2024 IL App (3d) 230253

Opinion filed April 10, 2024 

____________________________________________________________________________ 

IN THE

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

2024 

WELLS FARGO BANK, N.A., )

 ) 

Plaintiff, ) 

 ) 

 v. ) 

 ) 

SANDY S. NGUYEN; PAUL P. NGUYEN; ) 

STATE FARM BANK, FSB; MORTGAGE ) 

ELECTRONIC REGISTRATION SYSTEMS, ) 

INC., as Nominee for Corinthian Mortgage ) 

Corp., d/b/a Southbanc Mortgage; FIA CARD ) 

SERVICES, N.A., f/k/a Bank of America, N.A.,) 

(USA); CHASE BANK USA, N.A., f/k/a ) 

Chase Manhattan Bank USA, N.A., f/k/a ) 

Bank One Delaware, N.A.; UNKNOWN HEIRS) 

AND LEGATEES OF SANDY S. NGUYEN, ) 

IF ANY; UNKNOWN HEIRS AND ) 

LEGATEES OF PAUL P. NGUYEN, IF ANY; ) 

and UNKNOWN OWNERS AND ) 

NONRECORD CLAIMANTS, ) 

 ) 

Defendants. ) 

 ) 

(Samuel Sweet, in His Official Capacity as ) 

Chapter 7 Trustee of the Bankruptcy Estate of ) 

Sandy S. Nguyen and Paul P. Nguyen, ) 

Petitioner-Appellant; Wells Fargo Bank, N.A., ) 

Respondent-Appellee). )

Appeal from the Circuit Court 

of the 18th Judicial Circuit, 

Du Page County, Illinois, 

Appeal No. 3-23-0253 

Circuit No. 09-CH-2569 

Honorable 

Bryan S. Chapman, 

Judge, Presiding.

____________________________________________________________________________

JUSTICE BRENNAN delivered the judgment of the court, with opinion. 

Justices Hettel and Albrecht concurred in the judgment and opinion. 
2 

OPINION

¶ 1 Sandy and Paul Nguyen (debtors) were the mortgagors on a residential mortgage for the 

property located at 52 Jacobsen Avenue, Glendale Heights, Illinois. Wells Fargo Bank (Wells 

Fargo) was the mortgagee. In 2009, after the debtors failed to make timely payments, Wells Fargo 

filed a foreclosure complaint, alleging that the debtors defaulted on their loan. After several 

unsuccessful attempts at personal service, the debtors were served via publication. The debtors did 

not participate in the proceedings, and the property was sold to Wells Fargo in a judicial sale. The 

debtors were assessed a $50,000 deficiency balance. In 2010, Wells Fargo sold the property to 

Ross and Ryan Tinson. 

¶ 2 One day after the deed was conveyed to the Tinsons, the debtors filed for Chapter 7 

bankruptcy, and Samuel Sweet was appointed as the trustee of the bankruptcy estate. Their filing

indicated that they did not own any interest in any real estate, and they disclosed the deficiency 

balance associated with the property as a liability. They obtained a discharge in bankruptcy shortly 

thereafter. 

¶ 3 In 2017, the debtors filed a petition to quash service of process of the foreclosure complaint 

and summons pursuant to section 2-1401(f) of the Code of Civil Procedure (Code) (735 ILCS 5/2-

1401(f) (West 2016)), arguing that Wells Fargo’s service by publication was improper and, 

therefore, the court lacked personal jurisdiction over them (sufficiency of service claim). The court 

dismissed the debtors’ petition and denied their motion for leave to amend, and the debtors 

appealed. The Second District reversed the court’s ruling and remanded the case (see Wells Fargo 

Bank, N.A. v. Nguyen, 2019 IL App (2d) 180965-U, ¶ 29), and the debtors filed an amended 

petition. In the meantime, the property was sold to the current owners, Patrice and Billy Frias. In 

response to the amended petition, Wells Fargo filed a motion to dismiss, arguing, in part, that the 
3 

claim was barred by laches and judicial estoppel and that all necessary parties were not named as 

respondents in the petition. 

¶ 4 Thereafter, debtors reopened their bankruptcy case to amend their schedules to reflect their 

claimed interest in the property. Sweet was reappointed as trustee of the bankruptcy estate and was 

substituted into the debtors’ place in the prosecution of their sufficiency of service claim. The court 

again dismissed the petition, in relevant part, based on laches. Sweet appealed, and the Second 

District reversed and remanded, holding that the Friases were necessary parties to the action but 

had not been named as respondents. Therefore, the court’s dismissal order was vacated and the 

case remanded. See Wells Fargo Bank, N.A. v. Nguyen, No. 2-21-0034 (2022) (unpublished 

summary order under Illinois Supreme Court Rule 23(c)). 

¶ 5 Sweet filed another amended petition to quash service, adding the Friases as respondents. 

Wells Fargo filed a motion to dismiss, again arguing in relevant part that the claim was barred by 

laches. The court granted Wells Fargo’s motion to dismiss on this basis, and this appeal followed. 

For the reasons set forth below, we affirm the trial court’s judgment. 

¶ 6 I. BACKGROUND

¶ 7 This is the third appeal in this case. In February 2004, the debtors obtained a mortgage loan 

from Washington National Bank to purchase the property and executed a promissory note to repay 

the loan in the amount of $192,000 plus interest. The note set forth monthly payments due on the 

first of each month and indicated that the failure to submit timely payments would result in default. 

The mortgage and note were later transferred to Wells Fargo. On July 7, 2009, Wells Fargo filed 

a foreclosure complaint against the debtors, alleging that they had not submitted mortgage 

payments since January 2009 and were in default. 
4 

¶ 8 A special process server attempted to serve the debtors at the property for the first time on 

July 9, 2009, but was unsuccessful, noting that the property was vacant, the utilities were off, 

garbage was strewn throughout the house, and there was a violation notice from the Village of 

Glendale Heights regarding the lawn posted on the door. Further investigation into the debtors’ 

whereabouts revealed various potential addresses in both Illinois and Michigan. After 22 attempts, 

personal service was ultimately unsuccessful, and the debtors were served via publication. The 

debtors did not file a response to the complaint or otherwise participate in the foreclosure 

proceedings. The parties disagree as to whether the service by publication was proper, although 

this is not the dispositive issue on appeal. 

¶ 9 On November 3, 2009, the court entered a default order and judgment for foreclosure and 

sale against the debtors. On January 12, 2010, the property was sold to Wells Fargo in a judicial 

sale. On February 9, 2010, the court entered an order approving the foreclosure report of sale and 

distribution and an order for possession and deed. The debtors were assessed a $50,000 deficiency 

balance in connection with the mortgage. 

¶ 10 The property was conveyed via special warranty deed to the Tinsons on May 5, 2010. The 

deed was recorded on June 23, 2010. The Tinsons obtained a mortgage on the property. 

¶ 11 On May 6, 2010, the debtors filed for Chapter 7 bankruptcy in the United States Bankruptcy 

Court for the Eastern District of Michigan. Sweet was appointed as the trustee of the bankruptcy 

estate. As part of their filing, the debtors completed various schedules disclosing their assets and 

liabilities. On “Schedule A - Real Property,” they did not disclose or otherwise claim any interest 

in the property (or any other real estate). On “Schedule F - Creditors Holding Unsecured 

Nonpriority Claims,” they disclosed a deficiency balance of $50,000 for the property and listed 
5 

“Wells Fargo Home Mortgage” as the creditor, along with the property address. The debtors 

obtained a discharge in bankruptcy on August 18, 2010. 

¶ 12 On May 4, 2017, debtors filed a petition to quash service in the foreclosure action, arguing 

that there were certain deficiencies in the service by publication process, including that the 

affidavit for service by publication failed to show that their place of residence could not be 

ascertained, the file lacked any evidence that the clerk mailed the publication to the debtors, and 

Wells Fargo was required to strictly comply with the statute for service by publication. 735 ILCS 

5/2-206(a) (West 2008). Debtors argued that the court lacked personal jurisdiction and, thus, all 

orders should be vacated. The debtors named Wells Fargo, PennyMac Loan Services (PennyMac) 

(the Tinsons’ mortgage lender), and the Tinsons as respondents. 

¶ 13 In response, PennyMac filed a motion to dismiss the debtors’ petition, arguing that service 

by publication was proper, the bona fide purchasers and lenders were protected from the claim 

pursuant to section 2-1401(f) of the Code (735 ILCS 5/2-1401(f) (West 2016)), the debtors’ 

petition was moot, and the claim was barred by laches. 

¶ 14 On December 8, 2017, the debtors filed an amended petition to quash service, revised to 

name only Wells Fargo as the respondent and narrow the scope of relief sought to solely quashing 

service of process. PennyMac then filed a petition to intervene, which was granted. On January 

16, 2018, PennyMac filed another motion to dismiss the debtors’ amended petition, arguing that 

the service by publication was proper and that the debtors could not divest PennyMac of its interest 

in the property. On April 2, 2018, Wells Fargo joined in PennyMac’s motion to dismiss as it 

pertained to the effectiveness of the service by publication. 

¶ 15 On June 27, 2018, the court dismissed the debtors’ amended petition, finding that the 

service by publication was proper. On July 20, 2018, the debtors filed a motion for leave to file a 
6 

second amended petition, which the court denied. The debtors appealed the court’s decision, and 

the Second District reversed and remanded, holding that the voidness claim that the debtors sought 

to raise in their second amended petition could be raised any time. Nguyen, 2019 IL App (2d) 

180965-U, ¶ 26. 

¶ 16 On April 30, 2019, the property was sold in an unrelated judicial sale to the Friases. An

order approving the sale was entered on May 20, 2019. PennyMac was subsequently dismissed 

from the instant case due to lack of interest, as it was outbid at the judicial sale and paid in full.

¶ 17 On February 21, 2020, the debtors filed their second amended petition to quash service. 

On April 16, 2020, Wells Fargo filed a motion to dismiss, arguing that the claim was barred by 

judicial estoppel and laches, the petition failed to include all necessary parties (those with an 

interest in the property), service by publication was proper, and the debtors lacked standing to 

assert the sufficiency of service claim because the claim was an asset belonging to the bankruptcy 

estate. The judicial estoppel argument was based upon inconsistent positions by the debtors, who 

claimed no interest in the property during the bankruptcy proceedings but asserted a right in the 

property in the instant case. In response, the debtors filed a motion to stay the case in order to file 

a motion before the bankruptcy court to reopen their case and correct the schedules therein to 

disclose their interest in the property. The motion was granted. 

¶ 18 On July 13, 2020, the debtors filed a motion to reinstate their case in the United States 

Bankruptcy Court for the Eastern District of Michigan, which was granted. Sweet was reappointed 

as the trustee of the bankruptcy estate. On September 24, 2020, the debtors filed a motion in the 

trial court to substitute Sweet in their place for the prosecution of their petition to quash service, 

suggesting that the substitution would “likely [ ] moot or supersede some if not all of Wells Fargo’s 

arguments.” The motion for substitution was granted.
7 

¶ 19 On November 18, 2020, Wells Fargo’s motion to dismiss the second amended petition to 

quash service was granted with prejudice on the bases of judicial estoppel and laches. Regarding

judicial estoppel, the court reasoned that the policy underlying judicial estoppel, to prevent fraud, 

would be subverted by allowing the debtors to reopen their bankruptcy case to disclose a 

previously concealed asset in order to defend the foreclosure action “many, many years after the 

fact.” As to laches, the court stated, in relevant part,

 “ *** The Court finds that laches pursuant to the Second District Appellate Court’s 

recent cases of Kusmierz, Altamirano, that an eight-year delay in bringing this 1401 

petition is textbook laches. The bank is clearly prejudiced. 

And just like juries that are asked to decide certain matters, they’re not required to 

leave their common sense at the front door of the courthouse when they decide—when they 

come in here for jury duty. Similarly, the Court is not required to do that either.

*** And we were waiting on the Second District to decide whether laches applies 

in 1401 petitions due to the fact that 1401s can be brought in perpetuity, and they ruled that 

laches does in fact apply. 

This is textbook laches. And if for some unknown reason, the [debtors] didn’t know 

they lost their home, at some point relatively close to the judicial sale, then one would think 

that an affidavit earning to that—to the date or the approximate time they learned of the 

foreclosure proceeding, it’s a tacit admission by it not being there. They knew about it and 

it would be silly to believe otherwise, especially given nothing, no affidavit indicating, hey, 

I didn’t know about it for six years or seven years or four years or three years. So laches 

applies.” 
8 

¶ 20 Sweet then filed a motion for reconsideration, asserting that he was unaware of the debtors’ 

sufficiency of service claim until his reappointment as trustee in 2020. The court agreed with Sweet 

that judicial estoppel should not apply but maintained that laches nonetheless barred the claim. 

Therefore, the motion for reconsideration was granted in part, but the dismissal with prejudice 

stood on the basis of laches. Sweet appealed, and the Second District reversed and remanded, 

holding that the Friases, as the current owners of the property, were necessary parties and should 

have been named in the second amended petition. Because they were not, the Second District 

vacated the dismissal order without addressing the merits of the laches ruling. See Nguyen, No. 2-

21-0034 (2022) (unpublished summary order under Illinois Supreme Court Rule 23(c)). 

¶ 21 On December 14, 2022, Sweet filed a third amended petition to quash service, this time 

adding the Friases as respondents. Wells Fargo filed another motion to dismiss, maintaining that 

the petition was barred by laches and judicial estoppel, that the service by publication was proper, 

and, in the alternative, that the case should be transferred to the bankruptcy court. As to the laches

argument, Sweet responded that the case presented an issue of first impression. He argued that no 

authority existed to determine whether the debtors’ delay in informing him of their interest in the 

property and sufficiency of service claim until 2020 was attributable to him as trustee for the 

purposes of laches. He argued that their delay should not be imputed to him, as he swiftly acted 

on the sufficiency of service claim within days of learning of the same. As such, laches would not 

bar his claim as trustee, even if it would bar the claim when brought by the debtors. 

¶ 22 In support, Sweet cited judicial estoppel cases that held it inequitable to apply judicial 

estoppel to the detriment of creditors where debtors had concealed later-discovered assets. He 

analogized that creditors should not similarly suffer by the application of laches because of the 

debtors’ delay, though he did not provide examples of how the bankruptcy creditors would suffer. 
9 

Wells Fargo replied that those cases were inapposite because Sweet did not assume the prosecution 

of the sufficiency of service claim to protect the creditors; rather, it was an effort to “restart the 

clock on the [debtors’] belated attack on a 2010 judgment.” Wells Fargo further argued that Sweet 

was aware of the foreclosure proceedings in 2010, as the deficiency balance resulting therefrom 

was listed on schedule F of the bankruptcy documents that Sweet would have reviewed prior to 

the discharge in bankruptcy. 

¶ 23 On May 2, 2023, the court entered an order granting Wells Fargo’s motion to dismiss 

Sweet’s third amended petition based on laches, again citing PNC Bank, National Ass’n v. 

Kusmierz, 2022 IL 126606. The court further found that the substitution of Sweet for the 

prosecution of the sufficiency of service claim did not change the result, as “a trustee steps into 

the shoes of a debtor and any defenses to which a debtor is subject apply equally to the trustee.” 

The court agreed with Wells Fargo that the judicial estoppel cases cited by Sweet were inapposite

as applied to the laches argument. The court denied the motion to dismiss with respect to judicial 

estoppel, finding that, “while laches applies to the claim regardless of who brings it, judicial 

estoppel applies to the party bringing the claim.” 

¶ 24 Sweet timely appealed.

¶ 25 II. ANALYSIS

¶ 26 On appeal, Sweet argues that the debtors’ seven-year delay in asserting their sufficiency of 

service should not be attributed to him and, thus, laches should not bar his claim. In support, he 

contends that he did not learn of the potential claim until 2020, when the debtors informed him of 

the same after his reappointment. He alleges that he asserted the claim on behalf of the bankruptcy 

estate within days of learning of it. Wells Fargo counters that Sweet’s substitution into the case 

does not alter the applicability of laches, as he stepped into the debtors’ shoes when he was 
10 

appointed as trustee and was subject to all defenses that could have been asserted against the 

debtors had they brought the claim themselves. For the reasons that follow, we affirm the trial 

court’s judgment. 

¶ 27 We review a trial court’s dismissal based upon laches for an abuse of discretion, as it is a 

fact-specific inquiry that lies within the sound discretion of the trial court. See Marshall v. 

Metropolitan Water Reclamation District Retirement Fund, 298 Ill. App. 3d 66, 74 (1998). We 

may affirm the trial court’s judgment for any reason supported by the record, regardless of the 

rationale employed by the trial court in reaching its decision. Akemann v. Quinn, 2014 IL App 

(4th) 130867, ¶ 21. 

¶ 28 Initially, we note that, while the trial court focused on the debtors’ seven-year delay in 

filing their section 2-1401 sufficiency of service claim, the proper time frame for analyzing the 

laches question vis-à-vis Sweet is the date of the filing of the bankruptcy petition. Section 

541(a)(1) of the Bankruptcy Code (11 U.S.C. § 541(a)(1) (2006)) provides that the debtors’ 

bankruptcy estate includes “all legal or equitable interests of the debtor in property as of the 

commencement of the case.” (Emphasis added.) This language also captures as part of the 

bankruptcy estate “any causes of action the debtor may bring.” Official Committee of Unsecured 

Creditors of PSA, Inc. v. Edwards, 437 F.3d 1145, 1149 (11th Cir. 2006). Commencement of the 

proceedings under section 541(a) has been described as allowing the trustee “to succeed to certain 

property interests possessed by the debtor at the time of the filing of his bankruptcy petition.” 

(Emphasis added.) McAllester, III v. Aldridge (In re Anderson), 30 B.R. 995, 1009 (Bankr. M.D. 

Tenn. 1983). In other words, “commencement” is generally understood to mean the initial filing 

of the case. Here, the bankruptcy petition was filed in May 2010, which would be the operative 
11 

date for purposes of section 541(a). The debtors did not file a new bankruptcy petition in 2020; 

rather, they filed a motion merely seeking to reopen the case to amend the schedules. 

¶ 29 When a bankruptcy trustee is appointed, the trustee stands in the shoes of the debtor and 

assumes the debtor’s rights as they existed at the commencement of the bankruptcy proceedings. 

Edwards, 437 F.3d at 1150. Consequently, if a defense can be raised against a potential claim by 

the debtor at the commencement of the bankruptcy case, that defense can likewise be asserted 

against the trustee if the trustee brings the claim on behalf of the bankruptcy estate. Id.; see 

Peterson v. McGladrey & Pullen, LLP, 676 F.3d 594, 596 (7th Cir. 2012). Simply put, the trustee 

does not inherit “rights and interests greater than those of the debtor.” (Emphasis in original.) 

Edwards, 437 F.3d at 1150. 

¶ 30 Accordingly, we consider whether the sufficiency of service claim existed at the 

commencement of the debtors’ bankruptcy proceeding and, if so, whether laches could have been 

raised as a defense against them at that time. If so, Sweet inherited the sufficiency of service claim, 

as well as any possible defenses thereto, upon his initial appointment. We discuss each point in 

turn. 

¶ 31 Initially, we note that the debtors’ sufficiency of service claim existed at the 

commencement of their bankruptcy case, as contemplated by section 541(a). The foreclosure 

proceedings began on July 7, 2009, and the order approving the judicial sale was entered on 

February 19, 2010. Any claim related to service arose between those dates, and the debtors did not 

file for bankruptcy until May 6, 2010. As such, the debtors’ sufficiency of service claim existed at 

the commencement of the bankruptcy case, and thus Sweet had the right to bring forth the claim 

at his initial appointment. 
12 

¶ 32 Next, we consider whether laches could have been raised against the debtors at the time 

they filed their bankruptcy petition. Laches “is grounded in the equitable notion that courts are 

reluctant to come to the aid of a party who has knowingly slept on his rights to the detriment of 

the opposing party.” Tully v. State, 143 Ill. 2d 425, 432 (1991). To successfully assert laches, it 

must be shown “that a party unreasonably delayed asserting a known right and that delay unduly 

prejudiced the opposing party.” Renth v. Krausz, 219 Ill. App. 3d 120, 121-22 (1991). If laches

applied to preclude the debtors’ sufficiency of service claim at the time they commenced their 

bankruptcy, Sweet is similarly precluded from asserting the claim. See Reid v. Wolf (In re Wolf), 

595 B.R. 735, 757 (Bankr. N.D. Ill. 2018) (“The trustee’s rights under section 541(a)(1) are by 

definition no greater than the debtor’s; thus, for instance, the trustee cannot succeed on a section 

541(a)(1) cause of action where the debtor would necessarily have failed.”).

¶ 33 Of course, a laches defense only applies if the debtors possessed a known right, which is 

measured by determining when a party knew or should have known of their right to bring a cause 

of action. Renth, 219 Ill. App. 3d at 122. A party need not possess actual knowledge of the specific 

facts giving rise to his cause of action; “[i]f the circumstances are such that a reasonable person 

would make inquiry concerning these facts, a party will be charged with laches if he fails to 

ascertain the truth through readily available channels.” Bobin v. Tauber, 45 Ill. App. 3d 831, 837 

(1976). “When a right to sue is based upon a statute or a public record, Illinois courts have charged

a party with constructive knowledge, because ‘ignorance of the law or legal rights will not excuse 

delay in bringing suit.’ ” Renth, 219 Ill. App. 3d at 122 (quoting Pyle v. Ferrell, 12 Ill. 2d 547, 555 

(1958), citing LeGout v. LeVieux, 338 Ill. 46 (1929)). Thus, we consider not only what the debtors 

actually knew but also what they could have known “by the use of the means of information within 

[their] reach with the vigilance the law requires of [them].” Pyle, 12 Ill. 2d at 554. 
13 

¶ 34 The record here demonstrates conclusively that the debtors had actual knowledge of the 

foreclosure proceedings prior to filing their bankruptcy petition. The debtors filed for bankruptcy 

on May 6, 2010, and did not disclose as an asset any interest in real estate, raising the reasonable 

inference that they were aware of the foreclosure and sale of the property. More significantly, on 

schedule F of their bankruptcy filing, the debtors listed the “Wells Fargo Home Mortgage” 

deficiency balance of $50,000, along with the property address, reflecting their liabilities. Clearly, 

if they knew the deficiency amount they were subject to after the foreclosure sale, they knew about 

the foreclosure judgment. 

¶ 35 By extension, then, the debtors knew that they were never personally served with the 

complaint and summons prior to filing their bankruptcy petition. A reasonable person would make 

inquiry concerning these facts and explore whether insufficient service might defeat the 

foreclosure action. Bobin, 45 Ill. App. 3d at 837 (laches applies if a party fails to ascertain the truth 

through readily available channels). Further, “[w]hen a right to sue is based upon a statute or a 

public record, Illinois courts have charged a party with constructive knowledge, because 

‘ignorance of the law or legal rights will not excuse delay in bringing suit.’ ” Renth, 219 Ill. App. 

3d at 122 (quoting Pyle, 12 Ill. 2d at 555, citing LeGout, 338 Ill. 46). As correctly noted by the 

trial court, the debtors knew they lost their home, “and it would be silly to believe otherwise.” 

Nonetheless, they proceeded with their bankruptcy, accepting that they had no interest in the 

property when they declined to disclose the asset and included the related deficiency judgment in 

their schedule F. 

¶ 36 While we have determined that the debtors had actual knowledge of their sufficiency of 

service claim, they can also be charged with constructive notice. The debtors agreed to and 

executed a 15-year mortgage on the property, and the corresponding promissory note indicated 
14 

that their payments were due on the first of each month and that they would be in default if they 

failed to make timely payments. They stopped paying the mortgage in January 2009, and as of July 

2009, the property was vacant, the utilities were off, and garbage was strewn throughout the home. 

All signs pointed to the debtors having abandoned the property. By the terms of the mortgage and 

note, the debtors knew that neglecting to make payments would result in their default. Knowing 

that defaulting on a loan would eventually result in consequences, a reasonable person would have 

inquired as to the status of the property. Public records concerning the foreclosure proceedings 

were readily available to the debtors. Had they made such an inquiry, they would have discovered 

the foreclosure proceedings, as well as their sufficiency of service claim. See Pyle, 12 Ill. 2d at 

554-55; Bobin, 45 Ill. App. 3d at 837. Thus, the debtors also had constructive notice of the 

foreclosure proceedings and their potential sufficiency of service claim. Indeed, despite filing four 

separate petitions to quash service, the debtors never claimed, via affidavit or otherwise, that they 

were unaware of the foreclosure proceedings. 

¶ 37 As explained above, Sweet is charged with the debtors’ actual and constructive knowledge 

of their sufficiency of service claim at the time of his original appointment, having stepped into 

their shoes and circumstances as of the date of the bankruptcy filing. Supra ¶ 29. Parenthetically, 

though not factoring into our analysis, we also observe that Sweet could have learned of the 

foreclosure proceedings during his original appointment in 2010. In his role as trustee, he would 

have reviewed the debtors’ schedule F filing that disclosed “Wells Fargo Home Mortgage” as a 

creditor in relation to the deficiency balance owed on the property. No ambiguity existed as to the 

nature of the deficiency balance, as the property’s address was listed alongside the sum due on 

schedule F. If Sweet had any questions or concerns related to the foreclosure, he had a duty 
15 

pursuant to section 704(a)(4) of the Bankruptcy Code (11 U.S.C. § 704(a)(4) (2006)) to further 

investigate the debtors’ financial affairs. 

¶ 38 As to whether the debtors unreasonably delayed asserting their known right, we recognize 

that only six months passed between the entry of the judgment for foreclosure and the debtors’ 

bankruptcy filing. However, “laches concerns more than the mere passage of time.” Kusmierz, 

2022 IL 126606, ¶ 25. Laches is “principally a question of the inequity of permitting the claim to 

be enforced, an inequity founded upon some change in the condition or relation of the property 

and parties, and where there is such a change as to make it inequitable to grant relief, it will be 

refused.” Pyle, 12 Ill. 2d at 552. Indeed, in the case of serious prejudice, laches has been utilized

to preclude a claim even prior to the expiration of its statute of limitations. Renth, 219 Ill. App. 3d 

at 122. As discussed in more detail below, when the debtors’ delay in asserting their sufficiency 

of service claim is viewed through the lens of prejudice, even if considered only as of the time they 

filed for bankruptcy, it is clear that the delay was unreasonable. See id. at 123 (“The question of 

delay, therefore, is enmeshed in the question of prejudice ***.”). 

¶ 39 Prejudice is established where a party “ ‘incurs risk, enters into obligations, or makes 

expenditures for improvements or taxes’ while the other party remains passive.” Kusmierz, 2022 

IL 126606, ¶ 33 (quoting Pyle, 12 Ill. 2d at 555). 

¶ 40 The prejudices present in the instant case are substantially similar to those presented in 

Kusmierz. In Kusmierz, a bank filed a complaint for foreclosure of a residential mortgage. Id. ¶ 3. 

The process server personally served the property owners three days before being appointed by 

the court as required by statute. Id.; 735 ILCS 5/2-202(a) (West 2016) (requiring the special 

appointment of private detectives serving process in counties with a population exceeding two 

million). The property owners did not participate in the foreclosure proceedings, and the property 
16 

was sold to the bank. Kusmierz, 2022 IL 126606, ¶ 4. The property was subsequently sold to a 

third party. Id. Six years later, the property owners filed a section 2-1401 petition to void the 

judgment of foreclosure, arguing that the court lacked personal jurisdiction over them due to 

improper service. Id. ¶ 5. The bank and the third party moved to dismiss, arguing that the claim 

was barred by the doctrine of laches. Id. ¶ 6. 

¶ 41 The trial court granted the motion to dismiss, in relevant part, based on laches, and the 

appellate court affirmed. Id. ¶ 7. After holding generally that laches could be applied to a petition 

seeking relief from a void judgment, the supreme court then agreed that laches precluded the 

property owners’ claim. Id. ¶¶ 27-28. The element of the unreasonable delay in asserting a known 

right was easily satisfied, as there was no dispute that the property owners received actual notice 

of the foreclosure proceedings when they were personally served, albeit improperly. Id. ¶ 31. The 

court specifically noted that the property owners did nothing to preserve their rights for more than 

six years after the property was sold, nor did they offer affidavits to demonstrate that such a delay 

was reasonable or otherwise explainable. Id. As for the element of prejudice, the court found that 

both the bank and the third-party purchasers of the property were prejudiced by the property 

owners’ delay. Id. ¶ 33. 

“[The bank] was prejudiced because the six-year delay increased defendants’ damages 

without detriment to themselves, resulted in [the bank] selling the property to bona fide

purchasers, and prevented [the bank] from being able to recover the property used to secure 

defendants’ loan. With respect to third-party [purchasers], they purchased the property for 

value and expended considerable sums building a home on the property and paying taxes 

and insurance. Thus, we find that the record supports a finding of prejudice as to both [the 

bank] and third-party [purchasers].” Id. 
17 

¶ 42 Here, as of the filing of the bankruptcy petition, the property had already been sold twice—

to Wells Fargo at the judicial sale and then to bona fide purchasers, the Tinsons. The deed to the 

property was conveyed to the Tinsons one day before the debtors filed for bankruptcy. The 

unreasonable delay in asserting the sufficiency of service claim resulted in Wells Fargo selling the 

property to bona fide purchasers, preventing it from being able to recover the property used to 

secure the debtors’ mortgage. See id. With respect to the Tinsons, they obtained a mortgage to 

purchase the property for value and were entitled to rely upon unclouded title. Yet, here they have 

been named as necessary parties in the instant action. The debtors’ unreasonable delay in asserting 

their known rights as it relates to their sufficiency of service claim prejudiced both Wells Fargo 

and the Tinsons. As in Kusmierz, this prejudice warrants the application of laches to the debtors’ 

sufficiency of service claim. 

¶ 43 Because we have determined that the defense of laches precluded the debtors’ sufficiency 

of service claim at the commencement of their bankruptcy proceedings, we do not address the trial 

court’s determination that laches applied to the debtors’ delay in filing the section 2-1401(f) 

petition, which it attributed to Sweet as the substitute petitioner. Sweet stepped into the debtors’ 

shoes and inherited any causes of action, as well as any defenses thereto, as they existed at the 

commencement of the bankruptcy proceedings. Laches precludes both Sweet and the debtors from 

asserting their sufficiency of service claim for the reasons set forth herein. Akemann, 2014 IL App 

(4th) 130867, ¶ 21 (we may affirm on any grounds supported by the record). 

¶ 44 Accordingly, we affirm the trial court’s judgment. 

¶ 45 III. CONCLUSION

¶ 46 The judgment of the circuit court of Du Page County is affirmed.

¶ 47 Affirmed. 
18 

Wells Fargo Bank, N.A. v. Nguyen, 2024 IL App (3d) 230253 

Decision Under Review: Appeal from the Circuit Court of Du Page County, No. 09-CH2569; the Hon. Bryan S. Chapman, Judge, presiding. 

Attorneys

for 

Appellant:

Adam Goodman, of Goodman Tovrov Hardy & Johnson, LLC, 

of Chicago, for appellant. 

Attorneys

for 

Appellee:

Lucia Nale, Michael H. Bornhorst, and Clare E. Myers, of 

Mayer Brown LLP, of Chicago, for appellee.