Bank of New York Mellon v. Sperekas , 2020 IL App (1st) 191168 ( 2020 )

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Appellate Court Date: 2020.12.29
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Bank of New York Mellon v. Sperekas, 2020 IL App (1st) 191168Appellate Court THE BANK OF NEW YORK MELLON, f/k/a the Bank of New York,
Caption as Trustee for the Certificate Holders of CWALT, Inc., Alternative
Loan Trust 2005-47cb, Mortgage Pass-Through Certificates, Series
2005-47CB, Plaintiff-Appellant, v. GEORGE J. SPEREKAS II; THE
BANK OF NEW YORK, as Trustee for the Benefit of the Certificate
Holders of the CWHEQ Inc., Homer Equity Loan Asset-Backed
Certificates, Series 2006-S1; RANDOLPH PLACE RESIDENCES
CONDOMINIUM ASSOCIATION; CHICAGO PATROLMEN’S
FEDERAL CREDIT UNION; UNKNOWN OWNERS; and
NONRECORD CLAIMANTS, Defendants-Appellees.
District & No. First District, First Division
No. 1-19-1168
Filed March 9, 2020
Decision Under Appeal from the Circuit Court of Cook County, No. 16-CH-10079; the
Review Hon. Patricia S. Spratt, Judge, presiding.
Judgment Reversed and remanded.
Counsel on Melissa E. Manning, Geneka L. Holyfield, and Rebekah A. Carpenter,
Appeal of Akerman LLP, of Chicago, for appellant.
Stephen E. Brown and Douglas M. Matton, both of Chicago, for
appellee George Sperekas.
Panel JUSTICE HYMAN delivered the judgment of the court, with opinion.
Justices Pierce and Walker concurred in the judgment, and opinion.
OPINION
¶1 The Bank of New York Mellon (Bank) filed a mortgage foreclosure complaint against
defendant George J. Sperekas II. On its own motion, the trial court dismissed the complaint,
without prejudice, finding the Bank failed to present sufficient evidence that it complied with
section 15-1503(b) of the Mortgage Foreclosure Law (Foreclosure Law). 735 ILCS 5/15-
1503(b) (West 2018). This section requires the Bank to send the notice of foreclosure to the
alderman of the ward where the property is located. The court found that although the Bank
mailed the notice to the alderman’s proper street address, it failed to present evidence showing
the proper room number or that the alderman received it. The trial court also denied the Bank’s
motion to reconsider, finding it failed to present newly discovered evidence showing
compliance with the statute.
¶2 At the time of the dismissal, section 15-1503(b) of the Foreclosure Law provided that
failure to send a copy of the notice to the alderman or to file an affidavit as required “results in
the dismissal without prejudice of the complaint on motion of a party or the court.” After the
Bank filed its notice of appeal, the General Assembly amended section 15-1503(b). It now
provides that failure to send a copy of the notice to the alderman or file an affidavit results “in
a stay of the foreclosure action on a motion of a party or the court.” Pub. Act 101-399 (eff.
Aug. 16, 2019) (amending 735 ILCS 5/15-1503(b)). The stay will be lifted once the plaintiff
presents the trial court with proof of delivery. Id.¶3 The Bank argues the amendment to section 15-1503(b) should be applied retroactively and
asks us to reverse the dismissal and enter a stay. Alternatively, the Bank argues the trial court
erred in dismissing its complaint because (i) it complied with section 15-1503(b) by mailing
the notice to the alderman at the correct street address and filing the affidavit of compliance
and (ii) any error in the room number was immaterial, as the notice would have been forwarded
to the alderman and Sperekas was not prejudiced absent evidence the alderman would have
taken action on the notice. The Bank also argues the trial court erred in denying its motion to
reconsider because it presented newly available evidence showing that based on custom and
practice in 2016, a notice sent to the wrong room number would have been forwarded to the
alderman.
¶4 We agree that the amendment to section 15-1503(b) is procedural and should be applied
retroactively. We reverse the dismissal and remand to permit the trial court to apply the
amended provision.
¶5 Background
¶6 Sperekas took out a loan for $309,200 secured by a mortgage on his condominium in
Chicago. The Bank filed a complaint to foreclose the mortgage, along with an affidavit stating
it complied with the requirements of section 15-1503(b) of the Foreclosure Law by mailing a
copy of the notice of foreclosure to the ward alderman, Brendan Reilly, at his office in city
hall. The notice was addressed to “City of Chicago, 121 North La Salle Street, Room 200,
Chicago, Illinois.”
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¶7 Sperekas filed a motion to dismiss the Bank’s complaint under section 2-615 of the Code
of Civil Procedure (735 ILCS 5/2-615 (West 2018)), arguing that despite the affidavit, the
Bank failed to comply with the alderman notification requirement of section 15-1503(b) of the
Foreclosure Law. Section 15-1503(b) of the Foreclosure Law requires the foreclosing party to,
within 10 days after filing the complaint, “(i) send by first class mail, postage prepaid, a copy
of the notice of foreclosure to the alderman for the ward in which the real estate is located and
(ii) file an affidavit with the court attesting to the fact that the notice was sent to the alderman
for the ward in which the real estate is located.” Id. § 15-1503(b).
¶8 Sperekas asserted that although the Bank sent the notice to Reilly at the correct street
address, it was sent to room 200, not room 300, which Sperekas contends was the location of
the alderman’s office since at least August 2016, when the complaint was filed. Attached to
Sperekas’s motion was a letter from the alderman stating he had no record of having received
the notice of foreclosure. And, as Sperekas points out, Reilly’s letterhead lists his office as
room 300.
¶9 After a hearing, the trial court struck Sperekas’s motion to dismiss as improper and, on its
own motion, ordered the Bank to provide an affidavit or other proof showing that it complied
with the alderman notification requirement.
¶ 10 The Bank submitted two documents to the trial court. One was an affidavit from the
managing attorney of its law firm, stating he sent a letter to Brendan Reilly at “City Hall, 121
N. La Salle Street, Room 200, Chicago, IL 60602” via certified mail, and the letter was
delivered to the alderman despite the incorrect room number. The Bank also submitted an
affidavit from Ivan Hansen, deputy commissioner for facility operations with the City of
Chicago. Hansen averred that “[i]t is the custom and practice of the mailroom that when mail
is received for an alderman, and the mail is misaddressed to the wrong floor, that the mailroom
redirects the mail internally to deliver it to the alderman without returning it to the United
States Postal Service.”
¶ 11 After argument, the trial court found the Bank’s affidavits did not sufficiently show
compliance with section 15-1503(b) and dismissed the foreclosure complaint without
prejudice. The court found Hansen’s affidavit insufficient because it only addressed current
protocols but did not address protocols in place in 2016, when the Bank purportedly sent the
notice to the alderman. The judge was not “convinced that [the notice] went to the right
address” or met the requirements of section 15-1503(b).
¶ 12 The Bank filed a motion to reconsider, attaching a new affidavit from Hansen stating that,
in August 2016, it was the custom and practice for the mailroom to forward misaddressed mail
internally rather than return it to the post office. The trial court denied the motion to reconsider,
stating that the affidavit was not newly discovered evidence because it contains information
previously available to the Bank. The Bank appealed the dismissal order and the order denying
its motion for reconsideration.
¶ 13 After the Bank filed its notice of appeal, the General Assembly amended section 15-
1503(b) of the Foreclosure Law to state:
“The failure to send a copy of the notice to the alderman or to file an affidavit as
required shall result in a stay of the foreclosure action on a motion of a party or the
court. If the foreclosure action has been stayed by an order of the court, the plaintiff or
the plaintiff’s representative shall send the notice by certified mail, return receipt
requested, or by private carrier that provides proof of delivery, and tender the return
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receipt or the proof of delivery to the court. After proof of delivery is tendered to the
court, the court shall lift the stay of the foreclosure action.” Pub. Act 101-399 (eff. Aug.
16, 2019) (amending 735 ILCS 5/15-1503(b)).
¶ 14 Analysis
¶ 15 Retroactive Application of Statute
¶ 16 The Bank contends we should apply the amendment to section 15-1503(b) retroactively (it
became effective during the appeal) and, rather than dismiss its complaint, impose a stay to
allow the Bank to comply with the alderman notification requirement. Contrary to Sperekas’s
contention that retroactivity should be heard in the first instance by the trial court, since the
amendment arose after the filing of the appeal, we may consider it. See People v. Hunter, 2017
IL 121306, ¶ 15; Deicke Center–Marklund Children’s Home v. Illinois Health Facilities
Planning Board, 389 Ill. App. 3d 300, 303 (2009). We review the issue of retroactive
application of a statute under a de novo standard of review. Deicke Center, 389 Ill. App. 3d at
303.
¶ 17 In determining whether an amendment applies prospectively or retroactively, we follow
the two-step approach established by the United States Supreme Court in Landgraf v. USI Film
Products, 511 U.S. 244 (1994). First, if the legislature has expressly prescribed the amended
statute’s temporal reach, that expression of legislative intent must be given effect, absent a
constitutional prohibition. People ex rel. Madigan v. J.T. Einoder, Inc., 2015 IL 117193, ¶ 29.
Second, if the amendment contains no express provision regarding its temporal reach, the court
must determine whether the statute would have a retroactive impact, keeping in mind the
general principle that prospective application is the appropriate default rule. Allegis Realty
Investors v. Novak, 223 Ill. 2d 318, 330-31 (2006). A court will consider whether retroactive
application of the amended statute will impair rights a party possessed when acting, increase a
party’s liability for past conduct, or impose new duties with respect to transactions already
completed. If retrospective application of the amended statute has inequitable consequences, a
court will presume the legislature did not intend that it be so applied. J.T. Einoder, Inc., 2015
IL 117193, ¶ 30.
¶ 18 Illinois courts, however, rarely look beyond the first step of the Landgraf analysis. Courts
presume an amendatory act, without a clear indication of legislative intent on its temporal
reach, was to have been framed in view of section 4 of our Statute on Statutes (5 ILCS 70/4
(West 2018)). Caveney v. Bower, 207 Ill. 2d 82, 94 (2003). Referred to as a general saving
clause (Novak, 223 Ill. 2d at 331), this section has been construed as applying procedural
changes to statutes retroactively and substantive changes to statutes prospectively. People
ex rel. Alvarez v. Howard, 2016 IL 120729, ¶ 20 (citing People v. Glisson, 202 Ill. 2d 499,
506-07 (2002)).
¶ 19 The Bank contends the amendment to section 15-1503(b) describes a mere procedural
change and should be applied retroactively, with the proceedings stayed until it complies by
sending notice to the alderman.
¶ 20 Sperekas acknowledges the procedural nature of the change but contends that because the
trial court dismissed the complaint, ending the proceedings, the amendment only applies
prospectively. For support, Sperekas relies on Hunter. In Hunter, our supreme court stated that
“ ‘the mere fact that a new rule is procedural does not mean that it applies to every pending
case.’ ” Hunter, 2017 IL 121306, ¶ 34 (quoting Landgraf, 511 U.S. at 275 n.29). So additional
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analysis determines if the construction brings about “absurd, unreasonable, or unjust results
that the legislature could not have intended.” Id. ¶ 28.
¶ 21 In Hunter, the defendant was 16 years old when he committed armed robbery with a firearm
and aggravated vehicular hijacking. Id. ¶¶ 4, 6. During his direct appeal, a statute went into
effect that removed his offenses from the list of those requiring automatic transfer from
juvenile to adult court. Id. ¶¶ 7-8. On appeal, the defendant argued his case should be remanded
for a discretionary transfer hearing. Id. ¶ 9. The supreme court disagreed, as “the proceedings
in the trial court were completed well before the statute was amended,” and “[n]o ‘ongoing
proceedings’ existed to which the amended statute could apply.” Id. ¶ 32. Retroactive treatment
would result in the reviewing court “effectively creating new proceedings for the sole purpose
of applying a procedural statute that postdates [the defendant’s] trial and sentence.” Id. ¶ 33.
The court stated, “[r]emand under such circumstances would create inconvenience and a waste
of judicial resources—a real-world result that the General Assembly could not have intended.”
Id. ¶ 36.
¶ 22 The Hunter court conceded that “retroactivity jurisprudence has not typically distinguished
between cases that are pending in the trial court and cases pending in the appellate court on
direct review at the time a statutory amendment becomes effective.” Id. ¶ 27. And that section 4
“contemplates the existence of proceedings after the new or amended statute is effective to
which the new procedure could apply.” Id. ¶ 31. No ongoing proceedings existed to which the
amendment could apply. Id. ¶ 32. Accordingly, “[n]othing remains to be done.” “Because
Hunter’s trial court proceedings have been concluded and no further trial court proceedings are
necessitated by reversible error, applying the amended statute retroactively to Hunter’s case
would result in this court effectively creating new proceedings for the sole purpose of applying
a procedural statute that postdates his trial and sentence.” Id. ¶¶ 32-33. The court noted that
appellate remand to the circuit court for retrial each time the General Assembly enacted a new
procedural trial rule would “create inconvenience and a waste of judicial resources—a real-
world result that the General Assembly could not have intended.” Id. ¶ 36.
¶ 23 Sperekas contends that because the trial court dismissed the Bank’s complaint, nothing
further needs to be done. We disagree. Unlike in Hunter, where the defendant had a trial and
was sentenced, this foreclosure case was still at an early stage. Had the court dismissed the
complaint with prejudice, precluding the Bank from refiling, the proceedings would be
complete. But, as required by section 15-1503(b), the trial court dismissed the complaint
without prejudice. Proceedings are contemplated after the dismissal; the Bank will refile the
same complaint including the same facts and allegations, with the only difference being that
notice will be provided to the alderman, who has no legal interest in the proceeding.
¶ 24 As the supreme court stated in Hunter, in deciding whether to apply the amended statute
retroactively, we must look to avoid “inconvenience and a waste of judicial resources.” Id.
Requiring the Bank to refile merely to provide notice to the alderman would obviously be
inconvenient to the Bank and waste judicial resources. To avoid this unreasonable result, the
trial court’s dismissal of the complaint without prejudice does not preclude retroactive
application of the amended statute, if it is procedural rather than substantive in nature.
¶ 25 Substantive or Procedural?
¶ 26 Generally, a procedural change in the law prescribes a method of enforcing rights or
involves pleadings, evidence, and practice. Ores v. Kennedy, 218 Ill. App. 3d 866, 871 (1991).
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Examples of amendments that have been characterized as procedural and applied retroactively
include amendments to the long-arm statute and service of process changes. Id. In contrast, a
substantive change in law establishes, creates, or defines rights. Ogdon v. Gianakos, 415 Ill.
591, 596 (1953). An example of an amendment that was characterized as substantive and
applied prospectively involved a statutory amendment that allowed an income tax credit for
subchapter S corporation shareholders that previously did not exist. Caveney, 207 Ill. 2d 82.
¶ 27 Section 15-1503(b) involves a plainly procedural matter, as it does not give, define, or
affect any substantive rights. It merely requires notifying the alderman where the foreclosed
property is located. This would be most akin to statutes addressing service of process but even
less significant because the alderman has no substantive interest in the proceeding.
¶ 28 A finding of the statutory change as procedural in nature, however, does not end our
inquiry. We need to look at its retroactive impact. An amended statute has a retroactive impact
or effect where it (i) impairs rights that a party possessed when it acted, (ii) increases a party’s
liability for past conduct, or (iii) imposes new duties with respect to transactions already
completed. Commonwealth Edison Co. v. Will County Collector, 196 Ill. 2d 27, 34 (2001). A
statute does not operate retrospectively because it upsets expectations based on prior law.
Instead, we must consider whether the amendment attaches new legal consequences to events
completed before the amendment. Id. at 39.
¶ 29 Nothing indicates retroactive application of the amended statute will impair any vested
rights. It merely creates a stay without imposing new legal consequences or impairing
Sperekas’s rights.
¶ 30 We reverse the dismissal of the Bank’s complaint and remand for further proceedings in
compliance with the amended statute. Because we reverse on this basis, we need not address
the parties’ other arguments.
¶ 31 Reversed and remanded.
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