Bayview Loan Servicing, LLC v. Szpara

• Decision Date: 30 December 2015
• Docket Number: No. 2–14–0331.,2–14–0331.
• Citation: 46 N.E.3d 950
• Parties: BAYVIEW LOAN SERVICING, LLC, Plaintiff and Counterdefendant–Appellee, v. Dominik SZPARA and Lidia Szarek, Defendants and Counterplaintiffs–Appellants (Unknown Owners and Nonrecord Claimants, Defendants).
• Court: United States Appellate Court of Illinois

46 N.E.3d 950

BAYVIEW LOAN SERVICING, LLC, Plaintiff and Counterdefendant–Appellee

v.Dominik SZPARA and Lidia Szarek, Defendants and Counterplaintiffs–Appellants (Unknown Owners and Nonrecord Claimants, Defendants).

No. 2–14–0331.

Appellate Court of Illinois, Second District.

Dec. 30, 2015.

Charles A. Silverman, of Charles Aaron Silverman, P.C., Chicago, for appellants.

Louis J. Manetti Jr., of Codilis & Associates, P.C., Burr Ridge, for appellees.

OPINION

Justice SPENCE delivered the judgment of the court, with opinion.

¶ 1 Plaintiff, JPMorgan Chase Bank, NA,¹ filed a complaint to foreclose the mortgage on the property of defendants, Dominik Szpara and Lidia Szarek, at 122 East Lincoln Avenue, Glendale Heights, Illinois (the Property). Defendants answered the complaint and raised four affirmative defenses and one counterclaim. Plaintiff moved to strike three of the affirmative defenses and the counterclaim; one affirmative defense and the counterclaim were struck with prejudice, and two affirmative defenses were struck without prejudice. Defendants amended those two affirmative defenses. The two amended affirmative defenses were subsequently struck with prejudice.

¶ 2 Plaintiff moved for summary judgment, and defendants responded by attacking the sufficiency of plaintiff's prove-up affidavit for the amounts due. The court granted summary judgment for plaintiffs. Defendants now appeal the entry of summary judgment, the order approving the sale, and the order striking their amended affirmative defenses. For the reasons stated herein, we affirm.

¶ 3 I. BACKGROUND

¶ 4 Defendants obtained a mortgage on the Property on June 22, 2006, from Washington Mutual Bank, FA. On March 29, 2011, defendants filed a Chapter 7 bankruptcy petition in the Northern District of Illinois, case No. 11–12966. On April 15, 2011, the district court granted plaintiff relief from the automatic stay.

¶ 5 On August 17, 2011, plaintiff filed a complaint to foreclose the mortgage on the Property. The complaint alleged that defendants had failed to pay monthly installments due since July 1, 2010.

¶ 6 Defendants filed their answer on June 7, 2012. The answer contained four affirmative defenses: (1) plaintiff failed to send defendants an acceleration letter prior to filing its complaint, a condition precedent to foreclosure; (2) plaintiff violated section 15–1502.5 of the Code of Civil Procedure (Code) (735 ILCS 5/15–1502.5 (West 2010) ) by failing to send a grace-period notice prior to filing its complaint, which voided the foreclosure and the sale; (3) the broker, who was also the appraiser, committed fraud in the inducement by inflating the appraisal price in order to obtain a larger commission as well as by inflating defendants' assets, thereby voiding the mortgage lien; and (4) alternatively, in light of the broker's conduct, the action was barred by equitable estoppel. Defendants also included a counterclaim to quiet title, alleging again that the broker inflated the appraisal for personal gain and inflated defendants' assets. They further alleged that they were not fluent in English and therefore could not understand that the broker was acting dishonestly.

¶ 7 On August 31, 2012, plaintiff replied to defendants' first affirmative defense, denying that it failed to send an acceleration letter. It also filed a motion to strike defendants' second, third, and fourth affirmative defenses and their counterclaim to quiet title. After the matter was briefed, the trial court entered a November 7, 2012, order striking defendants' second affirmative defense and their counterclaim with prejudice and striking defendants' third and fourth affirmative defenses without prejudice.

¶ 8 On December 6, 2012, defendants filed amended third and fourth affirmative defenses. In defendants' amended third affirmative defense, they alleged the following to support fraud in the inducement: the broker was also the appraiser of the Property, creating a conflict of interest; defendants never received a copy of the appraisal; the broker inflated defendants' assets; defendants did not speak fluent English; and therefore plaintiff was estopped from enforcing their lien. The amended fourth affirmative defense, equitable estoppel, contained allegations identical to those in the amended third affirmative defense.

¶ 9 On December 26, 2012, plaintiff filed a motion to strike defendants' amended affirmative defenses. Plaintiff argued that the amended affirmative defenses were not well pleaded, containing conclusory allegations insufficient to support fraud in the inducement or equitable estoppel. Furthermore, plaintiff argued that, under the terms of the purchase and assumption agreement (PAA), which it entered into with the Federal Deposit Insurance Corporation (FDIC), as receiver for Washington Mutual Bank, on September 25, 2008, plaintiff explicitly disclaimed liability to defendants arising from Washington Mutual Bank's prior conduct, even if defendants raised their claims affirmatively or defensively.

¶ 10 On January 8, 2013, the trial court entered an order stating that it took judicial notice of the PAA. The court therein also granted plaintiff's motion to strike, striking the amended third and fourth affirmative defenses with prejudice.

¶ 11 On August 30, 2013, plaintiff filed its motion for summary judgment. Defendants responded, arguing primarily that plaintiff's prove-up affidavit for the amounts due and owing on the mortgage loan was insufficient. They argued that the affidavit, of plaintiff's vice president Rosalva Cardenas, lacked a foundation as a business record because she lacked personal knowledge of the pertinent records and that the affidavit thus relied on inadmissible hearsay. Plaintiff replied that there was a proper foundation for the affidavit and that defendants did not challenge anything else in the affidavit, such as the actual amounts owing.

¶ 12 On November 6, 2013, the trial court granted a summary judgment of foreclosure and sale in plaintiff's favor.

¶ 13 The judicial sale of the property occurred on February 11, 2014. Plaintiff filed a motion for confirmation of the sale on February 19, 2014. On March 11, 2014, the trial court granted the motion and confirmed the sale.

¶ 14 Defendants timely appealed.²

¶ 15 II. ANALYSIS

¶ 16 1. Standard of Review

¶ 17 Defendants' affirmative defenses and counterclaim were struck pursuant to sections 2–615 and 2–619 of the Code (735 ILCS 5/2–615, 2–619 (West 2012)). We review de novo dismissals under these sections of the Code. Kean v. Wal–Mart Stores, Inc., 235 Ill.2d 351, 361, 336 Ill.Dec. 1, 919 N.E.2d 926 (2009).

¶ 18 We also review de novo an order granting summary judgment. Chatham Foot Specialists, P.C. v. Health Care Service Corp., 216 Ill.2d 366, 376, 297 Ill.Dec. 268, 837 N.E.2d 48 (2005). Plaintiff argues, however, that because the trial court's determination of whether the prove-up affidavit was based on admissible evidence was within its sound discretion, we should review the grant of summary judgment for an abuse of discretion. We reject this argument because, although “[i]n general, this court reviews a circuit court's decision on a motion to strike an affidavit for an abuse of discretion, * * * when the motion ‘was made in conjunction with the court's ruling on a motion for summary judgment,’ we employ a de novo standard of review with respect to the motion to strike.” US Bank, National Ass'n v. Avdic, 2014 IL App (1st) 121759, ¶ 18, 381 Ill.Dec. 254, 10 N.E.3d 339 (quoting Jackson v. Graham, 323 Ill.App.3d 766, 773, 257 Ill.Dec. 330, 753 N.E.2d 525 (2001) ). Here, there was no specific motion to strike the affidavit, but in substance the argument was that the affidavit could not support summary judgment because it failed to comply with Illinois Supreme Court Rule 191 (eff. Jan. 4, 2013) and thus should not be considered. Accordingly, we review de novo the grant of summary judgment in conjunction with the consideration of the prove-up affidavit. See Jackson, 323 Ill.App.3d at 774, 257 Ill.Dec. 330, 753 N.E.2d 525 (“[W]hen the trial court rules on a motion to strike a Rule 191 affidavit in conjunction with a summary judgment motion, we review de novo the trial court's ruling on the motion to strike.”).

¶ 19 2. Motions to Strike

¶ 20 Defendants argue that the trial court erred in striking their second affirmative defense, their amended third and fourth affirmative defenses, and their counterclaim to quiet title. We address the affirmative defenses and the counterclaim in turn.

¶ 21 a. Second Affirmative Defense

¶ 22 Defendants first argue that the trial court improperly struck their second affirmative defense, that plaintiff violated section 15–1502.5 of the Code by failing to send a grace-period notice to them prior to filing its complaint.

¶ 23 Section 15–1502.5 requires a mortgagee to send notice via United States mail advising the mortgagor to seek approved housing counseling if the mortgage becomes more than 30 days delinquent, “[e]xcept for mortgages secured by residential real estate in which any mortgagor has filed for relief under the United States Bankruptcy Code.” 735 ILCS 5/15–1502.5(c) (West 2010).

¶ 24 Here, defendants claim that they filed for bankruptcy on March 29, 2011, after plaintiff initiated its foreclosure action on March 23, 2011. Therefore, they claim, the exception in section 15–1502.5(c) quoted above did not apply, and plaintiff was required to send them the notice.

¶ 25 Plaintiff responds as follows. First, this court does not have jurisdiction to entertain an appeal of the striking of defendants' second affirmative defense (and, for the same reasons, the striking of their counterclaim). Defendants' notice of appeal lists three specific orders from which they appeal: the January 8, 2013, order, in which the court struck their amended third and fourth affirmative defenses with prejudice; the November 6, 2013, order granting summary judgment³ ; and the March 11, 2014, order confirming the...