U.S. Bank Nat. Ass'n v. Sullivan-Moore

• Court: U.S. Court of Appeals — Seventh Circuit
• Writing for the Court: Ilana Diamond Rovner
• Citation: U.S. Bank Nat. Ass'n v. Sullivan-Moore, 406 F.3d 465 (7th Cir. 2005)
• Decision Date: 27 April 2005
• Docket Number: No. 04-2254.,No. 04-2968.,04-2254.,04-2968.
• Parties: U.S. BANK NATIONAL ASSOCIATION, N.D., Plaintiff, v. Mattie SULLIVAN-MOORE, Defendant-Appellee. Appeal of: Fisher & Fisher, P.C.

406 F.3d 465

U.S. BANK NATIONAL ASSOCIATION, N.D., Plaintiff, v. Mattie SULLIVAN-MOORE, Defendant-Appellee Appeal of: Fisher & Fisher, P.C.

No. 04-2254.

No. 04-2968.

United States Court of Appeals, Seventh Circuit.

Argued January 11, 2005.

Decided April 27, 2005.

Elizabeth K. Meyers, Fisher & Fisher, Chicago, IL, for Plaintiff.

Michael Resis (argued), O'Hagan, Smith & Amundsen, Chicago, IL, for Defendant-Appellee.

William J. Harte, Joan M. Mannix (argued), Harte & Associates, Chicago, IL, for Appellant Fisher & Fisher.

Before POSNER, MANION, and ROVNER, Circuit Judges.

ILANA DIAMOND ROVNER, Circuit Judge.

Fisher and Fisher, Attorneys at Law, P.C. earns its bread and butter representing mortgage companies and lending institutions in mortgage foreclosure cases, creditor bankruptcies, evictions, real estate closings, housing court, and housing related matters. By its own description, it is a high volume operation, receiving 10,000 to 12,000 cases each year, 4,000 to 5,000 of which are new foreclosure matters. The firm does not assign one attorney to handle a single case, but rather lawyers work on numerous files on a daily basis and several attorneys may work on any particular matter.

This approach to its caseload may have exacerbated the firm's mishandling of a foreclosure action against Mattie Sullivan-Moore, who has since died. Working on behalf of U.S. Bank National Association, N.D., Fisher and Fisher handled the foreclosure of Sullivan-Moore's home, located at 7744 South Carpenter Street, Chicago. The proceedings got off to a bad start, however, because the complaint misidentified Sullivan-Moore's common address as 7742 South Carpenter instead of 7744 South Carpenter. As a result of this error, Sullivan-Moore never received proper notice of the proceedings before a judgment of foreclosure was entered, her property was sold, and she was evicted. Although sympathetic to the initial error, the district court believed Fisher and Fisher had ample opportunity to rectify the problem before Sullivan-Moore was evicted. The district court thus imposed sanctions against Fisher and Fisher, and it appeals, contending that the sanctions were improperly imposed.

The underlying action stems from a $140,000 loan from U.S. Bank, taken out by Sullivan-Moore in 2001, when she was 69 years old. Although the loan was ultimately used to refinance Sullivan-Moore's home at 7744 South Carpenter, the loan application lists the property to be refinanced as 7742 (an adjacent property previously owned by her daughter). This may be why U.S. Bank listed the address as 7742 South Carpenter when it referred the mortgage to Fisher and Fisher for foreclosure the following year after Sullivan-Moore failed to make the mortgage payments. Relying on the referral from U.S. Bank, Fisher and Fisher attorney Cynthia Sutherin filed the foreclosure complaint in the district court in August 2002. The complaint contained the correct legal description of the property, but incorrectly listed the common address as 7742 South Carpenter. However, the consumer installment note and the mortgage papers attached to the complaint itself correctly identified the address as 7744 South Carpenter.

In spite of these documents reflecting the correct address, Fisher and Fisher continued to rely on the defective address it had listed in the complaint. Not surprisingly, a process server given that address was unable to effect personal service. He reported back to Fisher and Fisher that the tenant at 7742 South Carpenter did not know Sullivan-Moore and paid rent to an individual named Donna Lillybirde. Just over a week later, Fisher and Fisher moved for service by publication. The district court granted the motion and the notice was published in the Daily Law Bulletin, again listing the common address as 7742 South Carpenter. Fisher and Fisher went on to obtain a default order and judgment of foreclosure, and scheduled a special commissioner's sale for April 30, 2003. U.S. Bank purchased the property at the sale.

Shortly after the commissioner's sale Sutherin discovered the address error. On May 16 she received calls from both the tenant at 7742 Carpenter and an attorney for the property's owner, complaining about the eviction notice sent there. These calls prompted Sutherin and another attorney to examine the file, where they learned that the pleadings contained the wrong commonly known address for the property.

Instead of exploring at that point whether Sullivan-Moore had received adequate process, Fisher and Fisher pressed forward, moving on May 21 for an order approving the sale and an order for possession. Its only acknowledgment of the error came by way of a motion to correct scrivener's error filed June 11, a motion Fisher and Fisher now acknowledges was an inappropriate response to the mistake in the complaint. The district court granted both motions, setting the stage for Sullivan-Moore's eviction.

Thus, although she had never received the requisite notice of the proceedings, Sullivan-Moore was evicted on August 1, 2003. She moved back in the next day, prompting Fisher and Fisher to move for a renewed order of possession so that they could enlist the Cook County Sheriff's Department to re-evict her.

It was at the hearing on the motion for a renewed order of possession that the district court learned that Sullivan-Moore had never been served. Sullivan-Moore appeared at the hearing with her daughter Delaura Sullivan. Michael Fisher, an associate who had taken over the case to handle the eviction, appeared for Fisher and Fisher. Sullivan-Moore explained that she had not received notice of the foreclosure before being evicted, and Delaura moved to vacate based on lack of jurisdiction. Michael Fisher responded that although he did not have the file for the foreclosure action, Sullivan-Moore must have been served because she was evicted, and anyway the case had been "over for almost four months." In an attempt to sort out whether Sullivan-Moore had been served, the district court's clerk retrieved the court's electronic docket. Meanwhile, Michael Fisher located Sutherin, who had handled the foreclosure and happened to be in court on another matter. Using the docket sheet the district court then recounted the attempts at service to the wrong address (7742). The court concluded that Sullivan-Moore had never been properly served, a deficiency that could not have been cured with the correction of the "scrivener's error." Faced with this information, Sutherin moved to vacate the order approving the sale, void the sale, and vacate the judgment.

Approximately one month later the district court sua sponte issued an order requiring U.S. Bank and Fisher and Fisher to show cause why they should not be sanctioned under Federal Rule of Civil Procedure 11 and 28 U.S.C. § 1927. The court identified multiple potential Rule 11 violations, including failing to reasonably review the complaint before filing it, which would have revealed Sullivan-Moore's correct address, see Fed.R.Civ.P. 11(b)(3), failing to serve Sullivan-Moore with the motion to correct scrivener's error, see Fed.R.Civ.P. 11(b)(1), and advocating—via the motion for a renewed order of possession—the validity of papers presented to the court after discovering that the papers contained errors, see Fed.R.Civ.P. 11(b)(1).

The district court later discharged U.S. Bank from the rule to show cause, concluding that any sanctionable behavior was attributable to Fisher and Fisher. While the show cause order was pending, Sullivan-Moore died, and the district court appointed her daughter Delaura as a special representative, see 735 ILCS 5/2-1008(b), and substituted her as the defendant. Finally, in response to Fisher and Fisher's stipulation that any sanction would run against the firm as a whole, the district court released the individual attorneys involved from liability.

After receiving affidavits from Sutherin, Michael Fisher, and several other Fisher and Fisher attorneys, the district court issued an order sanctioning the firm. The court concluded that the initial mistake as to Sullivan-Moore's address "was an honest one" for which Fisher and Fisher should not be faulted. It believed, however, that the firm's actions after it learned of the mistake were sanctionable in several respects. First, once it learned of the error, Fisher and Fisher should have known that since the attempt at personal service had been made at the wrong address, the service by publication was deficient and thus the sale, judgment, and other court orders needed to be vacated. The court also pointed out that the motion to correct scrivener's error could not possibly cure the failure of process, and that by filing such a motion instead of moving to vacate the previous orders Fisher and Fisher caused the wrongful eviction. The court also chastised the firm for seeking to evict Sullivan-Moore yet a second time after at least two attorneys who had worked on the case knew (or should have known) that Sullivan-Moore had never been served. Finally, the court rebuked Michael Fisher for what it viewed as his attempt to prevent Delaura from assisting her "elderly mother" to communicate with the court at the hearing on the motion for a renewed order of possession.

By way of sanctions, the court ordered all Fisher and Fisher attorneys admitted in the Northern District of Illinois and any attorneys joining the firm within two years to attend or view a sixteen-hour course in federal subject matter jurisdiction and civil procedure. The court also ordered Fisher and Fisher to reimburse the estate's attorney $302.47 in expenses. Fisher and Fisher filed a motion for reconsideration, but the district court...