Gorman-Dahm v. BMO Harris Bank, N.A. , 94 N.E.3d 257 ( 2018 )

2018 IL App (2d) 170082No. 2-17-0082
Opinion filed January 17, 2018
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT
______________________________________________________________________________
MEGHAN GORMAN-DAHM, as ) Appeal from the Circuit Court
Administrator of the Estate of Kathleen) of Kane County
Gorman, Deceased, )
)
Plaintiff-Appellant, )
)
v. ) No. 16-CH-293
)
BMO HARRIS BANK, N.A.; STEPHAN G. )
DADAY; and KLEIN, DADAY, ARETOS )
and O’DONOHGHUE, LLC, ) Honorable
) David R. Akemann,
Defendants-Appellees. ) Judge, Presiding.
______________________________________________________________________________
JUSTICE BURKE delivered the judgment of the court, with opinion.
Justices McLaren and Schostok concurred in the judgment and opinion.
OPINION
¶1 Plaintiff, Meghan Gorman-Dahm, as administrator of the estate of Kathleen Gorman,
deceased, filed a complaint against defendants, BMO Harris Bank, N.A. (BMO); Stephan G.
Daday; and Klein, Daday, Aretos and O’Donohghue, LLC, consisting of five counts: count I, for
slander of title; counts II and IV, for punitive damages; count III, for abuse of process; and count
V, for partition. The trial court granted defendants’ motion to dismiss all counts, finding that (1)
the absolute litigation privilege barred counts I and III, (2) there was no separate cause of action
for punitive damages (counts II and IV), and (3) the partition claim in count V was at issue in
2018 IL App (2d) 170082another case, the underlying foreclosure complaint pending in the same circuit. Plaintiff
contends that the trial court erred in dismissing counts I, III, and V of her complaint. 1 We
affirm.
¶2 I. FACTS
¶3 A. Underlying Foreclosure Complaint
¶4 The underlying foreclosure complaint arose from a mortgage loan made by Amcore
Bank, N.A. (Amcore), BMO’s predecessor in interest, to Kathleen’s husband, John P. Gorman
(deceased), on November 30, 2007, in the amount of $750,000, which was secured by property
commonly known as 760 Church Street, Batavia, Illinois. The property had been owned by John
and Kathleen, as tenants in common, prior to her death on July 3, 2006.
¶5 John defaulted on the loan and Amcore filed the foreclosure complaint on January 20,
2010 (No. 10-CH-266), in Kane County, naming both John and Kathleen as defendants.
¶6 The mortgage attached to the complaint showed that only John had granted a security
interest in the property.
¶7 A judgment of foreclosure and sale on the property was entered on June 11, 2012. The
judicial sale occurred on August 14, 2014. Later, the parties to the foreclosure action, BMO,
John, and plaintiff (who was granted leave to intervene on October 14, 2014), agreed that the
notice of sale indicated that the property to be sold was an “undivided half interest” in the
property. It was also undisputed by the parties that an undivided half interest was the only
interest that could be sold at the judicial sale. BMO was the successful bidder, in the amount of
1
In her opening brief, plaintiff continuously cites her appendix rather than the record, in
violation of Illinois Supreme Court Rule 341(h)(6) (eff. Jan. 1, 2016).
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2018 IL App (2d) 170082$112,399. The report of sale and distribution did not indicate that only an undivided half interest
was sold.
¶8 On April 2, 2015, the trial court vacated the judicial sale of August 14, 2014. On April
28, 2015, the trial court granted BMO’s motion to amend the complaint to conform to the proofs
and its motion to amend the judgment of foreclosure and sale nunc pro tunc to reflect that the
mortgaged real estate consisted of an undivided half interest in the property. The trial court also
expunged the deed, which had not described the property as an undivided half interest. Another
judicial sale took place, and a deed was issued to BMO for an undivided half interest in the
property. A motion to confirm the sale was granted on January 4, 2017.
¶9 B. Plaintiff’s Complaint
¶ 10 On August 11, 2016, while the foreclosure case was still pending, plaintiff filed her
complaint in the present proceedings, alleging the following.
¶ 11 John executed the loan and the mortgage in his individual capacity only. When he
borrowed the money for the mortgage, he did not know that he owned only an undivided half
interest in the property and that Kathleen’s estate owned the other half interest. John proceeded
under the assumption that he held title to the property in joint tenancy with Kathleen and,
therefore, had mortgaged the entire property. The complaint in the foreclosure case sought the
entire property, not just an undivided half interest. And, at least as of the date of being served
with John’s answer, defendants knew that the loan was secured by only an undivided half interest
in the property. Despite that knowledge, defendants sought foreclosure on the entire property.
¶ 12 Defendants proceeded to obtain a judgment of foreclosure against the entire property.
Upon entry of the judgment, defendants caused to be published a notice of sale that provided for
the sale of only an undivided half interest in the property. At the judicial sale, however,
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2018 IL App (2d) 170082defendants caused the sheriff to sell the entire property. BMO was the successful bidder at the
sale, having bid a price of $125,000. After the sale, defendants filed a motion for approval of the
sale and distribution, reflecting the sale of the entire property. The court approved the sale of the
entire property, and a sheriff’s deed was issued and recorded by defendants.
¶ 13 During the pendency of the foreclosure proceeding, John proposed a settlement of a
negotiated amount toward the loan in return for a release of the mortgage. He tried to fund the
proposal by obtaining a reverse mortgage against the property, the proceeds of which were to be
paid to BMO. During this process, he discovered through a title search that the property was
held by him and Kathleen as tenants in common.
¶ 14 Plaintiff filed a petition to intervene in the foreclosure proceeding and ultimately
prevailed in having the foreclosure court expunge the sheriff’s deed. A second judicial sale
occurred. BMO was the successful bidder again, but this time for an undivided half interest at a
reduced price of $73,500.
¶ 15 Plaintiff further alleged that the clear purpose of accurately describing the secured
interest in the notice of sale was to deter third-party bidders at the sale. During the settlement
discussions with John, defendants produced a recent appraisal for the property showing a value
of $250,000. Defendants thus used the foreclosure proceeding to obtain title to the entire
property, with full knowledge that their security interest extended to only an undivided half
interest in the property. The loan was substantially undersecured by the property mortgaged by
John.
¶ 16 Plaintiff further alleged that defendants filed false pleadings in the foreclosure action,
knowingly and intentionally misrepresenting BMO’s security interest in the property. Plaintiff
alleged that defendants prepared and filed the sheriff’s deed representing the transfer of the entire
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2018 IL App (2d) 170082interest in the property in order to obtain the full value of the property and apply it to the balance
due on the note executed by John and to avoid the delay and cost of filing a partition action when
and if a proper judicial sale of John’s undivided half interest took place. The complaint
expressly alleged $51,500 in deterioration of the estate’s share of the property during the
extended period of delay caused by defendants’ dishonest conduct.
¶ 17 C. Defendants’ Motion to Dismiss
¶ 18 BMO filed a combined motion to dismiss all counts of plaintiff’s complaint, pursuant to
section 2-619.1 of the Illinois Code of Civil Procedure (Code) (735 ILCS 5/2-619.1 (West
2016)). Daday and Klein, Daday, Aretos and O’Donohghue joined in BMO’s motion.
Defendants contended that count I for slander of title and count III for abuse of process should be
dismissed pursuant to both sections 2-615 and 2-619(a)(9). Finally, as to count V for partition,
defendants contended that it too should be dismissed under section 2-619(a)(9) as the same cause
was pending between the same parties in the foreclosure case.
¶ 19 On January 6, 2017, the trial court found that counts I and III were barred by the absolute
litigation privilege, which applies to the recording of a “judicial deed.” The court also dismissed
count V, finding that “the partition matter is the subject of another case pending in this Circuit.”
Plaintiff timely appeals.
¶ 20 II. ANALYSIS
¶ 21 A. Standard of Review
¶ 22 Plaintiff contends that the trial court erred in dismissing counts I, III, and V of her
complaint. Defendants maintain that the trial court properly dismissed counts I for slander of
title and III for abuse of process as barred by the absolute litigation privilege. Defendants also
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2018 IL App (2d) 170082assert that the trial court properly dismissed count V for partition, as the same cause was pending
between the same parties in the foreclosure case.
¶ 23 Defendants’ motion to dismiss was brought under section 2-619.1 of the Code, which
allows a party to file a motion combining a section 2-619 motion to dismiss with a section 2-615
motion to dismiss. See 735 ILCS 5/2-619.1 (West 2016). A section 2-615 motion to dismiss
tests the legal sufficiency of a complaint. Vitro v. Mihelcic, 209 Ill. 2d 76, 81 (2004). A section
2-619 motion to dismiss admits the sufficiency of the complaint but asserts a defense outside the
complaint that defeats it. King v. First Capital Financial Services Corp., 215 Ill. 2d 1, 12
(2005). Specifically, section 2-619(a)(9) permits involuntary dismissal where the claim is barred
by “other affirmative matter.” 735 ILCS 5/2-619(a)(9) (West 2016). When ruling on such
motions, a court must accept as true all well-pleaded facts, as well as any reasonable inferences
that may arise from them (Doe v. Chicago Board of Education, 213 Ill. 2d 19, 28 (2004)), but a
court cannot accept as true mere conclusions unsupported by specific facts (Pooh-Bah
Enterprises, Inc. v. County of Cook, 232 Ill. 2d 463, 473 (2009)). See also Hanks v. Cotler, 2011
IL App (1st) 101088, ¶ 17 (stating that a motion to dismiss under sections 2-615 and 2-619
admits well-pleaded facts but that “conclusions of law and conclusory factual allegations not
supported by allegations of specific facts are not deemed admitted” (internal quotation marks
omitted)). Our review of a dismissal under either section 2-615 or section 2-619 is de novo.
Patrick Engineering, Inc. v. City of Naperville, 2012 IL 113148, ¶ 31.
¶ 24 B. Absolute Litigation Privilege
¶ 25 The crux of plaintiff’s claim for slander of title in count I concerned the sheriff’s deed
that was recorded against the property. The claim for abuse of process in count III was based on
defendants’ course of conduct by which they sought and initially obtained a deed to the property,
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2018 IL App (2d) 170082i.e., the summons, complaint, judgment of foreclosure, court order approving the judicial sale,
and deed that were entered in the foreclosure case.
¶ 26 In Harrell v. Summers, 32 Ill. App. 2d 358 (1961), the Fourth District Appellate Court set
forth the controlling principle of the absolute litigation privilege:
“It has long been the recognized rule of law that whatever is said or written in a
legal proceeding which is pertinent and material to the matters in controversy, is
privileged, and no action of slander or libel can be maintained thereon.” Id. at 361-62.
¶ 27 We find the case of Ringier America, Inc. v. Enviro-Technics, Ltd., 284 Ill. App. 3d 1102(1996), instructive. In that case, the plaintiff filed a complaint alleging that the defendant
Enviro-Technics, Ltd., breached a contract to purchase the plaintiff’s real estate. The defendants
filed an answer and a counterclaim, admitting that an agreement existed to purchase the property
but alleging that the plaintiff had defaulted on the agreement by failing to deliver a suitable title
commitment as required by the contract. The defendants sought specific performance or
rescission and filed and recorded a lis pendens notice. Id. at 1103-04. The plaintiff voluntarily
dismissed its suit. The plaintiff filed a new complaint for slander of title, alleging that the
defendants maliciously and without justification filed the counterclaim and the lis pendens notice
for the sole purpose of clouding title to the plaintiff’s property to interfere with the plaintiff’s
ability to sell it. The defendants responded by alleging that the lis pendens notice was privileged.
Id. at 1104.
¶ 28 The Ringier court noted the existence of a narrow class of cases in which an absolute
privilege provides complete immunity from civil action for statements made in the course of
litigation, even though the statements are made with malice, because public policy favors the free
and unhindered flow of such information. Id. at 1105 (citing Starnes v. International Harvester
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2018 IL App (2d) 170082Co., 184 Ill. App. 3d 199, 203 (1989)). Citing other jurisdictions that had considered the
question presented, the Ringier court further pointed out that nearly all of them had extended the
absolute privilege to include the filing and/or recording of a lis pendens notice, “provided the
underlying litigation makes allegations affecting some ownership interest in the subject
property.” Id. (and the cases cited therein). Of importance to the Ringier court’s determination
was the following reasoning of the Supreme Court of California:
“It would be anomalous to hold that a litigant is privileged to make a publication
necessary to bring an action but that he can be sued for defamation if he lets anyone
know that he has brought it [citation], particularly when he is expressly authorized by
statute to let all the world know that he has brought it.” Albertson v. Raboff, 295 P.2d
405, 409 (Cal. 1956).
The Ringier court found that the allegations made by the defendants in their counterclaim were
protected by the absolute privilege, and the court extended the same protection to the recording
of the associated lis pendens notice. Ringier, 284 Ill. App. 3d at 1106.
¶ 29 We agree with defendants that the filing of a lis pendens notice is analogous to the
recording of the sheriff’s deed in the present case. It constitutes a communication made in the
course of litigation affecting an ownership interest in the subject property. The recording of a
sheriff’s deed results from a mortgage foreclosure action. As defendants note, the deed provides
the title of and the parties to the litigation, the court in which it was brought, and a description of
the property. It is similar to a lis pendens notice, because it provides notice that the property is
involved in litigation. See Applegate Apartments Ltd. Partnership v. Commercial Coin Laundry
Systems, 276 Ill. App. 3d 433, 444 (1995). Accordingly, we extend the absolute litigation
privilege to the recording of a sheriff’s deed in a mortgage foreclosure action.
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2018 IL App (2d) 170082¶ 30 The cases plaintiff cites in support of her argument are distinguishable. In August v.
Hanlon, 2012 IL App (2d) 111252, the statements an attorney made to a reporter regarding a
pending lawsuit were not protected by the absolute litigation privilege, as they had nothing to do
with the litigation process. Id. ¶ 6. On the other hand, the recording of the sheriff’s deed in the
present case was the final step of the mortgage foreclosure process and thus was clearly
connected to that process.
¶ 31 In Kurczaba v. Pollock, 318 Ill. App. 3d 686 (2000), the defendant-attorney disseminated
copies of an amended complaint in an advertisement announcing the formation of his new firm.
The court determined that the litigation privilege did not apply, because the complaint was not
yet part of the record, as it was filed without leave of court, and was disseminated to groups
beyond those covered by the privilege. Id. at 703. The court noted that “Illinois clearly limits
the attorney litigation privilege and has refused to extend it to third-party communications
unrelated to a lawsuit.” Id. at 705. Here, unlike in Kurczaba where the purpose of disseminating
the material was to advertise, defendants’ purpose in recording the sheriff’s deed was related to
the foreclosure case.
¶ 32 In Thompson v. Frank, 313 Ill. App. 3d 661, 664 (2000), the court refused to extend the
litigation privilege to the defendant-attorney, who sent a letter to the opposing party’s spouse
detailing damaging behavior of the opposing party and encouraging the spouse to act as a
witness against the party. Clearly, this communication was an out-of-court communication not
authorized by statute, unlike a deed transfer following the entry of an order approving a
foreclosure sale. See 735 ILCS 5/15-1509 (West 2016).
¶ 33 Plaintiff contends that the sheriff’s deed is not “in a legal proceeding” and that therefore
the absolute litigation privilege is inapplicable. Plaintiff is correct that the order approving the
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2018 IL App (2d) 170082sale is the final order in a mortgage foreclosure case. However, the Illinois Mortgage
Foreclosure Law (Foreclosure Law) contemplates that a deed transfer will occur after the order
approving the sale is granted. See id. Plaintiff cannot detach the sheriff’s deed from the
pleadings in the foreclosure case, the judgment of foreclosure, and the order approving the sale.
The recording of the deed simply does not occur outside of the foreclosure action.
¶ 34 Plaintiff also contends that the absolute litigation privilege is inapplicable because she
was not a party to the foreclosure case. There is no authority for the proposition that a plaintiff
must be a party to the litigation for the absolute litigation privilege to apply. Of importance is
that the privilege covers the publication of matter that has a connection to the litigation. See,
e.g., O’Callaghan v. Satherlie, 2015 IL App (1st) 142152, ¶ 25 (the communications protected
by the absolute litigation privilege “must relate to proposed or pending litigation and must be in
furtherance of representation”).
¶ 35 Plaintiff argues that, even if the filing of the sheriff’s deed was subject to a privilege, the
privilege should be qualified and not absolute. Plaintiff relies upon Kurtz v. Hubbard, 2012 IL
App (1st) 111360. In that case, the court determined that statements made in an assessment lien
were not entitled to the absolute litigation privilege, because, unlike a lis pendens notice, which
depends on the underlying litigation for its existence, the assessment lien existed entirely
separately from the litigation. Id. ¶ 15. As previously noted, the recording of a sheriff’s deed is
the result of a mortgage foreclosure action and is similar to the filing of a lis pendens notice.
Therefore, the recording of a sheriff’s deed is also distinguishable from the circumstance in
Kurtz.
¶ 36 Furthermore, although the trial court relied on the absolute litigation privilege in
dismissing counts I and III, in affirming the judgment, we are not restricted to the basis relied on
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2018 IL App (2d) 170082by the court. See Huang v. Brenson, 2014 IL App (1st) 123231, ¶ 16. In order to defeat a claim
of qualified privilege in a cause of action for slander of title, the plaintiff must plead that the
statements made were both false and malicious. See Whildin v. Kovacs, 82 Ill. App. 3d 1015,
1016 (1980) (slander of title is a false and malicious publication, oral or written, of words that
disparage a person’s title to property, resulting in special damages). Count I for slander of title
contained no allegation that defendants intended for the recording of the sheriff’s deed to harm
plaintiff’s interests. Accordingly, plaintiff failed to plead a cause of action for slander of title.
¶ 37 To bring a claim for abuse of process, the plaintiff must plead “(1) the existence of an
ulterior purpose or motive for the use of regular court process, and (2) an act in the use of
process not proper in the regular prosecution of a suit.” McGrew v. Heinold Commodities, Inc.,
147 Ill. App. 3d 104, 111 (1986). Plaintiff’s allegations were based entirely upon actions that
occurred in the foreclosure case, in which defendants had the right to foreclose. See id. (“the
validity of the underlying debt is simply irrelevant to an abuse of process claim”). Therefore,
plaintiff failed to plead a cause of action for abuse of process.
¶ 38 C. Partition
¶ 39 Initially, we must address a motion this court took with the case: plaintiff’s motion to
strike defendants’ arguments regarding the partition issue on the ground of res judicata. Plaintiff
alleges in her motion that the trial court dismissed her partition claim on the ground that the same
cause was pending in the foreclosure case, but, according to plaintiff, the foreclosure court
granted plaintiff’s motion to dismiss BMO’s partition claim because BMO lacked standing when
it filed its partition claim. Plaintiff further alleges that BMO did not appeal the foreclosure
court’s order dismissing its partition claim and that the time for filing an appeal has expired.
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2018 IL App (2d) 170082Therefore, plaintiff maintains, res judicata bars defendants from litigating the issue of BMO’s
standing to file its partition claim.
¶ 40 The doctrine of res judicata applies when there is a final judgment on the merits rendered
by a court of competent jurisdiction, there is identity of parties or their privies, and there is
identity of causes of action. Robinson v. Toyota Motor Credit Corp., 201 Ill. 2d 403, 411 (2002).
The foreclosure court’s order, which plaintiff attached to the motion to strike, states that the
motion to dismiss BMO’s partition claim was dismissed without prejudice to BMO’s right to
refile a partition action. A dismissal “ ‘without prejudice’ ” signals that there is no final decision
on the merits and that the plaintiff is not barred from refiling the action. Richter v. Prairie
Farms Dairy, Inc., 2016 IL 119518, ¶ 24. Thus, res judicata does not apply, as the order
dismissing BMO’s partition claim was not final. We therefore deny plaintiff’s motion to strike.
¶ 41 We now turn to plaintiff’s contention that the trial court erred in dismissing her partition
claim.
¶ 42 Under section 2-619(a)(3) of the Code, a defendant may seek dismissal of an action on
the ground “[t]hat there is another action pending between the same parties for the same cause.”
735 ILCS 5/2-619(a)(3) (West 2016). The decision to grant or deny a section 2-619(a)(3) motion
is within the trial court’s discretion, unlike motions under other subsections of section 2-619.
Combined Insurance Co. of America v. Certain Underwriters at Lloyd’s, London, 356 Ill. App.
3d 749, 754 (2005). The purpose of section 2-619(a)(3) is to avoid duplicative litigation. In re
Marriage of Epsteen, 339 Ill. App. 3d 586, 593 (2003). A section 2-619(a)(3) motion is
inherently procedural and urges the trial court to weigh several factors when deciding whether it
is appropriate for the action to proceed. Overnite Transportation Co. v. International
Brotherhood of Teamsters, 332 Ill. App. 3d 69, 73 (2002); Hapag-Lloyd (America), Inc. v. Home
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2018 IL App (2d) 170082Insurance Co., 312 Ill. App. 3d 1087, 1090 (2000). Thus, on appeal, a trial court’s decision to
dismiss pursuant to section 2-619(a)(3) will not be overturned absent an abuse of its discretion.
Continental Casualty Co. v. Radio Materials Corp., 366 Ill. App. 3d 345, 347 (2006). An abuse
of discretion occurs when the ruling is “arbitrary, fanciful, or unreasonable, or when no
reasonable person would take the same view.” Favia v. Ford Motor Co., 381 Ill. App. 3d 809,
815 (2008). It is the burden of a section 2-619(a)(3) movant to demonstrate through clear and
convincing evidence that the two actions involve (1) the same parties and (2) the same cause.
Hapag-Lloyd (America), Inc., 312 Ill. App. 3d at 1091.
¶ 43 When defendants moved to dismiss plaintiff’s partition claim on the basis that the same
cause was pending between the same parties in the foreclosure case, plaintiff responded that the
motion to dismiss should be denied because BMO had no standing to file its partition claim and
that, when BMO had standing, the proper remedy would be consolidation. Therefore, plaintiff,
in effect, conceded that the same cause was pending between the same parties in the foreclosure
case.
¶ 44 On appeal, plaintiff asserts for the first time that there was no action pending between the
parties when plaintiff filed her claim for partition. We agree with defendants that plaintiff has
forfeited this issue, as plaintiff did not raise it in the trial court. Issues not raised in the trial court
are forfeited and may not be raised for the first time on appeal. Haudrich v. Howmedica, Inc.,
169 Ill. 2d 525, 536 (1996).
¶ 45 Nevertheless, the record shows that the foreclosure case was pending when the trial court
in the present case rendered its decision. As pointed out by defendants, when the trial court
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2018 IL App (2d) 170082dismissed plaintiff’s partition claim on January 6, 2017, there was an identical claim for partition
pending between the same parties in the foreclosure case. 2
¶ 46 Plaintiff also contends that BMO lacked standing to file its partition claim in the
foreclosure case, because BMO did not have title to the property when it filed the claim and
therefore was not an owner of the property. The issue of standing was a matter for the court in
which the claim was pending. See In re Marriage of Baltzer, 150 Ill. App. 3d 890, 895 (1986)
(orderly administration of justice does not permit one court of this state to ignore action pending
in another court of this state). Under the circumstances, the trial court did not abuse its
discretion in allowing the partition claim to go forward with the same parties in a different case.
¶ 47 III. CONCLUSION
¶ 48 For the preceding reasons, the judgment of the trial court is affirmed.
¶ 49 Affirmed.
2
Both plaintiff’s motion to strike and a footnote in BMO’s response brief state that the
foreclosure court dismissed BMO’s claim for partition, without prejudice, on March 1, 2017.
BMO states that it in fact refiled a partition action on April 17, 2017, in case No. 17-CH-325,
which is still pending.
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