Financial Freedom v. Kirgis

• Decision Date: 28 September 2007
• Docket Number: No. 1-06-0523.,1-06-0523.
• Citation: 877 N.E.2d 24
• Parties: FINANCIAL FREEDOM, f/k/a Unity, Mortgage Corporation, d/b/a The Reverse Mortgage Company Plaintiff-Appellee, v. Mabel A. KIRGIS, United States of America Department of Housing and Urban Development, Unknown Heirs and Legatees of Mabel A. Kirgis, Raymond Kirgis Jr., Mary Scholze, Patricia Bishop, Unknown Owners and Non-Record Claimants, Defendants-Appellants.
• Court: United States Appellate Court of Illinois

877 N.E.2d 24

FINANCIAL FREEDOM, f/k/a Unity, Mortgage Corporation, d/b/a The Reverse Mortgage Company Plaintiff-Appellee, v. Mabel A. KIRGIS, United States of America Department of Housing and Urban Development, Unknown Heirs and Legatees of Mabel A. Kirgis, Raymond Kirgis Jr., Mary Scholze, Patricia Bishop, Unknown Owners and Non-Record Claimants, Defendants-Appellants.

No. 1-06-0523.

Appellate Court of Illinois, First District, Sixth Division.

September 28, 2007.

Susan M. Rentscheler, Law Offices of Susan M. Rentscheler, Chicago, for Appellant.

E. William Maloney, Maloney, Craven & Longstreet, P.C., Des Plaines, for Appellee.

Justice JOSEPH GORDON delivered the opinion of the court:

Plaintiff, Financial Freedom, f/k/a Unity Mortgage Corp., d/b/a/ the Reverse Mortgage Co., filed a complaint to foreclose a reverse mortgage against numerous defendants including the deceased mortgagor/borrower, Mabel A. Kirgis (Mabel), and her son, Raymond Kirgis Jr. (Raymond). Raymond filed a motion to dismiss pursuant to section 2-619 of the Code of Civil Procedure (Code) (735 ILCS 5/2-619(6) (West 2002)) contending that the circuit court lacked subject matter jurisdiction because the foreclosure action had been filed against a deceased person and because it was time barred by the statute of limitations promulgated in section 18-12 of the Probate Act of 1975 (755 ILCS 5/18-12 (West 2002)). The circuit court denied Raymond's motion to dismiss but certified the questions presented in the motion for interlocutory appeal (155 Ill.2d R. 308). On review, this court denied Raymond leave to appeal. Subsequently, Raymond answered plaintiff's complaint and raised three affirmative defenses: (1) that the circuit court lacked subject matter jurisdiction because plaintiff filed a suit against a deceased person; (2) that under section 18-12 of the Probate Act, the foreclosure action was barred because more than two years had passed since the decedent's death; and (3) that the mortgage was produced by fraud.¹ Plaintiff filed a motion for summary judgment arguing that there were no genuine issues of material fact as to any of Raymond's affirmative defenses, and the circuit court granted that motion. Raymond now appeals, contending (1) that his motion to dismiss should have been granted and (2) that plaintiff's motion for summary judgment should have been denied. For the reasons that follow, we affirm.

BACKGROUND

The record below reveals the following relevant facts and procedural history. On September 16, 2002, plaintiff, the mortgagee, filed a complaint to foreclose a reverse mortgage against, inter alia, Mabel and her son Raymond upon belief that he was one of her heirs.² According to the complaint, Mabel was the sole owner in fee simple of the real property known as 1244 Campbell Avenue, Chicago Heights, Illinois (property). The complaint alleged that Mabel executed a reverse mortgage instrument with plaintiff on May 9, 1997, securing a maximum of $184,500 in principal indebtedness with a pledge of the said property as collateral. According to the complaint, this mortgage instrument was recorded and registered with the Department of Housing and Urban Development on May 22, 1997. The complaint further alleged that the borrower was deceased and that, therefore, pursuant to paragraph 9(a) of the mortgage instrument "all sums owed were immediately due and payable," the principal balance on the note and mortgage being $84,385.19 plus interest, costs, advances and fees. Accordingly, the complaint requested, among other things, a judgement of foreclosure and sale and a personal judgment for deficiency in the event that the amount obtained through the foreclosure sale was insufficient to satisfy the debt.

In support of the allegations in the complaint, plaintiff attached a copy of the reverse mortgage instrument and the adjustable rate note. Pursuant to that instrument, plaintiff agreed to lend to Mabel the maximum amount of $184,500 in principal, from which Mabel could take advances and cash payouts during her lifetime, and which she was not obligated to repay until after she either sold her property or died.³ According to the instrument, in return Mabel "mortgag[ed], grant[ed], and convey[ed]" to plaintiff the said property. The reverse mortgage instrument was prepared by "Unity Mortgage Corp., d/b/a The Reverse Mortgage Co." Both the mortgage instrument and the adjustable rate note were signed by "Mabel A. Kirgis by Raymond W. Kirgis Jr., Attorney-in Fact."⁴ Additionally, the mortgage instrument was publically notarized by Kevin B. O'Rourke.

On October 21, 2002, defendant, Raymond, filed a motion to dismiss the complaint pursuant to section 2-619 of the Code, as against himself, Mabel, and "all unknown heirs and legatees of Mabel," contending that the circuit court lacked subject matter jurisdiction over the cause because the suit was filed against a dead person. According to that motion, the action was also time barred as it was filed on September 16, 2002, three years after the decedent mortgagor's death, in contravention of the two-year statute of limitations prescribed under section 18-12 of the Probate Act. In support of that contention, defendant attached the medical certificate of Mabel's death indicating that she had died on June 23, 1999.

On January 7, 2003, plaintiff filed a response to defendant's motion to dismiss contending that when it filed the complaint for foreclosure it was unaware of the mortgagor's death, and that it became aware of the mortgagor's death only after the process server was unable to serve process on her.⁵ In addition, plaintiff argued that the Probate Act's statute of limitations on claims applies only to the filing of claims seeking entry of a personal judgment, and not to foreclosure claims.

On March 4, 2003, the circuit court heard arguments and denied defendant's motion to dismiss. The circuit court also ruled that plaintiff was barred from any deficiency in the event that the foreclosure sale of the property was insufficient to satisfy its claims.

Upon defendant's subsequent motion, the circuit court certified the following question for interlocutory appeal:

"Does section 18-12 of the Probate Act, 755 ILCS 5/18-12, bar a mortgage foreclosure action on a secured lien where the sole mortgagor and sole obligor on the underlying promissory note died more than three years prior to the filing of the foreclosure action?"

This court, however, denied defendant leave to file that appeal. See Financial Freedom f/k/a Unity Mortgage Corp. d/b/a The Reverse Mortgage Co., v. Kirgis et al., No. 1-03-1849 (June 23, 2003).

On July 17, 2003, defendant filed an answer and raised three affirmative defenses to plaintiff's complaint. Defendant again contended that this action must be dismissed because (1) the court lacked subject matter jurisdiction where a party files suit against a deceased person; and (2) plaintiff's claim was time-barred by the two-year statute of limitations articulated in section 18-12 of the Probate Act. In addition, defendant asserted that the mortgage was procured by fraud. In support of this third affirmative defense, defendant alleged that the mortgage was "an integral part of a scheme brought by Senior Citizen's Remodeling, Inc., (SCR), to defraud the elderly." In support of this assertion, defendant argued that SCR came to Mabel's home, suggested certain repairs and improvements on her home, and recommended a reverse mortgage as the means of obtaining these repairs and improvements. According to defendant, SCR intended that Mabel rely on its statements and obtain the reverse mortgage. Defendant asserted that Mabel relied on SCR's assurances and borrowed money to make the repairs and improvements through a reverse mortgage agreement with plaintiff. According to defendant, SCR procured and used the plaintiff's predecessor mortgage company to finalize the transaction and to collect the payment. According to the record, the company that entered into the reverse mortgage agreement with Mabel was the "Unity Mortgage Co., d/b/a (doing business as) The Reverse Mortgage Co." It is unclear from the record whether plaintiff, which filed its claim as "Financial Freedom Senior Funding Corp. f/k/a (formally known as) Unity Mortgage Co., d/b/a The Reverse Mortgage Co." is the same as the original reverse mortgage company, merely acting under a new name, or is in fact a purchaser of the original mortgage company.

On October 27, 2004, defendant filed an additional section 2-619 motion to dismiss plaintiff's complaint based upon a purported settlement agreement reached by the parties. In support of this contention, defendant attached a letter dated August 11, 2004 from plaintiff's counsel indicating that he had received verbal confirmation that defendant would accept plaintiff's settlement proposal.⁶ On December 20, 2004, the circuit court voluntarily dismissed this section 2-619 motion.

On December 22, 2004, plaintiff, filed an amended complaint to foreclose mortgage solely in order to name Mary Scholze and Patricia Bishop as additional defendants, by "virtue of the fact that, upon information and belief, they are believed to be the heirs of Mabel A. Kirgis." The amended complaint also specifically alleged that Mabel did not execute the reverse mortgage instrument alone but, rather, that the instrument was executed on her behalf by her son Raymond.

On February 18, 2005, defendant filed an answer and affirmative defenses to plaintiff's amended complaint. Defendant admitted that the mortgage was executed by "Mabel A. Kirgis, by and through her agent-in-fact, Raymond Kirgis Jr.," and raised the exact same three affirmative defenses that he had raised in his answer to plaintiff's original complaint. (See above.)

On February 25, 2005, apparently without leave of court in presenting it, defendant also filed a counterclaim against plaintiff contending that plaintiff breached their settlement...