Deutsche Bank Nat'l Trust Co. v. Cortez
| Decision Date | 10 September 2020 |
| Docket Number | No. 1-19-2234,1-19-2234 |
| Parties | DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR MORGAN STANLEY ABS CAPITAL I INC. TRUST 2004-WMC2, Plaintiff-Appellee, v. James CORTEZ, Defendant-Appellant. |
| Court | United States Appellate Court of Illinois |
Arthur C. Czaja, of Niles, for appellant.
Douglas R. Sargent and Ryan A. Sawyer, of Locke Lord LLP, of Chicago, for appellee.
¶ 1 In this mortgage foreclosure action, defendant James Cortez (defendant) appeals the circuit court of Cook County's entry of an order approving the sale of the property in question in favor of plaintiff Deutsche Bank National Trust Company, as Trustee for Morgan Stanley ABS Capital I Inc. Trust 2004-WMC2 (plaintiff). Defendant's contention on appeal is that justice was not otherwise done in this case, where he had entered into a loan modification agreement with plaintiff, and thus, the circuit court erred in entering the order approving sale under section 15-1508(b)(iv) of the Illinois Mortgage Foreclosure Law (Foreclosure Law) ( 735 ILCS 5/15-1508(b)(iv) (West 2018)). Defendant further contends, separate and apart from his argument under section 15-1508(b)(iv), that the amount of the surplus awarded in the order approving the sale was in error where it did not account for payments he made totaling $7800. Because the deed to the property subsequently vested to a third party, under section 15-1509(c) of the Foreclosure Law ( 735 ILCS 5/15-1509(c) (West 2018)), we affirm the judgment of the circuit court confirming the sale of the property. However, we remand the matter for further proceedings for the circuit court to conduct a hearing to determine the correct amount of the surplus and to modify the order approving the sale accordingly.
¶ 3 Plaintiff filed a complaint to foreclose a mortgage against defendant on April 4, 2017, for a property located at 3539 Vernon Avenue, Brookfield, Illinois (the property). In its complaint, plaintiff alleged that it was the legal holder of the indebtedness and that defendant was in default for failure to pay his November 2015 mortgage payment.
¶ 4 Thereafter, defendant was served by publication. When defendant failed to appear, a default judgment of foreclosure was entered on May 15, 2018. The judgment of foreclosure provided that defendant owed $150,723.53 in principal, accrued interest, advances, and late fees as of March 9, 2018.
¶ 5 In July 2018, plaintiff noticed the judicial sale for August 16, 2018. On August 15, 2018, defendant, with the assistance of counsel, filed an emergency motion to stay the sale. In the motion, defendant argued that he believed he was under a loan modification with plaintiff, since plaintiff had accepted numerous payments from him. Defendant attached to his motion a printout from his bank that demonstrated payments made to the servicer of his mortgage loan in the amount of $1410 each month from September 2017 through May 2018. Defendant requested more time to ascertain how these payments were accounted for by plaintiff. The following day, his motion was withdrawn as plaintiff had voluntarily rescheduled the judicial sale for September 17, 2018. Just before the September sale, defendant filed a pro se motion to stay the sale. The circuit court granted the motion and ordered the sale to take place on November 9, 2018, or thereafter.
¶ 6 In May 2019, a notice of sale was sent to defendant's counsel of record as well as to the unknown owners and nonrecord claimants at the property address. At the June 2019 sale, the property was sold to a third-party bidder for $205,000.
¶ 7 On June 12, 2019, defendant filed an emergency motion to stay and vacate the sale, arguing that he believed he was in a modification agreement with plaintiff as plaintiff had been accepting his monthly mortgage payments. Defendant requested more time to explore loss mitigation options or to redeem the property.
¶ 8 On June 21, 2019, the third-party bidder filed a motion to confirm the sale. At the hearing on the motion to confirm the sale, defendant's motion to vacate and defendant's counsel's appearance, as well as the third-party bidder's motion, were stricken by the circuit court. The circuit court then granted defendant until July 19, 2019, to file an appearance.
¶ 9 On July 17, 2019, plaintiff filed a motion to confirm the sale, which was set for July 29, 2019. On July 26, 2019, defendant's new counsel filed an appearance.
¶ 10 At the hearing on the motion to confirm the sale, the circuit court set a briefing schedule. In response to the motion, defendant argued that he had applied and was approved for a trial payment plan that required him to pay $1454.11 for three months (December 2018-February 2019). Defendant maintained he completed the trial payment plan and signed and returned the final modification agreement to plaintiff as requested. Defendant further argued that he made two payments pursuant to the final modification agreement, which plaintiff accepted until May 2019 when that payment was returned. The final loan modification agreement set forth a mortgage payment amount of $1410.21. Defendant asserted that plaintiff breached the loan modification agreement by going forward with the foreclosure sale. Attached to his response were printouts from his bank's website indicating that amounts ranging from $1500 to $1600 had been withdrawn from his account from December 2018 through April 2019 and paid to "Homeq Servicing Corporation." He further attached an unsigned copy of the trial period plan offered by plaintiff. No affidavit was attached to defendant's response.
¶ 11 In reply, plaintiff recognized that defendant was asserting that the sale should not be confirmed under the "justice was not otherwise done" clause of section 15-1508(b)(iv) of the Foreclosure Law. Plaintiff first recognized that defendant made all the required payments under the trial payment plan. Plaintiff maintained, however, that it had forwarded defendant a final modification agreement on February 28, 2019, but it was never signed and returned. Accordingly, because defendant did not execute the permanent modification agreement, the plaintiff was allowed to proceed with the judicial sale of the home. Plaintiff attached to its reply a copy of the unsigned final modification agreement. No affidavit was attached to plaintiff's reply.
¶ 12 Defendant appeared pro se at the hearing on the motion to confirm the sale, as his counsel had withdrawn from the case. There is no record of proceeding on the hearing for the motion to confirm the sale. However, the circuit court allowed defendant to enter into the record a handwritten letter that provided background on his ownership of the property and his desire for a loan modification.
¶ 13 After considering this letter and the arguments of the parties, the circuit court entered the order approving the sale. It provided for a $24,598.35 surplus, but the report of sale and distribution did not appear to include any credits for the payments made by defendant from December 2018 through April 2019 totaling $7800. This appeal followed.
¶ 15 Prior to examining the claims at issue, we will first address plaintiff's argument that we must affirm the decision of the circuit court solely based on the lack of an adequate record. Citing Gataric v. Colak , 2016 IL App (1st) 151281, ¶ 29, 405 Ill.Dec. 816, 59 N.E.3d 109, plaintiff asserts that the lack of a report of proceedings of the hearing on the order approving the sale requires this court to presume that the circuit court's order had a sufficient factual basis and that it conforms with the law. We decline to make such a presumption in this case as the record is sufficient for our review. The parties' arguments on appeal are substantially similar to those presented to the circuit court when briefing the motion to confirm the sale of the property. Additionally, the circuit court had before it the same documents attached to those pleadings that have been presented for our consideration. There is no argument raised in this appeal that is dependent on the arguments of trial counsel or statements made by the circuit court during the hearing on the motion to confirm the sale. Therefore, we decline to adopt plaintiff's position.
¶ 17 We now turn to address our standard of review. Defendant's primary argument on appeal is that questions of material fact remained at the time the order approving the sale was entered as to whether or not defendant had accepted the loan modification. We note that defendant's attempt to apply a summary judgment standard to the entry of an order approving the sale is not appropriate. The Foreclosure Law, and the case law interpreting it, is clear that whether the order approving the sale was proper is reviewed for an abuse of discretion. Household Bank, FSB v. Lewis , 229 Ill. 2d 173, 178, 322 Ill.Dec. 15, 890 N.E.2d 934 (2008). "The circuit court abuses its discretion if it committed an error of law or where no reasonable person would take the view adopted by the court." US Bank, National Ass'n v. Avdic , 2014 IL App (1st) 121759, ¶ 18, 381 Ill.Dec. 254, 10 N.E.3d 339. The party opposing the foreclosure sale bears the burden of proving that sufficient grounds exist to disapprove the sale. Bayview Loan Servicing, LLC v. 2010 Real Estate Foreclosure, LLC , 2013 IL App (1st) 120711, ¶ 32, 373 Ill.Dec. 417, 993 N.E.2d 976.
¶ 18 In this appeal, defendant maintains that the circuit court erroneously confirmed the sale of the property where justice was not otherwise done under section 15-1508(b)(iv) of the Foreclosure Law. 735 ILCS 5/15-1508(b)(iv) (West 2018). Defendant asserts that the evidence presented by both sides demonstrated that there was a question regarding whether defendant had entered into a loan modification agreement with plaintiff so as to preclude...
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