Hatchett v. W2X, Inc.

• Citation: 993 N.E.2d 944,2013 IL App (1st) 121758,373 Ill.Dec. 385
• Decision Date: 21 August 2013
• Docket Number: Docket No. 1–12–1758.
• Parties: Helen HATCHETT, Plaintiff–Appellant, v. W2X, INC., Warren Jackson, Kendra Thomas, Mortgage Electronic Registration Systems, Inc, and Saxon Mortgage Services, Inc., and Unknown Owners and Nonrecord Claimants, Defendants. (Avalon Betts–Gaston and JP Morgan Chase Bank, N.A., a/t/f holders of Master Adjustable Rate Mortgages Trust 2005–8, Defendants–Appellees).
• Court: United States Appellate Court of Illinois

2013 IL App (1st) 121758
993 N.E.2d 944
373 Ill.Dec. 385

Helen HATCHETT, Plaintiff–Appellant,
v.
W2X, INC., Warren Jackson, Kendra Thomas, Mortgage Electronic Registration Systems, Inc, and Saxon Mortgage Services, Inc., and Unknown Owners and Nonrecord Claimants, Defendants.
(Avalon Betts–Gaston and JP Morgan Chase Bank, N.A., a/t/f holders of Master Adjustable Rate Mortgages Trust 2005–8, Defendants–Appellees).

Docket No. 1–12–1758.

Appellate Court of Illinois,
First District, First Division.

June 24, 2013.
Rehearing Denied Aug. 21, 2013.

[993 N.E.2d 948]

Legal Assistance Foundation, of Chicago (Michelle A. Weinberg, of counsel), for appellant.

Lillig & Thorsness, Ltd., of Oak Brook (Russell R. Custer, Adrian Mendoza, and Edward R. Sherman, of counsel), for appellee bank of New York Mellon Trust Company.

Avalon Betts-Gaston, of Matteson, appellee pro se.

OPINION
Justice CUNNINGHAM delivered the judgment of the court, with opinion.

[373 Ill.Dec. 389]¶ 1 This appeal arises from the November 1, 2010 order entered by the circuit court of Cook County, which granted a directed finding against the plaintiff, Helen Hatchett (Helen), and in favor of the defendants, Avalon Betts–Gaston (Attorney Gaston) ¹ and The Bank of New York Mellon Trust Company (BONY), and which entered a default judgment against Warren Jackson (Jackson) ² and in favor of Helen in the amount of $121,158.69. This appeal also arises from the circuit court's February 10, 2011 order denying Helen's motion to reconsider its November 1, 2010 ruling. On appeal, Helen argues that the circuit court erred in granting a directed finding in favor of BONY and Attorney Gaston. For the following reasons, we affirm in part and reverse in part the judgment of the circuit court of Cook County, and remand the cause for further proceedings.

¶ 2 BACKGROUND

¶ 3 On August 26, 2005, a foreclosure action was filed against Helen in the circuit court of Cook County ³ for a mortgage loan pertaining to her house located at 10458 South Vernon Avenue in Chicago, Illinois (the property), where she had lived since 1970. In September 2005, Helen received a solicitation flyer from W2X, Inc. (W2X),⁴ a company operated by Jackson, [373 Ill.Dec. 390]

[993 N.E.2d 949]

which purportedly offered to save her home from foreclosure. Jackson's telephone number was listed on the flyer. Helen, a senior citizen with limited education, contacted Jackson for help. The next day, Jackson visited Helen's home, during which Helen signed documents and gave Jackson a copy of her driver's license. Helen did not know what documents she had signed. According to Helen, Jackson explained that his name would be on the title of her house, that Helen could “have the house back” in her name within a year, that Jackson “would deal with the other lawyer on foreclosure,” and that Helen would make no payments on her loans for one year. Jackson allegedly assured Helen that she did not need to read the forms. However, Helen knew that some of the signed documents pertained to “some kind of contract.”

¶ 4 On September 26, 2005, Attorney Gaston, who owned a real estate law practice, received a facsimile of a real estate contract bearing Helen's signature as the seller of the property. Kendra Thomas (Kendra) ⁵ was listed on the real estate contract as the buyer of the property. Attorney Gaston then reviewed the real estate contract to “make sure that everything was filled out.” According to Attorney Gaston's trial testimony, she often received client referrals from Jackson in 2005, and that either Jackson or a realtor named Shunte Thomas (Shunte) referred Helen's real estate transaction to her. Attorney Gaston then spoke with Helen by telephone, during which they discussed the broad terms of the real estate contract, and Attorney Gaston asked Helen whether she had any questions about it. However, Attorney Gaston did not make any notes contemporaneous with the telephone conversation. Attorney Gaston had an assistant at her law office whose responsibility included contacting clients, informing them of closing dates and locations, and performing other office tasks. Based on the telephone conversation, it was clear to Attorney Gaston that Helen intended to convey her property. On October 5, 2005, at approximately 10 p.m., Attorney Gaston, as counsel for Helen, prepared a warranty deed which described the terms of Helen's conveyance of the property to Kendra. Attorney Gaston also prepared other closing documents on behalf of Helen, including an affidavit of title and a bill of sale. A power of attorney was also prepared as a “backup” because Attorney Gaston's assistant had informed her that Helen would be unable to attend the closing due to illness. On October 6, 2005, Attorney Gaston gave the closing documents to her assistant to acquire Helen's signature. Later that day, on October 6, 2005, Jackson arrived at Attorney Gaston's law office with the original closing documents, which had been prepared by Attorney Gaston and given to her assistant earlier that day. Each of those closing documents bore what appeared to be Helen's signature. Jackson also physically produced Helen's driver's license. According to Attorney Gaston, Jackson informed her that Helen was waiting in the car, and that she was ill and could not climb the stairs to Attorney Gaston's third-floor office. Attorney Gaston testified at trial that she did not go downstairs to see Helen, and trusted Jackson's information to be the truth. Attorney Gaston, who was also a registered notary public in 2005, then notarized the documents after comparing the signatures on the documents with Helen's signature on her driver's license. It is stipulated by the parties that Attorney Gaston's assistant notarized the power of attorney purportedly signed by Helen.

[993 N.E.2d 950]

[373 Ill.Dec. 391]¶ 5 On October 7, 2005, a closing was held for the property at issue during which Attorney Gaston purportedly acted as counsel on behalf of Helen. The contract sales price for the property was $145,000. The buyer of the property, Kendra, executed two mortgage loans in the total amount of $137,750 from mortgage lender, American Home Mortgage Corp. (AHMC), an entity doing business as American Brokers Conduit. It is stipulated by the parties that Mortgage Electronic Registration Systems, Inc. (MERS),⁶ as “nominal mortgagee” of AHMC, was the record mortgagee on the subject property with the Cook County recorder of deeds. It was further stipulated by the parties that MERS later assigned its interest in the mortgage loans at issue to American Home Mortgage Servicing, Inc. (AHMS),⁷ which subsequently assigned its interest in the mortgage loans to BONY in July 2010. At the time of the October 7, 2005 closing, the total payoff or redemption amount owed on Helen's home was approximately $12,635, plus $4,238.65 owed for a lien on the property and $1,091.01 owed for property taxes. As a result of the sale of the property to Kendra, Helen's debt on her home was satisfied by a portion of the sale proceeds. The resultant net sale proceeds was then issued by the closing agent for Kendra's mortgage lender in the form of two checks made payable to Helen in the amounts of $117,959.50 and $3,199.19. Attorney Gaston gave the check made payable to Helen in the amount of $117,959. 50 to Shunte, whom Attorney Gaston knew worked with Jackson. It is undisputed, however, that both of these checks were deposited into the banking account of W2X, the company operated by Jackson, and that Helen only received $3,000 from Jackson in connection with the sale of her home. Attorney Gaston received fees pertaining to the closing of the subject mortgage loan transaction in the amount of $1,186, which included “title services” fees received as “issuing agent” and fees earned as the seller's attorney. Subsequently, the warranty deed transferring record title of the property from Helen to Kendra was recorded with the Cook County recorder of deeds.

¶ 6 On August 7, 2006, Helen filed a complaint for quiet title against W2X, Jackson, Kendra, MERS, American Brokers Conduit, Attorney Gaston and “unknown owners and nonrecord claimants,” alleging that the defendants engaged in fraudulent actions and seeking a declaration that the warranty deed conveying property title to Kendra was in fact an equitable mortgage and that the subsequent mortgage on the property was void. On August 22, 2006, a lis pendens relating to Helen's cause of action was recorded with the Cook County recorder of deeds.

¶ 7 On June 11, 2007, an order of default was entered against Jackson. On December 22, 2009, Helen filed an amended complaint for quiet title, which omitted American Brokers Conduit as a named defendant, but added JP Morgan Chase Bank, N.A.(Chase Bank),⁸ and Saxon [373 Ill.Dec. 392]

[993 N.E.2d 951]

Mortgage Services, Inc. (Saxon),⁹ as named defendants.

¶ 8 On March 16, 2010, Helen filed an 11–count second amended complaint for quiet title and other relief (second amended complaint) against W2X, Jackson, Kendra, MERS, Attorney Gaston, Chase Bank, Saxon, and “unknown owners and nonrecord claimants.” Count I of the second amended complaint alleged quiet title against Kendra and “unknown owners and nonrecord claimants,” arguing that the warranty deed transferring title of the property from Helen to Kendra should be properly construed as the granting of an equitable mortgage. Count II alleged quiet title against Kendra, and mortgagees Chase Bank and Saxon, arguing that Kendra's attempt to encumber the property with a mortgage loan was void and that Chase Bank and Saxon had notice that Kendra held only an equitable mortgage interest in the property. Count III alleged that Jackson, W2X and Kendra violated the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/2 (West 2008)). Count IV alleged common law fraud against Jackson, W2X and Kendra, arguing that their fraudulent misrepresentations and omissions induced Helen to enter into...