The Appellate Court of Illinois, Second District, recently affirmed a trial court’s ruling denying a borrower’s motion to vacate the default judgment of foreclosure against him and confirming the judicial sale of the borrower’s property.
In so ruling, the Second District rejected the various arguments advanced by the borrower that (1) the trial court should not have confirmed the foreclosure sale because justice was not otherwise done in the matter, (2) the trial court should have vacated the default against the borrower because he did not receive notice of the default motion and his first attorney did not appear on his behalf, (3) the borrower was in the midst of loss mitigation when the complaint was filed, and should have been allowed to complete the process, (4) the borrower did not receive notice “of the trial” in violation of his federal and state constitutional due-process rights, and (5) the mortgagee plaintiff lacked standing to bring the foreclosure action.
A copy of the opinion in U.S. Bank Trust National Association v. Stear is available at: Link to Opinion.
This action arose out of a June 2018 mortgage foreclosure action brought by the mortgagee against the borrower (“debtor”) and other defendants. The debtor was served with a summons which warned default judgment could be entered against him if he failed to answer. The debtor failed to answer or otherwise respond to the complaint but appeared at an October 2018 status hearing.
In December 2018, the mortgagee moved for a default judgment against the debtor alleging the debtor had not yet responded to the complaint. Notice of the motion was mailed to the debtor which stated the motion would be presented on the same date as the next status hearing that was scheduled at the previous hearing. The debtor did not appear at the motion hearing and the trial court granted the mortgagee’s motion. Notice of the default judgment was sent to the debtor.
In March 2019, the mortgagee served the debtor with a notice of sale which indicated the property would be sold in April 2019. Notice of sale was published in the local newspaper and the mortgagee subsequently purchased the property at auction. Shortly after the sale, the mortgagee moved to confirm the sale. When the mortgagee presented the motion to confirm sale, the debtor appeared, and the trial court allowed the debtor time to file a response in opposition to the confirmation of the sale.
In the interim, the debtor retained an attorney and moved the trial court to vacate default. The debtor alleged he had hired a different attorney after the October 2018 status hearing. The debtor asserted he did not receive notice of the default motion, which was filed with knowledge that the debtor was out of the country and was not aware of the default until after the January 2019 status hearing. The debtor supposedly learned the property had been sold in April 2019, at which time he contacted his former attorney and was told the attorney was gravely sick and had not appeared at the January 2019 status hearing. The debtor argued that since the sale had not yet been approved, no final order had been entered and he could seek relief.
The debtor also referred to section 15-1508(b)(iv) of the Illinois Mortgage Foreclosure Law, arguing the sale should not be confirmed as “justice was not otherwise done in the matter and substantial justice would be served by vacating the judgment and the sale.” The debtor also indicated he intended to raise several defenses to the complaint.
The trial court set briefing schedules for both motions and, in the interim, the debtor’s attorney asked for leave to withdraw. The motion to withdraw was granted and notice of the motion and a copy of the order granting the motion was served on the debtor. The debtor’s motion and the mortgagee’s motion were heard at a September 2019 date, at which the debtor failed to appear. The trial court granted the mortgagee’s motion confirming the sale and denied the debtor’s motion. The debtor appealed.
On appeal, the Second District noted that because the debtor did not provide a report of the proceedings or an acceptable substitute, the appellate court would presume the lower court’s order conformed to the law and had sufficient factual basis. Wells Fargo Bank, N.A. v. Hansen, 2016 IL App. (1st) 143720, ¶ 15 (citing Foutch v. O’Bryant, 99 Ill. 2d 389, 391-92 (1984)).
The Appellate Court reviewed the lower court’s orders for abuse of discretion and reiterated that without a report of proceedings or acceptable alternative, the court “must presume that the [trial] court did not act arbitrarily but within the bounds of reason, keeping in mind relevant legal principles.” Hansen, 2016 IL App (1st) 143720, ¶ 15. Without a record of proceedings, the debtor could only show the court abused its discretion by demonstrating it erred as a matter of law. Id. at ¶ 16.
The debtor raised the following arguments on appeal (1) the trial court should not have confirmed the sale because justice was not otherwise done in the matter, (2) the trial court should have vacated the default because the debtor did not receive notice of the default motion and his first attorney did not appear on his behalf, (3) he was in the midst of loss mitigation when the complaint was filed, and should have been allowed to complete the process, (4) he did not receive notice “of the trial” in violation of his federal and state constitutional due-process rights, and (5) the mortgagee lacked standing to bring the foreclosure action.
The Second District rejected the debtor’s first argument due to the absence of a report of proceedings. The Appellate Court reasoned that because there was no record of proceedings, it was unable to determine whether the lower court balanced the parties’ interests or acted arbitrarily or beyond the bounds of reason while ignoring applicable principles of law. Id. at ¶ 14. Thus, the Appellate Court presumed the lower court’s order “conformed to the law and had a sufficient factual basis.” Id. at ¶ 15.
The Second District also found the debtor’s motion to vacate and object to the mortgagee’s motion to confirm the sale were deficient on their face, as once a motion to confirm sale has been filed, a borrower may no longer seek to vacate default judgment of foreclosure. Wells Fargo Bank, N.A. v. McCluskey, 2013 IL 115469, ¶ 27. The debtor could only do so “by filing objections to the confirmation of the sale under the provisions of section 15-1508(b)” of the Illinois Mortgage Foreclosure Law. Id.
Finally, the Appellate Court held that a meritorious defense was not sufficient to vacate the sale under the “justice was not otherwise done” provision but the debtor had also to establish that justice was not done because “either the lender, through fraud or misrepresentation, prevented the borrower from raising his meritorious defenses to the complaint at an earlier time in the proceedings, or the borrower has equitable defenses that reveal he was otherwise prevented from protecting his property interests.” Id. at ¶ 26.
The debtor’s second argument — that the trial court should have vacated default since th debtor did not receive notice of the default motion and his first attorney did not appear on his behalf — was forfeited for failure to cite any authority in support. Doherty v. County Faire Conversion, LLC, 2020 IL App (1st) 192385, ¶ 36. The Appellate Court further reasoned there was nothing in the record to indicate the debtor did not receive notice and the motion was presented at a hearing of which the debtor had notice.
The Appellate Court also found the debtor had forfeited his third argument — he was in the midst of loss mitigation when the complaint was filed, and should have been allowed to complete the process, as he failed to raise it in the trial court and did not develop his point beyond a mere contention.
The fourth argument — that the debtor did not receive notice “of the trial” in violation of his federal and state constitutional due-process rights — was forfeited as there was no trial in the matter and the debtor did not make it clear what his argument actually was. The fifth argument – the mortgagee lacked standing to bring the foreclosure action — was also forfeited as the debtor failed to raise the argument of lack of standing until after he was held in default and the mortgagee had moved to confirm the sale.
Thus, the Appellate Court ruled that the trial court properly confirmed the judicial sale and denied the debtor’s motion to vacate the underlying default.