Norman v. U.S. Bank Nat'l Ass'n

Decision Date30 June 2020
Docket NumberNo. 1-19-0765,1-19-0765
Citation177 N.E.3d 733,448 Ill.Dec. 677,2020 IL App (1st) 190765
Parties Geneva NORMAN, Plaintiff-Appellee, v. U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET MORTGAGE INVESTMENTS II, INC., Bear Stearns Alt-A Trust, Mortgage Pass-Through Certificates Series 2006-3, Defendant-Appellant.
CourtUnited States Appellate Court of Illinois

Harry N. Arger, Rosa M. Tumialán, and Margaret Rhiew, of Dykema Gossett PLLC, of Chicago, for appellant.

Lawyers' Committee for Better Housing, of Chicago (Julie Pautsch, Frank G. Avellone, and Aileen Flanagan, of counsel, and Caelin Miltko and Will Cronin, law students), for appellee.

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

¶ 1 The defendant purchaser of a foreclosed Chicago apartment appeals from orders granting summary judgment, statutory damages, and attorney fees on the existing tenant's claim that the new owner failed to comply with an ordinance requiring it to offer relocation assistance or to continue the tenancy within 63 days of acquiring the property. See Chicago Municipal Code § 5-14-050 (amended Apr. 15, 2015). The new owner argues that the tenant waived her statutory claim by accepting the lease extension she was offered 187 days after the property changed hands. The new owner also contends that substantial compliance with the ordinance, rather than strict compliance, suffices and that the offer on the 187th day was substantial compliance. The new owner is also challenging the amount of attorney fees.

¶ 2 We have jurisdiction over the new owner's appeal from a final judgment of the trial court pursuant to Illinois Supreme Court Rule 301 (eff. Feb. 1, 1994) and Rule 303 (eff. July 1, 2017).

¶ 3 I. BACKGROUND

¶ 4 Geneva Norman, the plaintiff-appellee, became a tenant of 655 West Irving Park Road, Unit #5202, Chicago, in 1993. She regularly renewed her lease, even after the apartment building converted to condominiums in 2003. Norman and her family were residing in the apartment in late 2014, when the condominium association obtained a court order assigning the unit owner's right to Norman's rent payments directly to the association. Shortly after that, the association entered into a month-to-month written lease with Norman, at a rate of $2187 per month. In early 2015, unbeknownst to Norman, the apartment unit became the subject of foreclosure proceedings. After proving its claim, the foreclosure plaintiff also became the owner of the property pursuant to a judicial sale that was approved on October 23, 2015. That plaintiff—U.S. National Bank Association, as Trustee for Structured Asset Mortgage Investments II, Inc., Bear Stearns Alt-A Trust, Mortgage Pass-Through Certificates Series 2006-3—refers to itself as "U.S. Bank," and we will do the same. U.S. Bank communicated with Norman after acquiring the property, but it was not until more than six months after the judicial sale that U.S. Bank offered to continue Norman's tenancy or provide the $10,600 relocation assistance that is set out in Chicago's "Protecting Tenants in Foreclosed Rental Property Ordinance." Chicago Municipal Code, § 5-14-010 (added June 5, 2013). The enactment is also known as the "Keep Chicago Renting Ordnance." After Foreclosure for Chicago Residents , Ill. Legal Aid Online, https://www.illinoislegalaid.org/legal-information/after-foreclosure-chicago-residents (last visited June 17, 2020) [https://perma.cc/JFS5-3RJ5]. Norman sued U.S. Bank for failing to comply with the ordinance and prevailed. Before addressing U.S. Bank's arguments on appeal, we briefly summarize the ordinance and the facts that led to the judgment in Norman's favor.

¶ 5 The ordinance was first enacted in mid-2013 due to the national mortgage foreclosure crisis that began in 2006 and what became the common practice of foreclosing lenders to quickly and indiscriminately evict any tenants. Chicago Municipal Code § 5-14-010 (added June 5, 2013); Tenants in Foreclosure , Ill. Legal Aid Online, https://www.illinoislegalaid.org/legalinformation/tenants-foreclosure (last visited June 17, 2020) [https://perma.cc/9ZY7-HJZC]; Protecting Tenants in Foreclosed Rental Property Ordinance , Chi., https://www.chicago.gov/city/en/depts/bldgs/provdrs/inspect/alerts/2013/sep/_protecting_tenantsinforeclosedrentalpropertyord.html (last visited June 17, 2020) [https://perma.cc/QKA3-TGCA].

¶ 6 The ordinance was amended in August 2015—shortly before U.S. Bank's purchase of the property in October 2015—to provide a specific timeline in which the new owner and the existing tenant are to communicate with each other and to require that the new owner provide a standardized information disclosure form about the renter's tenancy. More specifically, the ordinance specifies that the tenant of a foreclosed property "shall" be given notice of the change of ownership within 21 days of the change or within seven days of determining the tenant's identity. Chicago Municipal Code § 5-14-040(a) (amended Apr. 15, 2015). The new owner must deliver or mail the notice and also post the notice on the primary entrance of the foreclosed property. Chicago Municipal Code § 5-14-040(a), (c) (amended Apr. 15, 2015). Until that notice is given, the owner cannot collect rent or terminate a tenant's lease for failure to pay rent. Chicago Municipal Code § 5-14-040(d) (amended Apr. 15, 2015). The new owner is also required to pay a "qualified tenant" a one-time relocation assistance fee of $10,600, unless the new owner offers to renew or extend the rental agreement at a rate that is no more than 102% of the current annual rental rate. Chicago Municipal Code § 5-14-050(a), (b) (amended Apr. 15, 2015). If the owner elects to offer a lease, the owner must continue to offer renewals or extensions with rent increases of no more than 2% per year until the owner sells the property to a "bona fide third-party purchaser." Chicago Municipal Code § 5-14-050(g) (amended Apr. 15, 2015). A "qualified tenant" is an individual (1) who was using the property as his or her primary residence on the day ownership changed hands, (2) whose household does not include "the mortgagor, or any child, spouse, or parent of the mortgagor," (3) who entered into the rental agreement through "an arms-length transaction," and (4) whose rent is neither "substantially less than fair market rent" nor reduced by a government subsidy. Chicago Municipal Code § 5-14-020 (amended Apr. 15, 2015). To enable the owner to determine whether the tenant is "qualified tenant," the ownership change notice is to be accompanied by a "Tenant Information Disclosure Form," in the format prescribed by Chicago's commissioner of business affairs and consumer protection, and within 21 days of receipt, the tenant is to complete and return the form. Chicago Municipal Code § 5-14-040(b) (amended Apr. 15, 2015). The form includes a blank space for the owner to state the date the document is sent to the tenant and blank spaces in "Section 1" to be filled in with the owner or agent's name, return address, and telephone number so that the tenant may "complete Section 2 and return this Form to the name and address indicated in Section 1." Tenant Information Disclosure Form , Chi., https://www.chicago.gov/content/dam/city/depts/bacp/Consumer% 20Information/keepchicagorentingdisclosureenglish.pdf (last visited June 17, 2020) [https://perma.cc/V47X-KPJM]. Regardless of whether the tenant returns the form, the next step in the process is for the owner or agent to communicate whether the tenancy may be continued. The ordinance provides:

"No later than 21 days after the date upon which the tenant returns or should have returned the Tenant Information Disclosure Form pursuant to Section 5-14-040, the owner shall send a written: (1) notice to a Qualified tenant advising the qualified tenant that the owner is paying the required relocation fee: or (ii) offer to extend or renew the qualified tenant's rental agreement, or provide a rental agreement for a replacement rental unit, whichever is applicable, with an annual rental rate in an amount that complies with subsection (a). All notices or offers shall clearly show the date the offer or notice was sent." Chicago Municipal Code § 5-14-050(a)(3) (amended Apr. 15, 2015).

The tenant then has 21 days after receipt to accept (or in circumstances not relevant here, 42 days to accept). Chicago Municipal Code § 5-14-050(a)(3) (amended Apr. 15, 2015). Thus, the ordinance provides a series of 21-day periods in which the parties are to communicate with each other about their new relationship and whether the tenancy will persist despite the change of owners.

¶ 7 The Chicago City Council provided significant penalties for violations of the ordinance, including damages, fines, and injunctive relief. Chicago Municipal Code § 5-14-050 (amended Apr. 15, 2015) (tenant damage claims); § 5-14-90 (amended Apr. 15, 2015) (enforcement through injunction or other suit); § 5-14-100 (added June 5, 2013) (daily fines). The owner's failure to pay for relocation or offer the tenant the option to renew or extend the tenancy permits the qualified tenant to "bring a private right of action in a court of competent jurisdiction," where, "[i]n addition to any other fine or penalty provided," the prevailing plaintiff "shall be awarded damages in an amount equal to two times the relocation assistance fee" (Chicago Municipal Code § 5-14-050(f) (amended Apr. 15, 2015)) and "shall be entitled to recover * * * reasonable attorney's fees" (Chicago Municipal Code § 5-14-070 (added June 5, 2013)). An award of double damages does not "preclude the qualified tenant from recovering other damages to which he may be entitled under [the ordinance]." Chicago Municipal Code § 5-14-050(f) (amended Apr.ug. 15, 2015). "The rights, obligations and remedies set forth in [the ordinance] shall be cumulative and in addition to any others available at law or in equity." Chicago Municipal Code § 5-14-070 (added June...

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