Fin. Freedom Acquisition, LLC v. Standard Bank & Trust Co., 1–12–0982.

• Court: United States Appellate Court of Illinois
• Writing for the Court: Justice REYES delivered the judgment of the court, with opinion.
• Citation: 13 N.E.3d 776
• Parties: FINANCIAL FREEDOM ACQUISITION, LLC, Plaintiff–Appellee, v. STANDARD BANK AND TRUST COMPANY, as Trustee u/t/a dated March 18, 1991, a/k/a Trust No. 5193, Defendant–Appellant (Unknown Beneficiaries of Standard Bank and Trust Company u/t/a dated March 18, 1991, a/k/a Trust No. 5193, Lawncastle Cove Condominium Association, United States of America—Secretary of Housing and Urban Development, Unknown Owners and Nonrecord Claimants, Defendants).
• Docket Number: No. 1–12–0982.,1–12–0982.
• Decision Date: 13 June 2014

13 N.E.3d 776

FINANCIAL FREEDOM ACQUISITION, LLC, Plaintiff–Appellee
v.
STANDARD BANK AND TRUST COMPANY, as Trustee u/t/a dated March 18, 1991, a/k/a Trust No. 5193, Defendant–Appellant (Unknown Beneficiaries of Standard Bank and Trust Company u/t/a dated March 18, 1991, a/k/a Trust No. 5193, Lawncastle Cove Condominium Association, United States of America—Secretary of Housing and Urban Development, Unknown Owners and Nonrecord Claimants, Defendants).

No. 1–12–0982.

Appellate Court of Illinois, First District, Sixth Division.

June 13, 2014.

13 N.E.3d 778

John K. Wheeler, of Wheeler & Wheeler, of Westmont, for appellant.

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

OPINION

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

¶ 1 This appeal arises from a mortgage foreclosure action filed by plaintiff, Financial Freedom Acquisition, LLC (Financial Freedom), against defendant, Standard Bank and Trust Company, as Trustee u/t/a dated March 18, 1991, a/k/a Trust No. 5193 (Standard Bank). Thereafter, Standard Bank filed a counterclaim against Financial Freedom alleging violations of the Truth in Lending Act (TILA) (15 U.S.C. § 1601 et seq. (2006) ). The counterclaim sought damages as well as rescission of the loan transaction. Financial Freedom filed a motion to dismiss the counterclaim pursuant to section 2–619.1 of the Code of Civil Procedure (Code) (735 ILCS 5/2–619.1 (West 2010) ). Standard Bank now appeals from an order of the circuit court

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of Cook County granting Financial Freedom's motion to dismiss the counterclaim. Standard Bank contends on appeal the circuit court erred because it did not consider: (1) a land trust is a “natural person” under TILA; (2) it timely exercised its right to rescission; and (3) it has a contractual right to rescind the loan. For the reasons that follow, we affirm the decision of the circuit court.

¶ 2 BACKGROUND

¶ 3 On October 14, 2010, Financial Freedom filed a complaint to foreclose the mortgage on 10420 S. Circle Drive, Unit No. 21B, in Oak Lawn, Illinois (the property), against Standard Bank, a land trust and current owner of the property.¹ Financial Freedom alleged the original lender was Marquette National Bank. Subsequently, Marquette National Bank transferred its interest to Financial Freedom.² Financial Freedom complained the mortgage was in default due to the death of the borrower, Mary Jane Muraida, which occurred on May 20, 2010. Financial Freedom further alleged the amount due was $38,269.15.

¶ 4 Attached to the complaint were copies of the mortgage and note. The mortgage at issue was an adjustable rate home equity conversion mortgage, a type of reverse mortgage insured by the federal government through the Secretary of Housing and Urban Development. The mortgage provided the mortgagor was Standard Bank. In exchange for an amount up to $237,000, Marquette National Bank was given a security interest in the property. Standard Bank was the sole signatory on the mortgage.

¶ 5 The mortgage contained an exculpatory clause executed by Standard Bank. The exculpatory clause provided in full:

“This MORTGAGE is executed by STANDARD BANK & TRUST COMPANY, not personally but as Trustee as aforesaid in the exercise of the power and authority conferred upon and vested in it as such Trustee (and said STANDARD BANK & TRUST COMPANY, hereby warrants that it possesses full power and authority to execute this instrument), and it is expressly understood and agreed that nothing herein or in said Note contained shall be construed as creating any liability on the said Trustee or on said STANDARD BANK AND TRUST COMPANY personally to pay the said Note or any interest that may accrue thereon, or any indebtedness accruing hereunder, or to perform any covenant either express or implied herein contained, or on account of any warranty or indemnification made hereunder, all such liability, if any, being expressly waived by Mortgagee and by every person now or hereafter claiming any right or security hereunder, and that so far as the Trustee and its successors and said STANDARD BANK & TRUST COMPANY personally are concerned, the legal holder or holders of said Note and the owner or owners of any indebtedness accruing hereunder should look solely to the premises hereby conveyed for the payment thereof, by the enforcement of the lien hereby created, in the manner herein and in said

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Note provided or by action to enforce the personal liability of any guarantor, if any.”

¶ 6 The note was executed on June 9, 2009, and signed by Muraida and Standard Bank. The note provided Muraida would not be personally liable for the amounts due on the note; instead the future sale of the property itself would be payment of the note. Sale of the property through the lender would only occur upon Muraida's death, if all of Muraida's title in the property were transferred, or if Muraida failed to use the property as her principal residence for more than 12 consecutive months.

¶ 7 On July 19, 2011, Standard Bank, with leave of court, filed an answer to the complaint and a counterclaim. Standard Bank asserted that it entered into a consumer credit transaction with Financial Freedom's predecessor in interest, Marquette National Bank. Standard Bank alleged Financial Freedom failed to deliver material disclosures to Standard Bank as required by TILA. Standard Bank also asserted Financial Freedom failed to respond to the notice of rescission it sent on June 2, 2011, in violation of section 1635 of TILA. 15 U.S.C. § 1635 (2006).³ Standard Bank sought rescission of the loan, termination of the security interest, statutory damages of $4,000 for the disclosure violations, statutory damages of $4,000 for failure to respond to the rescission notice, return of the loan proceeds, and reasonable attorney fees.

¶ 8 On August 9, 2011, Financial Freedom filed a combined motion under section 2–615 and 2–619 of the Code to dismiss Standard Bank's counterclaim. 735 ILCS 5/2–619.1 (West 2010).

¶ 9 On November 2, 2011, OneWest Bank, FSB was allowed to substitute as party plaintiff.⁴

¶ 10 On January 5, 2012, the circuit court conducted a hearing and entered an order which stated, “It is hereby ordered that Defendant Standard Bank and Trust Company, as Trustee u/t/a dated 03–18–1991 a/k/a Trust No. 5193's Counterclaim is dismissed with prejudice.” The order did not indicate under which section of the Code the motion was granted.⁵

¶ 11 On February 12, 2012, Financial Freedom filed a motion to voluntarily dismiss the foreclosure complaint. On March 2, 2012, the circuit court dismissed the foreclosure action with prejudice.⁶ This appeal was timely filed on March 30, 2012. Accordingly, we have jurisdiction pursuant to Illinois Supreme Court Rule 301 (eff. Feb. 1, 1994).

¶ 12 ANALYSIS

¶ 13 Standard Bank asserts three issues on appeal: (1) the circuit court erred in dismissing the counterclaim because Standard Bank, as a land trust, has a right to rescind the consumer credit transaction

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under TILA; (2) it timely exercised its right to rescind the loan; and (3) it has a contractual right to rescind the transaction. Financial Freedom argues Standard Bank's counterclaim failed to state a cause of action under TILA, as it contains legal conclusions and did not allege any facts which would establish it is entitled to rescission. Particularly, Standard Bank cannot allege it is a consumer under TILA because Standard Bank is a land trust and not a consumer. Financial Freedom further contends Standard Bank cannot allege the property is its principal dwelling. Lastly, Financial Freedom asserts Standard Bank was not a party to the loan transaction and therefore has no right to rescind.

¶ 14 Standard Bank's counterclaim was dismissed pursuant to a motion brought under section 2–619.1 of the Code. 735 ILCS 5/2–619.1 (West 2010). This section permits section 2–615 and section 2–619 motions to be filed together as a single motion, but the combined motion shall be divided into parts which are limited to and specify the single section of the Code under which relief is sought. 735 ILCS 5/2–619.1 (West 2010). In this case, the circuit court did not indicate under which section of the statute it was dismissing Standard Bank's counterclaim. Thus, we note a trial court may be affirmed on any basis that appears in the record. Gunthorp v. Golan, 184 Ill.2d 432, 438, 235 Ill.Dec. 21, 704 N.E.2d 370 (1998). Under either section 2–615 or 2–619, our review is de novo. Mauvais–Jarvis v. Wong, 2013 IL App (1st) 120070, ¶ 64, 370 Ill.Dec. 98, 987 N.E.2d 864. De novo consideration means we perform the same analysis that a trial court would perform. Khan v. BDO Seidman, LLP, 408 Ill.App.3d 564, 578, 350 Ill.Dec. 63, 948 N.E.2d 132 (2011).

¶ 15 A motion to dismiss pursuant to section 2–619 of the Code admits the legal sufficiency of a plaintiff's complaint but raises defects, defenses, or other affirmative matters appearing on the face of the complaint or which are established by external submissions acting to defeat the complaint's allegations. 735 ILCS 5/2–619 (West 2010) ; ...