## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N o. 08
- 2153 P AT R I CK L. C OGSWELL a nd P AT R I CK M. O ’F LAHERTY, doi ng business as T HE P AT R I CK G R OUP, P la intif fs-A pp ella nts, v.
C IT I F INANCIAL M ORTGAGE C OMPAN Y, I NCO RPORATE D , s uc c e s s o r b y me r g e r t o As s o c i a t e s F i na nc e , Inc o r po r a t e d, D efend a nt-A pp ellee.

A pp eal from the United S t ates Di strictC our t fo r the N o rthernDi stricto f Illino is, Eas tern Div isi on. No . 1:05- cv-05008

— Charle s R. Norgle, Sr. , Judge .
A RGUED A PRI L 15, 2009

— D ECI DE D O CT OB ER 5, 2010

Befo re F LA UM, R IPPLE, a nd S YKES, C ircu it Judges . S YKES, Cir cu i tJudg e . Ci ti Financi alM or tga ge ass i gned its int erest in a m ortgage t o tw o i nv estors

— do i ng busi ne s s a s “ Th e P a t r i c kGr o up ”

—but neve r del i ver ed th e o r i g i nal or a c o py o fthe unde r l y i ngno te . W he n Th e P at r i c k G ro u p trie d to fore c los e o n th e m or tg ag e in2 N o. 08
- 2153 Illino is s ta te co u rt, i ts ac tio n w as d ism is s e d be c au se it co ul d no t pr o duce the no te . Af te r a n un su cc es sful appeal, The Patri ck Group fi l ed thi s br each- of

- contr act l aw sui t a gainst Ci ti Fi nanci al
. The s u it w as re m ove d to fede ral c o urt, and the d istri ct cou rt grante d sum m ary j u d gm en t in fav or of C itiF in an c ial. W e r eve rs e. The di str i ct cou rtbas ed i ts sum m ar yj ud gm ent d ec isi on pri m ar i l y o n a dete rm i nati on that Citi Fi nanci alneve r agr eed to del i verthe n ot e as part of th e par ti es ’ a g r ee m en t to t r an sferthe mor tg ag e. But w he the r the y a g r e e d o n thi s t e r m i s a qu e s t i o n o ff act, and Th e Pat ri ck Gr ou p p re sente d enough ev i dence fro m wh i ch a re aso nabl e f act fi n d er co uld co ncl ud e that it w as a par t o fthe parti es’ ag re em ent. The di str i ct c o u r t ’ s a l t e r n a t i v e b a s i s f o r s u mma r y j u d g me nt

— that Citi Fi nanci al ’ s a l l ege d bre ach di d not ca use The Pat ri ck Group’s dam age s

— w as also erroneou s. U nd er th e circ u m st an c es of th is c as e, th e c au sa tio n qu es tio n sh ou ld have b ee n reso l ved i n The Patr i ck Group’s f avo r as a m att ero fl aw ; the sta te trial an d app el l ate co urts rej ecte d Th e Pat ri c k G roup’s f or ecl osur e a cti on be cause wi th o uta c op y of th e no te , i t co ul d no t pr o ve i t was the ho l de r o fthe deb tthe mo r t g a g e s e c ur e d.

I . B a c kg r o und I n N ove m ber20 00 Citi Fi nanci ali ni ti ate d procee dings i n sta te cour t t o f or ecl ose o n a m or tga ge se c u re d byN o. 08
- 2153 3

A t the tim e of the m or tga g e tran sactio n a t i ss u e i n th is 1 c as e, As s oc i at es Fi nan c e actu all y owne d the m or t gage . By the ti m e the com plaintw as fil ed in this act ion, how ever, Assoc iat es Fi nan c e had m er ge d with Ci t i Fi nan c i al M or t gage . Forthe s ake ofs i m pl i c i t y, we r efert o A ssoc i at es Fi nan c e and C iti F in a n ci a l M o rt g a g e a s “ C iti F in a n ci a l.” re si denti alpro pertyi n I l l i noi s. A ro u nd the sam e t i m e, 1 Pa tric kCo g swe l la nd Pa tr i ckO’ F l ah er ty, who a t th e t i me we r e do i ngb us i ne s s a s T he P a t r i ckGr o up , a pproa ched Citi Fi nanci aland offer ed to purchase the m or tgag e a nd the und er lying note . The part i es set tl ed on a pu r c ha s e pr i c e o f $ 1 4 0 , 0 0 0 , a nd i n J a nu a ry 20 01 Ci ti F i na nc i ala ss i g ne d i ts i nt er est in the mor tg ag e an d th e no te t o The Pa tr i ckGr o up. The o r i g i nal no te a nd m or tg ag e c ou ld n otbe loc at ed , ho w ev er , a n d w h ile Ci t i F i na nc i a lwa s ab l e t o g i v e T he P atr i c kGr o up a c o py ofthe m or tga ge, i t di d not hav e aco py ofthe note . A fterthe ass i gnm ent, The Patr i ck Group ste pp ed i nto Ci ti F i na nc i al ’ s sh o es i n the f o recl o su r e pr o ce edingb ut qui ck l y r ani nt o pr o bl ems. The c urrent owne r s o fthe proper ty had not di sco ver ed Cit i Fi nanci al ’ s m or tga ge l i e n i n the i r t i t l e s e a r c h, a nd fur the r i nqui r y r e v e a l e d a g a p i n th e r e c o r d e d o wn e r s h i p o f th e mo r t g ag e. The or i gi nalm or tga gee , E quity M or tga ge, as si gned the m or tg age to F l ee t F i na nc e, b utthe ne xtr ec o r ded as si g nm ents w er e fro m H om e Equity t o Cit iFinancia land fro m C iti Finan cial to T he Pa trick G roup ; not hin g in th e re c ord i nd i cate d ho w H om e Eq uity acqui re d the m or tga ge f ro m F l e e t F i na nc e . S i nc e Th e Pa t r i c k Gr o up c o ul d not pr o duce e i th era n or i g i na lo r a c o py o fthe unde r l y i ng4 N o. 08
- 2153 note , the proper ty own er s c onte nd ed that The Patr i ck Gro up wa s no t a mor t g a g e e e nt i t l e d t o f o r e c l o s e upon the pr oper ty w ith in the m eani ng o f73 5 I LL . C OM P . S T AT . 5/ 15- 1208
. The Pa tr i ckGr o up i nt r o duced t es ti m o ny a nd Ci t i F i na nc i a l ’ s c o mput e r r e c o r ds a t t r i a l i n a n e ff o r t t o prove i t was ent i tled t o en f or ce the not e, but the s tat e tr i alc ou rtsi ded with the pro pertyo w ners and ente re d a d ire c te d ve rd ict ag ain st T h e P a t r i c k G ro u p . Th e Illino is A pp el l ate Courtaffi rm ed. The appel l ate co urt obs er ved that und erI l l i noi s l aw o nl y the hol de r ofa note m ay f or ecl ose on proper ty; tr ansfer ring a m or tga ge i s no t enou gh b y i tse l fto co nfe r the r i ght t o f or ecl ose upon p ro p er ty . Se e, e . g. , M oo r e v. Lewis , 36 6 N
. E.2 d 594, 59 9 ( I l l
. App. Ct
. 1 97 7)
. The c o ur t co nc lud ed tha t The Patr i ck Group h ad n ot prove d i t was a note hol der because i t nev err ecei ve d the note fro m Ci ti Fi nanci alo r othe rwis e pos ses sed i t a nd ther ef or e was n ot enti tl ed to f or ecl ose upon the m or tga ge. F r us tr at ed th ati t pai d $ 14 0, 00 0 to pur ch as e anune nf o r ce ab l e m o r tg ag e, The Pa tr i ckGr o up fi l ed th i s br ea ch

of-c on tr ac t a c tio n in s ta te co u rtag ain st C iti F i n a n c ial. Citi Fi n an c ialr em ove d the ca se to federa lco urt base d on d iversity j urisd ic t ion. B oth pa rties m oved f or sum m ary j ud gm en t, an d the d istri ct cou rt grante d CitiFinan cial’ s m otion. The c o ur t fi r stc o nc l ude d tha t The Pa tr i ckGr o up had not pr oven thatthe parti es’ ag re em ent r equi re d Ci ti F i na nc i alt o t r an sferthe o r i g i na lor a co py o fthe note . The co urt al so concl ud ed that eve n i fCi ti Fi na n ci al w as obligat e d t o t u rn over a cop y of th e note , i ts fai lureN o. 08
- 2153 5 to do so di d not ca use The Pat ri ck Group’s dam age s. This concl usi on was bas ed on the co urt’ s v i ew that I l l i noi s l aw p er m i tte d Th e Pat ri ck Group to f or ecl ose o n th e m ortgage ev en i f it did n o t h o ld th e note . Th e cou rt en te re d j u d gm en t fo r C itiF in an c ial, an d th is a p p ea l foll o we d.

I I . Discussi on We r e v i e w th e d i s t r i c tc o u r t ’ s d e c i s i o n t o gr a n ts u mm ar y j ud gem ent de novo
. W hen the dist ri ct c ourtdeci des c r o s s - mo t i o n s f o r s u mma r y j u d g me n t, a s i t d i d h e r e , “ we cons true al lf acts and i nfe re nces ther efro m i n f avo r of the par ty aga i nst whom the m oti on under c onsi derat i on i s ma de, ” wh i c h i n thi s c a s e i s T he P a t r i c kGr o up . Fi rs tSt at eBank o

f M ont icello v. O hi o Cas
. Ins . Co. , 55 5 F
. 3d 56 4, 5 67( 7th Ci r . 2 00 9) ( i nt erna lquo ta ti o n mar k s an d ci tat i on o m i tte d). S um m ar y j ud gm ent i s a pp ro p ri ate onl y i f“there i s no g en u in e i ssue as to any m ate ri alf act and .
. . the m ova nt i s e nti tl ed to j ud gm ent a s a m att er of law .” F ED . R. C IV . P. 56(c). The pa r ti es a g r ee th atI l l i no i s l aw g o ve r ns thi s ac ti o n. I n I l l i noi s, as el sewhere, a bre ach- of

- contr act cl ai m r equi r es : ( 1) a n o ffera nd a cc ept an ce ; ( 2) c o ns i der at i o n; ( 3) de finite a nd c er ta i n t er m s; ( 4) pe r f o r m an ce b y the pl aint i ffo fa l lr equi r ed co ndi ti o ns ; ( 5) b r ea ch ; a nd (6) d am a ge s c au se d by th e b re ac h
. E.g
. , Ass’ n B ene fi t Servs. , Inc. v. C a rem ark RX, Inc. , 493 F.3d 841 , 849 (7th C ir. 20 07 ) (c ita tio n om itt ed ); Bari l l ev. Se ars Roe b uc k & C o. , 68 2 N
. E. 2d 11 8, 1 21 ( I l l
. App. Ct
. 1 99 7)
. Onl y the thi r d a nd sixth elem en ts are at issue in th is app eal. M ore sp ecif-6 N o. 08
- 2153 i cal l y, the fi rs t quest i on i s whether the parti es’ ag re em en t r equi r ed Ci ti F i na nc i al to del i ve r th e o r i g i na lor a c op y of t h e n ot e s e c u r ed by th e m or tg ag e w h en it so ld the m or tga ge to The Patr i ck Group. T h e s eco nd questi on i s whether Citi Fi nanci al ’ s f ai l ure to del i veran o ri gi nal ora copy o fthe note caused The Patr i ck Group’s f or ec los u re ac tio n to fail.
A . The Ter m s o ft he Contr act The Patr i c k Gro up m ai ntai ns thatthe parti es agr eed Citi Fi nanci alwould d eli verthe note wh en i t t ra nsfer re d the m or tga ge. The di str i ct c ourttr ea ted thi s i ssue as a questi on o fl aw , drawing on l anguage from o ur ca ses sta ti ng tha t “ ‘ [ t] he questi on ofthe exi ste nce o fa contr act is a m at te r of law for d et er m in at ion by th e c ou rt .’ ” C a rem a rk, 49 3 F
. 3d at 849 ( quoti ng A rneso n v. B d. o f Tr s ., M cKendreeCo ll
. , 569 N
. E
. 2d 252, 256 (I ll. A p p . Ct
. 1991)). Butthi s r efer s to the de term inat i o n o fwhethe r the par ti es ha ve cr ea te d a n e nf o r ce ab l e co nt r ac t, whi chtur ns on w h et h er th ey d es c rib ed th eir “e ss en tia l ob liga tio n s” in d efin ite an d ce rt ain te rm s. Id. at85 1; a cco rd A cad. C hi. P ubli shers v. C heev er, 57 8 N
. E. 2d 98 1, 98 3- 84 ( I l l
. 1 99 1)
. The co nt r ac t be twe enCi ti F i na nc i ala nd Th e Pa tr i ckGr o up m eet s thi s t est; the ess ence ofthe parti es’ ag re em ent was to tr ansferthe m or tga ge i n exchange f or$1 40, 000. The re alquesti on her e i s whether the obl i gat i on t o tr ansferphysi calposs es sio n ofthe note

— oratl eas t a c o py

— w as part ofthe parti es’ a gr ee m en t. Thi s i s a questio n o f f act. Se e M ulliken v. Le w is , 615 N .E .2d 25 , 27 (Ill. A pp . Ct. 19 93) ( “W hethera contr act exi sts , i ts ter m s,N o. 08
- 2153 7

an d the inten t of th e pa rties are quest ions of f act f o r the t r i e r o f fac t.” (cit at ion om itt ed )); s e ea l s o Ott o v. Va r i ab le Annui ty L i

f eIns . Co. , 134 F.3d 841 , 848 (7th C ir. 1998); Estate o f Kern v. Hande l s m an , 49 1 N
. E.2 d 1275, 12 80 ( I l l
. A pp . Ct. 1986 )
. A ccor dingl y, the pert i nent i nquir y i s whether Th e Patri ck Group has pro du ced enough evi dence to convi nce a re aso nabl e f act fin der that the par ti es agr eed Citi Fi nanci alwould t ransferthe or i gi nalo r a co py of the no te. The Pa tr i ckGr o up has m et i ts b ur deno fpr o duct i o n. I n the dist ri ct c ourt, i t r el i ed on three p ieces o fev i dence. T he first w as its l ett er to CitiFi na nc ialoffering to pu rchase “the note se c ured by ” the m or tga ge; thi s o ffer w as subj ect to cer tain cond i ti ons, o ne o fwh i ch w as “[ v] er i fi ca ti o n o fa l lb ac k

- up do cument s i nc l udi ngb ut not l i m i ted to the N ot e.” The se cond pie ce o fev i dence w as the a ssi gnm ent e xecuted by the par ti es , which pro

vid ed th at C itiF in an c ial “ gr a n t s , a ss ign s a n d tra n sfe rs . . . a l lb e ne fi c i a l I nt e r e s t un de r [ the mor t g a g e ]
. . . T OGE THER wi ththe no te s th er ein de sc r ibe d o r re fer r ed to , the m o ne y due a nd t o b ecome due the r eo n wi thInt er es t, a nd all rig h ts ac c ru ed or to ac c ru e u n d er [ t h e m or tg ag e].” Fi nal l y, Patr i ck Cogswell s ubm i tte d an uncontes ted affi davi t in w hi ch he t est i fied that the parti es agr eed Citi Fi nanci alwas re quir ed to tr ansferbo th the o ri gi nal note andthe mo r t g a g e t o T he P a t r i c kGr o up . A s e ven Ci ti Fi nanci alag re es, this e vi dence i s o pen to d iffer en t in t er p re ta tio n s. B u t t h e d ist ric t c ou rt ’s a n aly sis sh o ws i t m i st ak en l y b el i ev ed i t co ul d r es o l ve the i ss ue o n the c r o ss - m otions f o r s um m ar y j udg m en t, whena8 N o. 08
- 2153
reason able fact find er cou ld acc ep t either p arty’s p r o ffered i nt erp retation. For exam p le, the d istri ct cou rt d isc ou n te d T h e P at ric k G ro u p ’s o ffer let te r b ec au se it sa i d o nl y tha t The Pat r i ckGro up w o ul d ha ve a n o ppo r tu
n ity to “ver i fy” the no te and w as si l ent a s t o w hether C itiF in an c ial w ou ld h av e t o “ tr a n sfe r” th e n ot e. T h is does not concl usi velyr eso l ve the i ssue. To the co ntra ry, th atthe note w as ment i o ne d i n the o fferl et te r de m o nstr ate s that The Patr i ck Group bel i eve d that the tra nsfer o fthe no te was pa r t o fthe t r an sa ct i o n. N ext, the dist ri ct c ourtdi sco unted the lan guage o f the a ssi gnm ent b y inter preting tha t d ocum ent t o m ean onl y that C itiF inanci al“t ra nsfer [ re d] .
. . al lbene fi ci al in te rest und er. . . the note s” and had no bea ring o n w hetherCi ti Fi n an ci alwas re quir ed to tr ansferphysi cal po ss es si o n o fthe no te . The c o ur t’s int er pr et at i o n i s o ne pl au sibl e r ea di ng of t hi s ev i den ce b uti s ha r dl y c o ncl usi ve; a re aso nabl e f act fi nd erc ou l d rej ect i t in f avo r o fThe Pa tr i ckGr o up’ s i nt er pr et at i o n. Fin ally , th e d ist ric t c ou rtrejec te d th e C og sw ell aff id av it bec au se Co g swe l la l so t es ti fi ed th athe r eque st ed th e or i gin al note and the m or tga ge on s eve ra lo ccasi ons a fter th e pa rties cam e to an agreem en t. I n th e d istri ct cou rt’s vi ew , thi s co urse of conduct i nd i cate d that a ny o bl i gati o n t o tur n o ve r the no te di d no t ar ise as p ar t o fthe p art ie s’ or igi nal ag re em en t. A ga in, th is is o n e p os sib le i nt er pr et at i o n o fCo g swell ’ s te st i m o ny, b uti t i s no t th e onl y r eas onabl e o ne; C og sw el lm i ght s i m plyhave beenr e mi nd i ngCi t i F i na nc i a lo fi t s p r o mi s e . T he P a t r i ck G ro u p is en tit led to h av e re as on ab le in fer en c es d ra w n inN o. 08
- 2153 9

C itiFin an ci a l also a rg u es tha t Th e P atrick G ro u p w aiv ed its 2 b re ac h- of

- c ont ra c tc l ai m by a t t em pt i ng t o f or ec l os e on the m ortgage, cl aim ing that this condu cti s incons is tentw ith an int ent to e nf orce any contractual ri ght to rec ei ve the not e. S ee Wik o ff v . V a n d er v eld , 89 7F .2d 23 2 , 24 1 (7t h C ir . 1 9 9 0 ); Wa ld v . C h i. S h ip p er s A ss ’n , 5 2 9 N .E .2d 1 1 3 8 , 11 4 7(Ill . A p p . C t. 1 9 8 8 ). W e s ee no i nc ons i s t en c y. its fav or , Akandev. Gr oun ds , 555 F.3d 586 , 5 8 9 ( 7th Cir. 20 09 ) , b ut th e di st r i ctc o ur t’ s an aly si s sh o ws tha t i t es se ntially resolved the factu al disp ut e itsel f. C iti Finan cial take s i ssu e w ith Th e Pat rick Grou p ’s ar gum ent on appeal that i t w as enti tl ed to the origin al n ote ora co py, n o t i n gth a tth e C o g s we l la ffi d a v i ta n d t he com pla i nt cl ai m enti tl em ent t o the or igi nal
. C f. C a rem a rk, 493 F.3d at 851 (find ing relevant f or pu rp o s es of determ i ni ng wh ethera contr act exi ste d as a m att ero fl aw th e fact tha t a pa rty ad op ted i nc ons istent pos iti ons ). T his ha r dl ymake s a di ffer en ce . F o r r ea so ns we wi l le xpl ain in a mom en t, e i th ero ne woul d ha ve cha ng ed th e o ut co m e i n the f o r ec l o su r e pr o ce eding . In a ddi ti o n, Cit i Fi nanci alar gues that The Patr i ck Group’s cour se of con d uc t sug gests that trans fer ofthe n ote w as no t a term ofthe parti es’ agre em ent. On thi s point Ci ti Fi nanci al not e s tha tT he P a t r i c kGr o up e xe c ut e d the p ur c ha se agr eem ent a nd at tem pted to f or ecl ose o n t he pro perty w ith ou t e ve r se ein g t h e n ot e . T h e a p p ar en t a rg u m en t is th ati fThe Pa tr i ckGr o up r ea l l y tho ug htc o pi es o fb o ththe note andth e m or tg ag e w er e re q u ire d t o for ec los e, it w ou ld have w ai ted unti li t had physi calposs ess i on of b oth of th es e do cuments. On su m m ar y j udg m en t th i s ar g um en t 2 i s unconvinci ng. Eval uati n g th e wei ght o fthe evi dence10 N o. 08
- 2153 is a task for a j ury, not a j ud ge, a n d th e evide nc e here is n otso on e-s id ed th at n o re as on ab le fa c t fin d er co u ld ag re e w ith T h e P at r ick G ro u p ’s in te rp re ta tio n . Se e, e . g. , Whe e l e rv. La wson , 539 F.3d 629 , 6 3 3 -34 (7th C ir. 2008).
“ [ T] he di s t r i c tc o ur twa s n o tp r e s e nt e d wi th a s i t uati on w here i t co u ld s i m plyi nter pret the c ontr act as a m att er of law ,” an d as su c h , i t is th e jur y’s res p on sib ility to , “in l i ght o fal lth e docum entar y a nd te sti m oni alev i dence, [ g l e a n ] th e i n t e n to fth e p a r t i e s a n d [ d e t e r mi n e ] the ter m s o fthe contr act. ” O tt o , 13 4 F
. 3d at 848. Th e r e r e mai ns o ne fi na ll o o s e e nd o n thi s i s s ue . On re m and the di st ric t cour t m i ght c oncl ud e that the o bli gation to tran sfer ph ysical pos s e s s io n of the n ote (or a copy) i s a “m i ssing te rm ” in the c ontr act that shoul d be su p p lied by a c ou rtas a m at te r of law
. See , e . g. , C heev er, 578 N
. E.2 d at 9 84 ( “I t i s no t uncom m on f ora cour t t o su ppl y a mis singmate r i alt er m , a s th e r eason abl e co nclusion often is th at th e pa rties int en d ed that the term be s up pl i e d b y i mpl i c a t i o n. ” )
. Co ur t s a r e g e ne r a l l y r e l uctant to i m ply m i ssing contr act ter m s; this re l uctance fl o ws fr o m a c o ncern abo utmis ta k en l y b i ndi ngc o ntr ac t in g p ar tie s t o t er m s o u ts id e t h eir ag re em en t. E.g
. , A rc hitec tu ra l M et al Sys. , Inc. v. Co nsol. Sys. , Inc. , 58 F. 3d 1227, 12 29 ( 7th Ci r. 19 95) ( “The m or e willin g the co urts ar e t o in te rp ola te m i s s in g t er m s, th e m or e d ifficu lt it is f o r the r ec i pi en t o fa v ague o ffer to i nt er pr etthe i nt en ti o ns b eh i nd the o ffer . ”)
. Ev ens o , the c ond ucto fthe p arti es o r c us to m ar y pr ac ti ce may su g g es t th atthe purchasero fa m or tga ge m ust recei ve the no te, a copy, o r othe r docum entar y e vi dence es ta b l i shi ng o w ners hi p of the debtas an i m pli ci t t er m o fthe parti es’ co ntra ctualN o. 08
- 2153 11 und er sta nd i ng, es peci al l y s i nce a p arty m ay not tr ansfer its int erest in th e m ortgage w it h ou t trans ferring i ts interes t in th e d eb t. See M o o re, 36 6 N
. E.2 d at 5 99. W e e xpress no o pi ni o n o n thi s que st i o n. Be ca us e T he Pa tr i ckGr o up neverr ai sed thi s a rgum ent in thi s co urt, we l eave the m at te r f orthe dist ri ct c ourtto co nsi der in the fi rs t i nstance .
B. Dam age s Caused by t he A l l ege d Br each T h e di s t r i c tc o u r t ’ s a l t e r n a t i v e b a s i s f o r e n t e r i n gs u mm ary j ud gm en t for C iti F in an cial w as th at C iti Finan cial’ s f ai l u re t o tu rn o verthe or i gi nalo r a co py ofthe note was no t th e ca us e o fThe Pat r i ckGr o up’ s damag es . The Patr i ck Group ar gues that causat i on i s e stabl i shed as a m at te r of law be c au s e t h e st at e-c ou rtd ec isio n s w ou ld have been differ ent i fi t co uld have pro du ced an o ri gi nal ora copy ofthe note . C i ti Fi nanci alm ai ntai ns that be cause ther e were al ternati ve w ay s of pr oving o w ners hi p of the no te, t h e d i sm i ssa lo fthe f or ecl osur e a cti on was not caused byi ts f ai l ure to del i verthe note . W e be gi n w i th the o bser vati on that the par ti cul ar causat i on quest i on he re is a l ega l, nota f actualo ne. A l though the ge nera lr ule i s that the dete rm i nati on o f causat i on i s forthe fac t find er, I l l i noi s co urts applya spe ci alr ul e i n b r ea ch

- o f

- co nt r ac t cl ai m s wher e th e assert ed da m age is c a u s ed by an ad verse ou tcom e of a j u d icia l p ro c ee d in g. Se e, e . g. , O’Ne i l v. Co n t ’ l Ba n k, N. A. , 66 2 N
. E. 2d 48 9, 4 96 ( I l l
. App. Ct
. 1 99 6)
. In O ’N ei l the pl aint i ff su bmi tt ed a bi d t o pur ch as e r ea le st at e i n a ba nk r upt cypr o ce eding ; the pl aint i ffc l ai m ed th e defen -12 N o. 08
- 2153 dan t ag r ee d t o s uppo r t con fi r m at i o n o fthe b i d i n the bankr upt cyc o ur t. W he n the t i m e ca m e f o r the de fen dan t to s o , how ev er, the de fen dan t r emai ne d s i l en t an d th e ba nk r upt cyj udg e ac ce pte d a c o m pet i to r ’ s bi d. In the ensui ng br each- of

- contr act acti on, the I l l i nois A pp el l ate Court hel d that a s a m att ero fl aw , the defe nd ant’ s br each c au se d th e p lain t i f f’s b id to fail. Id. at 497. The causa ti on i nquir y, the O ’Nei l co urt sai d, w as a l ega lqu es tio n f or the c ourti fthe ban kruptcy j ud ge acte d “i n hi s r ol e a s
‘ j ud ge, ’ notas ‘ f act fi nd er . ’ ” Id. at49 6. U nd er O ’Nei l , as w e ha ve not ed , th e cau sation in qu iry i n thi s co ntext i s a l ega lquesti on; the sta te cour ts that rej ecte d Th e Pat r ick Grou p ’s f oreclosu re action w ere acting i n thei r capaci ty as j u dges a nd notas f act fi nd er s. The t r i alc o ur t i n the foreclosu r e ac ti o n t o o kthe i ss ue o ut ofthe j ury’ s han d s byente ring a dir ecte d ver dictag ai nst The Pa tr i ckGroup

— a d ecision the ap p ell ate cou rt affi r m ed. The se co ur ts co nc l ude d th at The Pa tr i ckGr o up f ai l ed to m ake o ut a pri m a f aci e ca se because i t had not shown i t w as a “note hol der, ” and in I l l i noi s t h e q u est i on of w h et h er a p lain tiff h a s p re se n te d a p rim a fa c ie c as e is a q u es tio n of law
. E.g
. , P eopl eex re l
. Sh e r m an v. Cryns , 786 N
. E.2 d 1 39, 148 ( I l l
. 2003 )
. Si nce the I l l i noi s c ou rt s ac te d in t h eir ca p ac ity as j u d ge s, n otas fac t f i n d er s, th is parti cul arcausa ti on quest i on i s a l ega lo ne. O ’Nei l is al s o in st ru c tiv e b ec au se it em p h as ize s t h at in a br each- of

- contr act acti on l i ke th is one, wh i ch tur ns o n how the d efend an t’s cond uc t affecte d the ou tcom e of a j udi ci alpr o ce eding, the pr o perque st i o n t o a ska t th e causat i on s tag e i s what a r eas onable co urt “shoul d haveN o. 08
- 2153 13

The par t i es br i efl y di s put e who bea rs the bur den ofpr ovi ng 3 ca u sa tio n . O ’Neil contai ns l angu age suggest ing that the burd en ofpr oofon cau sati on s hi ft s fro m the pl ai nt i ff s t o the defe nd ants i fthe plai nti ff s show thatthe def endan t’ s bre a ch “m at er i al l y con t ribut ed” t o the out c om e ofthe j udi c i al pr oce ed in g . O ’N e i l v . C o n t ’ l B a n k, N
. A. , 66 2 N .E.2 d 4 8 9, 496 -97 (Ill. A p p . C t . 1 9 9 6 )
. B u tth i s l a n g u a g e i s d r a w n fr o m R ESTA TE MENT (S ECO ND ) OF C ONTRACTS § 2 45 ( 19 81 ), a nd thats ec t i on addre s s es c aus at i on i n the c ont ex tofdet er m i ni ng whe n a party’ s fa ilu re t o perf orm a c ond it ion m eans the party has b re a ch ed its co n tr a ct . A cco rd C um m i ngs v. Beat on & A ss ocs . , Inc. , 61 8 N .E.2d 292 , 30 6 (Ill. A p p . C t. 19 92 ). In th is ca se, b y con trast, w e are confronted w ith the ulti m ate quest ion ofw hethera d efend an t’ s br eac h ca u sed the p lain tiff’ s d am ag es. W e need n ot res olve the m att er he re. Plai nti ff s norm all y bear th e b u rd en o f p ro v in g th e e le m en ts o f th ei r c la im s, s e e T AS Dis t r i b
. Co
. v . Cummi ns En g i ne Co. , 491 F.3d 625, 633 ( 7th Cir
. 2 0 0 7 ); M i dl and Hote l C orp. v. R eube n H
. Donn el l ey C orp. , 5 1 5 N .E .2d 61 , 66 (Ill . 19 8 7 ); D yduch v. C rys t alG re en Corp. , 582 N. E. 2 d 3 0 2 , 30 5 ( I l l
. Ap p . C t . 1 9 9 1 ) , a n d f o r r e a s o n s we w il l explai n, The P a tr ick G roup has es tabli shed causat ion as a ma t t e r o fl a w. d on e” h ad th e d efe n d an ts foll o w e d th ro u gh on th eir a g r eem en t. 662 N
. E
. 2d at 496. The i nq uiry the refore foc u se s o n w h a t a rea so n ab le c ou rtsh ou ld h av e d on e in the for ecl osur e acti on had C i ti Fi nanci algi ven Th e Pat ri ck Gr o up th e o r i g i na l o r a co py o f th e no te se cur ed by the m or tga ge. 3 This questi on turns o n pri nc iple s o fI l l i noi s m or tga gef or ecl osur e l aw . Genera l l y s peaking, o nl y a m or tga gee can f or ecl ose o n proper ty, and a m or tga gee m u st ( at a m i ni m um ) be “th e h old er ofan ind ebte dn ess . . . se cured14 N o. 08
- 2153 by a m or tga ge. ” 7 35 I LL . C OM P . S T AT . 5/ 15- 1208
. U nd er th e U ni f or m Com m e r ci al Code, w h i c h I l l i n o i s h a s a d o p t e d, 810 I LL . C OM P . S T AT . 5/ 1- 101 et seq
. , a k eyr equi r ement to bei ng a hol der i s physi calposs ess i on o fthe note s e c u re d by th e m or tg ag e. See id
. 5/ 1- 201(b) ( 21) ( A ) ( defi nin g a hold er as “th e pe rson i n p ossess ion of a nego ti abl e instr um ent tha t i s payabl e e i therto bea re r or to an i d en tified p erson that is t he pers on in p ossess ion”). H ad Ci t i F i n a n c i a ld e l i v e r e d th e o r i g i n a lo r a c o p y o ft he n ot e, T h e P at ric k G ro u p w ou ld in t u rn h av e b ee n ab le to p ro d u c e itin t h e fo re c lo s u r e p ro c ee d in g a n d th u s fill the ev i de nt i a r y v o i d o n whi c h the I l l i no i s t r i a la nd a ppel l ate co urts r est ed thei r advers e decis i ons. A r easonab l e co urt under these ci rcum sta nces w oul d have al l owed The Patr i ck Group to proce ed w i th the f or ecl osur e. I t fol l ows, then, thatCi ti Fi nanci al ’ s f ai l ure to del i verthe note o r a co py to The Patr i ck Group caused th e fo re c los u re ac tio n to fail. Citi Fi nanci alr ai ses two ar gum ents i n re sponse, w hi ch do notaddress causa ti on s o m uch as they ad d ress whethe r The Pa tr i ckGr o up “ us e[ d] a l lr ea so nabl e m ea ns to m i ti gat e [ i ts] dam age s. ” P oko ra v. Warehouse D irec t, Inc. , 75 1 N
. E.2 d 1204, 1 21 3 (I l l
. A pp . Ct. 20 01)
. Fi rs t, C itiF in an c ial c on te n d s t h at T h e P at ric k G ro u p co u ld h av e a sk ed itt o p ro vid e a lost -n ot e a ffid av it, w h ich co u ld then have bee n u se d t o est abl i sh o w ners hi p ofthe debt s e c ur e d b y the mo r t g a g e a nd thu s for e c l o s e o n the p r o pe r t y . S e c o nd , Ci t i F i na nc i a lc l a i ms tha tT he P a t r i ck Group coul d have fi l ed a per sonal

-j ud gm ent a cti on ag ain stth e p ro p er ty ow n er s b a se d on its ow n er sh ip i nter esti n the note . N ei thero fthes e a rgum en ts car ri es the day.N o. 08
- 2153 15

I n I l l i noi s a par t y m ay f or ec l os e on a m or t gage withouts ui ng 4 to en fo rc e t h e u n d er l y in g p ro m iss o ry n o te . SeeHi ckey v. Un i on N at’ l B an k & T ru st C o. of Jol i et, 54 7 N .E.2d 4, 7 ( Ill. A p p . C t. 1 9 8 9 )
. Onl y m or t ga ge e s m a y f or e c l os e up onpr op e rt y, a nd a m o rt g a g ee is d efi n ed as “ t h e h o l d er o f an in d eb te d n es s . . . se cured by a m ortgage, ” “any person d es ignate d or authorized t o a ct on beh al fofs uc h h ol der, ” o r “a ny pe rs on c l ai m i ng through a m ortgagee as s ucces sor .” 735 I LL . C OM P . S TAT . 5/ 15- (co n tin u ed ...) A l ost
- note affi davi t fro m CitiFina nci alwould not h av e conclusi vel y e stabl i shed The Patr i ck Group’s abi l i ty to fore c los e o n t h e m or tg ag e. T h e Illino is ru les of civ il proce du re pro vi de that i fa cl ai m rest s upon a w ri tte n i nstr um ent, as f or ecl osur e a cti ons do, the plai nti ffm ust att ach a copy ofthe w ri tte n i nstr um ent t o the pl eadi ng. 735 I LL . C OM P . S T AT . 5 /2- 60 6. I t i s true tha t i fthe i ns trum en t i s no t av ai l ab l e, a pa r tymay pr o ce ed wi ththe ac ti o n b y r ely ing on an affi dav i t ex pl aini ngwhy th e i nstr um ent i s no t a vai l abl e a nd descr ibi ng i ts ter m s, i d. ; thi s i s co m m o nl y c all ed a “ l o stno te a ffi dav i t. ” The U ni f or m Com m e r ci al C o de conta i ns a si m i l arco ncept, al l owing a par ty to en f or ce a l ost, st ol en, o r destr oye d i ns trum en t i fi t ca n pr o ve the ter m s o fthe i ns trum en t an d its righ t t o e n for c e t h e in st ru m en t. See 810 I LL . C OM P . S T AT . 5/3-309(b). Ci t i F i na nc i a l ’ s a r g ume nta s s ume s tha ta p a r t y may succee d i n a fo re cl osur e acti on un der 7 35 I LL . C OM P . S T AT . 5/ 1 5
- 1 2 0 8 s o l o nga s i tc a n pr o du c e a l o s t
- no t e a ffi davi t. Ev e n i f we a s s ume tha t I l l i no i s l a w pe r mi t s a par ty to use a l ost
- note a ffid avi t a s par t o fi ts proo f, a l ost
- note 416 N o. 08
- 2153

(
. . . c on t i nu e d) 4 1208. Bu t no pub li shed Il li nois decis ions add res s w hether a p arty m ay f or eclo se up on a m or tga g e if it o w ns the in terest in t h e n ote ( as C itiFin an cial arg u es) or w he the r the p arty m u st sh o w t h at it hol ds th e n o t e i n o r de r t o f o r e c l o s e u p o n the m ortgage. Th e i n q u i r y i s ma d e mo r e c o mp l i c a t e d b y th e f a c t th a t by c onc l udi ng thatT he Pa t ri c k Grou p c oul d note nf or c e the m or tga g e, the Illin o i s A p p ellate C ou rt treate d these co nc ep ts as int erc hangeab le
. The app el lat e c ourt obser ved thatthe tr ial co u rt h a d en te re d a d i r e c te d v er d ic t b ec a u se th e “ p la in tiffs l ac k e d a n y i n t e r e s ti n th e d e b t, o r , p u ta n o th e r wa y , we r e no t ho l d e r s o f the no te an d , the refore , no t entitled to foreclo se the m or t gage , ” a nd c onc l uded thatThe Pa t ri c k Grou p was no t the no teh old er b eca u se C itiFin a n c ial “d id no t tran sfer the no te to plai nti ff s and
. . . the plai nti ff s never had p oss es si on of it
. ” O ’Neil i nst ructs thatw e c onsi der h o w a re asonable court sho u ld ha v e acted ifT he Pa trick G ro u p h a d p resen ted a lostnote affid a v it. As w e have noted, the re ar e no prece dential I l l i n o i s de c i s i o n s t o g u i d e u s , b u to th e r c o u r t s h a v e i n s o me c i rc um s t anc es c onc l uded thata par t y m ay fore c l os e s o l ong a s i t s h o w s ito w n s th e u n d er ly in g d eb t. SeeOcw en Fe d. Bank, F S B v . Ha rr is , N o. 99-C -658 , 2 0 0 0 W L 1 64 43 77, at *4 (N .D
. Ill. O ct . 24, 2000) ( int erpret ing Ill in o is l aw to all ow a f orecl osure to procee d ev en thoug h note was m is sin g b ec a use there w as no di s pu te thatpl ai nt i ffha d t i t l e t o the m or t gage an d the u n d er ly in g d eb t); accord A tl . N at’ l Trust, LL C v. M cN am ee, 98 4 S o. 2d 375, 378- 79 ( A la. 2007 ); N ew E n gland Sav
. B an k v. Bed f ord R ea l ty C orp. , 68 0 A. 2d 3 01 , 30 9- 10 ( Conn. 19 96 )
. W e will as s um e f or the s ake ofar gum en tthat I l l i noi s l aw would a l l ow T he Pa trick G r o u p to p ro ceed w ith forec losu re if a lost- (co n tin u ed ...)N o. 08
- 2153 17

(
. . . c on t i nu e d) 4 note affida v it cou ld have convinced a reas onab le court that itow ned the note
. affi dav i t woul d no t ha ve he l ped The P atri ckGr o up u n d er th e circ u m st an c es of th is cas e. L os t-n ot e a f f idav i ts a r e m ost co m m o nl y us ed to pr o ve the t er m s o fthe und er l yi ng debt; theyar e r ar el y e nough by them sel ves to prove o w ners hi p ofa debt. A l though a few co urts have al l owed f or ecl osur e t o proce ed base d on a l ost
note affi davit, the affi davi ts i n thes e ca ses al so att ached a c op y of t h e u n d er lyin g o rig in al n ot e. E.g
. , Fi rs tFe d. Sa v. & L o a n A s s ’ n o

f C h i
. v . C h i
. Ti t l e& Tr u s tC o. , 508 N
. E.2 d 28 7 ( I l l
. App. Ct
. 1 98 7) ( fi ndi ngtha t ana ffi dav i t an d cop ies ofnote an d m ort g a ge w ere su ffici en t to sup p ort for ec los u re ac tio n ). W e a re n otaw ar e o f a n y c as e in I l l i noi s in w hi ch a l ost
- note affi davit b y i tse l fwas en o ug h to pr o ve o wner sh i p o fthe unde r l y i ngde bt, a nd Citi Fi nanci alhas not i denti fi ed o therdocum entar y o r tes ti m oni alev i dence that, i n com bi nati on with a l ost
no te a ffi dav i t, woul d ha ve fi l led the e vi den ti ar y v ac uum id en tifie d by th e Illino is t ria l an d ap p ella te co u rt s in The Pa tr i ckGr o up’ s f o r ec l o su r e ac ti o n. Thu s, Ci ti Fi nanci al ’ s abi l i ty to provi de a l ost
- note affi davi t i fThe Patr i ck Group had ask ed is si m plya re d he r r i ng . Thi s i s es pec i al l y s o c o ns i der i ngthe g ap i n the c ha i n o ft i t l e i n thi s c a s e . T he de c i s i o ns o fthe s t a t e t r i al an d ap p ell ate cou rts refl ect an un d erstan d able con cern that Citi Fi nanci alm i ght no t hav e be en the tr ue o w ner ofthe d eb t. Because nei therThe Patr i ck Group nor18 N o. 08
- 2153 Ci t i F i na nc i a lc o ul d p r o duce a n o r i g i na lo r e v e n a c o py of th e n ote , ther e r em ai ned the pos sibi l i ty that the no te w as actual l y hel d b y anotherwh o w oul d be e nti tl ed to en force i t against the p rop erty ow ne rs. T his c o nc ern w as re as o nabl e i n l i g hto fthe que st i o ns r ai se d b y the am b igu ou s s tat e o fthe ti tl e r eco rd. I l l i noi s l aw i s cl ear th at a m ortgage m ay not be tran sferred un less the u nd erlyin g d eb t is als o t ra n sfe rre d
. In re B N TTe rm ina ls, Inc. , 1 25 B. R. 9 63 , 9 69 ( Ban k r . N. D. I l l
. 1 99 0) ( apply i ng I l l i no i s l a w) ; M o o re, 36 6 N
. E.2 d at 5 99. I t m i ght ha ve be enthe o r et i ca l l y po ss ibl e to e st ab l i sho wner sh i p o fthe und er l yi ng debt by tr aci ng i t thro ugh a t i tle se ar ch back to th e o rig in al m or tg ag ee . SeeFin. Free dom v . Kirgis , 87 7 N
. E
. 2d 24, 4 5 ( I l l
. App. Ct
. 2 00 7) ( al l o wi nga f o r ec l o sure ac tio n to p ro c ee d w h en th e p lain tiff p ro d u c ed te st im oni al evidence, a copy o fthe m or tga ge, and evi dence that the m or tga ge w as re cor d ed ). But that pos sibi l i ty woul d no t have he l ped The Pa tr i ckGr o up he r e g i ve n the unexp lain ed gap in the ti tl e r eco rd. A ccor dingl y, the f act th at The Patr i ck Group m i ght ha ve obt ai ned a l ost
- note affi davi t fro m Ci ti Fi nanci aldoe s no t a l terthe concl usi on th at C iti Finan cial’ s fai lure to de li ver anori ginal or a copy o fth e n ot e ca used the I l l i noi s s tat e co urts to r ej ec t The Pa tr i ckGr o up’ s f o r ec l o su r e ac ti o n. F i na l l y, Ci ti F i na nc i ala r g ue s th atThe Pa tr i ckGr o up co ul d ha ve f il ed a per so na l

-j udg m en t ac ti o n a g ains t th e p ro p er ty ow n er s b as ed on its int er es t in th e n ot e. A perso nal

-j ud gm ent a cti on a m ounts to an eff or t t o enf or ce the n ot e, and the nor m alr ule under the Un i f o r m C o mm ercia l C o de is th at a p ar t y m a y n o t e n for c e a n eg ot iab le i nstr um ent unl ess i t has physi calposs ess ion o fthe note .N o. 08
- 2153 19 81 0 I LL . C OM P . S T AT . 5 /3
- 3 0 1 ( c l a s s o f pa r t i e s e nt i t l ed to en f or ce nego ti abl e i nstr um ents und er I l l i noi s l aw is l i m i ted to “the h old ero fthe i nstrum ent” or“a nonhol der inp os se ss ion of th e in st ru m en t” ); L ocks v. N
. To w ne Nat’l B a n ko f R o ck fo rd, 4 51 N. E. 2d 19 , 2 0- 21 ( I l l
. App. Ct
. 1 98 3)
. Obvi ousl y, The Patr i ck Group coul d not m eetthi s r eq u i r e me n tb e c a u s e i tn e v e r h a d p o s s e s s i o n o fth e n o t e . As w e hav e di scusse d, I l l i noi s a l l ows a par ty to enf or ce a lost, st o le n , or d estroyed i ns tru m en t un d er certain circu m sta nces, 81 0 I LL . C OM P . S T AT . 5 /3- 30 1, 5 /3- 30 9, a nd here , The Patr i ck Group w as enti tl ed to ac q uir e whatever rig h ts C itiF in an c ial h ad in t h e n ot e, see F R ED ERI CK M. H ART & W I L L I A M F. W I LLI ER, N EGOTIAB LE I NST RUMENTS U NDER T HE U NI F ORM C OM ME R CIAL C ODE § 12. 03( 1) ( 2009 ) ( “[ T]he own ero fan instr u m en t m ay not be in posse ssi on o fi t. S uchno n- ho l dert r an sfer ee s ar e pr o te cted by the proper ty pri nci ple thata tr ansfer ee ofpro perty, b e i t r eal pr o pe r t y, t a ng ib l e p e r s o na lp r o pe r t y o r i nt a ng ib l e p r o per ty, o btains al lo fthe ri ghts of h is or hertr ansfer oras a resu lt ofthe tran sfer. ”). Put another w ay, The Patr i ck Group m i ght ha ve been ab le t o p ro c ee d w ith a p er so n al-j u d gm en t a c tio n if it coul d establ i sh that Ci ti Fi nanci al“was i n posse ssi on o f the instr um ent a nd enti tl ed to enf or ce i t when l oss o f posse ssi on o ccurr ed, ” that “the l oss of posse ssi on was not the r esul t o fa tr ansfer. . . o r a l aw ful sei zure , ” a nd that Citi Fi nanci al“ca nnot r eas onabl y obtain p ossess i on o f the i ns t r ume ntb e c a us e the i ns t r ume ntwa s de s t r o y e d, i ts wher eabo ut s ca nno t be de te r m i ne d, o r i t i s i n the w ro ngful posse ssi on o fan unknown perso n ora perso n that cannot be found or i s n ot a m en abl e t o ser vi ce o f20 N o. 08
- 2153

W e do no taddr es s the s epa ra t e que s t i on ofthe am ountof 5 T he Pa trick G ro u p ’ s d am ag es.

10- 5- 10 proce ss .” 810 I LL . C OM P . S T AT . 5/3- 309( a)
. But thi s i s j ust a di ffer ent way o fr equi ring The Pat ri ck Group to prove th atCi ti F i nanci alo wned a nd t r an sfer r ed th e deb t, a nd w e h av e alr ea d y ex p lain ed w h y a re as on ab le c ou rtw ou ld c on c lu d e t h at T h e P at ric k G ro u p c o u l d n otm ak e t h is showing. A ccor dingl y, a perso nal

-j ud gm ent a cti on t o r e c o v e r the a mou nto fthe pa s t
- du e de b two ul d h a v e f a i l e d. I n sh ort, as a m atter of l aw , Th e Pat rick Grou p ’s dam age s were caused byCi ti Fi nanci al ’ s f ai l ure to del i ver an o ri gi nalo r a co py of the note secur ed by the m or tga ge. 5 The open f actualquesti on i s wh etherthe parti es’ ag re em en t r equired Ci ti F i na nc i alt o do s o , a nd o n thi s th e evi dence is dis pu ted. W e there f or e R EVER S E the j ud gmen to fthe di s t r i c tc o urta nd R EMA ND f orfurtherpro ce eding s co ns i st en t wi ththi s o pi ni o n.