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Illinois App. Court (2nd Dist) Holds Borrower’s Second Attempt to Vacate Foreclosure Judgment Untimely

untimely foreclosureThe Appellate Court of Illinois, Second District, recently affirmed a trial court order dismissing a borrower’s attempt to vacate a default foreclosure judgment as untimely because the borrower’s first attempt to undo the foreclosure, which was withdrawn without prejudice, did not toll the time to file the petition within 60 days from the borrower’s first appearance in the case.

A copy of the opinion in BMO Harris Bank, N.A. v. Malarz is available at:  Link to Opinion.

The mortgagee served the borrower via special process server, but the borrower failed to timely appear in court. On Dec. 6, 2011, the trial court entered a default judgment and an order of foreclosure.

On Oct. 10, 2017, the borrower appeared and moved to vacate the default judgment and to quash the service of process.

On Nov. 1, 2017, the trial court allowed the borrower to file an “amended motion/petition” within 14 days. On Nov. 15, 2017, the borrower filed an amended petition to quash the service of process alleging that the service was defective.

Then, on Feb. 15, 2018, the borrower sought leave of court to file a second amended petition.  However, instead of seeking a hearing on this motion, the borrower agreed to withdraw it.  The trial court entered the parties’ agreed order on Feb. 16, 2018 withdrawing the amended petition without prejudice, striking the motion for leave to file a second amended petition, and closing the case.

On Aug. 3, 2018, the borrower moved to reopen the case and filed a second amended petition to quash service of process.  In response, the mortgagee moved to dismiss the petition as untimely and to strike the motion.  The mortgagee argued that the borrower failed to file the petition “within 60 days of borrower’s first appearance in the action, as required by section 15-1505.6(a)” of the Illinois Mortgage Foreclosure Law.

On Nov. 6, 2019, the trial court entered an order finding that the borrower’s second amended petition was untimely under section 15-1506.6(a) and declined to reopen the case. This appeal followed.

As you may recall, section 15-1505.6(a) of the Illinois Mortgage Foreclosure Law provides that “in a residential mortgage foreclosure proceeding, when a party moves to dismiss the cause or to quash service of process on the basis that the trial court lacked personal jurisdiction, the party must do so within 60 days of either the date he or she first files an appearance or the date he or she first participates in a hearing without filing an appearance, whichever is earlier.”

The Appellate Court observed that it addressed a similar situation in BAC Home Loans Servicing, LP v. Pieczonka, 2015 IL App (1st) 133128. There the Court held that an amended motion to quash was untimely under section 15-1505.6(a) because it was filed more than 60 days after the borrower’s first appearance. 

The borrower voluntarily withdrew the first motion to vacate and did not seek an extension of time.  As such, “the relevant period was between the borrower’s first appearance and the date of his amended motion.”  The amended motion was untimely because it was filed more than 60 days after the borrower’s first appearance.  Although Pieczonka concerned a motion to quash only and not a section 2-1401 petition, the Appellate Court found that this distinction did not matter because the plain language of section 15-1505.6(a) controlled.

The borrower argued that Pieczonka was inapposite because the borrower there did not withdraw the petition “without prejudice.”  The Appellate Court rejected this argument because “section 15-1506.6 plainly requires the challenge to service to be made within 60 days of the first appearance, with the only exception being if the time is extended by the trial court for good cause shown.”  

The borrower in this appeal failed to seek an extension of time and was not granted one.  Withdrawing the petition without prejudice did “not equate to an extension of time for good cause shown.”  As such, the second amended petition was untimely because it was filed more than 60 days after the borrower first appeared.

The Appellate Court also rejected the borrower’s argument that Bank of New York Mellon v. Laskowski, 2018 IL 121995, implicitly overruled Pieczonka.  The Appellate Court found Laskowski distinguishable because it involved an involuntarily dismissal.  The borrower could not move to dismiss or to quash while the case was dismissed.  In contrast, the borrower in Pieczonka, like the borrower in this case, voluntarily withdrew the motion to quash and did not request an extension of time for good cause shown. 

Thus, the Appellate Court ruled that the holding in Pieczonka controls this matter and the voluntary dismissal of the petition did not toll the time under section 15-1506.6. 

The Appellate Court next examined the borrower’s argument that he could refile his petition within one year of the dismissal order under 735 ILCS 5/13-217. Under 735 ILCS 5/2-1009(a), a plaintiff may voluntarily dismiss their action any time before trial begins. Section 13-217 gives a plaintiff one year to refile a “new action” after a voluntary dismissal.

The Appellate Court determined that section 13-217 could not help the borrower here because a “new action” brought pursuant to section 13-217 does not reinstate an old action.  Rather, a complaint filed under this provision is a “new and separate action,” that does not allow the borrower to reinstate an old, dismissed case.

Therefore, the Appellate Court affirmed the trial court order finding that the borrower’s second amended petition was untimely under section 15-1506.6(a) and declining to reopen the closed case.

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The attorneys of Maurice Wutscher are seasoned business lawyers with substantial experience in business law, financial services litigation and regulatory compliance. They represent consumer and commercial financial services companies, including depository and non-depository mortgage lenders and servicers, as well as mortgage loan investors, financial asset buyers and sellers, loss mitigation companies, third-party debt collectors, and other financial services providers. They have defended scores of putative class actions, have substantial experience in federal appellate court litigation and bring substantial trial and complex bankruptcy experience. They are leaders and influencers in their highly specialized area of law. They serve in leadership positions in industry associations and regularly publish and speak before national audiences.

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