Standard Bank & Trust Co. v. Madonia ( 2011 )

ILLINOIS OFFICIAL REPORTS
Appellate Court
Standard Bank & Trust Co. v. Madonia, 2011 IL App (1st) 103516Appellate Court STANDARD BANK AND TRUST COMPANY, Plaintiff-Appellee, v.
Caption MICHAEL MADONIA, LISA MADONIA, MONOGRAM CREDIT
CARD BANK OF GEORGIA, UNIFUND CCR PARTNERS,
ASSIGNEE OF BANK ONE, COLONIAL CREDIT CORPORATION,
RESURGENCE FINANCIAL LLC, CITIBANK (South Dakota) N.A.,
WORLDWIDE ASSET PURCHASING LLC, HARVEST CREDIT
MANAGEMENT VII, MBNA AMERICA BANK NA, NONRECORD
CLAIMANTS and UNKNOWN OWNERS, Defendants-Appellants.
District & No. First District, Second Division
Docket No. 1-10-3516
Filed December 27, 2011
Held In mortgage foreclosure proceedings, the denial of defendants’ motion to
(Note: This syllabus vacate an order granting summary judgment for plaintiff bank on the
constitutes no part of ground that the bank lacked standing because it failed to present evidence
the opinion of the court that it became the holder of the mortgage and note was upheld where the
but has been prepared bank’s pleadings were sufficient to demonstrate that it had rights to the
by the Reporter of mortgage and note pursuant to two mergers involving the original
Decisions for the mortgagee.
convenience of the
reader.)
Decision Under Appeal from the Circuit Court of Cook County, No. 09-CH-04192; the
Review Hon. Darryl B. Simko, Judge, presiding.
Judgment Affirmed.
Counsel on LOGIK Legal, LLC, of Chicago (Sabrina Herrell, of counsel), for
Appeal appellants.
Sosin, Arnold & Leibforth, Ltd., of Orland Park (Lawrence G. Leibforth
and Steven D. Mroczkowski, of counsel), for appellee.
Panel JUSTICE CUNNINGHAM delivered the judgment of the court, with
opinion.
Presiding Justice Quinn and Justice Harris concurred in the judgment and
opinion.
OPINION
¶1 Defendants-appellants, Michael and Lisa Madonia (collectively, the Madonias), are
mortgagors who appeal from the circuit court of Cook County’s denial of their motion to
vacate and their motion for leave to file an amended motion to vacate the circuit court’s order
granting summary judgment in favor of Standard Bank and Trust Company (Standard Bank)
in a mortgage foreclosure action. On appeal, the Madonias argue that Standard Bank lacks
standing to bring this action because it failed to present evidence showing that it became the
holder of the mortgage and note. For the following reasons, we affirm the denial of the
motion to vacate as Standard Bank’s pleadings complied with section 28 of the Illinois
Banking Act. 205 ILCS 5/28 (West 2008).
¶2 BACKGROUND
¶3 This is a mortgage foreclosure action concerning the real estate commonly known as
7404 W. 56th Street, Summit, Illinois (the property). On August 18, 1997, the Madonias
executed a note and mortgage in favor of the Bank of Lyons, and the mortgage granted a lien
on the property to secure the note which was in the amount of $41,000. On December 1,
1998, Bank of Lyons merged with East Side Bank and Trust Company. On September 1,
2000, East Side Bank and Trust Company changed its name to Bank Chicago. On April 15,
2003, Bank Chicago merged with Standard Bank.
¶4 On February 2, 2009, Standard Bank brought the instant foreclosure action, due to the
Madonias’ default under the note and mortgage under which more than $40,000 remained
due and owing. Standard Bank brought this action as successor in interest to Bank of Lyons,
and as the legal owner and holder of the note and mortgage executed by the Madonias. A
copy of the note and mortgage signed by the Madonias was attached to Standard Bank’s
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complaint. On March 29, 2010, the Madonias filed their pro se appearances. On May 22,
2010, the Madonias filed a verified answer to the complaint, which challenged Standard
Bank’s standing to bring the instant action. On June 25, 2010, Standard Bank filed its motion
for summary judgment. On August 13, 2010, following a hearing on the motion for summary
judgment, the trial court found in favor of Standard Bank and entered a judgment of
foreclosure and sale. The judgment included Illinois Supreme Court Rule 304(a) (eff. Feb.
26, 2010) language providing that there was no just cause for the delay, enforcement or
appeal therefrom.
¶5 On September 13, 2010, the Madonias, acting pro se, filed a motion under section 2-
1301(e) of the Code of Civil Procedure to vacate order granting summary judgment (motion
to vacate). 735 ILCS 5/2-1301(e) (West 2008). On September 21, 2010, counsel for the
Madonias was granted leave to appear on their behalf. Additionally, defense counsel made
an oral motion for leave to file an amended motion to vacate order granting summary
judgment. The amended motion to vacate alleged that Standard Bank had accepted payments
from the Madonias after filing the foreclosure action, that Standard Bank’s counsel may have
a conflict of interest as he may have been on its board, and that Standard Bank misled the
Madonias to believe that a refinance agreement was in process when Standard Bank filed this
foreclosure action. The trial court denied the Madonias’ pro se motion to vacate order and
denied defense counsel’s motion for leave to file an amended motion to vacate granting
summary judgment. On October 21, 2010, the Madonias filed a notice of appeal seeking
review of the trial court’s September 21, 2010 order denying the motion to vacate and the
August 13, 2010 order granting summary judgment and entering the judgment of foreclosure
and sale.
¶6 ANALYSIS
¶7 Section 2-1301(e) of the Code of Civil Procedure (Code) provides:
“The court *** may on motion filed within 30 days after entry thereof set aside any final
order or judgment upon any terms and conditions that shall be reasonable.” 735 ILCS
5/2-1301(e) (West 2002).
¶8 A trial court’s decision to deny a motion to vacate is reviewed for an abuse of discretion.
Larson v. Pedersen, 349 Ill. App. 3d 203, 207 (2004). “The moving party has the burden of
establishing sufficient grounds for vacating the judgment.” Id. The appellate court must
determine whether the trial court’s ruling denying the motion to vacate “ ‘was a fair and just
result, which did not deny [the moving party] substantial justice.’ ” Deutsche Bank National
v. Burtley, 371 Ill. App. 3d 1, 5 (2006) (citing Mann v. The Upjohn Co., 324 Ill. App. 3d 367,
377 (2001)). An abuse of discretion occurs where the trial court “acts arbitrarily without the
employment of conscientious judgment or its decision exceeds the bounds of reason and
ignores principles of law such that substantial injustice results.” (Internal quotation marks
omitted.) Mann, 324 Ill. App. 3d at 377. “If reasonable persons could differ as to the
propriety of the trial court’s actions, then the trial court cannot be said to have exceeded its
discretion.” Merchants Bank v. Roberts, 292 Ill. App. 3d 925, 930 (1997).
¶9 The Madonias assert that a plaintiff who is not the originating lender must show how the
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plaintiff obtained the note and mortgage by attaching to the complaint a copy of the
assignment or a copy of the note endorsed to the plaintiff. The Madonias cite Bayview Loan
Servicing, L.L.C. v. Nelson, 382 Ill. App. 3d 1184 (2008), and section 2-403(a) of the Code
(735 ILCS 5/2-403(a) (West 2008)) in support of their contention. The Madonias further
assert that Standard Bank’s exhibit, attached to its complaint for foreclosure, did not contain
a copy of any assignment from the original lender (Bank of Lyons) to Standard Bank.
Consequently, the Madonias argue that Standard Bank’s complaint amounted to a mere
allegation of a legal conclusion of standing under the Illinois Mortgage Foreclosure Law (735
ILCS 5/15-1101 et seq. (West 2008)), which was insufficient as a matter of law to support
Standard Bank’s standing for the entry of judgment.
¶ 10 In reply, Standard Bank asserts that it produced documents which established that it had
become the successor in interest to the original mortgagee, Bank of Lyons, making it the
legal holder entitled to rights under the note and mortgage. Therefore, it argues that it had
standing to bring the foreclosure action. Standard Bank relies upon the Illinois Banking Act
(205 ILCS 5/28 (West 2008)), which provides that a state bank resulting from the merger of
several banks, either in-state, out-of-state, or national in character, assumes the same
business and corporate entity of each merging bank.
¶ 11 The resulting bank enjoys all of the “property, rights, powers, duties, and obligations of
each merging bank,” except where such rights are modified by law. 205 ILCS 5/28 (West
2008). The resulting bank of a merger is liable for all liabilities of the merging banks and
acquires
“all the rights, franchises and interests *** and to every species of property, real,
personal, and mixed, and choses in action *** belonging [to the merging banks], shall
be deemed to be transferred to and vested in the resulting bank without any deed or other
transfer, and the resulting bank, without any order or other action on the part of any court
or otherwise, shall hold and enjoy the same and all rights of property, franchises, and
interests, including appointments, designations, and nominations and all other rights and
interests as trustee, executor, administrator, registrar or transfer agent of stocks and
bonds, guardian, assignee, receiver, and in every other fiduciary capacity, in the same
manner and to the same extent as was held and enjoyed by the merging bank.” 205 ILCS
5/28 (West 2008).
¶ 12 Neither the parties nor this court could find any cases from a court of review addressing
this section of the Illinois Banking Act and how it should be interpreted in the context of a
mortgage foreclosure case. We find two cases, which interpret predecessor statutes, to be
instructive.
¶ 13 In Olympic Federal v. Witney Development Co., 113 Ill. App. 3d 981 (1983), the
defendants to a mortgage foreclosure action argued, as do the Madonias here, that Olympic
Federal, a savings and loan association which was a successor to Olympic Savings & Loan
Association (Olympic Savings), failed to comply with section 2-403(a) of the Code (735
ILCS 5/2-403(a) (West 2008)). Section 2-403(a) provides:
“(a) The assignee and owner of a non-negotiable chose in action may sue thereon in his
or her own name. Such person shall in his or her pleading on oath allege that he or she
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is the actual bona fide owner thereof, and set forth how and when he or she acquired title.
The action is subject to any defense or set-off existing before notice of the assignment.”
735 ILCS 5/2-403(a) (West 2008).
¶ 14 Similarly to Standard Bank, Olympic Federal argued that section 2-403(a) did not apply
because no assignment had occurred. Olympic Savings had entered into a merger with two
other savings and loan associations, including Lincoln Savings and Loan Association, and
eventually converted into a federally chartered savings and loan association. Olympic
Federal, 113 Ill. App. 3d at 989. The trial court allowed Olympic Savings leave to amend
all of its pleadings on their face to show that Olympic Federal was its successor to all
interests of Olympic Savings. This court looked at sections 6-9 and 6-14 of the Illinois
Savings and Loan Act (Ill. Rev. Stat. 1981, ch. 17, ¶¶ 3169, 3174), which described the effect
of the merger and conversion of savings and loans. Olympic Federal, 113 Ill. App. 3d at 990-
91. The language of sections 6-19 and 6-14 was very similar to that in section 28 of the
Illinois Banking Act.
¶ 15 This court then held:
“A merged savings and loan association or one converted from state to federal is an
ongoing entity that retains all of its liabilities, rights, and interests in property without the
need for a transfer. The plaintiff has therefore properly established itself as the current
owner of the note and mortgage, and its motion to be placed in possession was not
insufficient on this basis.” Id. at 991.
¶ 16 In Land of Lincoln Savings & Loan v. Michigan Avenue National Bank of Chicago, 103
Ill. App. 3d 1095 (1982), plaintiff Land of Lincoln Savings and Loan (Land of Lincoln) filed
a mortgage foreclosure action against individual defendants. By reason of a 1978 merger,
Land of Lincoln became the successor of American Home Savings and Loan Association
(American Home), which provided the original mortgage loan to the individual defendants.
Id. at 1097. The trial court entered summary judgment for Land of Lincoln, ordered the sale
of the property, and entered a deficiency judgment against the defendants. Id. at 1099. On
appeal, the defendants asserted that the foreclosure complaint failed to allege the assignment
of the note from American Home to Land of Lincoln. Id. at 1105. This court agreed that there
had been no assignment but noted that the complaint had alleged that Land of Lincoln was
successor to American Home and that the record contained a “Certificate of Merger” between
those two savings and loan associations. Id. at 1105. This court held:
“By statutory provision, as a result of the merger, ‘all of the rights, franchises, and
interest of each of the merging associations in and to every kind of property, real,
personal or mixed, shall vest automatically in the continuing association, without any
deed or other transfer.’ (Ill. Rev. Stat. 1979, ch. 32, par. 819(b).) The pleading was not
deficient for failure to allege an assignment of the note.” Id. at 1106.
¶ 17 The Madonias argue that the instant case should be controlled by the holding in Bayview
Loan Servicing, L.L.C. v. Nelson, 382 Ill. App. 3d 1184 (2008). In Nelson, Old National
Bank entered into a mortgage agreement with Nelson. Old National Bank subsequently
assigned its interest in the mortgage to Bayview Financial Trading Group, L.C. (the
Partnership). Id. at 1185. Bayview Loan Servicing (Bayview) filed the mortgage foreclosure
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complaint against Nelson. Id. Nelson filed affirmative answers to the complaint alleging that
Bayview was not a proper party to the proceedings. Id. The trial court eventually entered
summary judgment for Bayview. Id. at 1186. On appeal, this court considered the Illinois
Mortgage Foreclosure Law (735 ILCS 5/15-1208 (West 2006)), which defines the mortgagee
as “the holder of an indebtedness secured by a mortgage or one claiming through a
mortgagee as a successor.” Nelson, 382 Ill. App. 3d at 1187-88. The court pointed out that
Old National, the original mortgagee, assigned its interest in the mortgage of the property at
issue to the Partnership. Id. at 1188.
¶ 18 However, Bayview acknowledged on appeal that it was a legal entity separate and distinct
from the Partnership, that the Partnership was the correct legal entity to which Old National
Bank assigned the mortgage and note, and conceded that Bayview was not the correct
plaintiff to have filed the complaint to foreclose the mortgage. Id. at 1187. Consequently, the
Nelson court reversed the grant of summary judgment in favor of Bayview. Id. at 1188.
¶ 19 We agree with Standard Bank that the decision in Nelson has no relevance to the instant
case. Nelson involved an assignment of a mortgage between a bank and a completely
separate entity. There was no assignment in the instant case. As in Olympic Federal and
Land of Lincoln, Standard Bank retained all of the interests of the Bank of Lyons, including
the Madonias’ mortgage and note, as a result of mergers between banks. Standard Bank
submitted merger documents, including certificates reflecting the State of Illinois’ approval,
as exhibits to the motion for summary judgment. Because the original mortgagee merged
with a bank that ultimately merged with Standard Bank, Standard Bank succeeded to the
mortgage rights possessed by the original mortgagee, Bank of Lyons, as a matter of law. 205
ILCS 5/28 (West 2008).
¶ 20 A foreclosure complaint is deemed sufficient if it contains the statements and requests
called for by the form set forth in section 15-1504(a) of the Mortgage Foreclosure Law (735
ILCS 5/15-1504(a) (West 2008)). Standard Bank complied with that form, pled that it was
the mortgagee, and attached a copy of the mortgage and note to its complaint, as well as the
aforementioned merger documents. Standard Bank’s complaint was legally and factually
sufficient and included allegations relative to standing. See Mortgage Electronic Registration
Systems, Inc. v. Barnes, 406 Ill. App. 3d 1, 6 (2010). Under the plain language of section 28
of the Illinois Banking Act, Standard Bank’s pleadings were sufficient to demonstrate that
it had rights to the mortgage and note at issue pursuant to two mergers involving the original
mortgagee. Therefore, the trial court did not abuse its discretion in denying the Madonias’
motion to vacate the order granting summary judgment.
¶ 21 The Madonias’ September 13, 2010 pro se motion to vacate averred that “[j]ust prior to
this [c]ourt granting [Standard Bank’s] summary judgment motion, the defendants had
learned of certain facts that would have warranted the amending of their answer to [Standard
Bank’s] complaint and of additional affirmative defenses. Defendant Michael Madonia,
through an oral motion, without success, requested that he be granted leave to amend.”
¶ 22 The trial court’s September 21, 2010 order denied this motion to vacate, allowed
Logiklegal, L.L.C., leave to file its appearance on behalf of the Madonias as their legal
counsel, and denied defense counsel’s verbal request to file an amended motion to vacate.
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The record does not contain a written motion for leave to file an amended motion to vacate
the order granting summary judgment.
¶ 23 The Madonias’ counsel has attached a document entitled “Motion for Leave to Amend
Defendants Michael and Lisa Madonia’s Motion to Vacate Order Granting Summary
Judgment” to the appendix section of their brief on appeal. This motion is not file-stamped
nor is there a notice of service attached. It is well settled that this court will not consider
attachments to briefs that have not been provided to the trial court and made part of the
record on appeal. McCarty v. Weatherford, 362 Ill. App. 3d 308, 311 (2005).
¶ 24 Our ability to review this issue is further hampered by the Madonias’ failure to include
in the record a transcript from the trial court’s September 21, 2010 hearing on the Madonias’
motion to vacate. The Madonias also failed to submit a report of proceedings, a bystander’s
report or an agreed statement of facts as required by Supreme Court Rule 323. Ill. S. Ct. R.
323 (eff. Dec. 13, 2005). The Madonias, as appellants, clearly had the burden to present this
court with a sufficiently complete record on appeal. Webster v. Hartman, 195 Ill. 2d 426, 432
(2001). A court of review will resolve any doubts that arise from an incomplete record
against the appellant and, absent a sufficient record on appeal, “it will be presumed that the
order entered by the trial court was in conformity with law and had a sufficient factual basis.”
(Internal quotation marks omitted.) McCarty v. Weatherford, 362 Ill. App. 3d at 315.
Consequently, we affirm the trial court’s order denying the Madonias’ oral motion for leave
to file an amended motion to vacate summary judgment order.
¶ 25 For the foregoing reasons we affirm the judgment of the circuit court of Cook County.
¶ 26 Affirmed.
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