First Bank of Highland Park v. Sklarov

• Decision Date: 18 September 2019
• Docket Number: No. 2-19-0210,2-19-0210
• Citation: 2019 IL App (2d) 190210,137 N.E.3d 218,434 Ill.Dec. 637
• Parties: FIRST BANK OF HIGHLAND PARK, Plaintiff-Appellee, v. Vladimir SKLAROV, a/k/a Val Sklarov; Chicago Title Land Trust Company, as Trustee Under Trust Agreements Dated November 1, 1999, a/k/a Trust No. 1107654, February 15, 2001, a/k/a Trust No. 9810, and January 20, 2000, a/k/a Trust No. 1108013; Sharon Sklarov; BMO Harris Bank, N.A.; Deborah S. Kimelman; and Unknown Owners and Nonrecord Claimants, Defendants (Vladimir Sklarov, Defendant-Appellant).
• Court: United States Appellate Court of Illinois

2019 IL App (2d) 190210

137 N.E.3d 218

434 Ill.Dec. 637

FIRST BANK OF HIGHLAND PARK, Plaintiff-Appellee,

v. Vladimir SKLAROV, a/k/a Val Sklarov; Chicago Title Land Trust Company, as Trustee Under Trust Agreements Dated November 1, 1999, a/k/a Trust No. 1107654, February 15, 2001, a/k/a Trust No. 9810, and January 20, 2000, a/k/a Trust No. 1108013; Sharon Sklarov; BMO Harris Bank, N.A.; Deborah S. Kimelman; and Unknown Owners and Nonrecord Claimants, Defendants(Vladimir Sklarov, Defendant-Appellant).

No. 2-19-0210

Appellate Court of Illinois, Second District.

Opinion filed September 18, 2019

Michael T. McCracken, of Chicago, for appellant.

Thomas J. Dillon, Wendy Kaleta Gattone, Nicholas S. Maragos, and Kyle T. Dillon, of McFadden & Dillon, P.C., of Chicago, for appellee.

JUSTICE SCHOSTOK delivered the judgment of the court, with opinion.

¶ 1 In this mortgage foreclosure case, the plaintiff, First Bank of Highland Park (Bank), moved to be appointed the mortgagee in possession pursuant to section 15-1701(b)(2) of the Illinois Mortgage Foreclosure Law (Foreclosure Law) ( 735 ILCS 5/15-1701(b)(2) (West 2016)). The defendant, Vladimir Sklarov, opposed the appointment on the basis that (among other things) the property was residential real estate and thus the statute favored maintaining him in possession. The trial court found that the property was not residential and thus the presumption in favor of Sklarov did not apply, and it granted the Bank's motion. Sklarov appeals ( Ill. S. Ct. R. 307(a)(4) (eff. Nov. 1, 2017)), and we affirm.

¶ 2 I. BACKGROUND

¶ 3 In 2011, a land trust, of which Sklarov was the beneficiary, obtained a mortgage on the property located at 460 Hunter Lane in Lake Forest (Property). Sklarov signed the promissory note secured by the mortgage. He also signed later promissory notes associated with the refinancing of the debt. Sklarov ceased making payments on the debt, and on October 17, 2016, the Bank filed this foreclosure action.

¶ 4 Sklarov traveled extensively for work, and the last date on which he resided at the property is not contained in the record. An affidavit by Bank employee Anne O'Connor¹ stated that, before the foreclosure action was filed, Sklarov informed the Bank that he was residing in Europe. It is undisputed that Sklarov has not resided in Illinois or at the Property since before the foreclosure action was filed and that a tenant named Ryan Eagle was residing at the Property when the action was filed. (Eagle was initially named as a defendant in the foreclosure action. He was dismissed from the case after he moved out.) At some point between 2014 and the filing of the foreclosure action, Sklarov and his wife, Sharon, were divorced. Pursuant to an order entered in the dissolution case, Sharon was to receive any rents generated by the Property.

¶ 5 On October 31, 2018, the Bank filed a motion pursuant to section 15-1701(b)(1) of the Foreclosure Law ( 735 ILCS 5/15-1701(b)(1) (West 2016)) to be appointed mortgagee in possession of the Property. Section 15-1701(b) sets out two different presumptions depending on whether the property at issue is "residential real estate":

"(b) Pre-Judgment. Prior to the entry of a judgment of foreclosure:

(1) In the case of residential real estate, the mortgagor shall be entitled to possession of the real estate except if (i) the mortgagee shall object and show good cause, (ii) the mortgagee is so authorized by the terms of the mortgage or other written instrument, and (iii) the court is satisfied that there is a reasonable probability that the mortgagee will prevail on a final hearing of the cause, the court shall upon request place the mortgagee in possession. * * *

(2) In all other cases, if (i) the mortgagee is so authorized by the terms of the mortgage or other written instrument, and (ii) the court is satisfied that there is a reasonable probability that the mortgagee will prevail on a final hearing of the cause, the mortgagee shall upon request be placed in possession of the real estate, except that if the mortgagor shall object and show good cause, the court shall allow the mortgagor to remain in possession." Id. § 15-1701(b).

Thus, if the property is residential, under subsection (b)(1) the mortgagor (borrower) is entitled to remain in possession unless the mortgagee (lender) meets its burden of showing good cause to be placed in possession. Nonresidential real estate is governed by subsection (b)(2). Under that provision, the lender is entitled to be placed in possession upon its request unless the borrower shows good cause why it should not be.

¶ 6 Although the Bank's motion for appointment was brought under subsection (b)(1) (which pertains to residential real estate), the body of the motion argued that the Property was not residential, because Sklarov was not living there and the Property was rented to someone else when the foreclosure action was filed. The Bank cited section 15-1219 of the Foreclosure Law, which defines "residential real estate" to include

"any real estate, * * * which * * * is occupied as a principal residence either (i) if a mortgagor is an individual, by that mortgagor, that mortgagor's spouse or that mortgagor's descendants, or (ii) if a mortgagor is a trustee of a trust * * *, by a beneficiary of that trust." Id. § 15-1219.

The Bank argued that Sklarov (the mortgagor and trust beneficiary) was not living at the Property, and neither were his spouse or children. The Bank also submitted an affidavit from the employee handling the file on the Property at the time, Joseph K. Kreisel, stating that the Bank had been told by the Village of Lake Forest that water to the home on the Property had been cut off. The Bank argued that this constituted good cause for it to be placed in possession.

¶ 7 Sklarov responded with a brief and affidavit of his own, explaining that the water was off to avoid burst pipes and that Sklarov had people "monitoring" the home, and arguing that the Bank had not shown good cause to be appointed mortgagee in possession. In its reply, the Bank attached the O'Connor affidavit, reciting the facts noted above (supra ¶ 4).

¶ 8 At the hearing on the motion, the trial court noted that, given the Bank's position that the Property was not residential and that Sklarov therefore bore the burden of showing why the Bank should not be appointed, the Bank should have cited subsection (b)(2) in its motion, not subsection (b)(1). The Bank then asked to withdraw its motion and file a new motion under subsection (b)(2). The trial court granted this request and did not rule on the withdrawn motion.

¶ 9 The next day, the Bank filed a new motion for appointment, citing subsection (b)(2). The motion relied on the two affidavits it had previously submitted. In response, Sklarov argued that, under the "mend the hold" doctrine, the Bank should not be permitted to file the new motion under subsection (b)(2), because it brought its earlier motion under subsection (b)(1) and thus implicitly conceded that the Property was residential real estate. As noted, Sklarov also argued that the O'Connor affidavit should be stricken. As for whether the Bank had shown good cause to be appointed, Sklarov attached a new affidavit, stating that the home on the Property was his only home in the United States and that he and his children stayed there when they were in the United States. He argued that the Bank was not likely to prevail at trial.

¶ 10 After hearing oral arguments, the trial court granted the Bank's motion for appointment, finding that the Property was "not residential property as defined by 735 ILCS 5/15-1219 due to the Property having been previously rented." This appeal followed.

¶ 11 II. ANALYSIS

¶ 12 On appeal, Sklarov argues that the trial court erred by relying on the fact that the Property had been rented out and that the Bank failed to meet its burden of showing that the Property was not residential real estate. Therefore, he argues, possession was governed by subsection (b)(1), not (b)(2). Sklarov also argues that the trial court should not have permitted the Bank to withdraw its first motion for appointment under subsection (b)(1) and file a new one pursuant to the more favorable subsection (b)(2). We address this latter argument first.

¶ 13 A. Withdrawal of First Motion and Filing of Second One

¶ 14 Sklarov argues that, because the first motion for appointment had been fully briefed and oral argument had begun, the Bank should not have been allowed to withdraw that motion and file a new one. In support of his argument, Sklarov cites the "mend the hold" doctrine:

"The mend the hold doctrine, which Illinois has recognized for over a century, provides that ‘[w]here a party gives a reason for his conduct and decision touching anything involved in a controversy, he [or she] cannot, after litigation has begun, change his [or her] ground and put his [or her] conduct upon another and different consideration. He [or she] is not permitted thus to amend his [or her] hold. He [or she] is estopped from doing it by a settled principle of law.’ [Citation.] This principle typically applies in contract cases to prevent a party from trying to evade performance of contractual duties for one reason and then, in the middle of litigation, switching to another reason. It is an equitable doctrine ‘developed to redress unfair and arbitrary conduct of the repudiating party.’ [Citations.]" (Internal quotation marks omitted.) 1002 E. 87th Street, LLC v. Midway Broadcasting Corp. , 2018 IL App (1st) 171691, ¶ 20, 424 Ill.Dec. 149, 107 N.E.3d 868 (quoting Trossman v. Philipsborn , 373 Ill. App. 3d 1020, 1042, 1044, 312 Ill.Dec. 156, 869 N.E.2d 1147 (2007) ).

The doctrine prevents a party from unfairly asserting a completely different argument or reason for its actions halfway through litigation after it comes to believe that its initial argument will not be successful. Trossman , 373 Ill. App. 3d at 1042, 312 Ill.Dec. 156, 869 N.E.2d 1147.

¶ 15 Although the...