U.S. Bank National Ass'n v. In Retail Fund Algonquin Commons, LLC ( 2013 )

ILLINOIS OFFICIAL REPORTS
Appellate Court
U.S. Bank National Ass’n v. IN Retail Fund Algonquin Commons, LLC,
2013 IL App (2d) 130213
Appellate Court U.S. BANK NATIONAL ASSOCIATION, as Successor in Interest to
Caption Bank of America, N.A., Successor to Wells Fargo Bank, N.A., as Trustee
for the Registered Holders of TIAA Seasoned Commercial Mortgage
Trust 2007 C-4, Commercial Pass-Through Certificates, Series 2007-C4,
Plaintiff-Appellee, v. IN RETAIL FUND ALGONQUIN COMMONS,
LLC; IN RETAIL FUND, LLC; and INLAND COMMERCIAL
PROPERTY MANAGEMENT, INC., Defendants-Appellants (Jeffrey R.
Anderson Real Estate; Xtreme Fire Protection, Inc.; Mike Kokosis, d/b/a
All Circuits Electric Inc.; Unknown Owners; and Nonrecord Claimants,
Defendants).
District & No. Second District
Docket No. 2-13-0213
Filed June 21, 2013
Held In an action for the foreclosure of a commercial development, the
(Note: This syllabus appellate court dismissed defendants’ appeal from various orders,
constitutes no part of including an order granting plaintiff’s motion for substitution of judge
the opinion of the court and declining to enforce a local rule against plaintiff as to its motions for
but has been prepared admission pro hac vice, a temporary restraining order, the appointment
by the Reporter of of a receiver, and leave to file an amended complaint, since defendants
Decisions for the failed to establish jurisdiction pursuant to Supreme Court Rule 307(a)(1).
convenience of the
reader.)
Decision Under Appeal from the Circuit Court of Kane County, No. 13-CH-12; the Hon.
Review John G. Dalton, Judge, presiding.
Judgment Appeal dismissed.
Counsel on Eugene S. Kraus, Miles V. Cohen, and Jason R. Sleezer, all of Scott &
Appeal Kraus, LLC, of Chicago, for appellants.
Jerry L. Switzer and Jean Soh, both of Polsinelli Shughart, P.C., of
Chicago, and Brett D. Anders and Aaron Jackson, both of Polsinelli
Shughart, P.C., of Kansas City, Missouri, for appellee.
Panel JUSTICE BIRKETT delivered the judgment of the court, with opinion.
Justices Schostok and Hudson concurred in the judgment and opinion.
OPINION
¶1 Defendants IN Retail Fund Algonquin Commons, LLC, IN Retail Fund, LLC, and Inland
Commercial Property Management, Inc., appeal various orders entered by the trial court. For
the reasons that follow, we dismiss this appeal for lack of jurisdiction.
¶2 BACKGROUND
¶3 In December 2012, plaintiff, US Bank National Association, brought a complaint for
foreclosure against defendants. The subject property is a commercial development in
Algonquin, Illinois. On January 11, 2013, plaintiff moved for appointment of a receiver for
the property. Also in January 2013, plaintiff filed (1) two motions for admission pro hac
vice; (2) a motion for a temporary restraining order; and (3) a motion to file an amended
complaint. The temporary restraining order that plaintiff sought would “restrain[ ]
[defendants] from in any manner removing, destroying or diminishing the [c]ollateral,”
except that defendants would be permitted “to make use of the [c]ollateral in the ordinary
course of their business and for payment of ordinary operating expenses currently incurred
in the ordinary course of business.”
¶4 On February 1, 2013, IN Retail Fund filed a motion to quash service of summons as
noncompliant with Supreme Court Rule 101 (Ill. S. Ct. R. 101 (eff. May 30, 2008)). Also on
February 1, the Honorable Edward C. Schreiber heard all of plaintiff’s pending motions. At
the hearing, defendants objected that the certificates of service for the motions were
deficient. The trial court agreed and directed plaintiff to “re-notice” the motions. On February
8, 2013, plaintiff refiled the motions and also filed a motion to strike the jury demand of
Inland Commercial Property Management. At a February 11 hearing, Judge Schreiber agreed
with defendants that the refiled motions likewise had deficient certificates of service. Judge
Schreiber again directed plaintiff to “re-notice” the motions. On February 14, plaintiff moved
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for substitution of judge as a matter of right under section 2-1001(a)(2) of the Code of Civil
Procedure (735 ILCS 5/2-1001(a)(2) (West 2010)). On February 22, plaintiff filed a “notice
of motion” for each of the following motions: (1) two motions for admission pro hac vice;
(2) a motion for appointment of a receiver; (3) a motion for a temporary restraining order;
(4) a motion for leave to file an amended complaint; and (5) a motion to strike Inland
Commercial Property Management’s jury demand. Plaintiff did not file the motions
themselves along with the notices, but stated that copies of the motions were previously
served upon defendants. Meanwhile, the motion for substitution was granted and the case
reassigned to the Honorable John G. Dalton.
¶5 On February 28, plaintiff’s third round of motions (or, more precisely, notices) came up
for hearing before Judge Dalton. Defendants now objected that plaintiff failed to comply with
local rule 6.05(d) (16th Judicial Cir. Ct. R. 6.05(d) (June 20, 2001)), which provides that “[a]
copy of the motion, any papers to be presented with the motion, and proof of service shall
be served with the notice.” Judge Dalton denied the objection. After argument on the merits
of the motions, the trial court granted the motion for appointment of a receiver. In light of
the appointment, plaintiff withdrew its motion for a temporary restraining order. The court
then ordered that, pending the receiver taking possession of the property, defendants were
enjoined “from making or cashing payments related to the property *** effective
[immediately].” The court also granted plaintiff’s remaining motions.
¶6 On March 1, Judge Dalton heard and denied IN Retail Fund’s motion to quash service
of summons. That same day, defendants filed a notice of appeal under Illinois Supreme Court
Rule 307(a)(1) (eff. Feb. 26, 2010), which provides that “[a]n appeal may be taken to the
Appellate Court from an interlocutory order of court *** granting, modifying, refusing,
dissolving, or refusing to dissolve or modify an injunction.” On March 4, defendants
amended the notice to identify 11 separate orders entered by the trial court on February 28
and March 1 in disposing of plaintiff’s various motions and IN Retail Fund’s motion to
quash service of summons.
¶7 ANALYSIS
¶8 Defendants argue that the trial court erred by (1) rejecting their objection that plaintiff
violated local rule 6.05(d) by serving notices without accompanying motions; (2) denying
IN Retail Fund’s motion to quash service of summons; and (3) granting plaintiff’s motion
for substitution of judge as a matter of right. Notably, though defendants claim jurisdiction
under a supreme court rule that permits appeals from interlocutory orders pertaining to
injunctions, they do not challenge the substance of the injunctive order entered by the trial
court. They believe nonetheless that we have jurisdiction over the various other orders. They
reason that “[t]he Trial Court’s Orders on these points–including the improper granting of
the Motion for Substitution of Judge–taint all further orders entered by the Trial Court,” and,
therefore, “[i]t is appropriate for this Court to undertake review, in order to avoid such dire
consequences, and before the trial court proceeding further advances.” As authority, they cite
two cases, Sarah Bush Lincoln Health Center v. Berlin, 268 Ill. App. 3d 184 (1994), decided
by the Fourth District Appellate Court, and Partipilo v. Partipilo, 331 Ill. App. 3d 394
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(2002), decided by the First District Appellate Court.
¶9 The defendant in Berlin moved for substitution of judge as a matter of right. The court
denied the motion and later granted the plaintiff’s motion for a preliminary injunction. The
defendant appealed under Rule 307(a)(1). The defendant’s sole challenge to the injunction
was that it was entered by a judge for whom another judge should have been substituted. The
appellate court held that jurisdiction under Rule 307(a)(1) lay nonetheless. In so ruling, the
court acknowledged two authorities that appeared to instruct otherwise: Murges v. Bowman,
254 Ill. App. 3d 1071 (1993), and City of Chicago v. Airline Canteen Service, Inc., 64 Ill.
App. 3d 417 (1978), both decided by the First District Appellate Court. Both Airline Canteen
and Murges were Rule 307(a)(1) appeals from injunctive orders, and in each case the trial
court, prior to entering the injunction, denied a motion to change venue. See Murges, 254 Ill.
App. 3d at 1076; Airline Canteen, 64 Ill. App. 3d at 423. The appellate court in each case
held that its Rule 307(a)(1) jurisdiction did not extend to the order denying a change of
venue. See Murges, 254 Ill. App. 3d at 1084; Airline Canteen, 64 Ill. App. 3d at 428. The
court in Airline Canteen reasoned:
“Only final judgments or orders are appealable unless the particular judgment or order
comes within one of the specified exceptions set forth [in the Supreme Court rules]. The
denial of a motion for change of venue is not a final order, nor does any Supreme Court
rule authorize an appeal from an interlocutory order of such nature. [Citations.] *** An
appeal under Rule 307 does not open up the door to a general review of all orders entered
by the trial court up to that date. Interlocutory appeals are piecemeal in nature and Rule
307 provides for some very specific exceptions to the rules against piecemeal appeals.”
Airline Canteen, 64 Ill. App. 3d at 428.
¶ 10 Besides declining to review the venue challenge, the court in Murges held that it had no
jurisdiction to consider the denial of the defendants’ motion to dismiss the plaintiff’s
complaint on the ground that the plaintiff lacked legal capacity to sue. Murges, 254 Ill. App.
3d at 1084. The court said: “This order is not final and appealable, and the appeal from a
later order under Rule 307 does not give this court jurisdiction to review the prior order
denying the motion to dismiss.” Id.
¶ 11 The court in Berlin declined to follow Murges and Airline Canteen, because the
“difficulty with the[ir] holdings *** is that they permit a judge who should not be hearing
a motion for interlocutory injunctive relief to hear that matter without the objecting party
having any recourse.” Berlin, 268 Ill. App. 3d at 186-87. As the Berlin court understood it,
Rule 307 permits the reviewing court “to review any prior error that bears directly upon the
question of whether the order on appeal was proper.” Id. at 187.
¶ 12 Berlin cited one case to support its reading of Rule 307: Kurle v. Evangelical Hospital
Ass’n, 89 Ill. App. 3d 45 (1980), decided by this court. In Kurle, the plaintiff filed a four-
count complaint for wrongful termination and petitioned for injunctive relief. The defendant
moved to dismiss count I of the complaint. At the hearing on the petition for an injunction
and the motion to dismiss, the following occurred:
“The motion to dismiss count I of the complaint and the petition for a preliminary
injunction were heard and in effect denied by the trial court. The court then ascertained
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that [the] defendant desired to stand on its motion to dismiss and did not intend to file
an answer to the allegations of count I or to the petition. The judge then stated that he
was ordering [the defendant] to reinstate the plaintiff with back pay, but then proceeded
to hold an evidentiary hearing.” Id. at 48.
At the conclusion of the hearing, the court entered an injunction. Id. The defendant appealed
the injunction, and this court held that the trial court erred in conducting an evidentiary
hearing on the petition, because “on a motion for a temporary injunction, where the
defendant has not answered the complaint and where issues have not been joined, the court
should not receive or consider evidence or affidavits.” Id. This court went on to hold that the
defendant had forfeited his objection to the evidentiary hearing by participating in it. Id.
¶ 13 The Berlin court reasoned that the issue of whether a substitution of judge should have
been granted prior to a ruling on a petition for an injunction is “of equal significance” with
the issue of whether the trial court should have held an evidentiary hearing on such a petition.
Berlin, 268 Ill. App. 3d at 187. Berlin concluded that, if a reviewing court has jurisdiction
to consider the latter, it has jurisdiction to consider the former.
¶ 14 As further support for reaching the substitution issue, the Berlin court noted that some
Illinois decisions have held that the erroneous denial of a motion for substitution of judge has
a tainting effect on subsequent orders in the trial court:
“While the judge from whom substitution was sought here is an able and respected jurist,
the rationale of the procedure for substitution of judge is that the party seeking
substitution perceives that the determination of the judge who hears the matter is likely
to ‘affect’ the outcome of the matter before the judge. The importance of a proper ruling
on a motion for substitution of judge is so great that some courts have held that the
wrongful refusal of a proper request for substitution of judge renders all subsequent
orders by that judge entered in the case void. [Citations.]” Id.
¶ 15 In Partipilo, the second case on which defendants rely here, the plaintiff appealed under
Rule 307, challenging both the denial of her petition for injunctive relief and the trial court’s
prior denial of her motion for substitution of judge. The First District, following Berlin
without question or comment, held that it had jurisdiction to review the substitution issue.
Partipilo, 331 Ill. App. 3d at 398.
¶ 16 Neither Berlin, Partipilo, nor Kurle convinces us that we have jurisdiction over the
orders that defendants challenge. As decisions from sister appellate districts, Berlin and
Partipilo are not binding on this court. See American Economy Insurance Co. v. Holabird
& Root, 382 Ill. App. 3d 1017, 1034 (2008). Moreover, since Kurle did not discuss the issue
of jurisdiction, we cannot deem it precedential on the question involved here. There are,
however, decisions from this district that expressly address the scope of jurisdiction under
Rule 307. Based on their direction, which is consistent with that of Airline Canteen and
Murges, we must conclude that we lack jurisdiction to review the orders that defendants
challenge.
¶ 17 In Olympic Federal v. Witney Development Co., 113 Ill. App. 3d 981 (1983), we cited
Airline Canteen in saying:
“Only final judgments or orders are appealable unless the particular judgment falls
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within one of the specified exceptions. Interlocutory appeals are piecemeal in nature, and
Supreme Court Rule 307 provides for some very specific exceptions to piecemeal
appeals.” Id. at 983-84 (citing Airline Canteen, 64 Ill. App. 3d at 428).
We went on:
“An appeal under Rule 307 does not open the door to a general review of all orders
entered by the trial court up to that date. [Citation.] However, certain other orders may
be reviewable. For example, in the case of an interlocutory appeal from the granting of
temporary injunctive relief, an appellant may ask the appellate court not only to
determine whether the trial court properly exercised its discretion but also whether the
complaint upon which the temporary injunction was based was proper to sustain an
injunction. [Citation.] The right to injunctive relief necessarily brings into question the
sufficiency of the complaint, and the defendant who does not stand on his motion to
dismiss the complaint may nevertheless contend on appeal from an interlocutory order
that the complaint does not set forth grounds for any relief. [Citation.] Thus, whether an
order preceding an interlocutory order from which an appeal is taken may be considered
during the interlocutory appeal depends on its relationship to the order appealed from.”
Id. at 984.
¶ 18 In Olympic Federal, the plaintiff filed a foreclosure action and later moved for possession
of the subject property. Without first responding to the allegations in the complaint or the
motion, the defendants filed a motion to strike the motion for possession on the ground that
the plaintiff failed to establish that it was entitled to sue on the mortgage. After the trial court
declined to strike the motion for possession, the defendants moved for leave to respond to
the allegations of the motion for possession. The court denied this as well, and subsequently
entered an order placing the plaintiff in possession. Id. at 985. The defendants appealed the
order under Rule 307(a)(4) (Ill. S. Ct. R. 307(a)(4) (eff. July 1, 1982)), which permits an
appeal from an order “placing or refusing to place a mortgagee in possession of mortgaged
premises.” We noted that, given the restricted scope of an interlocutory appeal under Rule
307, we could review “only orders attendant to the motion to be placed in possession”
(Olympic Federal, 113 Ill. App. 3d at 984), i.e., orders that “go to the sufficiency of the
motion” (id. at 990). The defendants challenged both the denial of their motion to strike and
the denial of their request for leave to respond to the motion for possession. We found that
we had jurisdiction to review both orders. We recognized that “[g]enerally, the denial of a
motion to strike or dismiss of itself is not an appealable order.” Id. at 985. Since, however,
the propriety of the order granting possession depended on the merits of the motion to strike,
we could review the latter. Id.
¶ 19 In their motion to strike, the defendants raised the issue of whether the plaintiff was
entitled to sue on the mortgage, given that it denominated itself as Olympic Federal while
the listed mortgagee was Olympic Savings and Loan Association. According to the
defendants, the plaintiff had to prove that it was the assignee of the mortgage. Id. at 990. The
trial court found that the plaintiff established that it was formerly Olympic Savings and Loan
Association, which had been converted into Olympic Federal, a federally chartered savings
and loan. This court noted that, under Illinois statutes, “[a] merged savings and loan
association or one converted from State to Federal is an ongoing entity that retains all of its
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liabilities, rights, and interests in property without the need for a transfer.” Id. at 991.
Accordingly, the plaintiff did not need to prove an assignment of the mortgage. Id.
¶ 20 This court then addressed whether, the motion to strike having been properly denied, the
defendants should have been permitted to respond to the allegations in the motion for
possession. Id. at 986. This court held that the defendants were entitled under the rules of
procedure to respond to the motion’s allegations. Id. at 987.
¶ 21 Another illustrative decision from this court is Executive Commercial Services, Ltd. v.
Daskalakis, 74 Ill. App. 3d 760 (1979), where the defendant appealed, under Illinois
Supreme Court Rule 304 (eff. Jan. 1, 1970), the dismissal of her counterclaim and third-party
complaint. The defendant asked us to address as well the trial court’s denial, prior to the
dismissal orders, of her motion to change venue. We held that we lacked jurisdiction to
review that order. Executive Commercial Services, Ltd., 74 Ill. App. 3d at 768. Noting that
Airline Canteen had “resisted an attempt to bootstrap an appeal of a venue ruling onto an
interlocutory appeal under Supreme Court Rule 307,” we found “no reason why a similar
conclusion is not warranted here for an appeal under Supreme Court Rule 304.” Id.
¶ 22 We were correct to conclude that the jurisdictional questions in Airline Canteen and
Daskalakis raised the same issue though under different supreme court rules. The
jurisdictional holdings in those cases, as in Olympic Federal, were applications of the
principle that, “[i]n an interlocutory appeal, the scope of review is normally limited to an
examination of whether the trial court abused its discretion in granting or refusing to grant
the interlocutory relief” (Estate of Bass v. Katten, 375 Ill. App. 3d 62, 72 (2007)). In Olympic
Federal, we recognized that review of an interlocutory order may well require review of
“attendant” prior orders, i.e., those intertwined with the merits of the interlocutory order.
¶ 23 Finally, we note In re Marriage of Nettleton, 348 Ill. App. 3d 961 (2004), cited by
plaintiff as a counterpoint to Berlin. The respondent in Nettleton appealed, under Rule
304(b)(5) (Ill. S. Ct. R. 304(b)(5) (eff. Feb. 1, 1994)), a stipulated finding of indirect civil
contempt that he procured in the trial court for the avowed purpose of challenging the court’s
prior denial of his motion for substitution of judge as a matter of right. Nettleton, 348 Ill.
App. 3d at 963-64. The stipulation provided that the respondent refused to comply with the
court’s maintenance order. Id. We declined to follow Berlin, holding that we lacked
jurisdiction to review the order denying substitution. We noted that to reach that order
“would render meaningless all other rules requiring a final order by allowing a party to
circumvent a trial court’s refusal to include Rule 304(a) language in its order or its
refusal to certify the issue pursuant to Rule 308 merely by refusing to comply with an
order by which the party’s refusal to comply would result in a contempt order and
challenge all other orders with which the party is dissatisfied. See, e.g., Bearden v.
Hamby, 240 Ill. App. 3d 779, 784 (1992) (permitting review of a contempt finding but
refusing to consider the trial court’s ruling on the party’s motion in limine because it was
not a final and appealable order and it did not fall under any exceptions to the general
rule that preliminary orders are not appealable). We therefore decline to subvert our
supreme court’s rules and precedent by considering respondent’s requests for review of
issues not properly before us at this juncture.” Id. at 971.
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Implicit in these remarks was our determination that the substitution and contempt issues
were not substantively linked and, therefore, that the order denying substitution was not
properly before us.
¶ 24 Based on the approach of Olympic Federal and the other authorities from this court, we
conclude that we lack jurisdiction to review any of the orders that defendants challenge.
Defendants’ first contention on appeal is that the trial court erred in declining to enforce local
rule 6.05(d) against plaintiff as to its motions (1) for admission pro hac vice; (2) for a
temporary restraining order; (3) for appointment of a receiver; (4) for leave to file an
amended complaint; and (5) to strike Inland Commercial Property Management’s jury
demand. Their second contention is that the trial court erred in denying IN Retail Fund’s
motion to quash service of summons for noncompliance with Illinois Supreme Court Rule
101. According to Olympic Federal, 113 Ill. App. 3d at 984, our review under Rule 307(a)(1)
extends to any orders “attendant” to the injunctive order that forms the basis for jurisdiction.
Defendants make no attempt to establish a link between any of the challenged orders and the
injunctive order, other than to claim broadly that the challenged orders “taint[ed]” all further
orders below. As the appellants, defendants have the burden to establish our jurisdiction (see
Ill. S. Ct. R. 341(h)(4) (eff. July 1, 2008)), and here that requires them to prove an exception
to the general rule in Illinois that the denial of a motion to dismiss (to which the challenged
orders may be likened) is not a final and appealable order (see Olympic Federal, 113 Ill. App.
3d at 985). See State Farm Mutual Automobile Insurance Co. v. Illinois Farmers Insurance
Co., 226 Ill. 2d 395, 415 (2007) (“It is *** well settled in this state that a trial court’s denial
of a motion to dismiss is an interlocutory order that is not final and appealable.”). Defendants
have not carried that burden.
¶ 25 Defendants have also failed to establish our jurisdiction over the order granting plaintiff’s
motion for substitution of judge. We recognize, as did the court in Berlin, that the erroneous
denial of a motion for substitution of judge as a matter of right renders void all subsequent
orders in the case. See Illinois Licensed Beverage Ass’n v. Advanta Leasing Services, 333
Ill. App. 3d 927, 932 (2002) (reversing both erroneous denial of substitution as a matter of
right and all subsequent orders in the case). We know of no authority, however, suggesting
that the erroneous grant of a motion for substitution–as is alleged here–has a like effect. In
any case, our supreme court has seen fit not to provide specifically for interlocutory appeals
of any order disposing of a motion for substitution. Evaluated under the criteria of Olympic
Federal, the trial court’s grant of plaintiff’s substitution motion was no more “attendant” to
its later injunctive order than the order denying a change of venue in Daskalakis was to the
later injunctive order in that case. Nettleton is further support for this conclusion.
¶ 26 CONCLUSION
¶ 27 For the foregoing reasons, we hold that Rule 307(a)(1) affords us no jurisdiction to
review the various orders defendants challenge. Accordingly, we dismiss this appeal for lack
of jurisdiction.
¶ 28 Appeal dismissed.
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