Household Bank v. Lewis ( 2008 )

Docket No. 104826.
IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
HOUSEHOLD BANK, FSB, v. JEWEL LEWIS et al. (Addie Glenn-
Tate, Appellant; Greenwich Investors XVI, LLC, Appellee).
Opinion filed May 22, 2008.
JUSTICE KARMEIER delivered the judgment of the court, with
opinion.
Chief Justice Thomas and Justices Freeman, Fitzgerald, Kilbride,
Garman, and Burke concurred in the judgment and opinion.
OPINION
The issue in this case is whether the Illinois Mortgage
Foreclosure Law (735 ILCS 5/15–1101 et seq. (West 2004)) permits
a circuit court to vacate a judicial sale at the mortgagee’s request
where the mortgagor has succeeded in finding her own buyer for the
subject property, with the mortgagee’s approval, after the statutory
redemption period has expired but before the judicial sale has been
confirmed. The circuit court of Cook County believed that it does and
ordered the judicial sale vacated. The high bidder at that sale objected
and appealed. The appellate court reversed and remanded with
instructions that the circuit court confirm the judicial sale. 373 Ill.
App. 3d 420. We granted leave to appeal. 210 Ill. 2d R. 315. For the
reasons that follow, the judgment of the appellate court is reversed
and the circuit court’s judgment is affirmed.
The pertinent facts are undisputed. In 1999, Jewel Lewis executed
a promissory note in the principal amount of $62,100.00 secured by
a mortgage on her home. The mortgage was held by Household Bank.
Lewis subsequently defaulted on the obligations which she owed
pursuant to the promissory note and mortgage.1 Household responded
by initiating foreclosure proceedings under the Illinois Mortgage
Foreclosure Law (735 ILCS 5/15–1101 et seq. (West 2004)). When
Lewis failed to answer Household’s complaint, the circuit court
entered a default judgment in Household’s favor in the amount of
$80,720.02. The judgment was entered March 17, 2005, and provided
that the statutory period of redemption would expire on June 17,
2005, after which the property would be sold.
In accordance with the circuit court’s judgment, a notice was filed
May 20, 2005, stating that the property would be sold to the highest
bidder on June 21, 2005. A sale was duly conducted on that date. The
highest bidder was Greenwich Investors XVI, LLC (Greenwich). Its
bid was $48,071, a figure substantially less than the amount due
under the default judgment entered against Lewis.
On June 29, 2005, eight days after the judicial sale, Household
sought and obtained an order from the circuit court continuing
proceedings for approval of that sale in order to allow Lewis to
attempt to negotiate a private sale of the property herself. Lewis’
efforts were successful and she was able to sell her home to Addie
Glenn-Tate on July 7, 2005, for the sum of $67,945. Lewis tendered
the proceeds of that sale to Household, and Household accepted them
as payment in full of the amounts due under the promissory note and
mortgage on July 12, 2005. One week later, a deed was recorded
showing that Glenn-Tate had purchased the property and was now its
owner.
1
The appellate court’s opinion states that an entity known as
Provincetown Improvement Association also defaulted on the mortgage.
373 Ill. App. 3d at 420. While Provincetown was named as a defendant in
the foreclosure action, along with “nonrecord claimants, unknown tenants
and unknown owners,” Provincetown was not a signator to either the
promissory note or the mortgage.
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Immediately after receiving the sale proceeds from Lewis,
Household requested leave to withdraw its motion to confirm the
judicial sale. That motion was granted. The following month,
Household moved to have the judicial sale vacated. Greenwich
objected to these developments and was granted leave to intervene
and to file a response. In its response, Greenwich complained of the
absence of documentation for Household’s representation that it had
accepted $67,945 in payment from Lewis. It protested that it “pays
significant costs to have its money available to bid at sale” but,
because of Household’s actions, that money was allowed “to just sit.”
In addition, it asserted that vacating the sale was “a clear abuse of the
judicial process and the Illinois Mortgage Foreclosure Act” and “a
violation of justice.”
Household filed a reply to Greenwich’s response. The circuit
court rejected Greenwich’s arguments and granted Household’s
motion to vacate the judicial sale. The court also ordered the proceeds
of that sale to be returned to Greenwich. With these actions, the
foreclosure proceedings concluded.
Greenwich filed a timely posttrial motion for reconsideration,
contending that the judicial sale should not have been vacated for the
reasons it had previously asserted. In the alternative, Greenwich
sought $27,000 in damages from Household under the theory of
tortious interference with prospective economic advantage.
Household filed a written response. Greenwich’s motion was
subsequently denied by the circuit court. Greenwich appealed. The
appellate court reversed and remanded to the circuit court with
instructions that the judicial sale to Greenwich be confirmed, holding
that the circuit court’s refusal to confirm the sale constituted an abuse
of discretion. 373 Ill. App. 3d at 423.
Following the appellate court’s action, Household indicated that
it would no longer attempt to defend the sale to Glenn-Tate. At the
same time, it refused to disgorge the sale proceeds to her. In order to
protect her position, Glenn-Tate therefore petitioned the appellate
court for leave to intervene. That petition was granted. In her capacity
as an intervening party, Glenn-Tate then petitioned our court for leave
to appeal (210 Ill. 2d R. 315), which we allowed.
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As grounds for her appeal, Glenn-Tate contends that the circuit
court’s decision to vacate the judicial sale at Household’s request was
supported by the provisions of the Illinois Mortgage Foreclosure Law
and the policies underlying that statute. She asserts that the appellate
court therefore erred when it set aside the circuit court’s judgment
and ordered that the judicial sale be confirmed.
Greenwich, for its part, contends that the appellate court’s
analysis was sound and that the result it reached was correct. It argues
that while a circuit court has the discretion to refuse to confirm a
judicial sale under certain circumstances, that discretion is not so
broad as to authorize a court to refuse to confirm a judicial sale based
on a private sale which occurs after the statutory redemption period
has expired and the judicial sale has already taken place.
Resolution of the foregoing issues turns on questions of statutory
construction and the application of the law to undisputed facts. Our
review is therefore de novo. See City of Champaign v. Torres, 214 Ill.
2d 234, 241 (2005).
Confirmation of judicial sales is governed by section 15–1508 of
the Illinois Mortgage Foreclosure Law (735 ILCS 5/15–1508 (West
2004)). Subsection (b) of that statute provides:
“Upon motion and notice in accordance with court rules
applicable to motions generally, which motion shall not be
made prior to sale, the court shall conduct a hearing to
confirm the sale. Unless the court finds that (i) a notice
required in accordance with subsection (c) of Section
15–1507 [735 ILCS 5/15–1507] was not given, (ii) the terms
of sale were unconscionable, (iii) the sale was conducted
fraudulently or (iv) that justice was otherwise not done, the
court shall then enter an order confirming the sale.” 735 ILCS
5/15–1508(b) (West 2004).
In speaking of a court’s obligations, the foregoing statute uses the
word “shall.” The Illinois Mortgage Foreclosure Law expressly
provides that when “shall” is used, it means that something is
“mandatory and not permissive.” 735 ILCS 5/15–1105(b) (West
2004). Under the terms of statute, a court therefore has mandatory
obligations to (a) conduct a hearing on confirmation of a judicial sale
where a motion to confirm has been made and notice has been given,
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and, (b) following the hearing, to confirm the sale unless it finds that
any of the four specified exceptions are present.
The provisions of section 15–1508 have been construed as
conferring on circuit courts broad discretion in approving or
disapproving judicial sales. See Citicorp Savings of Illinois v. First
Chicago Trust Co. of Illinois, 269 Ill. App. 3d 293, 300 (1995). A
court’s decision to confirm or reject a judicial sale under the statute
will not be disturbed absent an abuse of that discretion. See Fleet
Mortgage Corp. v. Deale, 287 Ill. App. 3d 385, 388 (1997); see also
Blancett v. Taylor, 6 Ill. 2d 434, 437 (1955) (addressing judicial sales
generally).
As we have indicated, the appellate court in this case concluded
that the circuit court abused is discretion when it vacated the judicial
sale and refused to confirm it under section 15–1508(b). In our view,
however, the appellate court’s focus on whether the circuit court
abused its discretion was misguided. The exercise of discretion in
applying section 15–1508(b) is necessary only when the requirements
of that law have become operative. Under the terms of the statute,
they do not become operative until they have been invoked by a
motion requesting confirmation of the sale. Although a motion to
confirm was filed by Household, the mortgagee, the motion was
withdrawn before any action on it was taken. A statutory prerequisite
to the confirmation process was thereby eliminated. Correspondingly,
the mandatory provisions of section 15–1508(b) were not triggered.
Under these circumstances, the dispositive question is not whether the
circuit court’s actions constituted an abuse of discretion under section
15–1508(b). It is, instead, whether the circuit court was obligated to
proceed with the confirmation process even after Household, which
initiated the foreclosure proceedings, elected not to pursue them.
Resolution of this issue implicates basic principles regarding a
party’s right to control its own litigation. In addressing that issue, we
begin by noting that the reason for Household’s decision to forgo its
remedies under the Illinois Mortgage Foreclosure Law was clear.
Lewis’ success in selling the property to Glenn-Tate enabled the
company to recover a significantly larger amount of the debt than it
would have through the foreclosure process. From Household’s
perspective, further pursuit of foreclosure proceedings would have
been counterproductive.
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Several decades ago, in a case recognizing the right of a plaintiff
in a tax foreclosure case to voluntarily dismiss the case after receiving
payment for the amount of the delinquent taxes, we observed that
“[t]hose who invoke the jurisdiction of the courts do not
thereby irrevocably commit themselves to that course of
action. Litigation, as a means of resolving disputes, should be
employed sparingly. Other methods of solution have long
been favorably regarded by the courts, and when, as here, the
underlying reason for particular litigation has vanished, the
foundation upon which the action stood is ordinarily
destroyed.” People v. American National Bank & Trust Co.,
32 Ill. 2d 115, 120-21 (1965).
Consistent with this view, our system of civil justice has
recognized that a plaintiff is ordinarily the master of his or her cause
of action. People v. American National Bank & Trust Co., 32 Ill. 2d
at 120. Under the common law, plaintiffs were permitted to
voluntarily dismiss their claims without prejudice any time prior to
entry of judgment. Through section 2–1009 of the Code of Civil
Procedure (735 ILCS 5/2–1009 (West 2004)), our legislature has now
qualified this right in order to discourage vexatious suits, “but only by
preventing an automatic voluntary dismissal without prejudice after
trial or hearing commenced.” (Emphasis added.) Kahle v. John Deere
Co., 104 Ill. 2d 302, 307-08 (1984). Even if we assume, for the sake
of argument, that the operative “hearing” in this case was the hearing
on the foreclosure complaint rather than the hearing on confirmation
of the sale and that Household’s motion to vacate came after the
hearing commenced, the foregoing statutory qualification is not
controlling here. That is so because when Household moved to
withdraw the motion to confirm and to vacate the judicial sale in this
case, it clearly intended to forgo any future claim it might assert to
have the property sold by the court based on Lewis’ default.
Household was, in effect, dismissing that claim with prejudice. The
statutory restrictions governing voluntary dismissals without
prejudice are therefore inapplicable.
Greenwich argues that allowing mortgagees to accept private
sales after a judicial sale has been conducted but before the judicial
sale has been confirmed will undermine the settled expectations of
those who bid at judicial sales, deter such bidders from participating
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in the judicial sale process, and thereby undermine the purposes of the
Illinois Mortgage Foreclosure Law.
We find this argument unpersuasive. First, it assumes that being
the highest bidder at a judicial sale confers on the bidder some legally
cognizable interest in the property. It does not. See Jennings v.
Dunphy, 174 Ill. 86, 90-91 (1898). The highest bid received by a
sheriff at a judicial foreclosure sale is merely an irrevocable offer to
purchase the property. The offer is not deemed to have been accepted
and the sale is not complete until it has been confirmed by the circuit
court. See Plaza Bank v. Kappel, 334 Ill. App. 3d 847, 852 (2002).
Numerous factors may affect a circuit court’s decision to confirm the
sale, including issues of notice, unconscionability and fraud. 735
ILCS 5/15–1508(b) (West 2004). In addition, even after the sale is
confirmed, the bidder may discover that the property is subject to
prior tax liens or other encumbrances that affect the property’s value.
Any expectations a bidder may have regarding property offered at a
judicial foreclosure sale are therefore speculative.
Second, Greenwich’s argument presupposes that protecting the
position of third-party bidders should be the preeminent principle
guiding our construction of the laws governing judicial sales. We find
no support for that view. It is true that our court has long recognized
the need to promote stability in the conduct of judicial sales so as not
to “ ‘impair that confidence so essentially necessary to induce persons
to become purchasers when real estate is offered for sale under a
judgment or decree of a court.’ ” See Abbott v. Beebe, 226 Ill. 417,
420 (1907), quoting Conover v. Musgrave, 68 Ill. 58, 62 (1873). At
the same time, however, the courts have also consistently held that
the law favors redemptions (Skach v. Sykora, 6 Ill. 2d 215, 224
(1955); Rodman v. Quick, 217 Ill. 162, 164 (1905)) and protection of
a mortgagor’s equity in the property (see Fleet Mortgage Corp. v.
Deale, 287 Ill. App. 3d at 389).
Balancing these competing policy considerations is ultimately a
matter for the legislature. See Country Mutual Insurance Co. v.
Livorsi Marine, Inc., 222 Ill. 2d 303, 319 (2006). Nothing in the
current statutory scheme enacted by our General Assembly prohibits
mortgagees from declining to seek confirmation of a judicial sale and
abandoning foreclosure proceedings where, as here, the mortgagor is
able to arrange a private sale for a price acceptable to the mortgagee.
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If the legislature had intended to impose such a prohibition, it could
have specifically done so. It did not and we cannot. As we have often
held, a court may not add provisions that are not found in a statute,
nor may it depart from a statute’s plain language by reading into the
law exceptions, limitations, or conditions that the legislature did not
express. Madison Two Associates v. Pappas, 227 Ill. 2d 474, 495
(2008), citing People v. Lewis, 223 Ill. 2d 393, 402 (2006).
In ruling for Greenwich, the appellate court relied on the
provisions of section 15–1605 of the Illinois Mortgage Foreclosure
Law (735 ILCS 5/15–1605 (West 2004)), which provides, in part, that
“[n]o equitable right of redemption shall exist or be enforceable under
or with respect to a mortgage after a judicial sale of the mortgaged
real estate.” Following an earlier appellate court decision in
Washington Mutual Bank, FA v. Boyd, 369 Ill. App. 3d 526, 530
(2006), the appellate court in this case construed section 15–1605 as
precluding any private sale or redemption of the property after the
statutory redemption period has expired and a judicial sale under
section 15–1507 of the Illinois Mortgage Foreclosure Act (735 ILCS
5/15–1507 (West 2006)) has been conducted.
Such a construction is not supported by the language of the statute
itself. By its terms, section 15–1605 does not purport to bar all
redemptions. It merely extinguishes the “equitable right of
redemption.” The equitable right of redemption is a right that belongs
to the mortgagor and is implicated only when a mortgagor wishes to
forestall efforts by a mortgagee to terminate the mortgagor’s
ownership interest in the property. See First Illinois National Bank v.
Hans, 143 Ill. App. 3d 1033, 1037 (1986). That situation is not
present here. Lewis, the mortgagor, did not attempt to invoke any
right adverse to the interests of Household, the mortgagee, in order to
preserve her ownership of the residence in question. When Household
initiated foreclosure proceedings, Lewis simply defaulted.
Redemption was permitted by Household purely as a matter of grace
after a private third-party buyer was found. That is a situation to
which 15–1605 does not speak.
Finally, we note that while the statutory right of redemption
enures to the benefit of mortgagors, the temporal limitations on the
exercise of that right, including the bar against revival of expired
redemption rights (see 735 ILCS 5/15–1603(c) (West 2004)), are
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designed to benefit mortgagees such as Household. Illinois law
recognizes that a party may waive a statutory provision designed for
its benefit. See In re Application of the County Collector for
Judgment & Order of Sale Against Land & Lots Returned Delinquent
for Nonpayment of General Taxes for the Year 1996 & Prior Years,
318 Ill. App. 3d 641, 645 (2000). Exceptions to the waiver rule may
be established by the General Assembly (see, e.g., 735 ILCS
5/15–1601(a) (West 2004) (restricting mortgagor’s right to waive its
rights of reinstatement and redemption)), but no restriction has been
imposed on a mortgagee’s freedom to permit redemption, as a matter
of grace, after the statutory redemption period has passed and before
the judicial sale has been confirmed. Household was therefore entitled
to allow belated redemption of the subject property in this case rather
than seek confirmation of the judicial sale.
For the foregoing reasons, the circuit court did not err when it
granted Household’s motion to vacate the judicial sale. The judgment
of the circuit court is therefore affirmed and the judgment of the
appellate court is reversed.
Appellate court judgment reversed;
circuit court judgment affirmed.
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