Wilmington Sav. Fund Soc'y, FSB v. Barrera
| Decision Date | 21 September 2020 |
| Docket Number | No. 2-19-0883,2-19-0883 |
| Citation | 443 Ill.Dec. 917,162 N.E.3d 1068,2020 IL App (2d) 190883 |
| Parties | WILMINGTON SAVINGS FUND SOCIETY, FSB, d/b/a Christiana Trust, AS Owner TRUSTEE OF the RESIDENTIAL CREDIT OPPORTUNITIES TRUST III, Plaintiff-Appellant, v. Marta C. BARRERA, Edson Barrera, the North Shore Water Reclamation District, Unknown Owners, and Nonrecord Claimants, Defendants (Marta C. Barrera and Edson Barrera, Defendants-Appellees). |
| Court | United States Appellate Court of Illinois |
Thomas J. Cassady, of Dimonte & Lizak, LLC, of Park Ridge, for appellant.
Robert J. Magee and James T. Magee, of Magee Hartman, P.C., of Round Lake, for appellees.
¶ 1 Wilmington Savings Fund Society, FSB, doing business as Christiana Trust as Owner-Trustee of the Residential Credit Opportunities Trust III (Wilmington), appeals from an order that dismissed its foreclosure complaint, the fourth relating to the same secured loan, as barred by the single refiling rule. Wilmington's complaint alleged that the mortgagor, Marta C. Barrera (Marta), defaulted on the mortgage by failing to pay (or reimburse Wilmington for) real estate taxes and property insurance payments. Marta and her husband, Edson Barrera (Edson), who was sued as a person with potential homestead rights, contend that the Illinois Supreme Court's holding in First Midwest Bank v. Cobo , 2018 IL 123038, 429 Ill.Dec. 416, 124 N.E.3d 926, establishes that the single refiling rule applies here to bar Wilmington's action. For the reasons to follow, we hold that the single refiling rule is not a complete bar to Wilmington's action.
¶ 3 Wilmington, the holder of the sole mortgage on the property at 1404 Muirfield Avenue in Waukegan, filed its foreclosure action against the mortgagor, Marta, on December 7, 2018. Wilmington also named as defendants Edson and North Shore Water Reclamation District as a possible lienholder. The complaint alleged four defaults: (1) failure to reimburse Wilmington for payments it made for insurance on the property, (2) failure to reimburse Wilmington for property taxes it paid on the property, (3) failure to pay for insurance on the property directly, and (4) failure to pay the property taxes on the property directly. Wilmington alleged that it or its predecessor mortgagees had advanced $7193.42 for hazard insurance and $16,561.70 for real estate taxes.
¶ 4 According to the exhibits attached to the complaint, the original lender was First Magnus Financial Corporation (First Magnus). First Magnus and Marta executed the mortgage and note in April 2006. The mortgage required the borrower to include with the monthly payment of principal and interest (as set forth in the note) an amount to cover the taxes on the property. The mortgage also required the borrower to maintain hazard insurance on the property. If the borrower failed to maintain hazard insurance or include tax payments in the monthly payment, the lender had the right to make its own payments for insurance and taxes. These payments would become additional debt secured by the mortgage.
¶ 5 After the mortgage was executed, it passed through several assignments. Wells Fargo became one of the successor mortgagees. Wilmington then succeeded to the mortgage, as documented by the exhibits to the complaint.
¶ 6 The Barreras appeared through counsel and filed a motion to dismiss the complaint under sections 2-619(a)(4) and (a)(9) of the Code of Civil Procedure (Code) ( 735 ILCS 5/2-619(a)(4), (a)(9) West 2018)). Section 2-619(a)(4) permits dismissal when a prior judgment bars the cause of action, and section 2-619(a)(9) permits dismissal when some other affirmative matter bars the asserted claim. The Barreras cited the single refiling rule of section 13-217 of the Code ( 735 ILCS 5/13-217 (West 1994) )1 as the other affirmative matter barring the foreclosure claim. They noted that (1) Wilmington's predecessor in interest, Wells Fargo, had filed two earlier foreclosure cases relating to the mortgage at issue, and (2) Wilmington itself had also earlier filed a foreclosure case. Relying on the holding in Cobo , the Barreras asserted that the single refiling rule barred claims based on the defaults that Wilmington alleged. The exhibits to the motion included the complaints in the three prior actions and the orders dismissing those complaints:
On April 11, 2018, the circuit court dismissed this third complaint on the Barreras' motion. The court ruled that the suit was barred because the default dates alleged in the third complaint were at issue in the earlier two actions.
¶ 7 Wilmington, responding to the Barreras' motion, argued that their failure to make payments for insurance and property taxes was the sole default claimed in the fourth foreclosure complaint; the payment of principal and interest was not at issue. It contended that the previous cases related to a default in payments of principal and interest, an obligation under the note, whereas the requirement to pay property taxes and maintain insurance is an obligation under the mortgage. It further noted that previous cases did not result in judgments on the merits. Thus, no prior filing barred Wilmington from suing on the defaults specific to the obligations under the mortgage. In reply, the Barreras contended that Wilmington's position was not consistent with the holding of Cobo .
¶ 8 On June 20, 2019, the court granted the Barreras' motion to dismiss:
"In applying the transactional test as identified in [ Cobo ,] this Court believes that this fourth lawsuit arises from the same single group of operative facts; the prior three lawsuits were seeking to adjudicate the parties' rights under the same mortgage and note; and the advances identified in the fourth complaint of real estate taxes and hazard insurance were specifically requested in the first and second complaints."
¶ 9 Wilmington filed a timely motion to reconsider or, in the alternative, for leave to amend the complaint. It argued that the circuit court erred in ruling that the first and second complaints sought to adjudicate defaults in insurance and property taxes payments: "Those [two] Complaints followed the [statutory] form complaint * * * in stating that tax and insurance advances were due, but Plaintiff's prayers for relief [did] not request those amounts." (Emphases in original.) It asserted that those defaults were set out only in the " ‘informational’ " sections of the complaints. Alternatively, it asked for leave to file an amended complaint stating the dates of the defaults with more specificity. On September 12, 2019, the court denied Wilmington's motion in its entirety. Wilmington timely appealed.
¶ 11 On appeal, Wilmington argues that the fourth foreclosure filing "allege[d] a separate, subsequent default and therefore does not violate the ‘single re-filing’ rule." Wilmington asserts that at least one default occurred after the third complaint's dismissal and, thus, neither it nor Wells Fargo could have raised that default in any of the prior filings. It asks us to take judicial notice that the first due date for Lake County real estate taxes was after the third case's dismissal. Alternatively, it argues that the circuit court erred in failing to allow it to amend its complaint to make the dates of the defaults more specific.
¶ 12 The Barreras respond that the current complaint and the prior three complaints arose from a single group of operative facts. They argue that the first and second complaints both could have and did include claims for insurance and tax escrows, so that Wilmington, through its predecessor Wells Fargo, has raised the tax and insurance default twice before. They contend that Cobo is controlling here and mandates affirmance.
¶ 13 In reply, Wilmington concedes that, because it sought to accelerate the note, the single refiling rule might have barred it from claiming that any new defaults occurred on that note. It admits that "some courts" would hold that "[t]he acceleration of the principal and interest payments * * * prevents a foreclosing plaintiff from bringing a separate foreclosure every time a mortgagor misses a monthly payment." See Deutsche Bank Trust Co. Americas v. Sigler , 2020 IL App (1st) 191006, ¶ 41, ––– Ill.Dec. ––––, ––– N.E.3d –––– (so holding). However, it contends that the mortgagor's tax and insurance obligations are different because the required payments cannot be reduced to a lump sum and cannot be accelerated. Thus, two types of default exist, "one which involves acceleration and one which involves ongoing obligations." Tax and insurance obligations are ongoing, according to Wilmington.
¶ 14 We hold that the single refiling...
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