Bank of America, N.A. v. Basile

2014 IL App (3d) 130204
Opinion filed May 20, 2014
Supplemental Opinion filed October 27, 2014
_____________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
A.D., 2014
BANK OF AMERICA, N.A., ) Appeal from the Circuit Court
) of the 12th Judicial Circuit,
Plaintiff-Appellee, ) Will County, Illinois,
)
v. )
) Appeal No. 3-13-0204
PERRY BASILE a/k/a Perry A. ) Circuit No. 09-CH-1717
Basile; ERICA BASILE, a/k/a )
Erica G. Basile; HARRIS, N.A.; )
WESLAKE COUNTRY CLUB )
ASSOCIATION; UNKNOWN OWNERS ) The Honorable
and NONRECORD CLAIMANTS, ) Richard J. Siegel,
) Judge, Presiding.
Defendants-Appellants.
JUSTICE McDADE delivered the judgment of the court, with opinion.
Justices O'Brien and Schmidt concurred in the judgment and opinion.
OPINION
¶1 Defendants, Perry Basile and Erica Basile, were sued by plaintiff, Bank of America,
N.A., under the Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1101 et seq. (West 2008)).
The circuit court entered judgment of foreclosure and sale in favor of plaintiff. We affirm.
¶2 On July 22, 2005, defendants executed a mortgage related to property located at 1758
Autumn Woods Lane in Romeoville. The mortgage secured a $135,800 loan from plaintiff.
After defendants failed to make any payments on the loan for more than a year, plaintiff filed a
complaint to foreclose mortgage. The mortgage and defendants’ note were attached to the
complaint. Defendants' last payment on the mortgage was apparently six years ago (February
2008).
¶3 Defendants were personally served with the complaint. Defendants did not, however, file
an appearance or respond to the complaint until after the circuit court entered a default judgment
against them. Defendants subsequently filed a motion to vacate the default judgment, which the
court granted.
¶4 On December 16, 2009, defendants filed an answer (the 2009 Answer), which contained
three affirmative defenses: (1) plaintiff failed to provide notice of default, (2) plaintiff failed to
provide sufficient or accurate copies of the notice of rescission, and (3) defendants exercised
their right of rescission on March 6, 2008.
¶5 After plaintiff filed a motion to strike the affirmative defenses, defendants withdrew them
and requested leave to amend the 2009 Answer or replead the affirmative defenses. The court
entered an order withdrawing the affirmative defenses and granted defendants 28 days to replead
their answer and/or affirmative defenses.
¶6 Defendants filed an amended answer 57 days later on September 30, 2010 (the 2010
Answer). The 2010 Answer again included three affirmative defenses: (1) the mortgage and/or
note were altered and/or defaced, making them unenforceable, (2) defendants had exercised their
right of rescission on March 6, 2008, so there was no mortgage to enforce, and (3) plaintiff failed
to provide sufficient or accurate copies of the notice of rescission.
2
¶7 On October 14, 2010, plaintiff moved to strike defendants’ affirmative defenses. At the
hearing on plaintiff’s motion, defendants requested leave to withdraw and replead their
affirmative defenses. At the hearing on plaintiff’s motion to strike, plaintiff’s counsel informed
the court that defendants had agreed to withdraw their affirmative defenses. Based on this
agreement, the court granted defendants "leave to withdraw their answer and affirmative
defenses" and ordered defendants "to answer or otherwise plead to the complaint within 28
days." Defendants never filed an amended answer.
¶8 On December 30, 2011, plaintiff moved for summary judgment allowing it to foreclose
and sell the property. Plaintiff attached defendants’ 2009 Answer to its motion. In response,
defendants argued that the 2010 Answer and affirmative defenses contained therein were still in
effect. Additionally, for the first time, defendants raised a new affirmative defense challenging
plaintiff’s standing to bring the complaint, arguing that Fannie Mae owned the note, not plaintiff.
¶9 Defendants also moved for leave to file a motion to dismiss, which seems to contend that
both the 2009 and 2010 Answers were still in effect. Defendants argue that they never actually
withdrew the 2010 Answer and plaintiff has acknowledged the continued viability of the 2009
Answer by attaching it to its motion for summary judgment. Defendants reasserted their claim
that plaintiff lacked standing. Upon hearing argument, the court denied defendants leave to file a
motion to dismiss.
¶ 10 The matter proceeded to a hearing on plaintiff’s motion for summary judgment. The
circuit court heard argument on the issues of (1) whether the 2009 and 2010 Answers and
corresponding affirmative defenses were still in effect, and (2) plaintiff’s standing. Ultimately,
3
the court granted plaintiff’s motion for summary judgment. The court specifically held that no
affirmative defenses existed on file.
¶ 11 Defendants filed a motion to reconsider, arguing that the circuit court erred in finding
plaintiff had standing. The motion did not challenge the court's finding that no affirmative
defenses existed on file. 1 Instead, defendants moved for leave to file a new amended answer and
affirmative defenses, which included the exact three affirmative defenses pled in the 2009
Answer plus a fourth affirmative defense challenging standing. After hearing argument, the
court denied the motion to reconsider and found the motion for leave to file amended pleadings
to be moot.
¶ 12 Pursuant to plaintiff's motion, the court confirmed the sale in foreclosure by order of
October 19, 2012. On November 19, 2012, defendants moved for reconsideration of the order
confirming sale, arguing that plaintiff did not have standing to foreclose. The court rejected this
claim. Defendants appealed.
¶ 13 ANALYSIS
¶ 14 At the outset, we note that there is a great deal of confusion with regard to the procedural
posture of this case. Upon review of the record, we attribute much of this confusion to
1
It is well-established that "[f]ailure to specifically allege error in the post-trial motion
waives the issue for review." Graves v. North Shore Gas Co., 98 Ill. App. 3d 964, 969-70 (1981)
(citing Wilson v. Clark, 84 Ill. 2d 186, 189-90 (1981)). In the interest of relieving the substantial
confusion brought about by defendants' actions, or lack thereof, in present case, we will review
all issues argued on appeal.
4
defendants, who on several instances failed to comply with the circuit court’s imposed deadlines.
First, defendants, who were personally served, did not take any legal action until a default
judgment was entered against them. Second, after the court entered an order withdrawing the
2009 affirmative defenses and granted defendants 28 days to replead their answer and/or
affirmative defenses, defendants did not file an amended answer until 57 days later. Lastly, and
most significantly, after the court granted defendants’ request for "leave to withdraw their
[2010] answer and [2010] affirmative defenses" and ordered defendants "to answer or otherwise
plead to the complaint within 28 days," defendants did nothing for over a year. Only after
plaintiff filed its motion for summary judgment did defendants choose to act by moving for leave
to file a motion to dismiss, whereby they confusingly argued that both the 2009 and 2010
Answers were still in effect.
¶ 15 Defendants now argue that the circuit court erred in: (1) determining defendants did not
have any affirmative defenses on file at the time plaintiff’s motion for summary judgment was
argued, (2) denying defendants’ motion to file an amended answer and affirmative defenses after
summary judgment was entered, and (3) refusing to adjudicate defendants’ rescission claim. We
examine each of these three issues with the above facts in mind. We also consider (4) sua sponte
sanctions.
¶ 16 I. Affirmative Defenses
¶ 17 First, defendants argue the circuit court erred in determining defendants did not have any
affirmative defenses on file at the time plaintiff’s motion for summary judgment was argued.
Specifically, defendants contend that the affirmative defenses contained within the 2010 Answer
were still before the court because defendants never actually withdrew the affirmative defenses.
5
Instead, defendants only received leave to withdraw. Stated another way, defendants argue that
they were granted permission to withdraw, but never acted upon that permission. Because the
facts as to this issue are uncontested, our review is de novo. People v. Chapman, 194 Ill. 2d 186,
208 (2000).
¶ 18 Defendants clearly communicated their intent to withdraw the affirmative defenses
contained within the 2010 Answer. This intent is established by the fact that defendants filed a
motion for leave to withdraw said affirmative defenses. The transcript of the proceedings on
plaintiff’s motion to strike also confirms defendants’ intent. Plaintiff’s counsel stated that the
case was "up on plaintiff’s motion to strike defendants’ affirmative defenses. Defendants agreed
to withdraw the affirmative defenses, and [defendants'] counsel is going to need 28 days to
answer or otherwise plead." Defendants raised no objection to this recitation of the parties'
agreement. Upon review, we also find it significant that the parties came to this agreement at
the hearing on plaintiff’s motion to strike defendants’ affirmative defenses. We view
defendants’ agreement as a tacit stipulation to plaintiff’s motion to strike. Based on this
agreement/stipulation, the court granted defendants’ request to withdraw. At that point, the
affirmative defenses contained within the 2010 Answer were no longer before the court.
¶ 19 The fact that defendants did not actually replead has no bearing on the defendants'
agreement/stipulation to withdraw or strike. Defendants remained silent for over a year, failing
to replead within 28 days as ordered by the court. Defendants attempt to justify this silence by
focusing on the isolated term "leave." They would have us find that an affirmative defense is not
actually withdrawn until a new affirmative defense is filed. Such a proposition not only defies
logic, but will result in the exact procedural confusion that has occurred in this case. Thus, we
6
hold that where a party affirmatively agrees to withdraw his/her affirmative defenses at a hearing
on the opposing party’s motion to strike said affirmative defenses, the affirmative defenses will
be deemed to have been withdrawn upon entry of a court order granting leave to withdraw and/or
replead. Withdrawal is not dependent upon the pleading of a new affirmative defense.
¶ 20 Defendants bring three alternative arguments in an effort to establish that their
affirmative defenses either remained before the circuit court or were somehow revived. First,
defendant relies upon the fact that the 2010 Answer was a "verified" pleading. Second,
defendants claim that plaintiff’s act of attaching the 2009 Answer to its motion for summary
judgment somehow revived the affirmative defenses contained therein. Third, defendants argue
that their response to plaintiff’s motion for summary judgment and/or the corresponding attached
affidavits revived the previously withdrawn affirmative defenses. All three of these claims lack
merit.
¶ 21 Defendants’ reliance upon the fact that the 2010 Answer is a "verified" pleadings is
misplaced. They argue that because the 2010 Answer was "verified," the affirmative defenses
contained within remain before the court indefinitely. Allegations in verified pleadings remain
part of the record, even after those pleadings have been subsequently withdrawn or amended, but
only to the extent they are deemed to be admissions of fact. Winnetka Bank v. Mandas, 202 Ill.
App. 3d 373, 397 (1990). Allegations of legal conclusions or admissions of law do not remain
part of the record after withdrawal or amendment. Winnetka Bank, 202 Ill. App. 3d at 397.
Here, we are not dealing with admissions of fact. Instead, we are dealing with affirmative
defenses which must be pled (or repled) so they appear as part of the answer. 735 ILCS 5/2-
613(d) (West 2010). Defendants failed to do this in the instant case.
7
¶ 22 We also reject defendants' claim that plaintiff’s act of attaching the 2009 Answer to its
motion for summary judgment somehow revived the affirmative defenses contained therein. The
affirmative defenses in the 2009 Answer were withdrawn and therefore were no longer before
the court. Even if we were to accept plaintiff's proposition that defendants never withdrew the
2009 Answer, but only withdrew the contained affirmative defenses, the new answer that
defendants filed in 2010 superseded the 2009 Answer. At that point, the 2010 Answer was the
operative pleading, along with the affirmative defenses contained therein. This pleading was
then voluntarily withdrawn (noting the circuit court’s order granting defendants "leave to
withdraw their answer and affirmative defenses"). At that point, defendants did not have any
answer or affirmative defenses before the court. Significantly, defendants were afforded the
opportunity to replead their answer and/or affirmative defenses (noting the circuit court’s order
allowing defendants 28 days "to answer or otherwise plead to the complaint"). Defendants failed
to do so. Plaintiff’s subsequent act of attaching a nonoperative pleading to its motion for
summary judgment does not excuse defendants' failure to replead. An affirmative defense must
be specifically pled. 735 ILCS 5/2-613(d) (West 2010).
¶ 23 We also reject defendants’ argument that their response to plaintiff’s motion for summary
judgment and/or their corresponding attached affidavits revived the previously withdrawn
affirmative defenses. Defendants base this belief upon the fact that the response and affidavits
referenced the previously raised affirmative defenses. 2 In support, defendants call our attention
2
In discussing this particular argument on appeal, defendants only reference their
previously raised affirmative defenses, not their standing issue, which they raised for the first
time in their response.
8
to the fact that Illinois law permits a defendant to file a motion for summary judgment even
before an answer is filed, and an affirmative defense may be raised on the motion for summary
judgment even though it was not raised in the answer. Defendants rely solely upon two cases in
support of this rule (Costello v. Illinois Farmers Insurance Co., 263 Ill. App. 3d 1052, 1059
(1993), and Romero v. Ciskowski, 137 Ill. App. 3d 529, 533 (1985)). We find both cases
distinguishable. We also find the above rule inapplicable in the instant case.
¶ 24 First, we note defendants never moved for summary judgment in the instant case.
Second, and more importantly, the present matter does not involve a scenario where defendants
are attempting to raise an affirmative defense for the first time. Unlike the present case,
defendants’ cited cases and the above rule do not contemplate or involve scenarios where the
defendant voluntarily withdrew affirmative defenses and then subsequently failed to replead in
violation of a court order. The cited cases and above rule merely stand for the proposition that a
defendant does not need to file an answer before raising an affirmative defense. Instead, the
defendant can raise her affirmative defense for the first time in a motion for summary judgment.
The instant case does not present us with such a scenario.
¶ 25 Here, defendants filed two previous answers, both of which included affirmative
defenses. Defendants voluntarily withdrew both answers and all corresponding affirmative
defenses. 3 After the second withdrawal, defendants failed to comply with the circuit court’s
order allowing them 28 days to replead. In light of the totality of the facts and circumstances, we
hold defendants' failure to replead constituted a knowing and intelligent waiver of any
3
As discussed above, even if defendants did not withdraw the 2009 Answer it was
superseded by the 2010 Answer.
9
affirmative defense. Defendants' subsequent response and/or attached affidavits do not change
this conclusion. Accordingly, we find the circuit court was correct when it held that there were
no affirmative defenses before the court at the time of plaintiff’s summary judgment hearing.
¶ 26 II. Amended Answer
¶ 27 Second, defendants argue that the circuit court erred in denying their motion to file an
amended answer and affirmative defenses after summary judgment was entered. Defendants
explain that the denied amended answer would have "pled the allegations raised in the response
to plaintiff’s motion [for summary judgment] and [those] previously raised in the[ir] initial
answer."
¶ 28 Section 2-1005(g) of the Code of Civil Procedure (the Code) expressly provides, in
pertinent part, that "after the entry of a summary judgment, the court shall permit pleadings to be
amended upon just and reasonable terms." (Emphasis added.) 735 ILCS 5/2-1005(g) (West
2010). The decision to grant leave to file an amended answer or amended affirmative defense
rests within the sound discretion of the trial court and such a decision will not be disturbed
absent an abuse of discretion. Loyola Academy v. S&S Roof Maintenance, Inc., 146 Ill. 2d 263,
273 (1992). See also Champaign National Bank v. Landers Seed Co., 194 Ill. App. 3d 1019,
1027-28 (1990) (no abuse of discretion to deny the defendants’ request to file a third affirmative
defense after a deadline in a scheduling order).
¶ 29 "In order to determine whether the trial court has abused its discretion, we must look at
four factors ***. These factors are: (1) whether the proposed amendment would cure the
defective pleading; (2) whether other parties would sustain prejudice or surprise by virtue of the
proposed amendment; (3) whether the proposed amendment is timely; and (4) whether previous
10
opportunities to amend the pleading could be identified. [Citation.]" Loyola Academy, 146 Ill.
2d at 273.
¶ 30 Defendants argue that all four of the above factors are met. We disagree. Upon review,
we find defendants fail to establish any of the four factors. First, we note that we do not have a
defective pleading, we have no pleading. Defendants withdrew all of their pleadings and then
subsequently failed to replead. Second, we believe plaintiff would be prejudiced by the proposed
amendment. In support, we note the procedural history in this case whereby defendants have
continually disregarded the circuit court’s imposed deadlines. Defendants’ actions or lack
thereof have not only dragged this matter out beyond what is necessary, but also created a great
deal of unnecessary procedural confusion in this case. This conclusion dovetails into the third
and fourth factors. Defendants' proposed amendment is not timely. In fact, it is over a year late.
Finally, we note that defendants were previously allowed to vacate the default judgment entered
against them and subsequently afforded two opportunities to replead. While defendants failed to
comply with the 28-day deadline imposed with respect to the first opportunity to replead, they
did ultimately replead. Apparently, the circuit court excused defendants’ lack of timeliness with
respect to this particular instance. As to the second opportunity, however, defendants simply did
not replead. Defendants now seek a third opportunity to replead. In light of all these facts, we
hold the circuit court did not abuse its discretion in denying defendants’ motion to file an
amended answer and affirmative defenses after summary judgment was entered.
¶ 31 III. Rescission
¶ 32 Finally, defendants argue that the circuit court erred in refusing to adjudicate defendants’
rescission claim. Defendants incorrectly believe that a claim of rescission is not an affirmative
11
defense, but a complete defense to foreclosure. Thus, defendants apparently conclude that they
can raise a claim of rescission at any time and without restriction. Curiously, plaintiff’s brief
does not address this issue.
¶ 33 We find the holding in Beach v. Ocwen Federal Bank, 523 U.S. 410 (1998), instructive.
The Beach court explained:
"The [Truth in Lending] Act provides *** that the borrower’s right
of rescission ‘shall expire three years after the date of
consummation of the transaction or upon the sale of the property,
whichever occurs first,' even if the required disclosures have never
been made. [Citation.] The [Truth in Lending] Act gives a
borrower no express permission to assert the right of rescission as
an affirmative defense after the expiration of the 3-year period."
(Emphasis added.) Beach, 523 U.S. at 413.
¶34 Beach makes clear: (1) the right of rescission is an affirmative defense, and (2) section
1635(f) of the Truth in Lending Act (15 U.S.C. § 1635(f) (1994) is a statute of repose that
extinguishes all claims for rescission outside the three-year period. Because rescission is an
affirmative defense, defendants were required to specifically plead it. See 735 ILCS 5/2-613(d)
(West 2010). As discussed above, defendants have not met this burden.
¶ 35 IV. Sanctions
¶ 36 At the beginning of our analysis we noted the procedural confusion that defendants'
actions, or lack thereof, caused in this case. Coupled with defendants' apparent failure to make
any payment on the mortgage since February 2008, we view defendants' behavior as nothing
12
more than stalling tactics. Stated another way, we believe defendants simply wanted to remain
in possession of the property, for as long as they possibly could, without having to pay.
Defendants used the stalling tactics discussed above, along with bringing this appeal, as a means
to attain this goal. This conclusion is readily apparent upon review of the entire record.
¶ 37 Illinois Supreme Court Rule 375(b) (eff. Feb 1, 1994) allows us to sua sponte impose an
appropriate sanction upon a party or a party's attorney if:
"[i]t is determined that the appeal or other action itself is frivolous,
or that an appeal or other action was not taken in good faith, for an
improper purpose, such as to harass or to cause unnecessary delay
or needless increase in the cost of litigation, or the manner of
prosecuting or defending the appeal or other action is for such
purpose."
¶ 38 "If the reviewing court initiates the sanction, it shall require the party or attorney, or both,
to show cause why such a sanction should not be imposed before imposing the sanction."
(Emphasis added.) Ill. S. Ct. R. 375(b) (eff. Feb 1, 1994)
¶ 39 The following quotation aptly expresses our view of this appeal:
"We find that this appeal, viewed as a whole, was frivolous,
that it was taken for an improper purpose, and that it was filed
specifically to harass and to cause unnecessary delay and
needlessly increase the cost of litigation. We choose to impose
sanctions for this conduct, finding that cases like this drain
valuable resources intended to benefit those who accept the social
13
contract of living under a law-based system of government."
Parkway Bank & Trust Co. v. Korzen, 2013 IL App (1st) 130380,
¶ 88.
¶ 40 "The tactics employed by defendants in this case caused the expenditure of significant
time and resources not only by the court below, but by the judges, law clerks, librarians, and
clerk's office of this court." Korzen, 2013 IL App (1st) 130380, ¶ 92. "By imposing a fine in
this case, we seek not only to deter similar conduct by future litigants, but to provide some
measure of compensation for the public fisc for that needless expenditure." Korzen, 2013 IL
App (1st) 130380 ¶ 92. Moreover, we note the expense the public consumer suffers when
individuals engage in behavior similar to that of the defendants in the instant case. A
mortgagee's failure to satisfy their financial obligation along with any resulting costs and fees the
mortgagor must expend to recover the property or asset from the mortgagee is almost always
shifted back onto the public consumer. While we are sensitive to the fact that mortgagees are
occasionally exposed to circumstances that may make them unable to satisfy their obligation, we
will not approve or reward the harassing behavior/stalling tactics present in the instant case.
¶ 41 We hold sanctions should be "initiated" against defendants and their attorney for filing a
frivolous appeal. See Ill. S. Ct. R. 375(b) (eff. Feb 1, 1994). We direct plaintiff to file within 14
days a statement of reasonable expenses and attorney fees incurred as a result of this appeal.
Defendants and their attorney shall have 14 days to file a response. We strictly admonish both
parties to comply with their respective 14-day window. If the bank finds it necessary, it can have
seven days to reply. Moreover, we order that defendants' response must "show cause [as to] why
such a sanction should not be imposed." See Ill. S. Ct. R. 375(b) (eff. Feb 1, 1994). We
14
admonish both parties that the actual issue of rescission or the purported right to rescission is not
before us. For the reasons discussed above, rescission was never properly pled and cannot be
raised here on appeal. Thus, neither party's upcoming sanction filing should address, in any
fashion, the substantive issue/purported right of rescission. Plaintiff's statement is limited to a
statement of reasonable expenses and attorney fees incurred as a result of this appeal.
Defendants' response is limited to why sanctions should not be imposed. Any deviation from
these instructions will expose the violating party to sanctions for violation of this opinion. Upon
receiving the party's sanction filings, this court will file a supplemental opinion determining
whether sanctions will be imposed and if so, the appropriate amount of the sanction.
¶ 42 Accordingly, the judgment of the circuit court of Will County is affirmed
¶ 43 Affirmed.
¶ 44 SUPPLEMENTAL OPINION
¶ 45 This matter comes before us on the limited question of whether sanctions should be
imposed upon: (1) Perry Basile and Erica Basile, and (2) the law firm of Woerthwein & Miller
(collectively referred to herein as defendants). 4 Upon review, we enter sanctions in the total
amounts of $10,000 in attorney fees and $3,505 in costs. We apportion those amounts as
follows: Perry Basile and Erica Basile in the amount of $5,000 in attorney fees and $1,752.50 in
costs; the law firm of Woerthwein & Miller in the amount of $5,000 in attorney fees and
$1,752.50 in costs. Neither the Basiles nor the law firm of Woerthwein & Miller will be held
liable for any portion of the other's respective share.
¶ 46 FACTS
4
Woerthwein & Miller represented defendants in the above-entitled matter.
15
¶ 47 At the outset, we adopt all facts and holdings found in our previous opinion of May 20,
2014.
¶ 48 In compliance with our directive, Bank of America (BOA) filed a "statement of
reasonable attorney fees and costs." BOA requested fees in the amount of $43,104 and costs in
the amount of $3,505.
¶ 49 Defendants filed a response as to "why sanctions should not be imposed." Defendants
argue that: (1) their arguments on appeal were not frivolous, (2) our reliance on Parkway Bank
& Trust Co. v. Korzen, 2013 IL App (1st) 130380, is misplaced, (3) we are barred from
considering any of defendants' conduct in the circuit court, (4) the Basiles were not "squatters,"
and (5) the amount sought by BOA is "excessive." BOA filed a response addressing each of
these arguments.
¶ 50 ANALYSIS
¶ 51 Illinois Supreme Court Rule 375(b) (eff. Feb. 1, 1994) allows this court to sua sponte
respond to a frivolous appeal with the imposition of sanctions, which may include reasonable
attorney fees and costs. Rule 375(b) states:
"An appeal or other action will be deemed frivolous where it is not
reasonably well grounded in fact and not warranted by existing law
or a good-faith argument for the extension, modification, or
reversal of existing law. An appeal or other action will be deemed
to have been taken or prosecuted for an improper purpose where
the primary purpose of the appeal or other action is to delay,
16
harass, or cause needless expense." Illinois Supreme Court Rule
375(b) (eff. Feb. 1, 1994).
¶ 52 Defendants' first argument against sanctions is that their arguments on appeal were not
frivolous. We disagree. Defendants attempt to relitigate the merits of their previously raised
issues. We briefly reexamine each of the three issues raised on appeal.
¶ 53 Defendants still assert that "the amended answer and affirmative defenses [(2010
Answer)] remained in place until actually pled over." Defendants are incorrect. Supra ¶¶ 17-19.
To this day, defendants have yet to cite any relevant authority justifying their tortured
interpretation of the term "leave." We again emphasize that defendants' voluntary and knowing
withdrawal of their 2010 Answer took place at the hearing on BOA's motion to strike defendants'
affirmative defenses. Supra ¶¶ 18-19. At that point, the 2010 Answer was no longer before the
court. Supra ¶ 18. Defendants do not dispute the fact that they failed to comply with the circuit
court's order allowing them 28 days to replead. Defendants also do not dispute the fact that they
did nothing for over a year. Only after BOA filed its motion for summary judgment did
defendants move for leave to file a motion to dismiss whereby they confusingly and incorrectly
argued that both the 2009 and 2010 Answers were still in effect.
¶ 54 In light of these facts, along with all the other facts discussed in our previous opinion,
defendants should have been aware that their appellate arguments regarding their affirmative
defenses were not reasonably well grounded in fact and not warranted by existing law. The same
applies to defendants' three alternative affirmative defense arguments. Supra ¶¶ 20-24. None of
these arguments is objectively reasonable when confronted with the facts of the present case and
well-established Illinois law.
17
¶ 55 Defendants also still assert that they "should have been allowed to file a second amended
answer and affirmative defenses after the motion for summary judgment was filed." Defendants
are incorrect. Supra ¶¶ 27-30.
¶ 56 We emphasize that defendants cannot establish even one of the four factors discussed in
Loyola Academy v. S&S Roof Maintenance, Inc., 146 Ill. 2d 263, 273 (1992). Supra ¶ 30. As to
the first factor, we simply reject defendants' belief that "lack of a pleading itself could reasonably
be characterized as a 'defective' pleading, since the proponent has no chance of success with no
pleading just as with a truly faulty pleasing [sic]." A defective pleading on file with the court is
different than the absence of any pleading at all.
¶ 57 As to the second and third factors, defendants seem to argue that any potential prejudice
from their actions, or lack thereof, is cured since BOA had notice of its intent to replead. We
disagree. Such a position fosters the following unreasonable scenario: (1) a defendant could
simply sit idle while an opposing party motions-up its pleading, (2) then at the hearing defendant
could voluntarily agree to withdraw its answer and replead within 28 days, (3) then defendant
could choose not to replead and instead wait for over a year, or perhaps longer, until the
opposing party acts (in this case bringing a motion for summary judgment), and (4) at that point,
defendant could then replead the very same affirmative defenses it previously pled and withdrew
on two separate occasions.
¶ 58 The above scenario clogs up the court system and costs the opposing party a substantial
sum of money before ever reaching the merits of the original pleading. Faced with the backdrop
of this case, we view the above behavior as stalling. Moreover, in determining whether prejudice
18
exists, we consider the totality of the circumstances, viewed from a commonsense perspective.
While notice is one factor, it is not the sole factor.
¶ 59 Defendants concede they have failed to prove the fourth factor. In light of these facts,
along with all the other facts discussed in our previous opinion, defendants should have been
aware that their appellate arguments regarding their amended answer were not reasonably well
grounded in fact and not warranted by existing law.
¶ 60 Defendants' final appellate argument -- that rescission is not an affirmative defense, but a
complete defense to foreclosure -- also was not reasonably well grounded in fact and not
warranted by existing law. It is very clear that rescission is an affirmative defense that must be
specifically pled. Supra ¶¶ 33-34.
¶ 61 Defendants' second argument against sanctions is that we mistakenly relied upon
Parkway in our previous opinion. Defendants allege Parkway is different from the instant case
because Parkway involved "gross procedural errors." Defendants have misread our previous
opinion. Here, the initiation of sanction proceedings and our decision that defendants' appeal is
frivolous is entirely grounded in the specific facts of this case. Whether the conduct in Parkway
was worse than the conduct at issue here is of no consequence. The fact remains, both the
present appeal and the Parkway appeal were frivolous. We merely cited Parkway for the
purpose of illustrating the effects frivolous appeals have upon the court system and for the
proposition that the entry of sanctions deters the filing of such appeals and provides some
measure of compensation for the public fisc. Lastly, we note that our sanctioning authority
derives from Illinois Supreme Court Rule 375(b) (eff. Feb. 1, 1994), not the holding in Parkway.
19
¶ 62 Defendants' third argument against sanctions is that we are barred from considering any
of defendants' conduct in the circuit court. Defendants have waived this argument as they have
failed to include any authority (statutory or case law) in support of this proposition. Illinois
Supreme Court Rule 341(h) (eff. Feb. 6, 2003) requires the parties to an appeal to provide legal
authority for their contentions.
¶ 63 Even if we excused defendants' waiver, however, their argument fails. Initially, we note
that it is the conduct and proceedings in the circuit court that should have notified defendants that
their appellate arguments lacked any objectively reasonable basis in law. One has to look to the
conduct and proceedings below when determining the merit or viability of a potential appellate
argument. The conduct and proceedings below are always the context for the appeal. Illinois
law supports this concept. For example, the court in Penn v. Gerig, 334 Ill. App. 3d 345, 356
(2002), looked at both the proceedings in the circuit court and on appeal when ordering sanctions
pursuant to Rule 375(b). Specifically, the court stated:
"Based on plaintiffs' conduct and failure at every stage of the
proceedings below, defendants argue their bringing of the lawsuit
was 'without any basis and in bad faith' and the appeal is a
'needless extension of a baseless lawsuit.' This appeal, defendants
contend, shows *** [p]laintiffs have remained stubbornly litigious
and caused defendants unnecessary expense. We agree." (internal
quotation marks omitted.) Penn, 334 Ill. App. 3d at 356.
¶ 64 Likewise, we find that the instant appeal is without any objectively reasonable basis and
is a needless extension of a groundless legal defense. The only purpose that was served via the
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proceedings below and these appellate proceedings is that it caused BOA unnecessary expense
and seriously delayed it from obtaining the property in question, while at the same time allowing
the Basiles to live on the property without making any mortgage payment for at least five
continuous years.
¶ 65 Defendants' fourth argument against sanctions is that the Basiles were not "squatters."
We disagree. The basis for the defendants' assertion is that the Basiles agreed to pay BOA a
monthly bond payment of $1,250 per month in order to remain in possession during the appeal.
Significantly, however, the Basiles paid nothing to BOA from early 2008 until the bond order
was entered in April 2013. Thus, the Basiles lived on the property without making any payments
for over five years. Such behavior begs the question, if defendants truly intended to exercise
their purported right to rescission, why did they continue to remain in possession of the property?
Usually when one party intends to void or rescind an agreement they return the consideration
that was tendered by the other party. We find it extremely curious that defendants allegedly
intended to rescind the mortgage, yet continued to remain in possession of the property. Lastly,
we note that even though the Basiles were making the monthly bond payment, BOA was still
required to expend substantial funds to defend against this frivolous appeal.
¶ 66 Defendants' final argument against sanctions is that the requested sanction amount is
excessive. We agree. Upon reviewing the record and all supplemental pleadings, we do not
believe the behavior in the instant case justifies attorney fees in the amount of $43,104. Instead,
we exercise our discretion and find that defendants' conduct compels fees in the amount of
$10,000. In coming to this conclusion, we take into account that the law firm of Woerthwein &
Miller claims that "defendants have not been and will not be charged for this appeal." While we
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find this mitigating to some extent, pro se representation does not excuse the bringing of a
frivolous appeal. Lastly, we find the behavior in the instant case does justify a full
reimbursement ($3,505) of costs.
¶ 67 For the foregoing reasons, we enter sanctions in the total amounts of $10,000 in attorney
fees and $3,505 in costs. Perry Basile and Erica Basile are liable in the amount of $5,000 in
attorney fees and $1,752.50 in costs. The law firm of Worethwein & Miller is liable in the
amount of $5,000 in attorney fees and $1,752.50 in costs.
¶ 68 Defendants sanctioned.
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