Wilmington Savings Fund Society v. Herzog , 2023 IL App (1st) 221467-U ( 2023 )


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    2023 IL App (1st) 221467-U
    No. 1-22-1467
    Second Division
    December 5, 2023
    NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the
    limited circumstances allowed under Rule 23(e)(1).
    ____________________________________________________________________________
    IN THE
    APPELLATE COURT OF ILLINOIS
    FIRST DISTRICT
    ____________________________________________________________________________
    ) Appeal from the
    WILMINGTON SAVINGS FUND                          ) Circuit Court of
    SOCIETY, FSB, d/b/a Christiana Trust, not in )     Cook County.
    its individual capacity but solely as Trustee of )
    the Brougham Fund I Trust [successor in          )
    interest to WELLS FARGO BANK, N.A.],             )
    )
    Plaintiff-Appellee,                     ) No. 11 CH 25112
    )
    v.                                      )
    )
    MALCOLM D. HERZOG,                               ) Honorable
    ) William B. Sullivan
    Defendant-Appellant.                    ) Judge, Presiding.
    ____________________________________________________________________________
    JUSTICE COBBS delivered the judgment of the court.
    Justices McBride and Ellis concurred in the judgment.
    ORDER
    ¶1    Held: Appeal is not moot despite appellant’s failure to obtain a stay because appellant has
    requested relief other than the sold property. The circuit court properly granted
    summary judgment in favor of Wilmington Savings where the release of the
    mortgage was not supported by consideration and foreclosure of the valid mortgage
    on Herzog’s property was warranted. The circuit court’s confirmation of sale and
    No. 1-22-1467
    entry of deficiency judgment was not an abuse of discretion. The circuit court is
    directed to enter an order expunging the invalid release from the public record.
    ¶2     In this mortgage foreclosure action, defendant-appellant Malcolm D. Herzog appeals from
    orders of the circuit court of Cook County entering summary judgment in favor of plaintiff-
    appellee Wilmington Savings Fund Society, doing business as Christiana Trust, not in its
    individual capacity but solely as Trustee of the Brougham Fund I Trust [successor in interest to
    Wells Fargo Bank, N.A.] (Wilmington Savings), confirming the sale of the property, and entering
    a deficiency judgment against Herzog in the amount of $1,574,091. On appeal, Herzog argues that
    the circuit court erred in granting summary judgment in favor of Wilmington Savings because the
    release of the mortgage barred its foreclosure and Wilmington Savings did not provide evidence
    of fraud, duress, illegality, or mutual mistake. He also argues that the court erred in confirming the
    foreclosure sale and entering a deficiency judgment without an evidentiary hearing where the
    amount was patently inequitable. For the reasons that follow, we affirm and remand with
    directions.
    ¶3                                      I. BACKGROUND
    ¶4     Preliminarily, we note that, despite the more than a thousand pages of record, Herzog’s
    statement of facts is comprised of less than three pages. See Ill. S. Ct. R. 341(h)(6) (eff. Oct. 1,
    2020) (Statement of facts “shall contain the facts necessary to an understanding of the case, stated
    accurately and fairly without argument or comment[.]”). Those three pages provide almost none
    of the procedural history of the case and contains improper argument throughout. Unfortunately,
    Wilmington Savings did not provide its own statement of facts, despite the deficiency in Herzog’s
    brief. See Ill. S. Ct. R. 341(i) (eff. Oct. 1, 2020) (Statement of facts need not be included in
    appellee’s brief “except to the extent that the presentation by the appellant is deemed
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    unsatisfactory.”). Nonetheless, we choose neither to strike the statement of facts nor dismiss the
    appeal. We will, however, disregard the noncompliant portions of Herzog’s statement of facts. See
    Szczesniak v. CJC Auto Parts, Inc., 
    2014 IL App (2d) 130636
    , ¶ 8. The following statement of
    facts, therefore, is based on the record filed on appeal.
    ¶5     The property that is the subject of these foreclosure proceedings is located at 9111 West
    126th Street in Palos Park, Cook County, Illinois. On September 8, 2006, Herzog executed a
    mortgage in the amount of $1,499,999. The original mortgagor, Wells Fargo Bank, N.A. (Wells
    Fargo), recorded the mortgage with the Cook County Recorder of Deeds on October 12, 2006.
    ¶6     The loan was twice modified, first on March 31, 2008, and a second time on April 3, 2008.
    After the second modification, the amount of indebtedness was $1,728,798.05. Significantly, the
    release of the original mortgage was recorded, five days later, on April 8, 2008.
    ¶7     In late 2010, Herzog failed to make the necessary mortgage payments and the note and
    mortgage went into default.
    ¶8     Subsequently, on July 18, 2011, Wells Fargo filed its initial complaint in this action.
    ¶9     Between 2011 and 2017, Wells Fargo continued to pursue its foreclosure action against
    Herzog. In 2016, Wells Fargo assigned Herzog’s mortgage to Wilmington Savings. On Wells
    Fargo’s motion, Wilmington Savings was substituted as plaintiff. Attached to the motion was an
    exhibit showing the corporate assignment of Herzog’s mortgage which reflected the mortgage as
    “ReRecorded” on February 22, 2016. The court granted the motion on August 15, 2017.
    ¶ 10   On October 16, 2017, Wilmington Savings filed several non-dispositive motions, including
    a motion for summary judgment.
    ¶ 11   Following briefing on Wilmington Savings’s motion for summary judgment on January
    18, 2018, Herzog filed a motion and was subsequently granted leave to file an affirmative defense,
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    namely release of the mortgage. Attached to the motion was an exhibit showing that, on April 18,
    2008, Wells Fargo executed a “Release of Mortgage or Trust Deed,” recorded on May 8, 2008,
    with the Cook County Recorder of Deeds. The release stated that Wells Fargo “for and in
    consideration of the payment of indebtedness” secured by Herzog and “the cancellation of all the
    notes thereby secured, and the sum of one dollar, “do hereby REMISE, RELEASE, CONVEY,
    AND QUITCLAIM unto [Herzog] *** all the right, title, interest, claim, or demand *** acquired
    in, through or by a certain Mortgage/Trust Deed, dated September 8, 2006[.]” The document was
    signed by Milly A. Thompson, as assistant vice president of Wells Fargo.
    ¶ 12   On March 2, 2018, Wilmington Savings moved to amend its complaint, the version of
    which is the subject of this appeal. Count I requested, inter alia, foreclosure on the mortgage.
    Count II requested a judgment declaring the validity of the mortgage and expungement of the
    release from the public record. The complaint stated that Wilmington Savings’s predecessor
    “executed an erroneous ‘Release of Mortgage or Trust Deed’ dated April 18, 2008 and recorded
    April 8, 2008[.]” The subject mortgage “was re-recorded February 22, 2016 *** to reflect that the
    subject mortgage is a valid and subsisting lien [against] the subject property” and Herzog
    continued to make payments on the note and mortgage “after the date of the erroneous Release of
    Mortgage[.]” Wilmington Savings requested that the circuit court declare the mortgage as valid,
    expunge the release of mortgage, and award such other relief as “fit and proper” under the
    circumstances.
    ¶ 13   Attached to the complaint was an affidavit of rescission dated May 4, 2015, and signed by
    Elizabeth Ripka, vice president of loan documentation of Wells Fargo. Ripka averred that the
    release should be expunged as “null and void” because there is still a “valid and existing lien
    against the subject property.”
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    No. 1-22-1467
    ¶ 14   In his answer to the amended complaint, Herzog stated “affirmatively that [Wilmington
    Savings] lacks any valid and subsisting instrument that is subject to foreclosure,” “all indebtedness
    secured thereby was released” by the release of mortgage, and the re-recording of the mortgage
    was not authorized or effective. He denied that the affidavit of rescission was genuine but
    “admit[ted] that he made payments to Wells Fargo” after the recording of the release. Finally, he
    requested that both counts be dismissed with prejudice.
    ¶ 15   Between 2018 and 2021, Herzog filed two motions to dismiss, as well as a motion for
    summary judgment, all of which were denied. During that time, the depositions of John Gresham,
    a corporate representative of BSI Financial Services (BSI), and Herzog were taken.
    ¶ 16   Gresham testified that BSI is the servicer for Wilmington Savings. BSI accepts payments
    from borrowers, sends out mortgage statements, takes inquiries, and assists with loss mitigation.
    Gresham was responsible for reviewing loans that fall into default and attending trials, mediations,
    and depositions in foreclosure cases. He testified that he had not seen the agreement between Wells
    Fargo and Wilmington Savings assigning the subject mortgage. He did not personally contact
    Wells Fargo to see if there were any additional documents related to this mortgage. He also did
    not contact any persons identified in the release document or the affidavit of rescission and he had
    no knowledge as to the error made in the release of the mortgage. As far as he knew, no one at BSI
    ever investigated who was involved in the execution of those documents. He further testified that
    there was nothing on the face of the release that would suggest that it was made in error.
    ¶ 17   Herzog testified that he had other “obligations” with Wells Fargo, in addition to the one at
    issue, and he did not recall making mortgage payments to Wells Fargo for the property at issue.
    He testified that he believed that he did not have a mortgage on the property at issue because “it
    was released as well as the debt.” He further testified that he did not recall any of the specifics
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    surrounding the execution of the release. As to the continued payments to Wells Fargo after the
    release, Herzog stated that he did not recall making any payments after March 26, 2008, but he
    had other obligations with Wells Fargo and any payments made should have been applied to his
    other mortgage.
    ¶ 18   During his deposition, the following colloquy occurred:
    “Q. Did you receive a form 1099-C for this property after the release of mortgage was
    recorded in May of 2008 from Wells Fargo Bank?
    A. I do not remember.
    ***
    Q. When people have loan forgiveness against them, it gets taxed a certain way. When
    people make monthly payments or pay off a debt, it gets taxed in an entirely different way.
    Do you know how that -- do you know what actions or steps you reported to the IRS relating
    to the forgiveness of the $1.5 million?
    A. No recollection.
    Q. Do you know if it was treated as personal income?
    A. No recollection.
    Q. Do you recognize if you took $1.5 million of loan forgiveness and didn’t treat it as
    earned income it could have tax consequences?
    A. No recollection.”
    ¶ 19   On June 1, 2021, Wilmington Savings filed a motion for summary judgment. Therein,
    Wilmington Savings asserted that Herzog admitted that the mortgage was a valid lien by failing to
    deny the allegation in his answer. Further, Herzog’s admission that he continued to make payments
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    on the mortgage after the release was executed is evidence that the release was in error. It also
    contended that those continued payments evidenced that Herzog had not paid the entire
    indebtedness at the time the release was executed. Additionally, it maintained, Herzog’s deposition
    showed that he had no evidence of valid consideration for the release because he could not recall
    any of the details of the release. It further pointed to Wells Fargo’s re-recording of the mortgage
    as evidence of the invalidity of the release. Finally, Wilmington Savings asserted that Herzog’s
    indebtedness still existed and had Herzog paid off the loan to secure the release, no amount would
    be owed. Attached to the motion was an affidavit from Cheryl Mallory, an assistant vice president
    of BSI, attesting that, as of January 8, 2021, the amount due under the mortgage was
    $2,481,266.62.
    ¶ 20   Simultaneously, Wilmington Savings filed a motion to appoint a selling officer and a
    motion for judgment of foreclosure.
    ¶ 21   On July 15, 2021, Herzog filed his response to Wilmington Savings’s motion for summary
    judgment. He argued that an issue of fact existed as to whether the mortgage in this action remains
    in existence and is subject to foreclosure. He further asserted that Wilmington Savings lacks any
    proof that the release was mistakenly prepared, executed, and recorded by Wells Fargo.
    Additionally, he claimed that evidence of unilateral mistake would be insufficient. Finally, Herzog
    asserted that there is no evidence of lack of consideration and that issue was never included in
    plaintiff’s amended complaint.
    ¶ 22   On August 5, 2021, Wilmington Savings filed its reply, arguing that there would only be
    an issue of material fact if Herzog claimed that there was consideration for the release and he had
    evidence to support that claim.
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    ¶ 23   The circuit court scheduled a hearing on the motion for September 28, 2021. There is no
    transcript of this hearing, or an acceptable substitute, in the record, in contravention of Illinois
    Supreme Court Rule 323(a), (c), (d) (eff. July 1, 2017). Following the hearing, the circuit court
    granted summary judgment in favor of Wilmington Savings and entered a judgment of foreclosure
    and sale. The court also appointed a selling officer.
    ¶ 24   On November 29, 2021, Herzog filed a motion for a stay pending appeal pursuant to Illinois
    Supreme Court Rule 305(b) and a motion for a finding pursuant to Illinois Supreme Court Rule
    304(a), which were both denied.
    ¶ 25   On that same day, Herzog also filed a motion for reconsideration, containing largely the
    same arguments as in his response to the motion for summary judgment. On April 12, 2022, the
    circuit court denied Herzog’s motion for reconsideration.
    ¶ 26   On April 19, 2022, the subject property was sold at auction for $1,088,000.
    ¶ 27   After the sale, Wilmington Savings filed a motion for approval of the sale and for an
    eviction order. Herzog objected, arguing that Wilmington Savings failed to show that the value of
    the collateral was less than the indebtedness and the sale was not commercially reasonable.
    ¶ 28   On August 30, 2022, the court approved the sale and entered a deficiency judgment of
    $1,574,091.18 against Herzog. The court’s written order stated that all required notices were given,
    the sale was fairly and properly made, and justice was otherwise done.
    ¶ 29   This timely appeal followed.
    ¶ 30                                      II. ANALYSIS
    ¶ 31   On appeal, Herzog argues that the circuit court erred in granting summary judgment in
    favor of Wilmington Savings because the release of the mortgage barred its foreclosure and
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    Wilmington Savings did not provide evidence of fraud, duress, illegality, or mutual mistake. He
    also argues that the court erred in confirming the sale and entering a deficiency judgment without
    an evidentiary hearing where the amount was patently inequitable.
    ¶ 32                                       A. Mootness
    ¶ 33   Initially, we must address Wilmington Savings’s contention that this appeal should be
    dismissed. Wilmington Savings asserts that Herzog’s appeal of the circuit court’s judgment is moot
    because he failed to obtain a stay of the judgment as required under Illinois Supreme Court Rule
    305(k) (eff. July 1, 2017).
    ¶ 34   Herzog, in his reply, contends that, if this court reverses the foreclosure judgment or, in the
    alternative, vacates the deficiency judgment, it will have “provided highly substantial relief
    regardless of the inability of [Herzog] to recover the foreclosed property.” He further asserts that
    “he will also get restitution for the value he lost by reason of the improper foreclosure and sale.”
    Finally, he argues that there is no precedent for declaring an appeal moot that involves a deficiency
    judgment, or “where money was at stake.”
    ¶ 35    Before proceeding, we note that while this appeal was pending, Wilmington Savings filed
    a motion to dismiss the appeal as moot pursuant to Illinois Supreme Court Rule 305(k). Herzog
    filed an objection. A different panel of this court denied the motion.
    ¶ 36   “The denial of a motion to dismiss an appeal is not final and ‘[t]he panel that hears the
    appeal has an independent duty to determine whether it has jurisdiction and to dismiss the appeal
    if it does not.’ ” Rocha v. FedEx Corporation, 
    2020 IL App (1st) 190041
    , ¶ 54 (quoting In re Estate
    of Gagliardo, 
    391 Ill. App. 3d 343
    , 348-49 (2009)). Therefore, despite the prior order denying the
    motion to dismiss, we reconsider whether this appeal is moot, pursuant to our inherent authority
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    to reconsider our prior rulings. See Stevens v. Village of Oak Brook, 
    2013 IL App (2d) 120456
    , ¶
    37 (“A court has inherent authority to reconsider and correct its rulings[.]”).
    ¶ 37   Whether an appeal is moot is a threshold question. Lakewood Nursing & Rehabilitation
    Center v. Department of Public Health, 
    2015 IL App (3d) 140899
    , ¶ 17. “An appeal is moot if no
    actual controversy exists or if events have occurred that make it impossible for the reviewing court
    to grant the complaining party effectual relief.” In re Marriage of Peters-Farrell, 
    216 Ill. 2d 287
    ,
    291 (2005). “The existence of a real dispute is not a mere technicality but, rather, is a prerequisite
    to the exercise of this court’s jurisdiction.” 
    Id.
     However, the failure to obtain a stay pending appeal,
    by itself, does not render an appeal moot. In re Tekela, 
    202 Ill. 2d 282
    , 292 (2002). Rather, where
    a reviewing court is not capable of granting any effectual relief to a party, the case is rendered
    moot. 
    Id. at 292-93
    .
    ¶ 38   In cases involving property, an appeal is moot when the subject property “has already been
    conveyed to a third party and the party seeking possession failed to obtain a stay.” Northbrook
    Bank & Trust, Co. v. 2120 Division LLC, 
    2015 IL App (1st) 133426
    , ¶ 14. Where there is no stay
    of judgment pending appeal, Illinois Supreme Court Rule 305(k) (eff. July 1, 2017) protects a
    third-party buyer from reversal or modification of a judgment regarding the subject property.
    Steinbrecher v. Steinbrecher, 
    197 Ill. 2d 514
    , 523 (2001). As such, the protections afforded to the
    non-party purchaser of the subject property under Rule 305(k) prevent this court from providing
    any relief that would affect the disposition of the property.
    ¶ 39   In his notice of appeal, as well as in his opening brief, Herzog requests merely that the trial
    court’s orders be reversed. In reply to Wilmington Savings’s mootness argument, however, he
    asserts that because there is a deficiency judgment at issue and there is a possibility for restitution
    for the value he lost if the foreclosure is held to be improper, his appeal cannot be considered moot.
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    ¶ 40    We first note that the case to which Wilmington Savings cites for support, Deutsche Bank
    National Trust Co. as Trustee for Indymax Indx Mortgage Loan Trust 2006-AR25 v. Roman, 
    2019 IL App (1st) 171296
    , is inapposite. There, although a deficiency judgment was entered against the
    defendant, the defendant did not on appeal request any monetary relief and this court’s mootness
    analysis lacked any reference to that deficiency judgment. 
    Id. ¶¶ 19-27
    . That said, it is debatable
    whether, but for Wilmington Savings’s mootness argument, Herzog would have made a specific
    request for restitution. However, in the face of Rule 305(k), reversal in this case could only yield
    monetary relief.
    ¶ 41    Although not often sought in cases such as the one now before us, restitution remains a
    viable form of equitable relief following a foreclosure. See, e.g., RCB Equities #3, LLC v. Jakubow,
    
    2021 IL App (1st) 200256-U
     (mootness argument rejected where defendant had no interest in
    return of the foreclosed property, but instead sought reversal of the deficiency judgment or an
    award of the sale proceeds); Wilmington Savings Fund v. Lockhart, 
    2019 IL App (1st) 181180-U
    (where the appellant’s claim requesting the court reverse the trial court’s dismissal of her quiet
    title claim was moot because this court could not grant any meaningful relief but her claims seeking
    money damages were not moot because they did not depend on the title to the property); but see
    First Horizon Home Loans v. Garcia, 
    2019 IL App (1st) 180092-U
     (where there was no evidence
    in the record to support defendant’s claim on appeal that it was seeking money damages as opposed
    to reversal of the judgment of foreclosure and confirmation of the sale, defendant’s appeal was
    deemed moot pursuant to Rule 305(k)). 1 Indeed, case law dating back over a century has
    1
    Although Wilmington Savings Fund v. Lockhart and First Horizon Home Loans v. Garcia are
    unpublished and were issued prior to January 1, 2021, and therefore, not precedential, we find them
    persuasive. See Osman v. Ford Motor Co., 
    359 Ill. App. 3d 367
    , 374 (“The fact one court has used certain
    reasoning in an unpublished opinion does not bar courts in this state from using the same reasoning in
    their decisions.”).
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    established that, on the reversal of a foreclosure judgment, when the postjudgment sale of a
    property prevents a court from restoring the foreclosure defendant to the status quo ante, the proper
    remedy is to award the defendant the sale proceeds in place of the property. See Thompson v.
    Davis, 
    297 Ill. 11
    , 15-19 (1921) (where “[t]he decree of foreclosure was reversed and set aside,
    and the parties became entitled to be restored to their former rights as nearly as possible”); see also
    Williamsburg Village Owners’ Ass’n, Inc v. Lauder Associates, 
    200 Ill. App. 3d 474
    , 483 (1990)
    (“[U]pon the reversal of a judgment, under which one of the parties has received benefits, he is
    under an obligation to make restitution.”).
    ¶ 42   Here, Herzog has requested that we vacate the summary judgment entered and, if he is
    ultimately successful in the circuit court, he could seek restitution in lieu of possession of the
    transferred property and he would be relieved of the deficiency judgment. Because Herzog has
    requested relief other than possession of the property, we find that the appeal is not moot and
    proceed to the merits.
    ¶ 43                                   B. Summary Judgment
    ¶ 44   On appeal, Herzog argues that the release issued by Wells Fargo should have barred the
    foreclosure and “cannot be avoided by parol evidence of lack of consideration for its issuance[.]”
    Herzog further contends that Wilmington Savings was required to present evidence of fraud,
    duress, illegality, or mutual mistake to set aside the release and it failed to present such proof.
    ¶ 45   Wilmington Savings responds that Herzog failed to demonstrate that the purported release
    created a genuine issue of material fact. It further asserts Herzog presented no evidence that he
    provided consideration for a release on the mortgage. Instead, it maintains, during his deposition,
    he repeatedly asserted that he could not recall anything about the release and he admitted to
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    continuing to make payments towards the outstanding indebtedness following the purported
    release.
    ¶ 46   Summary judgment is appropriate “ ‘where the pleadings, depositions, and admissions on
    file, together with the affidavits, if any, show that there is no genuine issue as to any material fact
    and that the moving party is entitled to judgment as a matter of law.’ ” Suburban Real Estate
    Services, Inc. v. Carlson, 
    2022 IL 126935
    , ¶ 15 (quoting 735 ILCS 5/2-1005(c) (West 2020)). “
    ‘Genuine’ means there is evidence to support the position of the nonmoving party.” Pekin Ins. Co.
    v. Adams, 
    343 Ill. App. 3d 272
    , 275 (2003). The court construes the pleadings, depositions,
    admissions, and affidavits strictly against the movant and liberally in favor of the opponent. Adams
    v. Northern Illinois Gas Co., 
    211 Ill. 2d 32
    , 43 (2004). The party moving for summary judgment
    is not required to prove its case or disprove the nonmovant’s case, but instead may be “entitled to
    summary judgment by demonstrating the absence of a genuine issue of material fact.” Berke v.
    Manilow, 
    2016 IL App (1st) 150397
    , ¶ 31. The nonmovant may defeat a summary judgment
    motion by demonstrating that a question of fact does exist. 
    Id.
     To do so, the nonmovant “must
    come forth with some evidence that arguably would entitle [them to] recovery at trial.” 
    Id.
    “Summary judgment is a drastic measure and should only be granted if the movant’s right to
    judgment is clear and free from doubt.” Outboard Marine Corp. v. Liberty Mutual Insurance Co.,
    
    154 Ill. 2d 90
    , 102 (1992). “Mere speculation, conjecture, or guess is insufficient to withstand
    summary judgment.” Sorce v. Naperville Jeep Eagle, Inc., 
    309 Ill. App. 3d 313
    , 328 (1999). Our
    review of the court’s decision is de novo (Adams, 
    211 Ill. 2d at 43
    ), meaning we perform the same
    analysis a trial court would perform and we afford no deference to the reasoning or the disposition
    of the trial court (Johnson v. Fuller Family Holdings, LLC, 
    2017 IL App (1st) 162130
    , ¶ 37).
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    ¶ 47    Count I of Wilmington Savings’s amended complaint alleges that the mortgage is a valid,
    existing lien and requests that the circuit court enter a judgment of foreclosure against Herzog.
    Count II, though oddly worded, seeks a declaratory judgment that the release was recorded in error
    and requests that the court “expunge” it from the public record. We first note that the order entered
    in this case states simply that the circuit court granted Wilmington Savings’s motion for summary
    judgment. No mention is made of the release, the later filed purported recission, or expungement.2
    That notwithstanding, the inference to be drawn from the court’s judgement is that the release was
    recorded in error and that there was, therefore, a valid lien on the property supporting summary
    judgment in favor of Wilmington Savings. See Illinois Bar Association Mutual Insurance Co. v.
    Canulli, 
    2020 IL App (1st) 190142
    , ¶ 19 (an order granting summary judgment that fails to
    expressly dispose of all issues may be appealed from where the order necessarily entailed the
    disposition of the remaining issues). Accordingly, we first address the validity of the release, a
    necessary predicate to determining whether there was a valid, existing mortgage under which
    Herzog defaulted and which supported the court’s judgment. We reserve for later discussion
    Wilmington Savings’s request that the release be expunged from the public record.
    ¶ 48    The salient facts surrounding the release are as follows. A release was executed by Wells
    Fargo on April 18, 2008, and recorded on May 6, 2008. The release identified Herzog as the
    mortgagor and identified the mortgage at issue in this case. Signed by the Assistant Vice President
    of Wells Fargo, the release stated that Herzog was released from the mortgage. Seven years later,
    Wells Fargo, just prior to assigning this mortgage to Wilmington Savings, filed an affidavit of
    2
    Despite Herzog’s failure to include a report of proceedings or acceptable substitute for the
    hearing on Wilmington Savings’s motion for summary judgment, the lack thereof does not hinder our
    review of the circuit court’s judgment because our review is de novo.
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    rescission with the Cook County Recorder of Deeds, which stated generally that the release was
    recorded in error. The mortgage was then “re-recorded” in 2016.
    ¶ 49   “A release is the abandonment of a claim to the person against whom the claim exists.”
    (Internal quotation marks omitted.) Borsellino v. Putnam, 
    2011 IL App (1st) 102242
    , ¶ 103.
    Because it is a contract, a release is governed by the rules of law pertinent to contracts. Bruner v.
    Illinois Cent. R. Co., 
    219 Ill. App. 3d 177
    , 180 (1991). Where the release in question is valid on
    its face, the burden of proof is on the party seeking to rescind or invalidate the release. Meyer v.
    Murray, 
    70 Ill. App. 3d 106
    , 111 (1979).
    ¶ 50   Herzog asserts that, for Wilmington Savings to avoid enforcement of the release, it must
    provide clear and convincing evidence that the release was obtained through fraud, duress,
    illegality, or mutual mistake. See Vandenburg v. Brunswick Corporation, 
    2017 IL App (1st) 170181
    , ¶ 29; Simmons v. Blauw, 
    263 Ill. App. 3d 829
    , 832 (1994) (citing Frank Rosenberg, Inc.
    v. Carson Pirie Scott & Co., 
    28 Ill. 2d 573
    , 579 (1963)). However, this argument assumes that the
    release was, in fact, a valid contract. Wilmington Savings takes the position that the release was
    not a valid contract because no consideration for releasing Herzog from the mortgage was given
    in exchange.
    ¶ 51   A valid contract is one that is supported by an offer, acceptance, and consideration.
    Steinberg v. Chicago Medical School, 
    69 Ill. 2d 320
    , 329 (1977); see also Moehling v. W.E. O’Neil
    Construction Co., 
    20 Ill. 2d 255
    , 265 (1960) (stating that consideration is an essential element of
    a valid contract). “Consideration for a contract consists of either some right, interest, profit, or
    benefit accruing to one party or some forbearance, detriment, loss of responsibility given, suffered,
    or undertaken by the other.” Johnson v. Maki and Associates, Inc., 
    289 Ill. App. 3d 1023
    , 1028
    (1997). “There must be a consideration for every valid contract and, if there is no consideration,
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    No. 1-22-1467
    the contract is invalid.” Beyer v. Wolfe, 
    228 Ill. App. 429
    , 435 (1923). Further, Illinois courts have
    expressly held that a release is invalid unless it is supported by consideration. See Rohr Burg
    Motors, Inc. v. Kulbarsh, 
    2014 IL App (1st) 131664
    , ¶ 48; Koules v. Euro-American Arbitrage,
    Inc., 
    293 Ill. App. 3d 823
    , 832 (1998). Nonetheless, “the mere pleading of lack of consideration
    [does] not overcome the presumption of a valid consideration, for that can only be done by offering
    evidence in support of that allegation.” Stolzenbach v. Pagoria, 
    71 Ill. App. 3d 863
    , 866 (1979).
    Such evidence must be of a “very clear and cogent nature.” Pedott v. Dorman, 
    192 Ill. App. 3d 85
    ,
    93 (1989).
    ¶ 52   Initially, we point out that, despite Wilmington Savings’s repeated assertions that Herzog
    has failed to demonstrate the validity of the release, for example, by proving consideration was
    given for the release, the burden is on Wilmington Savings, not Herzog, to first provide clear and
    cogent evidence that the facially valid release was invalid. See Blaylock v. Toledo, P. & W. R. Co.,
    
    43 Ill. App. 3d 35
    , 38 (rejecting the plaintiff’s position that “it was the burden of the defendant to
    prove the absence of those grounds which might vitiate the release” and finding fatal “the
    plaintiff’s failure to support his charge of fraud”). If Wilmington Savings first demonstrates that
    the release was invalid for lack of consideration, it will have proven that it is entitled to summary
    judgment as a matter of law, unless Herzog comes forth with some evidence to create a genuine
    issue regarding consideration.
    ¶ 53   In his attempts to defeat Wilmington Savings’s argument, Herzog cites to the principle of
    law that courts will typically not inquire into the sufficiency or adequacy of consideration.
    Sufficiency of consideration is not, however, the issue now before us. Wilmington Savings’s
    argument is that there is a total lack of consideration in exchange for the release of the mortgage.
    See White v. Village of Homewood, 
    256 Ill. App. 3d 354
    , 358 (1993) (rejecting the defendants’
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    No. 1-22-1467
    cited authority because the issue before the court was not adequacy of consideration but absolutely
    no consideration flowed between the parties). Thus, where the issue before the court, as it is here,
    is whether a valid contract was formed, a court may inquire into the actual consideration given.
    Agnew v. Brown, 
    96 Ill. App. 3d 904
    , 908 (1981) (“[L]ack or failure of consideration goes to the
    actual validity of contract formation [citation omitted] and cannot be swept aside by [a party’s]
    argument that a court typically does not review adequacy of consideration.”). Thus, Herzog’s
    argument fails.
    ¶ 54   Herzog fares no better with his repeated assertions regarding the inadmissibility of “parol
    evidence” to validate the release. “The parol evidence rule, in general, operates to exclude evidence
    which would change or alter the expressed meaning of a written document, when such evidence
    concerns dealings between the parties before or at the time of making the written contract.” Davis
    v. Buchholz, 
    101 Ill. App. 3d 388
    , 391 (1981). Where a contract recites consideration, “that recital
    is prima facie evidence that the grantor received the amount named.” Walton v. Malcolm, 
    264 Ill. 389
    , 397 (1914). Although there is a presumption that consideration was given for a contract, the
    presumption is rebuttable, although “evidence to rebut must be of a very clear and cogent nature.”
    Davis, 101 Ill. App. 3d at 392. “[F]ailure of consideration may be shown by parol evidence” where
    that issue is properly in dispute. Id. In the case before us, Wilmington Savings has explicitly
    challenged whether any consideration was given in exchange for the release of Herzog’s mortgage.
    As such, any evidence submitted on that issue was admissible and appropriately considered by the
    circuit court and now this court. In re Marriage of Tabassum and Younis, 
    377 Ill. App. 3d 761
    ,
    770 (2007) (stating that whether a contract contains consideration is a question of law that we
    review de novo).
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    No. 1-22-1467
    ¶ 55    To support its claim that the release was recorded in error, Wilmington Savings points to
    Wells Fargo’s 2015 affidavit of rescission, Herzog’s admission that he continued to make
    mortgage payments after the release was recorded, and the amount of Herzog’s outstanding
    indebtedness. Herzog contends that this evidence is insufficient to support recission of the release
    and Wilmington Savings’s allegations are based on pure speculation.
    ¶ 56    Based on the evidence before us, we are not persuaded that either Wells Fargo’s affidavit
    of rescission, which offers little, or Herzog’s admission of continued payments to Wells Fargo
    post-release are sufficient to support Wilmington Savings’s claim of no consideration. First, the
    affidavit, issued seven years after the release was recorded, generally states that the release was
    recorded “in error” and is rendered “null and void.” This is hardly evidence of a lack of
    consideration. Second, we do not dispute that Herzog admitted to continuing to make payments to
    Wells Fargo. However, in his deposition, he testified that he had multiple obligations with Wells
    Fargo and any of his payments could have been made for the purpose of a mortgage other than one
    at issue here. As such, neither of these facts constitute clear and cogent evidence of the release’s
    invalidity.
    ¶ 57    That said, we are persuaded that Wilmington Savings has presented evidence that Herzog’s
    mortgage has simply not been paid off. Further, the amount of his indebtedness at the time the
    motion for summary judgment was filed was $2,481,266.62, according to an affidavit from BSI
    on behalf of Wilmington Savings. As Herzog himself states in his brief, “[t]he Release
    unambiguously states that it was issued ‘for and in consideration of the payment of the
    indebtedness secured by the borrower[.]” Although he contends that this recital defeats
    Wilmington Savings’s contention that consideration was not given, we construe that recital
    differently in light of the evidence of Herzog’s continuing indebtedness. In our view, the release
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    No. 1-22-1467
    contains a specific recital of consideration, namely the payment of Herzog’s indebtedness, which
    at that time was more than $1.7 million. Although he asserts that consideration could have taken
    another form, the specificity of the release leaves no room for such an inference.
    ¶ 58   Further, and although neither party appears to press the point here, during his deposition,
    Herzog was asked a series of questions regarding tax consequences resulting from the release. He
    was specifically asked whether he had received a 1099-C for the property after release of the
    mortgage was recorded. In response to every question regarding tax consequences, Herzog
    repeatedly stated that he had “no recollection.”
    ¶ 59    We need not delve too deeply into the taxation issue here. Suffice it to say that if Wells
    Fargo had discharged $1.7 million of debt to Herzog, it would have been required, not only to
    notify the IRS of the same, but also Herzog. See In re Estate of Hofer, 
    2015 IL App (3d) 140542
    ,
    ¶ 22 (Form 1099-C “was created for the mandatory reporting by applicable entities to the IRS of
    discharges, cancellations, or extinguishments rendering a debt unenforceable or uncollectible y the
    creditor.”); see also 
    26 CFR § 1
    .6050P-1(a) (2016). And, notice would not have been the end of
    the story, for forgiveness of the debt would have resulted in personal income to Herzog, also
    reportable to the IRS (
    26 U.S.C. § 61
    (a)(11) (2017) (income for discharge of indebtedness is
    included within gross income)) and, not likely an event that one would have forgotten.
    ¶ 60   Given that, we are simply hard pressed to believe, number one, that Herzog had no
    recollection of not having received a 1099-C, if as he maintains, the debt had actually been
    released. Number two, given that lenders are not in the habit of giving away money, it strains the
    bounds of credulity that, on April 3, 2008, Wells Fargo granted a loan modification, increasing
    Herzog’s mortgage to $1,728,798 and then, a few short days later, on April 18, 2008, that same
    mortgage was released. Other than his protestations regarding Wilmington Savings’s lack of proof
    - 19 -
    No. 1-22-1467
    of consideration, Herzog has presented no evidence to defeat summary judgment. The simplest
    proof would have been cancelled checks or some other documents bearing the account number for
    payment on the mortgage identified in the release, materials clearly under Herzog’s control.
    Clearly, the purported release was filed in error.
    ¶ 61   In sum, Herzog has presented no evidence that contradicts Wilmington Savings’s proof of
    lack of consideration, and thus, there is no genuine issue of material fact before the court regarding
    consideration. Because Wilmington Savings presented “clear and cogent” evidence that
    consideration was not paid in exchange for the release, we conclude that the release was not a valid
    contract and Wilmington Savings had a valid, existing mortgage against Herzog. Therefore,
    Wilmington Savings was entitled to summary judgment as a matter of law.
    ¶ 62   As a final aside, it is not lost on this court that Wilmington Savings’s predecessor in
    interest, Wells Fargo, was in no way prompt in seeking to rescind the invalid release. The affidavit
    of rescission was not filed until seven years after the release was recorded. Considering there was
    no consideration for the release, and because we have no reason to believe that Wells Fargo, having
    entered into a loan modification with Herzog, intended to then effectively gift Herzog with millions
    of dollars, it is obvious that Wells Fargo made a serious error. Additionally, the complete lack of
    evidence presented regarding the circumstances which led to the execution and recording of the
    release is disconcerting, albeit not surprising considering fifteen years have passed since then.
    Nonetheless, under the circumstances before us, we cannot contemplate any better evidence
    available to Wilmington Savings to prove Herzog’s failure to give consideration than proof of his
    multimillion dollar outstanding indebtedness to Wilmington Savings.
    ¶ 63   For that reason, we conclude that the circuit court properly granted summary judgment in
    favor of Wilmington Savings.
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    No. 1-22-1467
    ¶ 64                   C. Confirmation of Sale and Deficiency Judgment
    ¶ 65   We next address Herzog’s challenges to the confirmation of sale and deficiency judgment.
    Herzog requests that this court “reject the sale” or “require an evidentiary hearing to determine
    whether it should be approved[.]” Herzog contends that the deficiency judgment was unfair and
    Wilmington Savings “made no effort to overcome the presumption that the value of the collateral
    is equal to the indebtedness.”
    ¶ 66   In response, Wilmington argues that Herzog “makes no showing as to any of the factors
    set forth in section 1508 of the Foreclosure Law,” his sole objection to the confirmation of the sale
    “is based upon conjecture regarding the fair market value of the property,” and he provided no
    proof that the sale price obtained at the foreclosure sale was unconscionable. For the following
    reasons, we agree with Wilmington Savings.
    ¶ 67   A judicial foreclosure sale must be approved by the circuit court. Citicorp Savings v. First
    Chicago Trust Co., 
    269 Ill. App. 3d 293
    , 300 (1995). Confirmation of a judicial sale is governed
    by section 15-1508(b) of the Illinois Mortgage Foreclosure Law (Foreclosure Law) (735 ILCS
    5/15/-1501 et seq. (West 2022)), which provides, in pertinent part:
    (b) Hearing. 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 was not given, (ii) the terms of sale were
    unconscionable, (iii) the sale was conducted fraudulently, or (iv) justice was not otherwise
    done, the court shall then enter an order confirming the sale.
    ***
    - 21 -
    No. 1-22-1467
    (e) Deficiency Judgment. In any order confirming a sale pursuant to the judgment
    of foreclosure, the court shall also enter a personal judgment of deficiency against any party
    (i) if otherwise authorized and (ii) to the extent requested in the complaint and proven upon
    presentation of the report of sale in accordance with Section 15-1508. Except as otherwise
    provided in this Article, a judgment may be entered for any balance of money that may be
    found due to the plaintiff, over and above the proceeds of the sale[.] *** Such judgment
    may be entered, or enforcement had, only in cases where personal service has been had
    upon the persons personally liable for the mortgage indebtedness, unless they have entered
    their appearance in the foreclosure action.” 735 ILCS 5/15-1508(b), (e) (West 2022).
    ¶ 68   It is well settled that a reviewing court reviews an order confirming a judicial sale for abuse
    of discretion. CitiMortgage, Inc. v. Lewis, 
    2014 IL App (1st) 131272
    , ¶ 31. This court also reviews
    the denial of an evidentiary hearing under section 15-1508 for an abuse of discretion. Deutsch
    Bank National Trust Co. v. Cortez, 
    2020 IL App (1st) 192234
    , ¶ 17. A circuit court abuses its
    discretion when its ruling rests on an error of law or where no reasonable person would take the
    view adopted by the circuit court. CitiMortgage, Inc. v. Bermudez, 
    2014 IL App (1st) 122824
    , ¶
    57.
    ¶ 69   It is not unusual for property to bring less than its full, fair market value at a forced sale.
    NAB Bank v. LaSalle Bank, 
    2013 IL App (1st) 121147
    , ¶ 20. “[M]ere inadequacy of price alone is
    not sufficient cause for setting aside a judicial sale.” Illini Federal Savings & Loan Association v.
    Doering, 
    162 Ill. App. 3d 768
    , 771 (1987). “This rule is premised on the policy which provides
    stability and permanency to judicial sales and on the well-established acknowledgment that
    property does not bring its full value at forced sales and that the price depends on many
    circumstances for which the debtor must expect to suffer a loss.” World Savings & Loans Ass’n v.
    - 22 -
    No. 1-22-1467
    Amerus Bank, 
    317 Ill. App. 3d 772
    , 780-81 (2000). The party objecting to the sale bears the burden
    of proving that sufficient grounds exist to disapprove the sale. Lewis, 
    2014 IL App (1st) 131272
    ,
    ¶ 31. Finally, regarding evidentiary hearings on foreclosure sales, one is only warranted where the
    debtor has presented a “current appraisal or other current indicia of value which is so measurably
    different than the sale price as to be unconscionable.” Resolution Trust Corp. v. Holtzman, 
    248 Ill. App. 3d 105
    , 115 (1993).
    ¶ 70    Here, the record shows that Herzog’s original mortgage on the property was for $1,499,799
    and after the second modification, the amount of indebtedness was $1,728,798.05. In its motion
    for confirmation of sale and deficiency judgment, Wilmington Savings attached exhibits showing
    that the total amount due to Wilmington Savings at the time of the foreclosure sale was
    $2,661,691.18. On April 19, 2022, the property sold for $1,088,000, which is a portion, but not
    all, of Herzog’s total indebtedness. According to Wilmington Savings’s exhibits, the amount of
    indebtedness remaining after the sale was $1,574,091.18. The property was then sold again in 2023
    for $1,000,000, which Wilmington Savings contends is evidence that the property was sold at the
    foreclosure sale for near fair market value.3
    ¶ 71    “When there is no fraud or other irregularity in the foreclosure proceeding, the price at
    which the property is sold is the conclusive measure of its value.” Nationwide Advantage Mortg.
    Co. v. Ortiz, 
    2012 IL App (1st) 112755
    , ¶ 35. Such is the case here where Herzog’s only challenge
    to the sale is based on conjecture alone regarding the fair market value of the property. He does
    not present any evidence that the sale price was unconscionably low or that there was any other
    flaw in the sale. He only cites to an online real estate website, stating that the property’s value is
    3
    This court may take judicial notice of the public records of the Cook County Clerk’s Office.
    Bayview Loan Servicing, LLC v. Szpara, 
    2015 IL App (2d) 140331
    , ¶ 31.
    - 23 -
    No. 1-22-1467
    estimated between $1.73 and $1.91 million. This is insufficient evidence to place
    unconscionability of the sale price into issue. In any case, “[r]ecent case law suggests that a sale
    price below 50% of fair market value is a reasonable threshold for unconscionability.” T2
    Expressway, LLC v. Tollway LLC, 
    2021 IL App (1st) 192616
    , ¶ 29. Even if we were to find that
    $1.91 million is the fair market value of the property, the sale price of $1,088,000 would still not
    be less than 50% of the fair market value. As such, an evidentiary hearing was not warranted on
    unconscionability. Rather, the circuit court’s order expressly stated that all required notices were
    given, the sale was “fairly and properly made,” and justice was otherwise done. Thus, all of the
    statutory criteria were met in this case, and the court properly confirmed the sale in accordance
    with section 15-1508(b) of the Foreclosure Law.
    ¶ 72    The deficiency judgment was also correctly entered against Herzog. The court was required
    under section 15-1508(e) to enter a deficiency judgment against Herzog where a balance remained
    due to Wilmington Savings after the sale of the property, the complaint properly requested a
    deficiency judgment, and Herzog voluntarily entered his appearance in the foreclosure action. See
    U.S. Bank Trust, N.A. v. Atchley, 
    2015 IL App (3d) 150144
    , ¶ 11 (stating that section 15-1508(e)
    is mandatory, not permissive, and a trial court must grant a deficiency judgment when the
    requirements of that section are met). Thus, the court did not err by granting the deficiency
    judgment where all of the statutory criteria were met.
    ¶ 73    Finally, Herzog cites First Galesburg National Bank and Trust Co. v. Joannides, 
    103 Ill. 2d 294
     (1984), which is inapposite. In that case, our supreme court ruled that the failure of the
    creditor to give notice of the sale of the collateral to the debtor resulted in a rebuttable presumption
    that the value of the collateral is equal to the indebtedness. 
    Id. at 300
    . In contrast, this case does
    not involve a failure of Wilmington Savings to give notice to Herzog of the property sale.
    - 24 -
    No. 1-22-1467
    Moreover, First Galesburg involved the sale of cars and the Uniform Commercial Code. 
    Id. at 296-99
    . Similarly, Munao v. Lagattuta, 
    294 Ill. App. 3d 976
    , 979-83 (1998), involved the Uniform
    Commercial Code and the sale of restaurant equipment and, thus, is not applicable to the case
    before us which involves a foreclosure. Herzog also cites to Munao for the proposition that a sale
    must have been “commercially reasonable” to support a deficiency judgment. Again, Munao
    applied the law under the Uniform Commercial Code and, thus, it has no relevancy to the
    proceedings in this case. Our own research has revealed that any reference to whether a sale was
    “commercially reasonable” is only found in cases involving the Uniform Commercial Code. As
    such, we do not find this contention or any of Herzog’s cited authority persuasive here.
    ¶ 74    Accordingly, the circuit court did not abuse its discretion in confirming the sale and
    entering the deficiency judgment against Herzog without an evidentiary hearing.
    ¶ 75                          D. Expungement of the Recorded Release
    ¶ 76    Count II of Wilmington Savings’s complaint requested a declaratory judgment expunging
    the recorded release from the public record. The circuit court granted summary judgment in favor
    of Wilmington Savings but its written order failed to expressly grant the requested relief under
    count II. The evidence necessary to address Wilmington Savings’s request is before this court.
    ¶ 77    As we discussed above, Wilmington Savings demonstrated that, despite the recorded
    release of mortgage, Herzog remained indebted to Wilmington Savings under the mortgage for
    more than $2 million. The remaining debt was clear and cogent evidence of a lack of consideration
    in exchange for the release of indebtedness. Herzog failed to provide any evidence to the contrary.
    Thus, based on the record before us, we find that Wilmington Savings’s predecessor, Wells Fargo,
    recorded the release in error and a declaratory judgment expunging the release was warranted in
    this case.
    - 25 -
    No. 1-22-1467
    ¶ 78      Pursuant to Illinois Supreme Court Rule 366 (eff. Feb. 1, 1994), a reviewing court, in any
    appeal, may, in its discretion, “enter any judgment and make any order that ought to have been
    given or made *** that the case may require.” As such, we exercise our supervisory power to direct
    the circuit court to enter an order expunging the erroneously recorded release from the public
    record.
    ¶ 79                                     III. CONCLUSION
    ¶ 80      For the reasons stated, the judgment of the circuit court of Cook County is affirmed, and
    we remand for the circuit court to comply with the directions set forth above.
    ¶ 81      Affirmed and remanded with directions.
    - 26 -
    

Document Info

Docket Number: 1-22-1467

Citation Numbers: 2023 IL App (1st) 221467-U

Filed Date: 12/5/2023

Precedential Status: Non-Precedential

Modified Date: 12/5/2023