Wells Fargo Bank, N.A. v. Rodriguez , 2024 IL App (3d) 230020 ( 2024 )

2024 IL App (3d) 230020Opinion filed November 12, 2024
____________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
2024
WELLS FARGO BANK, N.A., ) Appeal from the Circuit Court
) of the 18th Judicial Circuit,
Plaintiff-Appellant, ) Du Page County, Illinois,
)
v. )
)
MARGARET RODRIGUEZ; MIDLAND )
FUNDING, LLC; BANK OF AMERICA, N.A.; ) Appellate Court No. 3-23-0020
THE STATE OF ILLINOIS; and UNKNOWN ) Circuit No. 19-CH-954
OWNERS AND NONRECORD CLAIMANTS, )
)
Defendants )
)
(Margaret Rodriguez, ) Honorable
) Joseph T. Bugos,
Defendant-Appellee). ) Judge, Presiding.
____________________________________________________________________________
JUSTICE HETTEL delivered the judgment of the court, with opinion.
Justices Holdridge and Peterson concurred in the judgment and opinion.
____________________________________________________________________________
OPINION
¶1 Plaintiff, Wells Fargo Bank, N.A. (Wells Fargo), filed a foreclosure complaint against
defendant, Margaret Rodriguez (Margaret), seeking to foreclose on her home that was secured by
a Wells Fargo mortgage. Defendant moved to dismiss the complaint, and the circuit court granted
the motion on the ground that plaintiff’s cause of action violated section 13-217 of the Code of
Civil Procedure (Code) (735 ILCS 5/13-217 (West 1994)), 1 also known as the “single refiling
rule.” Plaintiff appeals, and we affirm.
¶2 I. BACKGROUND
¶3 In 2009, Dolores and Margaret Rodriguez purchased a home in Downers Grove after
obtaining a loan for $364,828 that was secured by a mortgage on the property. The loan required
the Rodriguezes to repay the principal and interest through monthly installments of $1958.48.
¶4 In July 2011, Wells Fargo acquired the mortgage, and the Rodriguezes defaulted on the
loan three months later. At the time of default, the remaining principal balance of the loan was
$358,051.01. On October 4, 2011, Wells Fargo executed a loan modification agreement that
extended the loan’s maturity date and reduced the loan’s interest rate from 6% to 4.375%. The
agreement added the unpaid interest and escrow amount that accrued during default, resulting in a
modified unpaid principal balance of $384,413.69.
¶5 On May 1, 2012, the Rodriguezes once again defaulted on the loan. Wells Fargo sent a
default notice to the Rodriguezes on June 15, 2012 (default notice). In the notice, Wells Fargo
stated that to correct the default the Rodriguezes needed to pay $5498.25, the total delinquency
amount as of June 15, 2012, and encouraged them to bring the loan current by July 19, 2012, to
avoid acceleration. The notice provided:
“If funds are not received by the above referenced date, we will proceed with
acceleration. Once acceleration has occurred, we may take steps to terminate your
ownership of the property by a foreclosure proceeding, which could result in [Wells Fargo]
1
Public Act 89-7, which amended section 13-217 in March 1995 (Pub. Act 89-7 (eff. Mar. 9, 1995)),
was held to be unconstitutional in its entirety in Best v. Taylor Machine Works, 179 Ill. 2d 367 (1997).
Thus, the version of section 13-217 that is currently effective is the version that was in effect prior to that
amendment. See Hudson v. City of Chicago, 228 Ill. 2d 462, 469 n.1 (2008).
2
or another person acquiring ownership of the property. If foreclosure is initiated, you have
the right to argue that you did keep your promises and agreements under the Mortgage
Note and Mortgage, and to present any other defenses that you may have.
You have the right to reinstate your Mortgage Note and Mortgage or Deed of Trust
after acceleration, and to have enforcement of the Mortgage discontinued and to have the
Mortgage Note and Mortgage remain fully effective as if acceleration had never been
required. However, any future negotiations attempting to reinstate your loan or any
payment of less than the full amount shall not require [Wells Fargo’s] waiver of the
acceleration unless otherwise agreed to, in writing, by [Wells Fargo].”
The Rodriguezes did not make a payment to cure the default.
¶6 On September 14, 2012, Wells Fargo mailed the Rodriguezes a notice of default and
acceleration (acceleration notice), stating that due to their default the entire balance on the loan
was “due and payable.” The Rodriguezes did not respond to the acceleration notice.
¶7 On October 4, 2012, Wells Fargo filed a foreclosure complaint (Wells Fargo Bank, N.A.
v. Rodriguez, No. 12-CH-004988 (Cir. Ct. Du Page County) (Case 1)). In the complaint, Wells
Fargo alleged that the amount of original indebtedness was $364,828. The complaint further
alleged that the Rodriguezes defaulted by failing to make monthly payments “for May 2012
through the present” and that the principal balance due on the note and mortgage was $381,276.23,
plus interest, costs, and fees.
¶8 The Rodriguezes applied for loss mitigation with Wells Fargo, and in June 2013, Wells
Fargo offered them a trial period plan under the federal Home Affordable Modification Program
(HAMP). The trial plan required the Rodriguezes to make three equal payments of $2173.32, due
3
in consecutive monthly installments. After making all three payments, the Rodriguezes declined
the HAMP loan modification.
¶9 On October 13, 2016, Wells Fargo filed an amended complaint in Case 1. The amended
complaint alleged original indebtedness of $364,828 and modified indebtedness of $384,413.69.
It further alleged that the Rodriguezes were in default by failing to make monthly payments “for
May 2012 through the present” and that the principal balance due “on the note and mortgage and
modification agreement” was $381,276.23, plus interest, costs, and fees. Wells Fargo voluntarily
dismissed the amended complaint on August 22, 2017.
¶ 10 In January 2018, Wells Fargo filed a second foreclosure complaint (Wells Fargo Bank,
N.A. v. Rodriguez, No. 18-CH-000071 (Cir. Ct. Du Page County) (Case 2)). The complaint alleged
original indebtedness of $364,828 and modified indebtedness of $358,051.01, which Wells Fargo
calculated based on the original indebtedness minus the HAMP qualifying payment the
Rodriguezes tendered in 2013. The complaint further alleged that the Rodriguezes were in default
by failing to make monthly payments “for December 2012 through the present” and that the
principal balance due on “the note and the mortgage and modification agreement” was
$377,530.71, plus interest, costs and fees, and advances. Margaret moved to dismiss Case 2, and
the circuit court granted her motion, dismissing the complaint with prejudice on April 9, 2019.
Wells Fargo did not move to reconsider or appeal the involuntarily dismissal order.
¶ 11 On August 16, 2019, Wells Fargo filed a third foreclosure complaint against Margaret
(Wells Fargo Bank, N.A. v. Rodriguez, No. 19-CH-000954 (Cir. Ct. Du Page County) (Case 3)). 2
In its third complaint, Wells Fargo alleged original indebtedness of $364,828, a default date of
2
Margaret is the only property owner listed in the third foreclosure complaint.
4
“April 1, 2019, through the present,” and a remaining outstanding principal balance due on the
note of $330,085.81, plus interest, fees, and costs.
¶ 12 Margaret moved to dismiss Case 3 pursuant to section 2-619 of the Code, arguing that the
case should be dismissed because it violated the “single refiling rule” under section 13-217 of the
Code. She maintained that, applying the rule, Case 3 was an impermissible second refiling of Case
1. In an affidavit attached to her motion, Margaret averred that (1) she received a default notice
from Wells Fargo dated June 15, 2012; (2) she did not make a payment pursuant to the terms of
the June 15, 2012, letter; and (3) subsequent to October 4, 2012, the filing date of Case 1, she did
not modify, reinstate, or make a payment on the past due balance on her loan.
¶ 13 At the conclusion of the hearing, the circuit court found that because Wells Fargo
accelerated the loan in 2012 before filing Case 1, the total amount due on the loan remained
constant across all three actions and the acceleration of the note remained in effect the entire time.
The court concluded that Wells Fargo’s current action “arose from the same set of operative facts
as the [previous] action” and therefore violated the single refiling rule. In reaching its decision, the
court relied heavily on the First District case of Deutsche Bank Trust Co. Americas v. Sigler, 2020
IL App (1st) 191006.
¶ 14 II. ANALYSIS
¶ 15 On appeal, Wells Fargo argues that the circuit court erred by dismissing its foreclosure
complaint in Case 3 on the basis that it violated the single refiling rule and raises three alternative
arguments in support of its claim. First, its claims the voluntary dismissal of Case 1
“deaccelerated” and/or reinstated the loan, creating a new cause of action under the “new-default
rule.” Second, it argues the court’s involuntary dismissal of Case 2 reinstated the loan, negating
any prior acceleration and avoiding application of the single refiling rule. Last, it contends the
5
foreclosure complaint filed in Case 3 does not violate the single refiling rule because the operative
facts alleged in the complaint—the default date and the outstanding principal balance—are
different from those alleged in the first two cases.
¶ 16 Section 2-619(a)(9) of the Code allows involuntary dismissal of a claim that is “barred by
other affirmative matter avoiding the legal effect of or defeating the claim.” 735 ILCS 5/2-
619(a)(9) (West 2022). An “[a]ffirmative matter is something in the nature of a defense that
negates the cause of action completely.” (Internal quotation marks omitted.) Watkins v. McCarthy,
2012 IL App (1st) 100632, ¶ 10.
¶ 17 Under section 2-619(a)(9), a moving party must assert a defense that is “apparent on the
face of the complaint” or “supported by affidavits or certain other evidentiary materials.” Van
Meter v. Darien Park District, 207 Ill. 2d 359, 377 (2003). Once the defendant satisfies its burden,
the plaintiff is required to show that the defense is unfounded or requires the resolution of an
essential element of material fact before it is proven. Id. Facts asserted in a section 2-619 affidavit
are deemed admitted unless the plaintiff submits a counter-affidavit refuting those facts. Kedzie &
103rd Currency Exchange, Inc. v. Hodge, 156 Ill. 2d 112, 116 (1993). We review a circuit court’s
dismissal of an action under section 2-619(a)(9) de novo. Watkins, 2012 IL App (1st) 100632, ¶ 10.
¶ 18 A. Single Refiling Rule
¶ 19 Here, Margaret asserted the single refiling rule as the affirmative matter defeating Wells
Fargo’s claim. The single refiling rule is derived from section 13-217 of the Code, which states,
that if “the action is voluntarily dismissed by the plaintiff, *** the plaintiff, his or her heirs,
executors or administrators may commence a new action within one year or within the remaining
period of limitation, whichever is greater, after *** the action is voluntarily dismissed by the
plaintiff.” 735 ILCS 5/13-217 (West 1994). Our supreme court has interpreted section 13-217 as
6
“expressly permit[ting] one, and only one, refiling of a claim even if the statute of limitations has
not expired.” Flesner v. Youngs Development Co., 145 Ill. 2d 252, 254 (1991).
¶ 20 “Whether two complaints state the same claim does not depend on how the plaintiff labels
the complaint.” First Midwest Bank v. Cobo, 2018 IL 123038, ¶ 18. Instead, to determine whether
two lawsuits assert the same cause of action for purposes of the single refiling rule, we apply the
transactional test used in res judicata cases. Id. The transactional test treats separate claims as
asserting the same cause of action “if they arise from a single group of operative facts.” River Park,
Inc. v. City of Highland Park, 184 Ill. 2d 290, 311 (1998). Courts should approach the single-
group-of-operative-facts inquiry “ ‘pragmatically, giving weight to such considerations as whether
the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit,
and whether their treatment as a unit conforms to the parties’ expectations or business
understanding or usage.’ ” Id. at 312 (quoting Restatement (Second) of Judgments § 24, at 196
(1982)).
¶ 21 In this case, each of the three foreclosure complaints arise from the same operative facts
because they were brought by the same plaintiff, Wells Fargo, alleged the same original
indebtedness of $364,828, and asserted default of the same underlying note, mortgage, and
modified loan agreement. Additionally, Margaret asserted in her uncontested affidavit that she did
not commit multiple defaults that could form the basis of different causes of action because, after
her initial default in July 2012, Wells Fargo accelerated the note under the terms of the modified
loan agreement. Thus, contrary to Wells Fargo’s assertion, the single refiling rule applies and
requires dismissal of its third foreclosure complaint.
¶ 22 Wells Fargo nevertheless claims that Case 3 was not an impermissible second refiling of
Case 1 because under transactional test and res judicata principles, a separate cause of action arose
7
each time Margaret failed to make a monthly installment payment. As such, Wells Fargo argues
that res judicata does not bar suits for defaults on installments payments whose due dates occur
after the filings of the prior complaints and cites Wilmington Savings Fund Society, FSB v. Barrera,
2020 IL App (2d) 190883, in support of its argument.
¶ 23 “The general rule is that where a money obligation is payable in installments, a separate
cause of action arises on each installment and the statute of limitations begins to run against each
installment as it becomes due.” Thread & Gage Co. v. Kucinski, 116 Ill. App. 3d 178, 184 (1983);
see Brown v. Charlestowne Group, Ltd., 221 Ill. App. 3d 44, 46 (1991). In Barrera, the Second
District relied on this general proposition and announced the “new-default rule.” Barrera, 2020 IL
App (2d) 190883, ¶ 19. The new-default rule allows a party entitled to installment payments under
a contract to bring a separate action on each installment as each one becomes due or wait until
several installments are due. Id. In Barrera, after three prior foreclosure complaints in which the
bank accelerated the note, the bank filed a fourth complaint, alleging that the borrowers defaulted
by failing to pay property taxes and insurance. Id. ¶ 6. The circuit court dismissed the fourth
complaint based on the single refiling rule. Id. ¶ 8.
¶ 24 On appeal, the court applied the transactional test and held that the single refiling rule was
not a complete defense to the bank’s fourth foreclosure complaint because, as alleged, the
borrowers “failures to pay taxes and insurance are new defaults.” (Emphasis omitted.) Id. ¶ 14.
The court reasoned that this new-default rule was a “specific instance of the transactional test” and
was necessary to provide remedies for contracts that require performance over a number of years.
Id. ¶¶ 19-21. Thus, the court concluded that the borrowers’ new defaults were not part of the core
set of operative facts that formed the basis of the prior complaints. Barrera explained that the new-
8
default rule prevents unreasonable and unjust results because a “continuing pattern of defaults
should not immunize a party from suit.” (Emphasis added.) Id. ¶ 20.
¶ 25 The court in Bank of New York Mellon v. Dubrovay, 2021 IL App (2d) 190540, ¶¶ 29-30,
relied on the reasoning in Barrera and extended its holding by concluding that the voluntary
dismissal of three prior foreclosure complaints deaccelerated the debt, which reinstated the note
and the mortgage in that case. Consequently, the Dubrovay court concluded that the bank’s fourth
foreclosure complaint alleged a new default and was not barred by the single refiling rule. Id. In
Dubrovay, after three prior foreclosure complaints in which the bank accelerated the loan (all three
of which the bank voluntarily dismissed), the bank filed a fourth complaint alleging the same
principal balance as alleged in the complaints but asserted a later default date than previously pled.
Id. ¶¶ 5-11. The borrower did not receive a notice of acceleration separate from the foreclosure
complaints. The complaints themselves simply indicated that the borrower “ ‘failed to make
payments when due and the subject loan has been accelerated.’ ” Id. ¶¶ 5, 11. In reversing the
circuit court’s dismissal, the appellate court reasoned that the effect of the bank’s voluntary
dismissal of the three previous foreclosure actions was to render the foreclosure proceedings a
nullity and to leave the parties in the same position as if the cases had never been filed. Id. ¶ 30.
The court concluded that nullification of the prior foreclosures resulted in nullification of the
acceleration, which essentially reinstated the borrower’s obligation to make monthly installment
payments on the note. Id.
¶ 26 There is a different rule, however, when a bank accelerates the note separate and apart from
the foreclosure proceedings. In a contract with an acceleration clause, a breach constitutes a breach
of the entire contract. See Kucinski, 116 Ill. App. 3d at 184-85; see Acceleration Clause, Black’s
9
Law Dictionary (10th ed. 2014) (defining an acceleration clause as “[a] provision in a mortgage
*** which allows a lender the opportunity to call monies due under the instrument”).
“[W]here the acceleration provision of the contract provides that payment of the entire debt
upon default is automatic, or where the acceleration provision is optional and the creditor
unequivocally exercises the option ***[,] it is sometimes held in those instances that the
statute of limitations begins to run immediately upon default.” Kucinski, 116 Ill. App. 3d
at 184-85 (citing 18 Samuel Williston, A Treatise on the Law of Contracts § 2027 (3d ed.
1978); 4 Arthur L. Corbin, Corbin on Contracts § 951 (1951)).
“[A] cause of action on a promissory note payable at a definite date accrues on the due date or date
stated in the promissory note or the date upon which the promissory note is accelerated.” 735 ILCS
5/13-206 (West 2022).
¶ 27 Here, after the Rodriguezes defaulted on the promissory note by failing to make the May
1, 2012, payment, Wells Fargo sent a default notice demanding payment of the total delinquency
amount and informed the Rodriguezes that they could cure the default by paying the delinquency
amount by July 19, 2012. The default notice further stated that, if the Rodriguezes failed to cure
the default by said date, Wells Fargo would accelerate the maturity of the loan and “may begin
foreclosure proceedings.” It is undisputed that the Rodriguezes did not cure the default or make
any subsequent payments. Then, on September 14, 2012, two months after the Rodriguezes failed
to cure their default, Wells Fargo sent an acceleration notice informing them that the entire balance
on the loan was “due and payable” immediately. In other words, Wells Fargo accelerated the note.
¶ 28 Like the circuit court, we find Sigler, 2020 IL App (1st) 191006, instructive. The relevant
facts in that case are nearly identical to those before us. In Sigler, the borrowers had a mortgage
and note with the bank and defaulted, leaving a principal balance due on the loan of $681,000. The
10
bank sent a default and acceleration notice and then filed the first of three foreclosure complaints.
The first complaint alleged default “ ‘for March 1, 2008, through the present’ ” and a balance due
on the note and mortgage of $681,000, plus interest and fees. Id. ¶ 13. It then voluntarily dismissed
the complaint. The second foreclosure complaint alleged default “ ‘for December 1, 2011, through
the present’ ” and asserted a balance due of $681,000, plus interest and fees. Id. ¶ 14. The circuit
court entered summary judgment in favor of the bank on the single-refiling-rule issue. Three years
later, the bank voluntarily dismissed the suit. The third foreclosure complaint alleged that “ ‘[t]he
mortgagor has failed to make payments when due and the subject loan has been accelerated.’ ” Id.
¶ 19. The complaint also alleged that the unpaid principal balance was $681,000, plus interest and
fees and that the loan was “ ‘paid through February 1, 2008.’ ” Id. The borrowers argued that all
the foreclosure complaints arose from the same operative facts because they were all filed by the
same bank, they all sought the same principal amount, and they all alleged a default of the same
underlying note and mortgage. The circuit court agreed and granted their 2-619(a)(9) motion to
dismiss for violating the single refiling rule. Id. ¶ 26.
¶ 29 The First District affirmed, holding all three complaints arose out of “the same set of
operative facts.” Id. ¶ 53. The court concluded that the third foreclosure complaint involved the
same facts as the first and second complaint. Specifically, the court held: “Once the Siglers
defaulted on the note and Deutsche Bank both invoked the acceleration clause and filed a
foreclosure action, the contract became indivisible, and the obligations to pay each installment
merged into one obligation to pay the entire balance on the note.” Id.
¶ 30 In this case, Wells Fargo does not deny that it sent a default notice (June 15, 2012, letter)
and an acceleration notice (September 14, 2012, letter) to the Rodriguezes but claims that it chose
not to accelerate the loan, essentially deaccelerating the loan, when it voluntarily dismissed the
11
first foreclosure complaint. However, here, similar to the facts in Sigler and contrary to the facts
in Dubrovay, Wells Fargo issued an acceleration notice that accelerated the loan; the foreclosure
complaint did not, by itself, accelerate the loan. Moreover, Wells Fargo did not expressly revoke
the acceleration notice when it voluntarily dismissed the first foreclosure complaint, nor did it
otherwise issue a letter or notice to the borrowers reinstating the loan. Wells Fargo’s suggestion
that the HAMP payments created a new agreement that “deaccelerated” the loan also lacks merit.
Although the Rodriguezes made three payments under the trial plan, they ultimately declined the
HAMP loan modification, thereby negating a restructured agreement.
¶ 31 In sum, there is no evidence presented by Wells Fargo in opposition to Margaret’s motion
to dismiss that the loan was reinstated, “deaccelerated,” or modified in any way following the
Rodriguezes default on May 1, 2012. Further, as the dissent in Dubrovay noted, “[t]here is no
evidence of a new amortization schedule requiring monthly installments after the dismissal of any
of the foreclosure complaints.” Dubrovay, 2021 IL App (2d) 190540, ¶ 55 (Hutchinson, J.,
dissenting). Here, likewise, Wells Fargo did not negotiate a new schedule with Margaret. Thus,
the accelerated contract was still effective, making the debt indivisible, when Wells Fargo filed
the second foreclosure complaint, which was the only refiling permissible under section 13-217.
¶ 32 B. Involuntary Dismissal of Second Action
¶ 33 Alternatively, Wells Fargo argues that the circuit court’s involuntary dismissal of its second
action reinstated the loan. We disagree.
¶ 34 In Timberlake v. Illini Hospital, 175 Ill. 2d 159, 165 (1997), the Illinois Supreme Court
stated:
“Under the statute, the reason a cause of action was originally dismissed is important in
determining whether a plaintiff can subsequently refile, but after the case has been filed a
12
second time, the reason for the second dismissal is of no consequence at all. No matter why
the second dismissal took place, the statute does not give plaintiff the right to refile again.
As this court expressly held in Flesner [citation], section 13-217 permits one, and only one,
refiling of a claim.”
Applying the rule emphasized in Timberlake, we find the reason for the dismissal of Case 2 is
immaterial. Wells Fargo’s third foreclosure complaint was the second refiling of its claim and was
impermissible under section 13-217 of the Code.
¶ 35 C. Different Operative Facts
¶ 36 We also reject Wells Fargo’s third alternative argument that each of the foreclosure
complaints alleged different default dates and therefore alleged different operating facts. The
relevant set of operative facts in all three complaints are the same—there was one default on the
modified loan, followed by a failure to cure that default, and a subsequent acceleration of the
modified note. “Allowing [the bank] to circumvent the single-refiling rule simply by changing the
date from which it sought accrued interest would mean that [the bank’s] claims would never be
barred by any prior adjudication because interest kept accruing as time passed following the initial
default.” Sigler, 2020 IL App (1st) 191006, ¶ 57; see U.S. Bank National Ass’n v. Gullotta, 120
Ohio St. 3d 399, 2008-Ohio-6268, 899 N.E.2d 987, ¶ 32 (rejecting the bank’s argument that every
missed payment is a new cause of action when a borrower fails to cure the breach because it “would
render the two-dismissal rule meaningless in the context of foreclosure actions because every
successive attempt to foreclose a mortgage could be construed as a new claim” (internal quotation
marks omitted)).
¶ 37 The key here is that Wells Fargo’s third foreclosure complaint makes no allegation of
Margaret’s failure to pay an ongoing obligation under the mortgage or the note after its election to
13
accelerate the debt following the original default. The third complaint arises from the same single
group of operative facts as the prior two lawsuits and seeks to adjudicate the parties’ rights under
the same mortgage, note, and modified loan agreement. Therefore, we must apply section 13-217
as written and decline the invitation to expand the single refiling rule to cover multiple foreclosure
complaints.
¶ 38 III. CONCLUSION
¶ 39 The judgment of the circuit court of Du Page County is affirmed.
¶ 40 Affirmed.
14
Wells Fargo Bank, N.A. v. Rodriguez, 2024 IL App (3d) 230020Decision Under Review: Appeal from the Circuit Court of Du Page County, No. 19-CH-
954; the Hon. Joseph T. Bugos, Judge, presiding.
Attorneys Michael A. Scodro, Lucia Nale, Michael H. Bornhorst, Lucy
for Holifield, and Clare E. Myers, of Mayer Brown LLP, of Chicago,
Appellant: for appellant.
Attorneys Daniel Khwaja, of Chicago, for appellee.
for
Appellee:
15