Thursday, June 27, 2013

FYI: Ill App Ct Rejects Appeal of Orders Relating to Foreclosure Plaintiff's Injunction as to Borrower's Collection of Payments Relating to Collateral

In a case involving a foreclosure on commercial property, the Illinois Appellate Court, Second District, recently dismissed an interlocutory appeal for lack of jurisdiction, reasoning that the lower court's orders were not "attendant" to the foreclosing plaintiff's temporary injunction enjoining the defendants from handling payments related to the property.


A copy of the opinion is available at:


Plaintiff bank ("Bank") filed a foreclosure action against real estate holding firms (collectively "Defendants") that owned commercial property.  Bank subsequently filed motions for, among other things, appointment of a receiver for the property, and a temporary restraining order to prevent defendants from removing or impairing the collateral. 


Defendants moved to quash service of summons, objected that certificates of service for the motions were deficient in that the motions were not included with the notices as required by local rule, and filed a jury demand.  After "re-noticing" the motions and moving to strike the jury demand, Bank moved for substitution of judge as a matter of right under the Illinois Code of Civil Procedure.  The lower court granted Bank's motion for substitution and the case was reassigned. 


The lower court overruled Defendants' objection that Bank failed to provide copies of the motions as required by local rule.  The lower court also granted Bank's motion for appointment of a receiver and other motions, enjoining Defendants from accepting or making payments on the property pending the receiver taking possession of the property.  Due to the appointment of the receiver, Bank withdrew its motion for a temporary restraining order.


Shortly thereafter, having their motion to quash service of summons denied, Defendants filed an interlocutory appeal under Illinois Supreme Court Rule 307(a)(1) with respect to 11 separate orders entered by the lower court on Bank's various motions and the motion to quash service of summons.  In so doing, Defendants argued that the lower court erred in: (a) denying their objection that Bank violated local rules by serving notices of the motions without copies of the motions themselves;  (b) denying the motion to quash service of summons; and  (c) granting Bank's motion for substitution of judge as a matter of right.


The Appellate Court dismissed the appeal for lack of jurisdiction, reasoning that Rule 307(a)(1) provided no basis to review the orders that were not intertwined with the merits of the lower court's injunction.


As you may recall Rule 307 provides that "[a]n appeal may be taken to the Appellate Court from an interlocutory order of court . . . granting, modifying, refusing, dissolving, or refusing to dissolve or modify an injunction."  Ill. Sup. Ct. Rule 307(a).


In noting that Defendants did not challenge the substance of the injunctive order enjoining them from accepting payments on the property, but nevertheless appealed under Rule 307, the Appellate Court rejected their assertion that the Appellate Court had jurisdiction over the other orders, and that those orders, including the order granting substitution of judge, tainted all further orders entered by the trial court. 


To support its conclusion that it lacked jurisdiction over the various other orders, the Court relied the rule that "[a]n appeal under Rule 307 does not open the door to a general review of all orders entered by the trial court up to that date. . . However, certain other orders may be reviewable.  . . . [W]hether an order preceding an interlocutory order from which an appeal is taken may be considered during the interlocutory appeal depends on its relationship to the order appealed from."  Olympic Federal v. Witney Development Co., 113 Ill. App3d 981 (1983).  


The court also noted that it lacked jurisdiction to review an order denying a motion to change venue in an appeal of a dismissal of a complaint and counterclaim because the order denying the change in venue was not "attendant" to, or intertwined with, the merits of the interlocutory order.  See Executive Commercial Services, Ltd. v. Daskalakis, 74 Ill. App.3d 760 (1979).  See also In re Marriage of Nettleton, 348 Ill. App. 3d 961 (2004)(ruling there was no jurisdiction to review an order denying substitution of judge, reasoning that there was no substantive linkage between the order and the appealed stipulated finding of contempt).


Accordingly, determining that the challenged orders were not "attendant" to the injunctive order that formed the basis for appellate jurisdiction under Rule 307, the Appellate Court ruled that it lacked jurisdiction over the various other orders. 


In so ruling, the Court noted that the Defendants failed to establish a link between any of the challenged orders and the injunctive order.  The Court also observed that Defendants failed to establish appellate jurisdiction over the order granting Bank's motion for substitution of judge, noting that an erroneous grant of a motion for substitution of judge as a matter of right may not have the same effect of voiding all subsequent orders as would an erroneous denial of a motion for substitution.


Accordingly, the Appellate Court dismissed the appeal.



Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
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