JUSTICE GORDON delivered the judgment of the court, with opinion.
Illinois Official Reports
Appellate Court
Decision Under Review Appeal from the Circuit Court of Cook County, No. 2012-CH-34114; the Hon. Anna M. Loftus, Judge, presiding. Judgment Affirmed. Counsel on Appeal David Cocroft, of Country Club Hills, appellant pro se. Kimberly A. Jansen, of Hinshaw & Culbertson LLP, of Chicago, for appellee. Panel JUSTICE GORDON delivered the judgment of the court, with opinion.
Presiding Justice Burke and Justice Ellis concurred in the judgment and opinion.
OPINION
¶ 1 The instant appeal arises from a foreclosure action filed against defendant David Cocroft and his wife, Veynecia Cocroft, by plaintiff Taylor, Bean, & Whitaker Mortgage Corporation. The trial court granted summary judgment in plaintiff's favor, and the property was sold at a judicial sale, at which plaintiff was the highest bidder. Defendant appeals, arguing (1) the trial court erred in permitting plaintiff to amend its complaint to substitute plaintiff as a party instead of the originally-named plaintiff, (2) the trial court erred in denying defendant's motion to strike the note attached to the amended complaint, (3) the trial court erred in granting plaintiff's motion for summary judgment despite defendant's allegation that he had not received the required grace period notice and his arguments that plaintiff was not the holder of the note, and (4) the trial court erred in confirming the sale because justice was not done. For the reasons that follow, we affirm the trial court's judgment.
We note that Veynecia Cocroft's first name is spelled in various ways throughout the record on appeal. We use the spelling that appears on the notice of appeal and appellate briefs.
¶ 2 BACKGROUND
¶ 3 On September 10, 2012, Colonial Bank filed a complaint to foreclose mortgage against defendant and his wife, Veynecia, which alleged that the mortgagee was "M.E.R.S., Inc., as Nominee for Taylor, Bean & Whitaker Mortgage Corp." and further alleged that Colonial Bank was the "holder of the Mortgage and Note." Attached to the complaint was a copy of the mortgage, which named Mortgage Electronic Registration Systems, Inc. (MERS), as the mortgagee acting solely as nominee for the lender, and named plaintiff as the lender. Also attached to the complaint was a copy of the note, which was in the amount of $572,000 and was executed by defendant and by one of plaintiff's representatives. ¶ 4 Defendant was served with the summons and complaint on September 16, 2012. ¶ 5 On December 18, 2012, plaintiff filed a motion for leave to file an amended complaint to substitute plaintiff for Colonial Bank as the named plaintiff in the foreclosure case. ¶ 6 On January 14, 2013, defendant filed a pro se appearance and, on the same day, filed an "Objection to Plaintiffs' [sic] Motion for Default and Motion for Substitution of Plaintiff," arguing, inter alia, that the complaint was defective, that plaintiff lacked standing, that defendant had rescinded the mortgage on May 19, 2009, and that the complaint was time-barred because there had been a previous foreclosure complaint that had been voluntarily dismissed and the instant complaint was filed more than one year from the date of that dismissal. The trial court set a briefing schedule on defendant's motions, which also included a motion for sanctions against plaintiff's attorney and a motion to dismiss that does not appear in the record on appeal. On February 19, 2013, plaintiff renoticed its motion for leave to amend the complaint, setting the motion for hearing on May 7, 2013, and defendant filed another "Objection to Plaintiffs' [sic] Petition to Amend Complaint" on March 12, 2013. On March 13, 2013, plaintiff filed a motion for extension of time to respond to defendant's motions or, in the alternative, leave to file an amended complaint, in which it renewed its request for leave to file an amended complaint. The complaint alleged that, as of May 15, 2014, there was due and owing $922,589.14, plus attorney fees and costs. The complaint alleged that the capacity in which plaintiff filed suit was "[a]s legal holder of the indebtedness and holder of the Mortgage which was pledged as security therefore." As relevant to the instant appeal, the complaint further alleged that a grace period notice was sent to defendant on February 24, 2012. ¶ 16 Attached to the amended complaint was an assignment of mortgage for the mortgage recorded as document No. 0726911063, which provided that MERS, as nominee for plaintiff, assigned to plaintiff "all interests in and under that certain Mortgage dated 6/26/2007 and executed by" defendant and MERS, as nominee for plaintiff, "together with note or notes therein described or referred to, the money due and to become due thereon, with interest, and all rights accrued or to accrue under said Mortgage." The assignment was dated November 14, 2008, and was executed by Erla Carter-Shaw on behalf of MERS. ¶ 17 Also attached to the complaint was a copy of a mortgage dated June 26, 2007, and recorded as document No. 0726911063, which named defendant as the borrower and listed MERS as the mortgagee acting solely as nominee for plaintiff, which was named as the lender. Additionally, a copy of the June 26, 2007, note provided that defendant promised to pay plaintiff $572,000. The note was executed by defendant and also contained three endorsements. One provided: "Without recourse, pay to the order of IndyMac Bank, F.S.B. By: Taylor, Bean & Whitaker Mortgage Corp." and was signed by Erla Carter-Shaw. Another provided: "Pay To the Order Of Taylor, Bean & Whitaker Mortgage Corp. Without Recourse IndyMac Bank, F.S.B." and was signed by Brian Brouillard. A third was a blank endorsement providing: "Without recourse, pay to the order of [space] By: Taylor, Bean & Whitaker Mortgage Corp." and was signed by Erla Carter-Shaw. ¶ 18 Also attached to the complaint was a document dated February 24, 2012, and addressed to defendant from RoundPoint Mortgage Servicing Corporation (RoundPoint). The document was entitled "Grace Period Notice" and provided, in all caps:
"Your loan is more than 30 days past due. You may be experiencing financial difficulty. It may be in your best interest to seek approved housing counseling. You have a grace period of 30 days from the date of this notice to obtain approved housing counseling. During the grace period, the law prohibits us from taking any legal action against you. You may be entitled to an additional 30 day grace period if you obtain housing counseling from an approved housing counseling agency. A list of approved counseling agencies may be obtained from the Illinois Department of Financial and Professional Regulation."
The document was accompanied by a copy of an envelope addressed to defendant, with first-class postage paid. ¶ 19 On October 1, 2014, defendant's motion for reconsideration was denied, and on October 27, 2014, defendant filed a
pro se motion to dismiss the complaint pursuant to section 2-619 of the Code, again alleging a lack of standing. Attached to defendant's motion to dismiss was a copy of a second assignment, dated February 13, 2011, in which MERS as nominee for plaintiff assigned the same mortgage loan to plaintiff; the assignment was signed by Melissa Long on behalf of MERS.
¶ 33 On November 6, 2015, defendant and his wife filed a "Third Amended Answer, Third Amended Affirmative Defense II and Counterclaim II." "Affirmative Defense II" was for rescission and alleged that defendant rescinded the loan. Count II of the counterclaim was for violation of the Truth in Lending Act (
15 U.S.C. § 1601 et seq. (2006)) and failure to honor defendant's rescission notice. ¶ 34 On December 11, 2015, plaintiff filed a motion to dismiss the third amended affirmative defenses and counterclaim pursuant to section 2-619.1 of the Code (
735 ILCS 5/2-619.1 (West 2014)), arguing that defendant's Truth in Lending Act claims must be dismissed because rescission under the statute did not apply to a purchase of a single family home occupied as a principal residence and, even if it did, such a claim was time-barred. Additionally, plaintiff argued that defendant failed to sufficiently allege a claim for rescission because his supporting evidence was unauthenticated and the same arguments had previously been rejected in other foreclosure proceedings. ¶ 35 On February 17, 2016, in its response to plaintiff's motion to dismiss the third amended affirmative defense and counterclaim, defendant conceded that "it appears the loan in question is a purchase money mortgage loan for the initial acquisition of real estate, in which the right of rescission does not apply under the Truth in Lending Act. Therefore, [defendant and his wife] seek to withdraw their third amended defense II and third amended counterclaim II." ¶ 36 On April 4, 2016, plaintiff filed a supplemental affidavit of Kernicky in support of its motion for summary judgment, in which she averred that since the filing of her initial affidavit, plaintiff had incurred additional costs in connection with the loan and that through March 9, 2016, the total amount due to plaintiff totaled $1,008,549.69. ¶ 37 On April 13, 2016, the trial court entered an order granting plaintiff's motion to dismiss and dismissing defendant's third amended affirmative defense and counterclaim. ¶ 38 On May 4, 2016, defendant filed a response to plaintiff's motion for summary judgment, arguing that the motion should be denied "because Plaintiff 1) request[s] unsubstantiated and unreasonable fees; and 2) failed to abide by required condition precedents. In addition, the Motion should be denied due to Plaintiff's lack of standing." With respect to conditions precedent, defendant argued that no notice of acceleration was provided, nor was a grace period notice or notice of counseling. ¶ 39 On June 2, 2016, the trial court granted summary judgment in plaintiff's favor and denied defendant's request that it reconsider its prior orders. The court entered a judgment of foreclosure and sale on the same day in the amount of $1,152,183.85. The property was sold at a sheriff's sale on December 21, 2016, and plaintiff was the successful bidder at $290,000. On January 11, 2017, plaintiff filed a motion for confirmation of the sale, and on March 2, 2017, the trial court entered an order confirming the sale and entering an
in personam deficiency judgment in the amount of $907,396.09 against defendant. ¶ 40 On April 3, 2017, defendant filed a
pro se notice of appeal, appealing the following orders: October 1, 2014; January 8, 2015; June 23, 2015;
April 13, 2016; June 2, 2016; and March 2, 2017.
The record on appeal does not indicate that plaintiff had filed a motion for a default judgment.
The amendment would also add another defendant—a subordinate lienholder—which is not at issue on appeal.
This first name is difficult to read on the copy contained in the record on appeal but appears to be "Brian."
The record does not reflect a court order entered on June 23, 2015.
¶ 41 ANALYSIS
¶ 42 On this pro se appeal, defendant raises a number of arguments, arguing (1) the trial court erred in permitting plaintiff to amend its complaint to substitute plaintiff as a party instead of the originally-named plaintiff, (2) the trial court erred in denying defendant's motion to strike the note attached to the amended complaint, (3) the trial court erred in granting plaintiff's motion for summary judgment despite defendant's allegation that he had not received the required grace period notice and his arguments that plaintiff was not the holder of the note, and (4) the trial court erred in confirming the sale because justice was not done.
¶ 43 I. Amendment of Complaint
¶ 44 We first consider defendant's argument that the trial court should not have permitted amendment of the complaint to replace plaintiff as the named plaintiff in the case instead of Colonial Bank. As an initial matter, we note that defendant attempts to draw a distinction between a misnomer and a mistaken identity and argues that the instant case was one of mistaken identity. While this distinction may be relevant in certain cases, namely, where the statute of limitations comes into play, it is not relevant in the instant case, as both the original and amended complaint were filed well within the statute of limitations period. See Fassero v. Turigliatto, 349 Ill. App. 3d 368, 370 (2004) (the relation-back doctrine applies where there is a misnomer but only applies in cases of mistaken identity under certain circumstances). Accordingly, the label placed on the error is irrelevant to our analysis of whether the trial court properly granted leave to file an amended complaint naming plaintiff as the party plaintiff. ¶ 45 Amendments to pleadings are governed by section 2-616 of the Code, which provides, in relevant part:
"At any time before final judgment amendments may be allowed on just and reasonable terms, introducing any party who ought to have been joined as plaintiff or defendant, dismissing any party, changing the cause of action or defense or adding new causes of action or defenses, and in any matter, either or form or substance, in any process, pleading, bill of particulars or proceedings, which may enable the plaintiff to sustain the claim for which it was intended to be brought or the defendant to make a defense or assert a cross claim."
735 ILCS 5/2-616(a) (West 2012).
¶ 46 The trial court has broad discretion in deciding a motion to amend pleadings prior to the entry of final judgment.
Loyola Academy v.
S&S Roof Maintenance,
Inc.,
146 Ill. 2d 263, 273 (1992). Accordingly, we will not reverse such a decision absent an abuse of that discretion.
McDonald v.
Lipov, 2014 IL App (2d) 130401, ¶ 47. In order to determine whether the trial court abused its discretion, we apply the four factors set forth by our supreme court in
Loyola Academy: "(1) whether the proposed amendment would cure the defective pleading; (2) whether other parties would sustain prejudice or surprise by virtue of the proposed amendment; (3) whether the proposed amendment is timely; and (4) whether previous opportunities to amend the pleadings could be identified."
Loyola Academy, 146 Ill. 2d at limitations period. Accordingly, res judicata does not provide a basis for denying the amendment of the complaint. ¶ 54 Second, defendant claims that he rescinded the loan due to plaintiff's failure to comply with the Truth in Lending Act (Act). However, the Act's right of rescission expressly does not apply to "a residential mortgage transaction" (15 U.S.C. § 1635(e)(1) (2012)), which is defined as "a transaction in which a mortgage, deed of trust, purchase money security interest arising under an installment sales contract, or equivalent consensual security interest is created or retained against the consumer's dwelling to finance the acquisition or initial construction of such dwelling" (15 U.S.C. § 1602(x) (2012)). There is no dispute that defendant's mortgage loan was made to finance the acquisition of his dwelling. Accordingly, under the Act's express language, the right of rescission does not apply. Defendant acknowledges this but claims that "a recent appellate decision supported Defendants argument that Plaintiff violated the Truth in Lending Act *** by failing to respond to his valid rescission of the alleged subject loan that were [sic] mailed on May 19, 2009." However, defendant does not identify this purported case or cite to it. Accordingly, we find his argument unpersuasive and cannot find that his rescission claim was a valid basis for denying amendment of the complaint. ¶ 55 Finally, defendant argues that the trial court should not have permitted amendment of the complaint because plaintiff lacked standing. However, defendant's arguments in his brief concerning this issue relate only to the standing of Colonial Bank, the previous plaintiff, and not plaintiff, the named party after amendment of the complaint. Since amendment was based on removing Colonial Bank as plaintiff and substituting plaintiff, any arguments as to Colonial Bank's lack of standing are irrelevant to the propriety of the amended complaint and do not serve as a basis for denying amendment. Accordingly, we cannot find that the trial court abused its discretion in permitting amendment of the complaint.
We note that defendant claims that the trial court did not apply any of these factors prior to permitting amendment of the complaint. However, there is nothing in the record to support such an assertion and defendant did not include a report of proceedings or bystander's report of the hearing on the motion. In the absence of a showing of error, we will presume that the trial court's actions were in conformity with the law and had a sufficient factual basis. See Foutch v. O'Bryant, 99 Ill. 2d 389, 391-92 (1984) (an appellant has the burden of presenting a sufficiently complete record of the proceedings at trial to support a claim of error and in the absence of such a record on appeal, it will be presumed that the order entered by the trial court was in conformity with the law and had a sufficient factual basis).
¶ 56 II. Motion to Strike Note
¶ 57 Defendant next argues that the trial court erred in denying his motion to strike the note that was attached to the amended complaint. Defendant claims that because the note attached to the original complaint bore one blank endorsement, while the note attached to the amended complaint bore three endorsements, the additional endorsements "were a forgery." However, defendant provides no support for this argument, other than his claim that IndyMac was closed on July 11, 2008, and sold on March 18, 2009. Defendant claims that plaintiff "gave no explanation for the endorsements when the trial court granted the motion to amend the complaint and denied Defendant's Motion to Strike." Again, however, there is no report of proceedings or bystander's report from this hearing, so we are unable to determine what occurred at that hearing. "Without an adequate report of the proceedings showing the basis for the trial court's ruling on the motion to strike, we must presume that its decision was appropriate." Ritacca Laser Center v. Brydges, 2018 IL App (2d) 160989, ¶ 24 (citing Foutch, 99 Ill. 2d at 391-92). We additionally note that, at a later date, the trial court found that "plaintiff has presented the original note in open court over defendants' oral objection that the note is forged" and that, in connection with its motion for summary judgment, plaintiff explained that the endorsements were the result of a 2007 potential loan sale that did not close. Accordingly, there is no support for defendant's contention that the endorsements on the note were forgeries, and the trial court did not err in denying his motion to strike the note.
¶ 58 III. Motion for Summary Judgment
¶ 59 Next, defendant claims that the trial court erred in granting summary judgment because there were genuine issues of fact as to whether defendant was sent a grace period notice and whether plaintiff was the holder of the note. A trial court is permitted to grant summary judgment only "if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." 735 ILCS 5/2-1005(c) (West 2014). The trial court must view these documents and exhibits in the light most favorable to the nonmoving party. Home Insurance Co. v. Cincinnati Insurance Co., 213 Ill. 2d 307, 315 (2004). We review a trial court's decision to grant a motion for summary judgment de novo. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102 (1992). De novo consideration means we perform the same analysis that a trial judge would perform. Khan v. BDO Seidman, LLP, 408 Ill. App. 3d 564, 578 (2011). ¶ 60 "Summary judgment is a drastic measure and should only be granted if the movant's right to judgment is clear and free from doubt." Outboard Marine Corp., 154 Ill. 2d at 102. However, "[m]ere speculation, conjecture, or guess is insufficient to withstand summary judgment." Sorce v. Naperville Jeep Eagle, Inc., 309 Ill. App. 3d 313, 328 (1999). The party moving for summary judgment bears the initial burden of proof. Nedzvekas v. Fung, 374 Ill. App. 3d 618, 624 (2007). The movant may meet his burden of proof either by affirmatively showing that some element of the case must be resolved in his favor or by establishing " 'that there is an absence of evidence to support the nonmoving party's case.' " Nedzvekas, 374 Ill. App. 3d at 624 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)). " 'The purpose of summary judgment is not to try an issue of fact but *** to determine whether a triable issue of fact exists.' " Schrager v. North Community Bank, 328 Ill. App. 3d 696, 708 (2002) (quoting Luu v. Kim, 323 Ill. App. 3d 946, 952 (2001)). We may affirm on any basis appearing in the record, whether or not the trial court relied on that basis or its reasoning was correct. Ray Dancer, Inc. v. DMC Corp., 230 Ill. App. 3d 40, 50 (1992). ¶ 61 In the case at bar, we cannot find that defendant has identified questions of fact concerning either the grace period notice or plaintiff's status as the holder of the note. With respect to the grace period notice, defendant argues that there is no evidence that plaintiff sent the grace period notice required by section 15-1502.5 of the Illinois Mortgage Foreclosure Law (Foreclosure Law) (735 ILCS 5/15-1502.5 (West 2014)). Section 15-1502.5 of the Foreclosure Law became effective on April 6, 2009, and required, in relevant part, for a grace period notice to be sent before any foreclosure action could be instituted. Bank of America, N.A. v. Adeyiga, 2014 IL App (1st) 131252, ¶¶ 87-88; see also 735 ILCS 5/15-1502.5(c) (West 2014) ("No foreclosure action *** shall be instituted on a mortgage secured by residential real estate before mailing the notice described in thus subsection (c)."). However, section 15-1502.5 was repealed by its own terms on July 1, 2016. 735 ILCS 5/15-1502.5(k) (West 2014). At least one court has held that this express repeal provides a homeowner "no recourse" after the date of the repeal, even if a judgment has been entered and the cause is pending on appeal. U.S. Bank, N.A. confirming plaintiff's ownership in the loan. Furthermore, defendant does not address the fact that plaintiff attached the mortgage and promissory note to the amended complaint and even produced the original note in open court, as the trial court found in a January 8, 2015, order. See Adeyiga, 2014 IL App (1st) 131252, ¶ 67 ("To establish a prima facie case of foreclosure in accordance with section 15-1504, a plaintiff is required to introduce evidence of the mortgage and promissory note, at which time the burden of proof shifts to the defendant to prove any affirmative defenses."). Accordingly, we cannot find that defendant has identified a question of material fact concerning plaintiff's standing and affirm the trial court's grant of summary judgment in plaintiff's favor.
Defendant also makes an argument concerning the validity of the endorsements on the note. However, we have addressed this argument in the context of his earlier motion to strike and have no need to repeat that argument with respect to the motion for summary judgment, which provided even more support for the validity of the note.
We note that, if a pleading is verified, "every subsequent pleading must also be verified, unless verification is excused by the court." 735 ILCS 5/2-605(a) (West 2014). However, in the case at bar, the complaint was not verified and defendant voluntarily chose to verify his pro se answers. "[A]s a general rule, where a pleading requires no verification, an amendment of that pleading need not be verified." People ex rel. Hartigan v. All American Aluminum & Construction Co., 171 Ill. App. 3d 27, 37 (1988). Thus, defendant was permitted to file a subsequent answer through counsel that was not verified. See Hartigan, 171 Ill. App. 3d at 37 (finding no violation of section 2-605(a) where the third amended complaint was not verified even though the two prior complaints had been verified). Nevertheless, any admissions made by defendant in those verified pleadings would remain binding after amendment because there was no allegation that those admissions were made through mistake or inadvertence. See Knauerhaze v. Nelson, 361 Ill. App. 3d 538, 558 (2005) ("[O]riginal verified pleadings will remain binding as judicial admissions even after the filing of an amended pleading which supersedes the original unless the amended pleading discloses that the original pleading was made through mistake or inadvertence." (Emphasis in original.)). With respect to the issue of grace period notice, defendant made no admissions in his verified answers and only made a general denial of plaintiff's allegation. --------
¶ 67 IV. Confirmation of Sale
¶ 68 Finally, defendant argues that the trial court erred in confirming the sale because "Justice was Not Done." Under section 15-1508 of the Foreclosure Law, after a hearing on a motion to confirm a sale, "[u]nless the court finds that (i) a notice required in accordance with subsection (c) of Section 15-1507 was not given, (ii) the terms of sale were unconscionable, (iii) the sale was conducted fraudulently, or (iv) justice was otherwise not done, the court shall then enter an order confirming the sale." 735 ILCS 5/15-1508(b) (West 2014). "The provisions of section 15-1508 have been construed as conferring on circuit courts broad discretion in approving or disapproving judicial sales." Household Bank, FSB v. Lewis, 229 Ill. 2d 173, 178 (2008). Accordingly, "[a] court's decision to confirm or reject a judicial sale under the statute will not be disturbed absent an abuse of that discretion." Lewis, 229 Ill. 2d at 178. ¶ 69 In the case at bar, defendant argues that justice was not done because plaintiff's purchase of the property was "deceptive and fraudulent" because plaintiff had been "liquidated and dissolved" at the time of the sale. However, Kernicky's affidavit explained that plaintiff's Chapter 11 reorganization did not result in the termination of its corporate existence; instead, the liquidation plan "provide[d] for the monetization of the remaining assets of [plaintiff's] bankruptcy estate for the benefit of [plaintiff's] creditors." Thus, plaintiff's Chapter 11 proceedings did not prevent plaintiff from proceeding with the foreclosure claim. ¶ 70 Furthermore, as plaintiff notes, even if plaintiff had been dissolved at the time of the sale, the dissolution of a corporation
"shall not take away nor impair any civil remedy available to or against such corporation, its directors, or shareholders, for any right or claim existing, or any liability accrued or incurred, either prior to, at the time of, or after such dissolution if action or other proceeding thereon is commenced within five years after the date of such dissolution."
805 ILCS 5/12.80 (West 2014).
Thus, even if plaintiff "went out of business on August 10, 2011," as defendant claims, plaintiff's foreclosure action was commenced within five years of that dissolution and so plaintiff would have been entitled to proceed with the action regardless of its status. Accordingly, we cannot find that the trial court abused its discretion in confirming the sale.
¶ 71 CONCLUSION
¶ 72 For the reasons set forth above, we affirm the trial court's judgment in its entirety. The trial court did not err in permitting plaintiff to amend the complaint, in denying defendant's motion 17 to strike the note, in granting summary judgment in plaintiff's favor, or in confirming the sale. ¶ 73 Affirmed.