Court Opinion

ID: 2998862
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:48:05.565875+00
Date Added: 2024-06-11T11:25:20.645182
License: Public Domain

UNPUBLISHED ORDER
                          Not to be cited per Circuit Rule 53

             United States Court of Appeals
                             For the Seventh Circuit
                             Chicago, Illinois 60604

                           Submitted November 30, 2004*
                              Decided March 23, 2006

                                       Before

                     Hon. KENNETH F. RIPPLE, Circuit Judge

                     Hon. MICHAEL S. KANNE, Circuit Judge

                     Hon. ANN CLAIRE WILLIAMS, Circuit Judge

Nos. 03-3471 & 03-4192
                                              Appeals from the United States
CONTIMORTGAGE                                 District Court for the Northern
CORPORATION,                                  District of Illinois, Eastern Division.
    Plaintiff-Appellee,
                                              No. 00 C 3756
      and,
                                              Charles R. Norgle, Sr.,
TIM BIASIELLO and JAMES                       Judge.
BYRNE,
     Intervening Appellees,

      v.

DEMETRIS ANGLEZIS,
    Defendant-Appellant.

                                     ORDER

      *
        After an examination of the briefs and the record, we have concluded that
oral argument is unnecessary. Thus, the appeals are submitted on the briefs and
the record. See Fed. R. App. P. 34(a)(2).
Nos. 03-3471 & 03-4192                                                           Page 2

       These appeals arise from an action to foreclose a mortgage. By the time
these appeals were filed, however, the mortgagor, Mr. Demetris Anglezis, had
already unsuccessfully appealed the foreclosure and sale of his property, which
resulted in full payment of the debt to his mortgagee’s assignee, Contimortgage
Corporation. The appeals now before us were taken from two orders partially
distributing the surplus from that sale--one to the mortgagor’s former lawyer,
Mr. Tim Biasiello, and the other to the third-party buyer, Mr. James Byrne. Now,
Mr. Anglezis, who represents himself, argues that we must reverse the partial
distribution orders. Additionally, despite his prior unsuccessful appeals, he asks us
to set aside the foreclosure and sale.

       When we first examined the briefs and the record, we were troubled by
several unanswered questions regarding appellate and subject matter jurisdiction.
Appellate jurisdiction concerned us primarily because the distribution of the
surplus was only partial, settling the rights of some, but not all, parties. We were
also concerned that the order distributing proceeds to the third-party buyer,
Mr. Byrne, may have rendered the confirmation of sale non-final by resetting the
sale price. In that event, the confirmation of sale would have become final only
upon disbursement of funds, making uncertain whether we have jurisdiction to
consider the appellant’s arguments about the foreclosure and sale. We were also
concerned about our subject matter jurisdiction because the third-party buyer had
intervened without asserting any basis for the court’s jurisdiction. We ordered a
limited remand to answer our questions; we directed that the district court explain
what action remains to be taken with regards to the surplus, as well as identify the
jurisdictional basis for Mr. Byrne’s intervention.

       The district court acted on that limited remand, informing us that it had
distributed the last of the surplus to Mr. Anglezis and had accepted briefing on the
court’s subject matter jurisdiction over Mr. Byrne’s claims. Regrettably, the court
drew no conclusions from Mr. Byrne’s jurisdictional briefs; it simply referred us to
them. Moreover, although the limited remand order directed all parties to brief the
jurisdictional issues upon the limited remand’s return to this court, only
Mr. Anglezis timely filed his brief. One intervenor, Mr. Biasiello, filed what
purports to be a jurisdictional memorandum, but it was filed in an untimely fashion
and contains neither argument nor citation to authority.

       We conclude that we have appellate jurisdiction over the orders of partial
disbursement, but not the foreclosure and sale. Subject matter jurisdiction over
Mr. Byrne’s intervention is lacking, but jurisdiction over Mr. Biasiellos’s lien exists.
Therefore, only the appeal concerning his lien is properly before us on the merits;
however, Mr. Anglezis raises no argument warranting reversal. We affirm the
disbursement to Mr. Biasiello, and reverse and remand for lack of subject matter
jurisdiction the order disbursing money to Mr. Byrne.
Nos. 03-3471 & 03-4192                                                        Page 3

                                          I

                                 BACKGROUND

A. Proceedings in the District Court

       The case began when Mr. Anglezis defaulted on his loan. Owing to that
default, Contimortgage filed a complaint on June 21, 2000, seeking foreclosure and
invoking the district court’s diversity jurisdiction. See 28 U.S.C. § 1332.1 Mr.
Anglezis failed to appear; Contimortgage was awarded a default judgment of
foreclosure on March 15, 2001. Mr. Anglezis appealed that judgment, but failed to
prosecute his appeal (Case No. 01-2552); that appeal was dismissed in March 2002.
Sale was set for October 2002. Mr. Anglezis then unsuccessfully sought a
temporary restraining order from the district court to prevent the sale. He again
appealed (Case No. 02-3705).

       Meanwhile, the property was sold to Mr. Byrne. The sale was made subject
to general taxes. On December 6, 2002, the district court entered an order
confirming the sale, awarding possession to Mr. Byrne and setting the surplus at
about $70,000. The court stayed that order. On December 27, 2002, Mr. Anglezis
filed a motion under Rule 60(b) of the Federal Rules of Civil Procedure to vacate the
default judgment. On December 30, 2002, Mr. Byrne moved to intervene and to
obtain compensation for then unpaid property taxes from the surplus. His motion
did not state the jurisdictional or substantive basis for his intervention, and the
district court asked for none. With a single order dated December 30, 2002, the
court denied Mr. Anglezis’ motion, lifted its stay of the order confirming the sale
and permitted Mr. Byrne to intervene to pursue his claim. On its docket, the court
aligned Mr. Byrne as a plaintiff.

      Mr. Anglezis appealed again (Case No. 03-1229), asking us to set aside the
orders of foreclosure and sale. We consolidated this appeal and his pending appeal
(Case No. 02-3705). Although Mr. Anglezis sought a stay in both the district court
and in this court, he did not prevail on these requests. Therefore, on August 13,
2003, we dismissed the appeals as moot, holding that, under Duncan v. Farm Credit
Bank of St. Louis, 940 F.2d 1099 (7th Cir. 1991), no relief could be granted because
the property already had been sold.

      1
         According to Contimortgage’s complaint, Contimortgage is a Delaware
Corporation with its principal place of business in Delaware. Mr. Anglezis is a
citizen of Illinois. The amount in controversy was the unpaid principal balance of
about $171,000 on the defaulted loan.
Nos. 03-3471 & 03-4192                                                          Page 4

       Complicating matters, Mr. Anglezis’ mother continued to live in the house
after the sale. Three months after the district court lifted the stay in March 2003,
Mr. Byrne moved to have an order of possession entered against Mr. Anglezis’
mother. For reasons unexplained, Mr. Byrne withdrew his motion for possession
the next month; there is no indication that Mr. Anglezis’ mother actually left the
premises.

       After dismissal of Mr. Anglezis’ appeals, a dispute arose over the distribution
of the approximately $70,000 surplus. Mr. Anglezis claimed it as his own, but two
others also claimed a portion. The first of the claimants, Mr. Biasiello, had served
very briefly as Mr. Anglezis’ lawyer. Mr. Biasiello began representing Mr. Anglezis
midway through the foreclosure proceedings--more precisely, after the entry of
default and while the order confirming sale was still stayed by the district court.
Mr. Biasiello moved to withdraw because, he contended, his relationship with
Mr. Anglezis had become impossible. (He was one of several lawyers to do so.)
Relying on his contract with Mr. Anglezis and his hourly charges, Mr. Biasiello
claimed a lien for $20,000 on the proceeds of the sale. The district court on April 18,
2003, referred the matter to a magistrate judge, who recommended disbursing that
amount to Mr. Biasiello and permitting withdrawal. Mr. Anglezis, who failed to
appear at the hearing before the magistrate judge, objected; the district court
adopted the magistrate judge’s recommendation over Mr. Anglezis’ objection on
September 10, 2003. Acting pro se, Mr. Anglezis filed a notice of appeal on
September 17, 2003 (Case No. 03-3471).

       The second person who claimed a portion of the surplus was the buyer, Mr.
Byrne. Mr. Byrne first sought a disbursement to pay property taxes that came due
before the sale. As noted above, he did not explain why he believed he was entitled
to payment, nor did he attempt to justify the court’s authority to grant such relief.
The district court originally referred this matter to the magistrate judge, who, on
June 18, 2003, recommended denying Mr. Byrne’s motion. Mr. Byrne reasserted his
claim to the surplus on October 15, 2003 while appeal No. 03-3471 was pending,
this time seeking $9,000 to compensate him for Mr. Anglezis’ mother’s continued
occupancy of the property. He also claimed approximately $9,000 for the property
taxes mentioned above, which he claimed to have paid since the original rejection of
his motion. On November 10, 2003, the district court granted Mr. Byrne’s motion
and ordered payment, stating that taxes were for the period before the sale.
Mr. Anglezis, again acting pro se, filed a notice of appeal on December 9, 2003 (Case
No. 03-4192).

       Meanwhile, the Special Commissioner held a remainder of about $32,000 in
proceeds. The court ordered the Commissioner to issue a report on what to do with
this remainder--how much should be paid and to whom. The Commissioner did not
write this report; at least it is not to be found in the record. Although Mr. Anglezis
Nos. 03-3471 & 03-4192                                                           Page 5

requested payment, the district court denied his motion as “moot” in July 2004
because of his pending appeal.

B. Limited Remand

       When these appeals first came before us, as we note above, we were
concerned about our appellate jurisdiction, given that $32,000 of the proceeds
remained undistributed and the rights to it were undecided. We also were troubled
because Mr. Byrne’s intervention for reimbursement for paid property taxes may
have undone the sale price, and therefore, the finality of the confirmation of sale.
In that case, the confirmation became final only upon the disbursement from which
Mr. Anglezis appealed, raising questions as to whether his arguments regarding the
confirmation of sale and foreclosure were properly before us. Subject matter
jurisdiction was also a problem because Mr. Byrne, a non-diverse party, intervened
as a plaintiff in this diversity action but raised only non-federal claims without
offering a basis for the district court’s jurisdiction over them. A similar problem
plagued Mr. Biasiello’s claim, but the magistrate judge suggested that the district
court had supplemental jurisdiction over his request for a lawyer’s lien. See Clarion
Corp. v. Am. Home Prods. Corp., 464 F.2d 444, 445 (7th Cir. 1972) (per curiam).

       To clarify matters, we ordered a limited remand, requesting that the district
court explain what action remained to be taken with respect to the $32,000 surplus,
as well as to explain the substantive and jurisdictional bases for Mr. Byrne’s
intervention. The district court responded by releasing the last of the $32,000
surplus to Mr. Anglezis and accepting jurisdictional briefing from Mr. Byrne.

                                          II

                                     ANALYSIS

A. Appellate Jurisdiction

      1. The Orders of Disbursement

       It has been long established that there may be multiple final orders in an
action to foreclose a mortgage. See Sage v. Cent. R.R. Co. of Iowa, 96 U.S. 712, 714
(1877). As relevant here, typically the first final order is the order confirming sale,
which establishes “who gets the property, at what price, and what deficiency
judgment (if any) will be entered against the [mortgagor],” and thereby ends the
underlying dispute between the mortgagor and mortgagee. Mortgage Elec.
Registration Sys., Inc. v. Estrella, 390 F.3d 522, 523–24 (7th Cir. 2004). Apart from
Nos. 03-3471 & 03-4192                                                          Page 6

serving as the means to resolve the underlying dispute over the debt, an order
confirming sale is final and appealable for another, practical reason: delay could
cause the mortgagor to suffer irreparable harm, stemming from the sale of the
mortgaged property. See United States v. Davenport, 106 F.3d 1333, 1334-35 (7th
Cir. 1997). Still, even after the order confirming sale becomes final, the distribution
of proceeds sometimes remains. Because the distribution process cannot undo the
confirmed sale, it is a bit like a second leg of litigation. This stage of proceedings
will not become final until the court issues an order disposing “of all claims against
all parties” and determining the parties’ respective rights to the surplus. See id. at
1334-35 (noting that distribution of proceeds from a tax sale was not final because it
left the property owner’s rights undetermined).

        Here, at the time this appeal was filed, the rights to the $32,000 surplus were
still undecided. Although the prior orders of disbursement (Case Nos. 03-3471 and
03-4192) settled the respective rights of Mr. Biasiello and Mr. Byrne
(Contimortgage received its share earlier), these orders did not determine whether
Mr. Anglezis also had a right to surplus; therefore, the disbursement orders were
not final at the time of appeal. See id. Nor was there a basis for immediate appeal:
There was neither a certification under Fed. R. Civ. P. 54(b), nor a discernable risk
of irreparable harm under the practical finality or collateral order doctrines. See
Cleveland Hair Clinic, Inc. v. Puig, 104 F.3d 123, 126 (7th Cir. 1997); People Who
Care v. Rockford Bd. of Educ. Dist. No. 205, 921 F.2d 132, 134–35 (7th Cir. 1991).

       Nevertheless, the district court now has disposed of all remaining claims by
disbursing the rest of the surplus, resolving our concerns. Under 4(a)(2) of the
Federal Rules of Civil Procedure, premature notice of appeal relates forward to
entry of final judgment, when the notice was filed from an order that would have
been appealable had a judgment been entered immediately afterward. FirsTier
Mortgage Co. v. Investors Mortgage Ins. Co., 498 U.S. 269, 276 (1991).2 Specifically,
we have repeatedly held that, “once a decision is announced, a premature notice of
appeal lingers until the final judgment is entered.” See Garwood Packaging, Inc. v.
Allen & Co., 378 F.3d 698, 700-01 (7th Cir. 2004) (holding that the notice of appeal,
filed after the district court entered judgment as to one defendant but before the
court dismissed the claims against the other defendants, would have become
effective when those defendants were later dismissed). The orders in this case had,

      2
         Several of our sister circuits have adopted similar rules. See Outlaw v.
Airtech Air Conditioning & Heating, Inc., 412 F.3d 156, 158 (D.C. Cir. 2005); In re
Bryson, 406 F.3d 284, 287–89 (4th Cir. 2005); Boudreaux v. Swift Transp. Co., Inc.,
402 F.3d 536, 539 n.1 (5th Cir. 2005); Good v. Ohio Edison Co., 104 F.3d 93, 95-96
(6th Cir. 1997); Clausen v. Sea-3, Inc., 21 F.3d 1181, 1186-87 (1st Cir. 1994).
Nos. 03-3471 & 03-4192                                                          Page 7

prior to appeal, disposed of the claims by Mr. Biasiello3 and Mr. Byrne; when the
district court, on remand, finally determined the rights of Mr. Anglezis to the
surplus, its distribution order became final. Under our precedent, the appellant’s
notice of appeal was merely premature. We therefore have appellate jurisdiction to
review the district court’s partial disbursement orders. See id.

2. The Foreclosure and Sale

       We were also concerned about finality because Mr. Byrne’s intervention
seeking back taxes was, in a sense, an attempt to renegotiate the sale price--
perhaps undoing the sale’s finality. If so, then the scope of the appeal might also
include the confirmation of sale itself. Cf. Mortgage Elec. Registration Sys., 390 F.3d
at 523–24 (emphasis added) (holding that a foreclosure action becomes final only
when the order confirming sale establishes “who gets the property, at what price,
and what deficiency judgment (if any) will be entered against the [mortgagor]”).
Such a situation raises, in turn, the possibility that the foreclosure action became
final only when the district court ordered a disbursement of surplus to Mr. Byrne
for back taxes, because it was only at that point that the court set the final sale
price.

       The limited remand resolved these concerns. First, although the payment for
back taxes could be seen as a refund, Mr. Byrne did not seek to undo the sale.
Payment to him therefore would not reverse the transfer of the property that
resulted in a risk of irreparable harm, justifying immediate appeal. See Sage, 96
U.S. at 714; Davenport, 106 F.3d at 1334-35. Second, to the extent that Mr. Byrne’s
intervention reset the sale price, it did not affect the amount paid to Contimortage
because, even after the refund, the sale price exceeded the debt. Since the whole
purpose of the foreclosure action is to secure that debt for the mortgagee, the
language in Mortgage Electronic Registration Systems, 390 F.3d at 523-24,
regarding the sale price should not be taken to undermine the finality of the
underlying dispute between Contimortgage and Mr. Anglezis. Third, as we are
about to explain, the district court had no subject matter jurisdiction over
Mr. Byrne’s claims, so as a matter of common sense, his intervention was void and
should not undo the finality of the underlying foreclosure.

      3
        Because Mr. Biasiello simultaneously withdrew, there was no chance that
he would accrue any other fees, and the order to pay him cannot be seen as interim
or inherently nonfinal. See Estate of Drayton v. Nelson, 53 F.3d 165, 167 (7th Cir.
1994).
Nos. 03-3471 & 03-4192                                                           Page 8

B. Subject Matter Jurisdiction

      1. The Disbursement to Mr. Byrne

       Turning to subject matter jurisdiction, we begin by discussing the district
court’s jurisdiction over Mr. Byrne’s claim. As an intervenor, Mr. Byrne bore the
burden to establish the court’s subject matter jurisdiction over his claims. See TIG
Ins. Co. v. Reliable Research Co., 334 F.3d 630, 633 (7th Cir. 2003). Nevertheless,
he offered no basis for subject matter jurisdiction, and the district court did not ask
for any. On appeal, he explained that he was entitled to payments for property
taxes he had previously paid, as well as for “use and occupancy” of the property--
both because Mr. Anglezis’ mother continued to live on the property and because
Mr. Anglezis unnecessarily drew out the litigation. On limited remand, after the
district court asked him what the substantive and jurisdictional bases for his claim
were, Mr. Byrne asserted that he intervened under Fed. R. Civ. P. 24(b) and that
his intervention was proper because his “interest in this litigation does not affect
the original diversity of the parties herein, since his interest comes into being
through the enforcement of prior orders of this Court.”

       Unfortunately for Mr. Byrne, however, his assertions simply fail to establish
federal jurisdiction. Because Mr. Byrne is a non-diverse party and intervened as a
plaintiff under Federal Rule of Civil Procedure 24(b) in a case in which the only
basis for jurisdiction was diversity, his action must be dismissed. See 28 U.S.C.
§ 1367(b); TIG Ins., 334 F.3d at 634. Mr. Byrne concedes that his intervention was
permissive rather than as of right. Even construing supplementary jurisdiction
broadly, permissive intervention requires an independent basis for jurisdiction,
which is lacking here. See Turner/Ozanne v. Hyman/Power, 111 F.3d 1312, 1319
(7th Cir. 1997); Am. Nat’l Bank & Trust Co. of Chicago v. Bailey, 750 F.2d 577, 583
(7th Cir. 1984); Charles Alan Wright, Arthur R. Miller, Mary Kay Kane, Federal
Practice & Procedure § 1917 (1986 & Supp. 2005).

       This leaves the question of the legitimacy of the district court’s order,
distributing funds to Mr. Byrne. The district court had no subject matter
jurisdiction to enter that order. We therefore direct the district court to ensure the
money’s return to Mr. Anglezis. See Nw. Fuel Co. v. Brock, 139 U.S. 216, 219 (1891)
(“[T]he power is inherent in every court, while the subject of controversy is in its
custody, and the parties are before it, to undo what it had no authority to do
originally, and in which it, therefore, acted erroneously, and to restore, so far as
possible, the parties to their former position.”); see also In re Graziadei, 32 F.3d
1408, 1411 (9th Cir. 1994) (ordering restitution of funds paid by bankruptcy court
lacking subject matter jurisdiction); Watts v. Pinckney, 752 F.2d 406, 410 (9th Cir.
1985) (affirming order of restitution for void judgment under Fed. R. Civ. P.
60(b)(4)).
Nos. 03-3471 & 03-4192                                                            Page 9

      2. The Disbursement to Mr. Biasiello

       As for subject matter jurisdiction over Mr. Biasiello’s claim, the magistrate
judge noted that a federal court has supplemental jurisdiction over a non-diverse
attorney’s claim for fees in a diversity action if the attorney asserts a lien on a fund,
which is within the district court’s jurisdiction. See Clarion Corp., 464 F.2d at 445.
Of course, Mr. Biasiello’s claim is based on state law, and jurisdiction over the
dispute might be lacking if the court had relinquished jurisdiction over the fund and
the underlying case. See Hill v. Baxter Healthcare Corp., 405 F.3d 572, 577 (7th
Cir. 2005). Nevertheless, since Mr. Biasiello’s lien arose from services provided
exclusively in the underlying litigation, supplemental jurisdiction was proper over
the lien. See Abbott Labs. v. CVS Pharmacy, Inc., 290 F.3d 854, 858 (7th Cir. 2002);
see also Alderman v. Pan Am World Airways, 169 F.3d 99, 102 (2d Cir. 1999);
Kalyawongsa v. Moffett, 105 F.3d 283, 286–288 (6th Cir. 1997).

C. The Merits

       As for the merits, only the order disbursing payment to Mr. Biasiello is
properly before us on appeal. Mr. Anglezis’ arguments do not warrant reversal of
that disbursement. Mr. Anglezis argues that the court erred because Mr. Biasiello
failed to provide proper notice to Mr. Anglezis, as required to perfect his attorney’s
lien under 770 Ill. Comp. Stat. 5/0.01, 5/1, and because Mr. Anglezis never agreed to
pay Mr. Biasiello’s fees. The argument regarding notice is without merit. The
magistrate judge did not decide that Mr. Biasiello held a statutory attorney’s lien.
Instead, he ruled that Mr. Biasiello held an enforceable equitable lien, which
requires only that there be a debt or duty and a res to which that obligation
attaches. See In re Brass Kettle Rest., Inc., 790 F.2d 574, 575-76 (7th Cir. 1986).
Both criteria were satisfied; the contract secured Mr. Biasiello’s fee by requiring
that it be paid only from proceeds from the loan on the property or from a
disbursement from the forced sale of that property. As for the second point,
Mr. Anglezis’ argument that he did not agree to pay fees similarly fails: he signed
a contract, which plainly provides for attorneys’ fees. Therefore, we affirm the
distribution to Mr. Biasiello.

                                     Conclusion

       For the reasons set forth in this order with regard to Case No. 03-4192, we
reverse and remand the order of disbursement to Mr. Byrne with instructions to
restore the money to Mr. Anglezis, without prejudice to the merits of Mr. Byrne’s
state-law claims (whatever those claims or their merits may be). In Case No. 03-
Nos. 03-3471 & 03-4192                                                      Page 10

3471, we affirm the order disbursing funds to Mr. Biasiello. We have no jurisdiction
over the orders of foreclosure and sale. All pending motions are denied.

                                                               IT IS SO ORDERED