Illinois App. Court (1st Dist) Holds Borrower Could Not Challenge Foreclosure Sale Notice as Unlawfully Discriminatory

The Illinois Court of Appeals, First District, recently determined that a borrower in a foreclosure matter did not have standing to challenge whether the mortgagee’s notice of sale was in violation of the Illinois Human Rights Act (IHRA).

Following the entry of a judgment of foreclosure, the plaintiff mortgagee published its notice of sale, in which the mortgagee required that anyone attending the sale possess a “photo identification issued by a government agency.”

The mortgagee purchased the property at the sale, and then moved for an order confirming the sale.  The borrower objected to the mortgagee’s motion, arguing that the language in the notice requiring government-issued identification violated the IHRA because it discriminated on the basis of national origin.

The Appellate Court concluded that the borrower did not have standing to assert the notice was discriminatory because he had not identified any individual, including himself, who went to the sale with adequate funds to purchase the property but was denied access because they did not have the required identification.

In the absence of such evidence, the Appellate Court held that the borrower failed to identify a distinct and palpable injury traceable to the language in the notice.  Accordingly, the Appellate Court affirmed the trial court’s confirmation of the order of sale.

A copy of the opinion in Deutsche Bank National Trust v. Peters is available at:  Link to Opinion.

The trial court entered a judgment of foreclosure and sale on the borrower’s property in favor of the mortgagee.  Following a judicial sale in which the mortgagee purchased the property, the mortgagee moved for any order confirming the sale pursuant to 735 ILCS 5/15-1508.

The borrower did not contest the judgment of foreclosure, but objected to the motion to confirm the sale, asserting that the published notice of sale was discriminatory and violated the IHRA.

The mortgagee’s notice of sale contained the following language: “You will need a photo identification issued by a government agency (driver’s license, passport, etc.) in order to gain entry into our building and the foreclosure sale room . . .” The borrower contended this language violated the IHRA and prevented the court from confirming the sale under section 15-508(b).

Following a hearing, the trial court entered an order approving the sale.  In its order, the trial court stated “the court makes a finding that [borrower] has not met [his] burden to show that the sale should not be approved.  Further, the court finds that [borrower] has not proven that the notice of sale violated the IHRA or that [borrower] has standing to raise that issue.”

The borrower filed a notice of appeal, challenging the confirmation of the sale.

On appeal, the Appellate Court observed that the borrower did not address at all the trial court’s finding that he did not have standing to challenge whether the notice of sale was discriminatory.

Instead, the Court noted, the borrower only challenged the notice as discriminatory, alleging that the notice discriminated on the basis of national origin.  In particular, the borrower argued that persons who had entered the country without proper documentation, particularly Mexican nationals, were prohibited from obtaining a government-issued identification and, thus, would be unable to participate in the judicial sale of the property.

The borrower therefore asserted that the terms of the sale were unconscionable and not commercially reasonable because the “universe of potential buyers” would be limited.

In response, the mortgagee argued that the borrower had forfeited any challenge to the trial court’s finding that he lacked standing to contest the notice because he did not address it in his appellate brief.  The mortgagee also argued that the notice did not violate the IHRA because (1) the language requiring a government-issued identification does not discriminate on the basis of national origin, and (2) the IHRA does not bar discrimination based on citizenship status.

The Appellate Court acknowledged that the borrower did not address the standing issue in his brief, but determined that forfeiture is a limit on the parties, not the court, and the Court could exercise its discretion to review an otherwise forfeited issue.

The Court first addressed the broad discretion given to trial courts under section 15-508 of the Illinois Code of Civil Procedure, which among other things states that the trial court shall confirm a foreclosure sale unless the trial court finds that (i) proper notice of the sale was not given, (ii) the terms of the sale were unconscionable, (iii) the sale was conducted fraudulently, or (iv) justice was otherwise not done.  Section 15-508 also provides that the trial court’s decision to confirm or reject a judicial sale will not be disturbed absent an abuse of the court’s discretion.

Addressing the standing issue, the Court established that “a plaintiff possesses standing to sue when the plaintiff has suffered an injury in fact to a legally cognizable interest.”  Noyola v. Board of Education of the City of Chicago, 227 Ill. App. 3d 429, 432 (1992).  The Court continued, “the claimed injury may be actual or threatened, and it must be (1) distinct and palpable, (2) fairly traceable to the defendant’s actions, and (3) substantially likely to be prevented or redressed by the grant of the requested relief.”  Glisson v. City of Marion, 188 Ill. 2d 211, 221 (1999).

The Court determined that, at the trial court level, the borrower had not identified any person, including himself, who went to the judicial sale with the adequate funds to purchase the property but was denied access due to a lack of government-issued identification.  Indeed, citing I.C.S. Illinois, Inc. v. Waste Management of Illinois, 403 Ill. App. 3d 211, 225 (2010), the Appellate Court noted that the plaintiff could not establish standing to challenge the result of a bidding competition without establishing that he would have been successful “but for the defendant’s conduct.”

The Court also observed that the borrower did not present any evidence at the trial court level that any undocumented person was actually discouraged from bidding.  According to the Appellate Court, in the absence of such evidence the borrower’s claim is “purely speculative.”

As a result, the Court held, the borrower did not establish a distinct and palpable injury fairly traceable to the notice of sale.  Thus, the borrower failed to establish he had standing to assert a violation of the IHRA as a basis to challenge the sale.

Accordingly, the Appellate Court affirmed the judgment of the trial court.

Print Friendly, PDF & Email

Mickey Lee practices in Maurice Wutscher’s Commercial Litigation, Consumer Credit Litigation and Employment Litigation groups. He has substantial experience representing clients in class action litigation, Fair Credit Reporting Act litigation, labor and employment law, and various types of commercial litigation. He has co-chaired several bench and jury trials in state and federal court and has authored numerous appellate briefs and argued numerous cases before the Indiana Court of Appeals and the United States Court of Appeals for the Seventh Circuit. He is Vice President of the Indianapolis Chapter of the Federal Bar Association, and a Board member of the Johnson County Indiana University Alumni Association. Mickey and his wife, Melissa, are active members of the Riley Society with the Riley Children’s Foundation and the Mended Little Hearts of Indianapolis. Mickey received his Juris Doctor from the Indiana University Robert H. McKinney School of Law, and obtained his Bachelor of Science degree from Indiana University – Bloomington.