Aurora Bank FSB v. Perry

• Citation: 30 N.E.3d 1166
• Decision Date: 08 April 2015
• Docket Number: No. 3–13–0673.,3–13–0673.
• Parties: AURORA BANK FSB, Plaintiff–Appellee, v. John B. PERRY and Evelyn Perry, Defendants–Appellants (Discovery Bank; Midland Credit Management, Inc.; The Country Walk Property Owners Association a/k/a The Gray Hawk Property Owners' Association, Defendants).
• Court: United States Appellate Court of Illinois

30 N.E.3d 1166

AURORA BANK FSB, Plaintiff–Appellee
v.
John B. PERRY and Evelyn Perry, Defendants–Appellants (Discovery Bank; Midland Credit Management, Inc.; The Country Walk Property Owners Association a/k/a The Gray Hawk Property Owners' Association, Defendants).

No. 3–13–0673.

Appellate Court of Illinois, Third District.

April 8, 2015.

30 N.E.3d 1168

Lloyd Brooks (argued) and Deadra Woods Stokes, both of Consumer Legal Group, P.C., of Matteson, for appellant.

Ralph T. Wutscher, Jeffrey T. Karek (argued), and F. John McGinnis, all of McGinnis Wutscher Beiramee LLP, of Chicago, for appellee.

OPINION

Presiding Justice McDADE delivered the judgment of the court, with opinion.

¶ 1 Defendant-appellants, Evelyn and John Perry (the Perrys), appeal from a trial court order granting summary judgment to plaintiff-appellee, Aurora Bank. In this appeal the Perrys contend that the trial court erroneously decided the issue of capacity as an issue of standing. The Perrys also appeal the trial court's subsequent confirmation of the sale of the subject property and substitution to plaintiff. We affirm the trial court's rulings.

¶ 2 FACTS

¶ 3 Aurora Bank filed a mortgage foreclosure complaint on October 26, 2011, against Evelyn and John Perry claiming default of mortgage payment for the real estate at 2182 White Thorn Drive in Aurora, Illinois. Aurora's complaint alleged its capacity for bringing the suit was mortgagee by way of assignment. It also said it was “designated and authorized to act on behalf of the owner of the note to enforce the note and mortgage at issue.” Aurora attached a copy of the mortgage, a corporate assignment agreement, and the note, blank but endorsed, to the complaint.

¶ 4 Mortgage Electronic Registration Systems, Inc. (MERS), the original mortgagee according to the mortgage, held:

“only legal title to the interest granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender's successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of lender”.

¶ 5 The corporate assignment of mortgage agreement stated that the mortgage was assigned to Aurora on July 27, 2011, and further stated in pertinent part:

“Assignor: MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. AS NOMINEE FOR FIRST NATIONAL BANK OF ARIZONA, ITS SUCCESSORS AND/OR ASSIGNS * * * Assignee: AURORA BANK FSB* * *.”

¶ 6 The note for the mortgage was made by First National Bank of Arizona, which endorsed to First National Bank of Nevada. First National Bank of Nevada endorsed the note to Residential Funding, which endorsed a blank note.

¶ 7 The Perrys' answer to this complaint denied many of Aurora's allegations, including the assertion that Aurora had capacity. They further asserted fraud as an affirmative defense. Aurora filed its reply in opposition to the Perrys' affirmative defense, a motion for judgment of foreclosure and order of sale and a motion for summary judgment that sought judgment of foreclosure and order of sale. The Perrys filed their response to the motion for summary judgment asserting Aurora did not have standing.

¶ 8 Due to communication issues, their original counsel withdrew. They retained new counsel who moved for leave to supplement their reply brief in opposition to Aurora's motion for summary judgment. After a hearing on the matter, the Perrys' motion was denied. The trial court held

30 N.E.3d 1169

that the Perrys had waived their right to argue whether Aurora lacked capacity because it was an affirmative defense which should have been asserted in their answer. The court also stated that there was no “adequate reason in law or equity to allow the supplemental filing of another response once * * * counsel for the defendant had an opportunity to file a response, and now where they seek to raise an issue I think it serves to work an unfair prejudice on the plaintiff.”

¶ 9 After a hearing on December 5, 2012, the trial court granted Aurora's motion for summary judgment and entered judgment of foreclosure against the defendants. A foreclosure sale was held.

¶ 10 On July 10, 2013, Aurora moved for approval of the property sale. On that same day, Aurora filed a motion requesting that Nationstar Mortgage, LLC, be substituted as plaintiff. The motion did not include the date when the property was transferred to Nationstar or whether the underlying note was also assigned, but had an attached document entitled “Corporation Assignment for Real Estate Mortgage” dating the mortgage transfer to Nationstar as November 1, 2012.

¶ 11 Despite an objection to the sale confirmation from the Perrys, who stated that they had not received notice of the sale, the trial court entered an order approving the sale of the property and permitted the substitution of plaintiff.

¶ 12 The defendants timely appealed.

¶ 13 ANALYSIS

¶ 14 A trial court's ruling on a motion for summary judgment is reviewed de novo. Harrison v. Addington, 2011 IL App (3d) 100810, ¶ 37, 353 Ill.Dec. 233, 955 N.E.2d 700. Such a judgment is proper where the pleadings, depositions, admissions, and affidavits, viewed in the light most favorable to the nonmoving party, reveal no genuine issue of material fact and the movant is entitled to judgment as a matter of law. 735 ILCS 5/2–1005(c) (West 2010). “[It] should only be granted when the moving party's right is clear and free from doubt.” Rosestone Investments, LLC v. Garner, 2013 IL App (1st) 123422, ¶ 23, 377 Ill.Dec. 616, 2 N.E.3d 532.

¶ 15 The Perrys first argue that despite their failure to raise the affirmative defense of lack of standing in their answer to Aurora's foreclosure complaint it is Aurora's burden to prove it had the capacity to foreclose the mortgage as required by the Illinois Mortgage Foreclosure Law (Foreclosure Law) (735 ILCS 5/15–1501 et seq. (West 2010)) because the Perrys' answer denied this allegation. Aurora contends the Foreclosure Law does not place a requirement of alleging and then proving capacity upon them and that the Perrys' failure to assert the affirmative defense of lack of standing in their answer or even in a possible cross-motion for summary judgment has foreclosed their right to raise such a defense.

¶ 16 The trial court decided this case as an issue of standing and the parties have similarly argued standing in this appeal. This case, however, does not present an issue of standing as we find the trial court was correct to determine that the Perrys waived their right to assert that affirmative defense. Accordingly, the argument, as originally raised by the Perrys' denial of the allegation in their answer, is whether Aurora proved its alleged “legal capacity to sue.” 735 ILCS 5/2–619(a)(2) (West 2010).

¶ 17 “The doctrine of standing requires that a party, either in an individual or representative capacity, have a real interest in the action brought and in its outcome.”

30 N.E.3d 1170

In re Estate of Wellman, 174 Ill.2d 335, 344, 220 Ill.Dec. 360, 673 N.E.2d 272 (1996). In contrast, the “ legal capacity to sue or be sued” generally refers to the status of the party, e.g., incompetent, infant (Patterson Heating & Air Conditioning Corp. v. Durable Construction Co., 3 Ill.App.3d 444, 446, 278 N.E.2d 410 (1972) ), or unincorporated association (American Federation of Technical Engineers, Local 144 v. La Jeunesse, 63 Ill.2d 263, 266, 347 N.E.2d 712 (1976) ). Thus standing is not the same as legal capacity to sue or be sued.

¶ 18 Lack of standing is an affirmative defense that can be forfeited if not timely raised in the trial court. Glisson v. City of Marion, 188 Ill.2d 211, 220, 242 Ill.Dec. 79, 720 N.E.2d 1034 (1999). Additionally, had Aurora alleged standing and not capacity, it is well settled that the denial of an allegation in a plaintiff's complaint does not rise to the level of an affirmative defense. Smith v. Waukegan Park District, 231 Ill.2d 111, 120–21, 324 Ill.Dec. 446, 896 N.E.2d 232 (2008). Therefore, even though the Perrys denied Aurora's allegation of capacity in their answer, they did not adequately raise the affirmative defense of standing.

¶ 19 We agree with the Perrys' argument that failing to plead an affirmative defense in an answer does not automatically waive the defense. However, the trial court did not abuse its discretion in not allowing the Perrys to supplement their response to the motion for summary judgment with the argument of lack of standing. Bank of America, N.A. v. Land , 2013 IL App (5th) 120283, ¶ 21, 372 Ill.Dec. 865, 992 N.E.2d 1266 (“[t]he right to amend pleadings is not absolute or unlimited, and the circuit court's decision to grant or deny that right will not be disturbed absent an abuse of discretion”). The Perrys' prior counsel had an opportunity to and did file a response to Aurora's motion for summary judgment. Allowing them to supplement their original response would work an unfair prejudice against Aurora. The asserted reasons for the need to supplement were: the substitution of new counsel, further...