Mayne Gate Creek, LLC v. HG Recovery Fund 1, LLC

2023 IL App (1st) 221433-UTHIRD DIVISION
May 10, 2023
No. 1-22-1433
NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the
limited circumstances allowed under Rule 23(e)(1).
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
FIRST JUDICIAL DISTRICT
______________________________________________________________________________
MAYNE GATE CREEK, LLC, and ) Appeal from the
LANN LOGISTICS, LLC, ) Circuit Court of
) Cook County
Plaintiffs-Appellants, )
)
v. ) No. 21 L 8523
)
HG RECOVERY FUND I, LLC, and )
BRIAN DUGGAN, ) Honorable
) Michael F. Otto,
Defendants-Appellees. ) Judge Presiding.
____________________________________________________________________________
JUSTICE REYES delivered the judgment of the court.
Presiding Justice McBride and Justice Burke concurred in the judgment.
ORDER
¶1 Held: Dismissing appeal for lack of jurisdiction where the challenged circuit court order
was not appealable.
¶2 Mayne Gate Creek, LLC (Mayne Gate) and Lann Logistics, LLC (Lann) filed a
complaint for fraud and conspiracy in the circuit court of Cook County against HG Recovery
Fund I, LLC (HG Recovery) and Brian Duggan (Duggan). The complaint alleged that HG
Recovery and Duggan engaged in improprieties in connection with a foreclosure action. The
circuit court dismissed the complaint with prejudice, finding that the complaint was barred by the
doctrine of res judicata based on a final order in the foreclosure action. Mayne Gate and Lann
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filed this appeal, challenging the dismissal of their complaint. For the reasons discussed below,
we dismiss this appeal for lack of jurisdiction.
¶3 BACKGROUND
¶4 The Commencement of the Foreclosure Action
¶5 Mayne Gate was the legal owner of two adjacent townhouses located at 3201 Nottingham
Court (3201 Nottingham) and 3207 Nottingham Court (3207 Nottingham), as well as
approximately 33 vacant lots located at 3133 and 3303 Nottingham Court (vacant lots) in
Olympia Fields, Illinois. RFLF 2, LLC – Mayne Gate’s secured lender – filed a verified
complaint for foreclosure against Mayne Gate and other defendants in the circuit court of Cook
County (case number 15 CH 7244) in May 2015. RFLF 2, LLC subsequently assigned its
interest in the loan documents to HG Recovery, which was substituted as the plaintiff in the
foreclosure action. After Mayne Gate transferred its interest in the vacant lots to Lann by
quitclaim deed, HG Recovery amended the foreclosure complaint to add Lann as a defendant.
¶6 On August 3, 2017, the circuit court entered a judgment of foreclosure and sale.1
The judgment amount was $529,598, including attorney fees. The vacant lots and 3201
Nottingham were scheduled for a sheriff’s sale on September 21, 2017. In response to Mayne
Gate’s request, HG Recovery – through its attorney Caren Lederer (Lederer) – agreed to
continue the sheriff’s sale for two weeks. On September 27, 2017, 3207 Nottingham was sold
through a private sale for $225,000; HG Recovery received approximately $189,000 in proceeds.
¶7 Despite Lederer’s representation regarding the two-week postponement, the sheriff’s sale
went forward as to 3201 Nottingham on September 21, 2017, allegedly without the knowledge of
1
While Mayne Gate and Lann have represented that the foreclosure judgment pertained to
3201 Nottingham, 3207 Nottingham, and the vacant lots, the judgment did not refer to 3207 Nottingham.
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Mayne Gate or Lann. HG Recovery was the sole bidder, with a credit bid of $50,000. On
September 27, 2017, HG Recovery filed a motion to approve and confirm the sheriff’s sale of
3201 Nottingham. The sale was confirmed by an order entered on November 7, 2017.
¶8 On November 6, 2017, the sheriff’s sale took place with respect to the vacant lots,
allegedly without the knowledge of Mayne Gate or Lann. HG Recovery was (again) the sole
bidder, with a credit bid of $100,000. On November 15, 2017, HG Recovery filed a motion to
confirm the sheriff’s sale of the vacant lots. The record suggests that Mayne Gate and Lann filed
a response in opposition to HG Recovery’s motion to confirm, but such response does not appear
to be included in the record on appeal.
¶9 In December 2017, Mayne Gate, Lann, and another defendant in the foreclosure action
filed a motion to vacate the confirmation of the sale order entered on November 7, 2017, and to
set aside the sheriff’s sale conducted on September 21, 2017. The movants argued that there was
no proper notice of the sheriff’s sale, given attorney Lederer’s agreement to a postponement.
The movants also contended that the terms of the sale of 3201 Nottingham were unconscionable,
as the “identical” townhouse (3207 Nottingham) was under contract for $225,000, and thus HG
Recovery’s bid of $50,000 created an artificially large deficiency judgment. The movants
further asserted that the sale was fraudulently conducted, e.g., they were induced into not
pursuing bankruptcy or other relief to protect their interests based on HG Recovery’s
representation through counsel that the sale would not proceed. Finally, the movants challenged
the comparative market analysis submitted by Duggan. Duggan, who is a licensed real estate
broker, is the manager of HG Advisors LLC, which is the manager of HG Recovery.
¶ 10 In an order entered on February 16, 2018, the circuit court (a) granted the motion to
vacate the sale of 3201 Nottingham and (b) denied HG Recovery’s motion to confirm the sale of
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the vacant lots “for the reasons stated from the bench.” The record on appeal does not include a
transcript or other report of the proceedings.
¶ 11 The Commencement of the Fraud Action
¶ 12 On April 5, 2018, Mayne Gate and Lann filed a complaint for fraud and conspiracy
against HG Recovery and Duggan in the circuit court of Cook County (case number 18 L 3435)
(fraud action). The complaint alleged that HG Recovery went forward with the sheriff’s sales of
3201 Nottingham and the vacant lots despite representing that the sales would be postponed.
According to the complaint, Mayne Gate and Lann had not filed for bankruptcy based on the
assurances of HG Recovery’s attorney. The complaint further alleged that the sale amounts for
3201 Nottingham and the vacant lots were “unconscionably” and “outrageously” low.
¶ 13 On May 25, 2018, HG Recovery and Duggan filed a motion to dismiss the complaint
pursuant to section 2-619(a)(3) and section 2-615 of the Code of Civil Procedure (Code) (735
ILCS 5/2-619(a)(3), 2-615 (West 2018)). As to section 2-619(a)(3) – which provides for
dismissal based on “another action pending between the same parties for the same cause” (735
ILCS 5/2-619(a)(3) (West 2018)) – the movants argued that the circuit court in the foreclosure
action had already been presented with “all of the facts and circumstances” alleged in the
complaint in the fraud action. According to the movants, the foreclosure court “made no
findings of fraud, conspiracy or other wrongdoing whatsoever,” but instead vacated the sales of
3201 Nottingham and the vacant lots and ordered that they be re-noticed “to cure any confusion
over what parcel would be sold on what date.” As to section 2-615 (735 ILCS 5/2-615 (West
2018)), the movants contended that there was no damage as the properties had not yet been sold
and the ability of Mayne Gate and Lann to file for bankruptcy remained “unimpaired.”
¶ 14 In their response to the motion to dismiss, Mayne Gate and Lann asserted that they “held
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off on bankruptcy” based on the agreement to postpone the sheriff’s sale and proceeded to close
on the private sale of 3207 Nottingham. The net proceeds of that sale (approximately $189,000)
were thus transferred to HG Recovery and Duggan instead of becoming property of a bankruptcy
estate. Mayne Gate and Lann further maintained that their claims in the fraud action were not –
and could not be – litigated in the foreclosure action. In their reply, HG Recovery and Duggan
characterized the fraud action as “redundant” and “duplicative” of the challenges in the
foreclosure action. HG Recovery also argued it would be entitled to all sale proceeds as to 3207
Nottingham, regardless of whether Mayne Gate sought bankruptcy protection.
¶ 15 In an order entered on August 21, 2018, the circuit court denied the motion to dismiss
under section 2-619(a)(3) of the Code but sua sponte transferred the fraud case to the court’s stay
calendar pending the conclusion of the foreclosure action.
¶ 16 The Continuation and Conclusion of the Foreclosure Action
¶ 17 Prior to the imposition of the stay in the fraud action, the circuit court in the foreclosure
action entered an order on June 26, 2018, wherein the circuit court sua sponte retroactively
amended its order of February 16, 2018, to vacate the sale of the vacant lots.2 The order further
provided that the sale of 3201 Nottingham and the vacant lots could proceed on June 27, 2018.
¶ 18 Mayne Gate, Lann, and another party also filed a petition for attorney fees in the
foreclosure action pursuant to section 15-1510 of the Illinois Mortgage Foreclosure Law (735
ILCS 5/15-1510 (West 2018)), which provides for the award of reasonable attorney fees to the
defendant “who prevails in a motion, an affirmative defense or counterclaim, or in the
2
In the February 16, 2018 order, the circuit court denied confirmation of the sale of the vacant
lots but did not vacate the sale.
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foreclosure action.” The circuit court awarded $8777.06 in attorney fees on December 14, 2018.
¶ 19 Although the order is not included in the record on appeal, the circuit court apparently
entered an order on October 13, 2020, which dismissed the foreclosure action with prejudice.
¶ 20 The Renumbered Fraud Action
¶ 21 In 2021, the fraud action was removed from the stay docket, reassigned, and
administratively renumbered (case number 21 L 8523). After HG Recovery and Duggan filed a
demand for bill of particulars pursuant to section 2-607 of the Code (735 ILCS 5/2-607 (West
2020)), Mayne Gate and Lann were granted leave to file a verified first amended complaint
(amended complaint).
¶ 22 In the amended complaint, Mayne Gate and Lann again asserted claims for fraud and
conspiracy against HG Recovery and Duggan. Among other things, Mayne Gate and Lann
alleged that 3201 Nottingham and the vacant lots sold at a sheriff’s sale on June 27, 2018, for
$176,001, even though their estimated combined value exceeded $900,000. 3
¶ 23 HG Recovery and Duggan filed a combined motion to dismiss the amended complaint
pursuant to section 2-619.1 of the Code (735 ILCS 5/2-619.1 (West 2020)). The movants sought
dismissal under the doctrine of res judicata pursuant to section 2-619(a)(4) (735 ILCS 5/2-
619(a)(4) (West 2020)), arguing that the claims asserted in the fraud action were already litigated
and decided in the foreclosure action. HG Recovery and Duggan also contended that the
amended complaint failed to plead the elements of fraud with specificity and particularity, thus
warranting dismissal under section 2-615 (735 ILCS 5/2-615 (West 2020)).
¶ 24 Mayne Gate and Lann responded, in part, that HG Recovery had asserted the same
3
We note that the amended complaint provided that 3207 Nottingham and the vacant lots sold on
June 27, 2017. Based on our review of the record, however, it appears that 3201 Nottingham and the
vacant lots sold on June 27, 2018.
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arguments in the 2018 motion to dismiss the fraud complaint pursuant to section 2-619(a)(3) of
the Code (735 ILCS 5/2-619(a)(3) (West 2018)), which the circuit court denied. Mayne Gate
and Lann further contended that the fraud and conspiracy counts required different proof than the
foreclosure action and that Duggan was not a party to the foreclosure action. HG Recovery and
Duggan replied, in part, that the amended complaint in the fraud action arose from the same
underlying facts as were previously adjudicated in the foreclosure action and that Duggan was in
privity with HG Recovery.
¶ 25 Prior to the circuit court’s ruling on the motion to dismiss, Mayne Gate and Lann filed a
motion for leave to amend the amended complaint to add attorney Lederer as a defendant.
¶ 26 In a memorandum opinion and order entered on August 30, 2022, the circuit court
granted the motion to dismiss the fraud action with prejudice. The circuit court found that the
amended complaint was barred by the doctrine of res judicata under section 2-619(a)(4) and that
the motion to dismiss under section 2-615 was moot (735 ILCS 5/2-619(a)(4), 2-615 (West
2020)). In a separate order entered on the same date, the circuit court granted Mayne Gate and
Lann leave to file its second amended complaint – adding Lederer as a defendant – instanter.
¶ 27 Mayne Gate and Lann filed a notice of appeal from the dismissal order on
September 21, 2022.
¶ 28 ANALYSIS
¶ 29 Mayne Gate and Lann contend on appeal that the circuit court erred in granting the
motion to dismiss their amended complaint pursuant to section 2-619(a)(4) of the Code (735
ILCS 5/2-619(a)(4) (West 2020)) with prejudice. HG Recovery and Duggan argue that the trial
court properly dismissed the amended complaint, as the elements of res judicata were satisfied.
¶ 30 As a threshold matter, we are required to consider our jurisdiction even though the parties
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did not raise the issue. Navigators Specialty Insurance Co. v. Onni Contracting (Chicago), Inc.,
2022 IL App (1st) 210827, ¶ 7. Our jurisdiction is limited to the review of appeals from final
judgments unless otherwise permitted by statute or under the Illinois Supreme Court rules. In re
Marriage of Morgan, 2019 IL App (3d) 180560, ¶ 9. “In order to be considered final, an order
must dispose of the rights of the parties, either upon the entire controversy or some definite and
separate part of it.” In re Marriage of Sanchez, 2018 IL App (1st) 171075, ¶ 21. If jurisdiction
is lacking, we must dismiss the appeal. Id. ¶ 20.
¶ 31 Mayne Gate and Lann contend that jurisdiction is conferred upon this Court in the instant
case pursuant to Illinois Supreme Court Rule 303 (eff. July 1, 2017), which governs the timing of
appeals from final judgments of the circuit court. Marsh v. Evangelical Covenant Church of
Hinsdale, 138 Ill. 2d 458, 460 (1990). The memorandum opinion and order entered on
August 30, 2022, appears on its face to be a final judgment, as it fully disposes of the rights of
Mayne Gate and Lann vis-à-vis HG Recovery and Duggan. Phoenix Capital, LLC v. Tabiti,
2016 IL App (1st) 162686, ¶ 6 (stating that a “final order or judgment requires a determination
by the trial court on the issues presented by the pleadings which ascertains and fixes absolutely
and finally the rights of the parties to the litigation”). The notice of appeal was filed within the
30-day period set forth in Rule 303(a)(1). Ill. S. Ct. R. 303(a)(1) (eff. July 1, 2017).
¶ 32 In a separate order also entered on August 30, 2022, however, the circuit court granted
the request to amend the amended complaint to add attorney Lederer as an additional defendant.
This order suggests that the relief provided in the memorandum opinion and order may not, in
fact, be “final and appealable,” despite the circuit court’s express statement therein to the
contrary. See Navigators Specialty Insurance, 2022 IL App (1st) 210827, ¶ 11 (noting that “the
beliefs of the court or parties as to the finality or appealability of an order is not conclusive”).
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¶ 33 Illinois Supreme Court Rule 304(a) (eff. Mar. 8, 2016) “governs the timing of appeals
from final orders not disposing of all matters presented to the court.” Marsh, 138 Ill. 2d at 464.
Under Rule 304(a), if a circuit court order disposes of fewer than all the claims in an action, then
the court must make an express written finding that there is no just reason for delaying
enforcement or appeal. Id. The rationale underlying the rule is that it allows appeals to be taken
before the final disposition of a case where the circuit court considers an immediate appeal to be
appropriate. Palmolive Tower Condominiums, LLC v. Simon, 409 Ill. App. 3d 539, 544 (2011).
¶ 34 Without a Rule 304(a) finding, a final order which disposes of fewer than all of the
claims is not an appealable order and does not become appealable until all of the claims have
been resolved. Marsh, 138 Ill. 2d at 464. “Thus, prior to the resolution of all claims with respect
to all parties, any order entered in a case, even if final as to any one party or claim, is not
appealable unless the order contains a finding that there is no just reason to delay enforcement or
appeal, in compliance with Rule 304(a).” Sanchez, 2018 IL App (1st) 171075, ¶ 23.
¶ 35 The circuit court herein entered an order allowing the filing of a second amended
complaint adding Lederer as a defendant instanter. The order dismissing the amended complaint
as to HG Recovery and Duggan – which is the subject of the instant appeal – was thus required
to include an express finding under Rule 304(a) to render the order appealable. Shelter Mutual
Insurance Co. v. Flynn, 2020 IL App (1st) 191123, ¶ 37. The circuit court’s statement in the
dismissal order that the order was “final and appealable” is insufficient for purposes of Rule
304(a). E.g., Shared Imaging, LLC v. Hamer, 2017 IL App (1st) 152817, ¶ 21 (observing that
courts often use the phrase “final and appealable” in “failed attempts to make a Rule 304(a)
finding”); Palmolive Tower Condominiums, 409 Ill. App. 3d at 544 (stating that “[a] circuit
court’s declaration that an order is ‘final and appealable,’ without reference to the justness of
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delay, or even reference to immediate appealability, evinces no application of the discretion Rule
304(a) contemplates”). Without any other indication from the record that the circuit court
intended to invoke Rule 304(a), its declaration that the dismissal order is final and appealable
“amounts to nothing more than a non-binding interpretation.” Id.
¶ 36 The statement of jurisdiction in the opening brief does not elucidate this matter. As the
appellants, Mayne Gate and Lann have the burden of establishing appellate jurisdiction. Shared
Imaging, 2017 IL App (1st) 152817, ¶ 19. Accord U.S. Bank National Ass’n v. IN Retail Fund
Algonquin Commons, LLC, 2013 IL App (2d) 130213, ¶ 24. Illinois Supreme Court Rule
341(h)(4) (eff. Oct. 1, 2020) provides that a statement of jurisdiction must set forth the supreme
court rule or other law that confers jurisdiction on the reviewing court. See Hall v. Naper Gold
Hospitality LLC, 2012 IL App (2d) 111151, ¶ 8 (noting that the purpose of requiring the
jurisdictional statement “is not merely to tell this court that it has jurisdiction, but to provoke
counsel into making an independent review of the right to appeal, before writing the brief”).
Among other things, the rule requires a demonstration of “the disposition of all claims and all
parties.” Ill. S. Ct. R. 341(h)(4) (Oct. 1, 2020). The jurisdictional statement in the instant case
fails to explain – or even mention – the order granting leave to add Lederer as a defendant. See
In re Marriage of Reicher, 2021 IL App (2d) 200454, ¶ 30 (stating that the “supreme court rules
governing the form and content of appellate briefs are not mere suggestions but, rather, are
mandatory and have the force of law”).
¶ 37 We note that, during oral argument before this Court, counsel to Mayne Gate and Lann
referenced a separate lawsuit filed against attorney Lederer in the circuit court of Cook County.
The exact nature and status of such litigation has not been fully explained to this court. See Atlas
v. Mayer Hoffman McCann, P.C., 2019 IL App (1st) 180939, ¶ 33 (providing that the reviewing
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court is entitled to have issues clearly defined and is not a repository into which an appellant may
dump the burden of research and argument). We further observe that the opening brief suggests
that Lederer’s involvement in the fraud action supports the denial of the application of the
doctrine of res judicata since there was a lack of identity of the parties, i.e., the brief suggests
that Lederer is a party to the fraud action but was not a party to the foreclosure action. See Ward
v. Decatur Memorial Hospital, 2019 IL 123937, ¶ 45 (setting forth the three requirements of res
judicata: (1) a final judgment on the merits rendered by a court of competent jurisdiction;
(2) identity of cause of action; and (3) identity of the parties or their privies). To the extent that
Mayne Gate and Lann have intimated that the inclusion of Lederer in the fraud action helps to
defeat the application of res judicata, such position is inconsistent with a finding of appellate
jurisdiction.
¶ 38 In sum, the entry of the order on August 30, 2022, allowing the addition of Lederer as a
defendant suggests that the dismissal order entered on the same date was not appealable unless
the circuit court included the requisite Rule 304(a) language therein. Navigators Specialty
Insurance, 2022 IL App (1st) 210827, ¶ 12. Although the order dismissing the complaint as to
HG Recovery and Duggan provided that it was “final and appealable,” such language did not
satisfy the requirements of Rule 304(a). As we do not have jurisdiction, we do not reach the
merits of the appeal. E.g., In re Marriage of Dougherty, 2017 IL App (1st) 161893, ¶ 16.
¶ 39 CONCLUSION
¶ 40 For the reasons discussed above, the appeal is dismissed for lack of appellate jurisdiction.
¶ 41 Appeal dismissed.
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