Court Opinion

ID: 4418197
Source: CourtListenerOpinion
Date Created: 2019-07-18 21:03:57.391455+00
Date Added: 2024-06-11T14:59:15.846807
License: Public Domain

Digitally signed by
                                                                         Reporter of
                                                                         Decisions
                                                                         Reason: I attest to
                          Illinois Official Reports                      the accuracy and
                                                                         integrity of this
                                                                         document
                                  Appellate Court                        Date: 2019.07.18
                                                                         15:35:25 -05'00'

    McGinley Partners, LLC v. Royalty Properties, LLC, 2018 IL App (1st) 172976

Appellate Court      McGINLEY PARTNERS, LLC, an Illinois Limited Liability
Caption              Company, Plaintiff-Appellee, v. ROYALTY PROPERTIES, LLC, a
                     Florida Limited Liability Company; RICHARD KIRK CANNON, an
                     Individual; and MERYL SQUIRES CANNON, an Individual,
                     Defendants-Appellants.

District & No.       First District, Fourth Division
                     Docket No. 1-17-2976

Filed                December 20, 2018

Decision Under       Appeal from the Circuit Court of Cook County, No. 2014-L-005231;
Review               the Hon. John C. Griffin, Judge, presiding.

Judgment             Affirmed.

Counsel on           Norman J. Lerum and Catherine E. Lerum, of Norman J. Lerum, P.C.,
Appeal               of Chicago, for appellants.

                     Katherine M. Saldanha Olson and Joseph S. Messer, of Messer
                     Strickler, Ltd., of Chicago, for appellee.
     Panel                    JUSTICE GORDON delivered the judgment of the court, with
                              opinion.
                              Presiding Justice McBride and Justice Reyes concurred in the
                              judgment and opinion.

                                               OPINION

¶1         The instant appeal arises from a lawsuit by plaintiff McGinley Partners, LLC, to enforce a
       note and guaranty executed by defendants Royalty Properties, LLC, Richard Kirk Cannon, and
       Meryl Squires Cannon in connection with the purchase of a horse farm. The trial court granted
       summary judgment to plaintiff and entered judgment against defendants in the amount of
       $8,320,669.43 on February 2, 2017. Nine months after the entry of the judgment, defendants
       filed a petition to vacate the judgment pursuant to section 2-1401 of the Code of Civil
       Procedure (Code) (735 ILCS 5/2-1401 (West 2016)), alleging that defendants had a
       meritorious defense to the lawsuit due to the terms of an agreement that plaintiff had failed to
       disclose during the pendency of the litigation. Defendants further alleged that this agreement
       came to the attention of defendant Richard Kirk Cannon a month prior to the filing of the
       section 2-1401 petition. The trial court denied defendants’ petition without an evidentiary
       hearing. For the reasons set forth below, we affirm the trial court’s judgment.

¶2                                             BACKGROUND
¶3         The underlying real estate transaction involved in the instant appeal has been considered
       three times by this court, first in BMO Harris Bank, N.A. v. Royalty Properties, LLC, 2016 IL
       App (1st) 151338-U, followed by Forest Preserve District v. Royalty Properties, LLC, 2017 IL
       App (1st) 171564-U, and Royalty Farms, LLC v. Forest Preserve District, 2017 IL App (1st)
161409. Additionally, we recently considered the propriety of the trial court’s grant of
       summary judgment in the instant litigation in McGinley Partners, LLC v. Royalty Properties,
       LLC, 2018 IL App (1st) 171317. Accordingly, we draw the pertinent facts from our prior
       decisions.
¶4         Defendants Richard and Meryl Cannon owned 43 horses, which resided on a farm in
       Barrington Hills owned by Horizon Farms, Inc. (Horizon Farms). In 2006, Horizon Farms
       solicited bids in an effort to sell the farm, and the Cannons submitted a bid of $19.35 million
       for the property, which was accepted. The Cannons made an earnest money deposit of nearly
       $2 million and financed the rest of the purchase price, primarily through obtaining a loan of
       $14.5 million from Amcore Bank in exchange for a mortgage on the property and the personal
       guaranties of the Cannons. In order to obtain this financing, Amcore Bank required the
       Cannons to form a limited liability corporation to sign for the loan as the mortgagee.
       Accordingly, the Cannons created Royalty Properties, LLC (Royalty Properties), also named
       as a defendant in the instant litigation. In addition to the financing from Amcore Bank, Horizon
       Farms, the seller, loaned $1.5 million to Royalty Properties, evidenced by a promissory note
       and secured by a second mortgage on the property. Horizon Farms subsequently assigned its
       interest in the note and guaranty to the William J. McGinley Marital Trust (trust) upon the
       dissolution and liquidation of Horizon Farms. On November 10, 2009, the trust assigned all of

                                                  -2-
       its right, title, and interest in the note and guaranty to plaintiff McGinley Partners, LLC, the
       plaintiff in this action. It is this loan that is the subject of the instant litigation.
¶5          In 2009, Amcore Bank filed a complaint to foreclose its primary mortgage. In 2010, during
       the pendency of the lawsuit, the loan was sold to BMO Harris Bank, which took over the
       foreclosure action. BMO Harris Bank, in turn, sold the loan to the Forest Preserve District of
       Cook County (Forest Preserve) in June 2013. In August 2013, the trial court granted summary
       judgment in favor of the Forest Preserve and entered a judgment of foreclosure and sale of the
       farm. The Forest Preserve was the highest bidder at the foreclosure sale, and the trial court
       entered a $6.2 million deficiency judgment against defendants.1
¶6          On May 15, 2014, plaintiff filed a verified complaint against defendants to enforce the note
       and guaranty executed by them with respect to the Horizon Farms loan. The complaint alleged
       that, on December 21, 2006, Royalty Properties executed a promissory note in favor of
       Horizon Farms in the amount of $1.5 million, which was secured by a second mortgage. The
       note was personally guaranteed by the Cannons, pursuant to a guaranty agreement dated
       December 21, 2006.
¶7          The complaint set forth two counts. The first count was for breach of the promissory note
       and was against Royalty Properties. Count I alleged that the note was in default as a result of
       nonpayment and that, as of May 14, 2014, $3,509,025.22 was due and owing under the note.
       Count I further alleged that under the terms of the note, interest continued to accrue at an
       annual rate of 20% and that Royalty Properties has refused to pay the amounts due and owing
       under the note.
¶8          Count II was for breach of guaranty against the Cannons. Count II alleged that the Cannons
       guaranteed all sums due and owing under the note and that if the note was in default, the holder
       of the note was permitted to demand payment of the note from the guarantors. Count II further
       alleged that plaintiff did demand payment but the Cannons refused to pay the amounts due and
       owing under the note.
¶9          Attached to the complaint were copies of the promissory note, the mortgage, the guaranty,
       and the affidavit of James McGinley, a trustee and beneficiary of the trust, which made the
       demand for payment prior to the trust’s assignment to plaintiff.
¶ 10        After a denial of a motion to dismiss, the parties engaged in discovery, and plaintiff filed a
       motion for summary judgment on December 17, 2015, which it amended on June 10, 2016.
       The motion for summary judgment was granted on August 31, 2016, and on September 13,
       2016, plaintiff filed a prove-up affidavit. On November 18, 2016, the trial court issued an
       opinion in which it found that there was a question of fact concerning the amount of damages.

           1
            Defendants appealed this order, resulting in our first decision, in which we found that summary
       judgment should not have been granted. BMO Harris Bank, 2016 IL App (1st) 151338-U. Upon
       remand, the trial court reinstated its judgment, which we again vacated in Forest Preserve District,
       2017 IL App (1st) 171564-U. The trial court’s judgment after remand is once again pending before
       this court, in appeal No. 1-18-1323. Additionally, Royalty Farms filed a separate suit against the
       Forest Preserve, alleging that the Forest Preserve breached the duties it assumed as a landlord when it
       purchased the farm. In the appeal resulting from that litigation, we vacated the trial court’s order
       granting possession of the property to the Forest Preserve during the pendency of the foreclosure
       action. Royalty Farms, 2017 IL App (1st) 161409. However, these events occurred after the filing of
       the instant lawsuit and are therefore not relevant to the issues on appeal.

                                                      -3-
       On November 29, 2016, plaintiff filed a motion to reconsider and, on February 2, 2017, the
       court granted plaintiff’s motion for reconsideration, finding that there was actually no question
       of fact concerning the amount of damages, and entered judgment in favor of plaintiff against
       defendants in the amount of $8,320,669.43. We affirmed the trial court’s grant of summary
       judgment in McGinley Partners, 2018 IL App (1st) 171317, ¶ 68.
¶ 11       On November 9, 2017, while the appeal from the grant of summary judgment was pending,
       defendants filed a petition to vacate the February 2, 2017, judgment pursuant to section 2-1401
       of the Code. Defendants claimed that a December 21, 2006, “Intercreditor Agreement” was an
       enforceable contract between the parties that barred plaintiff’s action against defendants and
       that this agreement was not disclosed in any way by plaintiff in the instant action. Defendants
       acknowledged that the agreement was signed by defendant Richard Cannon, but claimed that
       he was given the document as part of a 500-page group of loan documents which he was not
       given the chance to review prior to the closing.2 Defendants claimed that the agreement “did
       not specifically come to his attention until October 2017, when he reviewed the closing
       documents during the discovery process of the mortgage foreclosure action” filed by the senior
       lender (the Forest Preserve).
¶ 12       Defendants claimed that the terms of the intercreditor agreement provided that plaintiff
       was precluded from enforcing the promissory note against defendants until the senior loan was
       fully paid. Defendants also claimed that plaintiff would have been required to send a notice to
       the senior lender prior to initiating an action and that there was no evidence that this notice was
       sent. Finally, defendants claimed that even if plaintiff was entitled to file its lawsuit, plaintiff
       was limited to recovering the principal amount of $1.5 million and a maximum of $200,000 in
       interest and attorney fees, not the $8 million that was sought by plaintiff. Defendants claimed
       that plaintiff was fully aware of the existence of the intercreditor agreement prior to filing the
       instant lawsuit and deliberately deceived the trial court by not disclosing its existence.
¶ 13       As relevant to the instant appeal, attached to the section 2-1401 petition was the affidavit of
       defendant Richard Cannon, who averred that he first received a copy of the intercreditor
       agreement at the December 21, 2006, closing on the property, where he was pressured to sign
       the loan documents, despite the lack of the ability to properly review them, or forfeit
       defendants’ nearly $2 million deposit. Cannon averred that, after the appeal concerning the
       senior loan had been decided and the case had been remanded to the trial court, the senior
       lender issued discovery subpoenas to third parties, including a law firm that had been present at
       the closing. On October 24, 2017, the law firm produced copies of the closing documents,
       including the intercreditor agreement. Cannon averred:
                    “Before the October 24, 2017 [law firm] production in the foreclosure case, I was
               generally aware that a document entitled ‘Intercreditor Agreement’ existed, but I had
               forgotten about it since I last saw it (in a hurried way) amongst over 500 pages of
               documents presented to me for signing at the December 21, 2006 closing, almost
               eleven years ago. Before my recent review of it on October 24, 2017, I was not

           2
            The circumstances surrounding the closing of the sale of the property, including the allegations
       that defendants were given less than one day to review 500 pages of loan documents prior to closing
       and were pressured to close or forfeit their nearly $2 million deposit, were the basis of our first
       decision in BMO Harris Bank, 2016 IL App (1st) 151338-U, in which we found that there was a
       question of fact as to whether economic duress invalidated the loan documents defendants signed.

                                                     -4-
              consciously aware that there were provisions in the ‘Intercreditor Agreement’ which
              restricted, and limited, the ability of Horizon Farms [(the initial junior lender)], and its
              assignees, to enforce its separate Note.”
¶ 14      Also attached to the section 2-1401 petition was the intercreditor agreement, which
       provided that it was between Horizon Farms (the Junior Lender), Amcore Bank (the Senior
       Lender), and defendant Royalty Properties (the Borrower). The recitals of the agreement
       provided:
                  “A. Senior Lender is making a $14,500,000 ‘Senior Loan’ to Borrower evidenced
              by a Promissory Note dated December 21, 2006 (‘Senior Note’) and is secured by a
              Mortgage dated December 21, 2006 (the ‘Senior Mortgage’) on the property described
              on the attached Exhibit A (‘Mortgaged Property’).
                  B. Junior Lender is making a $1,500,000 ‘Junior Loan’ to Borrower which will be
              evidenced by Promissory Note dated December 21, 2006 (‘Junior Note’) and is secured
              by a Mortgage dated December 21, 2006 (the ‘Junior Mortgage’) on the Mortgaged
              Property.
                  C. As a condition to the extension of the Senior Loan and the Junior Loan, Senior
              Lender and Junior Lender have required the execution of this Agreement to set forth
              certain rights and obligations of Senior Lender and Junior Lender with respect to the
              Senior Loan and the Junior Loan.”
¶ 15      Section 2.1 of the agreement provided:
              “Junior Lender hereby agrees that unless and until the Senior Loan shall have been
              indefeasibly paid as herein provided, except as otherwise provided under Section 2.2
              below or elsewhere in this Agreement: (a) the Junior Loan is and shall be subordinate,
              to the extent and in the manner hereinafter set forth, to the prior indefeasible payment
              in full of the Senior Loan, (b) no payment shall be made by or on behalf of Borrower
              for or on account of the Junior Loan, (c) Junior Lender shall not take or receive from
              Borrower, directly or indirectly, in cash or other property or by setoff or in any other
              manner, including without limitation, from or by way of collateral, payment of all or
              any of the Junior Loan and (d) Junior Lender shall not initiate any formal actions,
              unless and until it has given Senior Lender ninety (90) days prior written notice. Senior
              Lender and Junior Lender acknowledge that Senior Lender shall be entitled to receive
              the first $14,500,000 of proceeds from any Enforcement Action plus interest and its
              reasonable costs of any Enforcement Action Foreclosure, not to exceed $1,000,000 in
              the aggregate and that Junior Lender shall after such payment to Senior Lender then be
              entitled to receive from any Enforcement Action the amount due on the Junior Note up
              to a maximum of $1,500,000, plus interest and its reasonable costs of any Enforcement
              Action, not to exceed $200,000 in the aggregate.”
       “Enforcement Action” was defined in the agreement as meaning,
              “with respect to any Person, the commencement of the exercise of any remedies against
              such Person including, without limitation, the commencement of any litigation, action,
              suit, claim, remedy or proceeding, including the commencement of any Insolvency
              Proceeding or foreclosure proceeding, the exercise of any power of sale, right of setoff,
              sale by advertisement, the taking of a deed or assignment in lieu of foreclosure, the
              obtaining of a receiver, the exercise of any other remedies available under the Uniform

                                                    -5-
                Commercial Code of any state, or the taking of any other enforcement action against, or
                the taking of possession or control of, any collateral by the secured party of such
                Person.”
¶ 16        Section 4.1 of the agreement set forth representations, warranties, covenants, and
       agreements that Horizon Farms, as the junior lender, owed to Amcore Bank, as the senior
       lender. Similarly, section 4.2 of the agreement set forth representations, warranties, covenants,
       and agreements that Amcore Bank owed to Horizon Farms. The agreement does not set forth
       any representations, warranties, covenants, or agreements between either of the lenders and
       Royalty Properties as the borrower. Additionally, section 5.7 of the agreement provided:
                “No Third Party Beneficiaries. Nothing contained in this Agreement shall be deemed
                to indicate that this Agreement has been entered into for the benefit of any Person other
                than Senior Lender and Junior Lender.”
       The intercreditor agreement was signed by both defendants Richard and Meryl Cannon on
       behalf of defendant Royalty Properties.
¶ 17        On November 15, 2017, plaintiff filed a combined motion to dismiss the section 2-1401
       petition pursuant to section 2-619.1 of the Code (735 ILCS 5/2-619.1 (West 2016)). Plaintiff
       argued that defendants had not alleged a defense that would have precluded the entry of
       judgment against them. Furthermore, plaintiff claimed that “the allegations and attached
       discovery documents confirm that [defendants’] failure to raise the claimed defense in the
       original action is solely the result of [defendants’] own negligence.” Specifically, plaintiff
       claimed that “during discovery, [defendants] themselves produced the Agreement upon which
       their claimed defense is based, yet failed to raise the Agreement as a defense prior to the entry
       of judgment.” (Emphasis omitted.) Plaintiff also argued that it had not engaged in any
       deception and had attached and produced all documents required by it during the course of the
       litigation.
¶ 18        With respect to the issue of whether defendants had raised a meritorious defense, plaintiff
       claimed that none of the defendants had standing to enforce the intercreditor agreement.
       Plaintiff noted that the Cannons were not parties or intended beneficiaries of the agreement.
       Plaintiff also argued that section 2.1 of the agreement did not preclude the judgment and that,
       even if it did, defendant Royalty Properties lacked standing to enforce it because it was not
       made for its benefit. Plaintiff also noted that no proceeds from the judgment had yet been
       sought or collected, making arguments about the priority of payment premature.
¶ 19        Plaintiff also claimed in its motion to dismiss the section 2-1401 petition that defendants
       had notice of the agreement since 2006 and were therefore not diligent in bringing the matter to
       the trial court’s attention in November 2017. Defendants had produced the agreement in their
       discovery responses and claimed that they failed to read it prior to judgment. Plaintiff asserted
       that this was “concrete proof” that defendants’ failure to raise the agreement as a defense in the
       original action is solely the result of their own negligence. Plaintiff noted that 16 months
       passed between defendants’ production of the agreement in October 2015 and the final
       judgment being entered in February 2017. Plaintiff also noted that the agreement was

                                                   -6-
       additionally produced in December 2015 by the law firm representing Horizon Farms in the
       sale, in response to a subpoena issued by defendants.3
¶ 20       Attached to the motion to dismiss was a copy of defendants’ response to plaintiff’s requests
       to produce, dated October 2, 2015, which referenced “documents produced in this matter
       [B]ates stamped 1 through 269,” as well as a copy of the intercreditor agreement, which bore
       Bates stamps of 257 through 269. Also attached to the motion to dismiss was a December 15,
       2015, subpoena for documents issued by defendants to the law firm that represented Horizon
       Farms at the closing, as well as a copy of the intercreditor agreement included as part of the
       document production from the law firm.4
¶ 21       On November 22, 2017, the parties appeared before the trial court for a hearing on the
       section 2-1401 petition, as well as plaintiff’s motion to dismiss the petition.5 At the hearing,
       defendants’ counsel did not dispute that the agreement was produced in defendants’ discovery
       responses and admitted that counsel “didn’t fly spec it,” but argued that he was not required to
       do so “[b]ecause the issues were defined. And *** my due diligence is confined to the issues as
       framed.” After hearing argument from the parties, the trial court found:
                    “I don’t believe there are questions of fact in this matter. I believe that the record is
                clear. The underlying case, when litigated, was litigated. Both sides fought very hard.
                There were motions to dismiss, motions to reconsider, motions for judgment on the
                pleadings, discovery. Extensive litigation took place as part of the underlying case.
                    *** [T]here’s just no question of fact that the defendants had the intercreditor
                agreement. They produced it. Attached to their production was certification by the
                defendants themselves that it was complete and true. Then [the law firm], who
                represented Horizon—I think they were the seller, but it was in the real estate
                deal—they produced it. *** [T]here’s just no question of fact that it was in the
                defendants’ possession for a significant period of time prior to the judgment being
                entered.
                    Therefore, the Court has no alternative other than to find there wasn’t due diligence
                in the underlying case. That’s the standard I’m dealing with, is the 2-1401 standard. So
                I’m going to grant the motion to dismiss.”
¶ 22       The trial court later expanded on the basis for its decision:6
                “I’m not granting the motion to dismiss based on due diligence in bringing the motion.
                It was due diligence in the underlying action.
                    But most importantly, I believed there was no meritorious defense. I believed that
                the intercreditor agreement does not preempt the judgment. And therefore, there would
                be no meritorious defense.
           3
             We note that this law firm is a different law firm than that identified by Richard Cannon in his
       affidavit, in which he averred that he first became aware of the agreement after the other firm’s
       production of the closing documents on October 24, 2017.
           4
             The intercreditor agreement bears a stamp with the law firm’s initials and page numbers 124
       through 136 on the bottom of each page.
           5
             The transcript of the hearing was attached as an exhibit to plaintiff’s response to a motion to
       quash citations to discover assets that was filed by defendants.
           6
             The report of proceedings shows that the parties were called back into court by the trial court,
       which stated that it “thought a reviewing court and yourselves are entitled to a full ruling.”

                                                     -7-
                   I think the [defendants] lack standing to enforce the lien. I think the intercreditor
               agreement is unambiguous. *** [T]hey don’t have standing. And the lien payment
               priority terms of it have not come into play. So *** whether it was timely argued in the
               underlying case or not, I don’t think it provides a meritorious defense to the
               [defendants].”
       The trial court entered an order dismissing defendants’ section 2-1401 petition with prejudice
       “for the reasons stated on the record.” The same order denied defendants’ request for an
       evidentiary hearing “as there is no question of fact.”
¶ 23       Defendants filed a notice of appeal, and this appeal follows.

¶ 24                                              ANALYSIS
¶ 25        On appeal, defendants claim that the trial court erred in finding that they had not alleged a
       meritorious defense or shown due diligence in raising the defense in the underlying
       proceedings. Section 2-1401 “provides a comprehensive statutory procedure by which final
       orders, judgments, and decrees may be vacated ‘after 30 days from the entry thereof.’ ” Smith
       v. Airoom, Inc., 114 Ill. 2d 209, 220 (1986) (quoting Ill. Rev. Stat. 1983, ch. 110, ¶ 2-1401(a)).
       “[A] section 2-1401 petition can present either a factual or legal challenge to a final judgment
       or order. *** [T]he nature of the challenge presented in a section 2-1401 petition is critical
       because it dictates the proper standard of review on appeal.” Warren County Soil & Water
       Conservation District v. Walters, 2015 IL 117783, ¶ 31. Our supreme court has noted that the
       de novo review of a section 2-1401 petition is limited to the “specific niche” of section 2-1401
       petitions, “presenting a purely legal claim challenging a final judgment or order as void.”
       Warren County, 2015 IL 117783, ¶ 49. Additionally, in such a case, the petitioner is not
       required to establish a meritorious defense or satisfy due diligence requirements. Warren
       County, 2015 IL 117783, ¶ 48. “ ‘[T]he allegation [in a section 2-1401 petition] that the
       judgment or order is void substitutes for and negates the need to allege a meritorious defense
       and due diligence.’ ” Warren County, 2015 IL 117783, ¶ 48 (quoting Sarkissian v. Chicago
       Board of Education, 201 Ill. 2d 95, 104 (2002)).
¶ 26        In the case at bar, defendants claim that they have presented such a “purely legal claim”
       such that de novo review is appropriate and they are excused from complying with the other
       requirements of section 2-1401 petitions. We first note that they raise this argument for the first
       time in their reply brief, after “further examination” of our supreme court’s analysis in Warren
       County. It is well settled that a party may not raise an issue for the first time in its reply brief.
       Ill. S. Ct. R. 341(h)(7) (eff. Nov. 1, 2017) (“Points not argued are waived and shall not be
       raised in the reply brief, in oral argument, or on petition for rehearing.”). Moreover, the instant
       case is not the type of case contemplated by the Warren County court, which expressly noted
       that de novo review is limited to petitions “presenting a purely legal claim challenging a final
       judgment or order as void.” Warren County, 2015 IL 117783, ¶ 49. Instead, defendants raise a
       factual challenge to the judgment, namely, that under the factual circumstances of the case,
       plaintiff was not entitled to relief. Where the petition raises a factual challenge, “[t]o be entitled
       to relief under section 2-1401, the petitioner must affirmatively set forth specific factual
       allegations supporting each of the following elements: (1) the existence of a meritorious
       defense or claim; (2) due diligence in presenting this defense or claim to the circuit court in the
       original action; and (3) due diligence in filing the section 2-1401 petition for relief.” Airoom,

                                                     -8-
114 Ill. 2d at 220-21. “The quantum of proof necessary to sustain a section 2-1401 petition is a
       preponderance of the evidence.” Airoom, 114 Ill. 2d at 221.
¶ 27       “Whether a section 2-1401 petition should be granted lies within the sound discretion of
       the circuit court, depending upon the facts and equities presented.” Airoom, 114 Ill. 2d at 221.
       “In reviewing discretionary rulings by the trial court, an appeals court must look to the criteria
       on which the trial court should rely to determine if the trial court abused its discretion.”
       (Internal quotation marks omitted.) Paul v. Gerald Adelman & Associates, Ltd., 223 Ill. 2d 85,
       99 (2006). “ ‘[A] trial court abuses its discretion if it fails to apply the proper criteria when it
       weighs the facts,’ and a reviewing court ‘must consider both the legal adequacy of [the] way
       the trial court reached its result as well as whether the result is within the bounds of reason.’ ”
       Paul, 223 Ill. 2d at 99 (quoting People v. Ortega, 209 Ill. 2d 354, 360 (2004)).
¶ 28       In the case at bar, the trial court found that defendants had failed to demonstrate the
       existence of a meritorious defense and also had failed to show due diligence in presenting that
       defense to the trial court. Since we agree with the trial court that defendants failed to establish
       due diligence in raising their defense, we need only consider that element and need not discuss
       whether defendants had a meritorious defense or were diligent in presenting their petition to
       the court.
¶ 29       As noted, to prevail on a section 2-1401 petition, the petitioner must affirmatively set forth
       specific factual allegations supporting both the petitioner’s “due diligence in presenting [a
       meritorious] defense or claim to the circuit court in the original action; and *** due diligence
       in filing the section 2-1401 petition for relief.” Airoom, 114 Ill. 2d at 220-21. “No bright-line
       rule exists for judging whether a petitioner has acted diligently. Rather, due diligence is judged
       by the reasonableness of the petitioner’s conduct under all of the circumstances.” Paul, 223 Ill.
2d at 99-100.
¶ 30       In the case at bar, we cannot find that the trial court abused its discretion in finding that
       defendants had failed to establish due diligence in raising their defense. On appeal, defendants
       focus heavily on plaintiff’s alleged failure to attach the intercreditor agreement to its pleadings
       or to produce the agreement in discovery. However, they gloss over the fact that defendants
       had this document in their possession since the closing. First, defendant Richard Cannon
       admitted to signing the document at the closing in December 2006. Furthermore, even leaving
       aside this fact (given the arguments concerning the circumstances under which the agreement
       was signed), defendants produced the agreement in their October 2, 2015, document
       production, meaning that they certainly could be charged with knowledge of the document by
       that point at the latest. Additionally, the law firm that represented Horizon Farms at the closing
       also turned over the intercreditor agreement in response to a December 15, 2015, subpoena by
       defendants. Thus, all of the evidence in the record shows that defendants had the agreement in
       their possession and should have known of its existence (even if Cannon had “forgotten” that
       he had originally signed it in 2006) by the end of 2015 at the latest. Since summary judgment
       was not granted until August 31, 2016, eight months after the document was produced by the
       law firm, we cannot find that the trial court abused its discretion in finding that the due
       diligence requirement had not been satisfied.
¶ 31       Defendants’ only response to the arguments concerning their diligence is to argue that the
       due diligence requirement should be relaxed in the instant case. Our supreme court has noted
       that “[o]ne of the guiding principles *** in the administration of section 2-1401 relief is that
       the petition invokes the equitable powers of the circuit court, which should prevent

                                                    -9-
       enforcement of a default judgment when it would be unfair, unjust, or unconscionable.”
       Airoom, 114 Ill. 2d at 225. “Because a section 2-1401 petition is addressed to equitable powers,
       courts have not considered themselves strictly bound by precedent, and where justice and good
       conscience may require it[,] a default judgment may be vacated even though the requirement of
       due diligence has not been satisfied.”7 Airoom, 114 Ill. 2d at 225.
¶ 32       “Relaxation of the due diligence requirement thereby entitling a defendant to a motion to
       vacate a judgment is justified only under extraordinary circumstances.” Ameritech Publishing
       of Illinois, Inc. v. Hadyeh, 362 Ill. App. 3d 56, 60 (2005) (citing All-Steel Employees Credit
       Union v. Singh, 345 Ill. App. 3d 1005, 1008 (2004)); Gonzalez v. Profile Sanding Equipment,
       Inc., 333 Ill. App. 3d 680, 686 (2002). “Although it is true that some decisions have relaxed or
       even excused the due diligence requirements, courts have only done so in the extraordinary
       circumstances where it is necessary to prevent an unjust entry of default judgment [citation], or
       where there is unconscionable conduct by the opposing party that would require that the due
       diligence requirement be relaxed [citation].” (Emphasis in original.) Gonzalez, 333 Ill. App. 3d
       at 689. “[I]n each case there was evidence of fraudulent conduct by the plaintiff in procuring or
       concealing the judgment, or other unusual circumstances which made enforcement of the
       judgment unjust.” European Tanspa, Inc. v. Shrader, 242 Ill. App. 3d 103, 108 (1993). Our
       supreme court has cautioned that, “[w]hile a liberal construction must be given to the petition
       to prevent an unjust result [citation], ‘the ambit of section [2-1401] relief must not be
       overbroadened to such an extent that principles of equity and an ordered concept of justice are
       diluted’ [citation].” Airoom, 114 Ill. 2d at 227 (quoting Lammert v. Lammert Industries, Inc.,
       46 Ill. App. 3d 667, 676-77 (1977)).
¶ 33       In the case at bar, we cannot find that the facts alleged justify the relaxation of the due
       diligence requirement. Defendants make a number of serious allegations against plaintiff,
       including accusing plaintiff of fraud, perjury, filing false affidavits, and deliberately
       concealing the existence of the intercreditor agreement from the trial court. However, none of
       these arguments are persuasive. For instance, defendants claim that the intercreditor agreement
       was a “loan document” that should have been attached to the complaint. However, “loan
       documents” as defined by the note consist of “This Note, the Mortgage and any and all other
       documents now or hereafter executed by Maker and/or others in favor of Holder, which wholly
       or partially secure or guarantee payment of this Note or pertain to indebtedness evidenced by
       this Note, and any modification, renewal or extension thereof.” An agreement between the
       lenders governing the priority of the loans would not be encompassed by this definition.
       Similarly, defendants claim that plaintiff failed to produce the agreement in response to
       discovery requests that sought documents evidencing “assets” of Horizon Farms and any
       “interest” in the note. Again, an agreement discussing loan priority would not fall within these
       requests. Finally, defendants claim that plaintiff submitted false affidavits because the
       calculation of interest included in the affidavits did not take into account a cap that defendants
       claim was imposed by the intercreditor agreement. However, the mere fact that defendants
       have a different interpretation of the meaning of the document than plaintiff does not mean that
       an affidavit filed in support of plaintiff’s interpretation is “false.”

           7
            We note that the instant case does not involve a default judgment but has been heavily litigated
       by the parties throughout the proceedings.

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¶ 34        “Due diligence requires the section 2-1401 petitioner to have a reasonable excuse for
       failing to act within the appropriate time.” Airoom, 114 Ill. 2d at 222. “Specifically, the
       petitioner must show that his failure to defend against the lawsuit was the result of an
       excusable mistake and that under the circumstances he acted reasonably, and not negligently,
       when he failed to initially resist the judgment.” Airoom, 114 Ill. 2d at 222. “ ‘Relief under
       section [2-1401] is available only to those who diligently pursue their legal defenses and
       remedies in court, not to those who disregard these procedures on the gamble that better results
       can be obtained through other procedures or at a cheaper cost.’ ” Airoom, 114 Ill. 2d at 224
       (quoting Abbell v. Munfield, 76 Ill. App. 3d 384, 388 (1979)). As our supreme court found in
       Airoom, in the case at bar, “[w]hen all of the circumstances of this case are viewed in their
       entirety, there is no doubt that [defendants’] dilemma is the result of [their] own negligence
       and indifference to or disregard of the circuit court’s process.” Airoom, 114 Ill. 2d at 224-25.
       Accordingly, we cannot find that the trial court erred in finding that the due diligence
       requirement had not been satisfied.
¶ 35        Since defendants have failed to establish one of the requirements for vacating the
       judgment, we have no need to consider whether they also failed to establish that they had a
       meritorious defense to the underlying action or whether they established due diligence in
       presenting their petition to the trial court.

¶ 36                                      CONCLUSION
¶ 37       The trial court did not abuse its discretion in finding that defendants had failed to
       demonstrate due diligence in presenting their defense in the underlying lawsuit, where
       defendants had actual knowledge of the intercreditor agreement no later than eight months
       prior to the entry of summary judgment.

¶ 38      Affirmed.

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