing was not final and appealable, because such denial was merely interlocutory, the Appellate Court explained that the validity of the underlying deficiency judgment would be finally decided after the wage deduction hearing, and that the Appellate Court lacked jurisdiction prior to the entry of a final judgment on the merits.
In so ruling, the Court noted that "[w]hen a debtor files a motion contesting the validity of the judgment underlying a wage deduction proceeding prior to a wage deduction hearing, a trial court's denial of such a motion is not final and appealable" because "the same attack could later be made at the wage deduction hearing." See Felton v. Shead, 6 Ill. App. 3d 123, 126 (1972).
Concluding that it lacked jurisdiction to consider the lower court's denial of Borrower's motion prior to the wage deduction hearing when the validity of the underlying judgment would be finally decided, the Appellate Court dismissed the appeal.
Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
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