Court Opinion

ID: 3142985
Source: CourtListenerOpinion
Date Created: 2015-10-22 17:57:42.530704+00
Date Added: 2024-06-11T15:05:45.435797
License: Public Domain

ILLINOIS OFFICIAL REPORTS
                                        Appellate Court

                 OneWest Bank, FSB v. Hawthorne, 2013 IL App (5th) 110475

Appellate Court            ONEWEST BANK, FSB, Plaintiff-Appellee, v. GERALD
Caption                    HAWTHORNE et al., Defendants, and KIM DOWNS, Defendant-
                           Appellant.

District & No.             Fifth District
                           Docket No. 5-11-0475

Rule 23 Order filed        February 4, 2013
Rehearing denied           March 8, 2013
Motion to publish
granted                    March 12, 2013
Opinion filed              March 12, 2013

Held                       The denial of defendant’s petition filed pursuant to section 2-1401 of the
(Note: This syllabus       Code of Civil Procedure seeking relief from a judgment of foreclosure
constitutes no part of     and sale and an order approving the sale of her foreclosed residence was
the opinion of the court   affirmed on the grounds that defendant was not diligent in raising the
but has been prepared      defenses to the foreclosure action that she alleged, she presented no
by the Reporter of         excuses for her tardiness, her allegations were not based on “newly
Decisions for the          discovered” evidence, and she did not present any allegations supporting
convenience of the         the existence of a meritorious defense regarding the mortgage.
reader.)

Decision Under             Appeal from the Circuit Court of St. Clair County, No.10-CH-491; the
Review                     Hon. Stephen P. McGlynn, Judge, presiding.

Judgment                   Affirmed.
Counsel on                 Kim Downs, of Swansea, for appellant.
Appeal
                           Louis J. Manetti, Jr., of Codilis & Associates, P.C., of Burr Ridge, for
                           appellee.

Panel                      JUSTICE WELCH delivered the judgment of the court, with opinion.
                           Justices Goldenhersh and Chapman concurred in the judgment and
                           opinion.

                                            OPINION

¶1          Kim Downs, the appellant, appeals from the denial by the circuit court of St. Clair
        County of her petition for relief from judgment, filed pursuant to section 2-1401 of the Code
        of Civil Procedure (the Code) (735 ILCS 5/2-1401 (West 2010)). The appellant sought relief
        from a judgment of foreclosure and sale, and the order approving sale of the foreclosed
        property. For reasons which follow, we affirm.
¶2          On April 5, 2010, OneWest Bank, FSB (the Bank), filed its complaint to foreclose
        mortgage on the appellant’s residence. There is no dispute that the appellant was a party to
        the mortgage and a co-owner of the property. Attempts at personal service on the appellant
        were unsuccessful and she was properly served by publication. The appellant failed to answer
        or otherwise respond to the complaint.
¶3          On June 21, 2010, the Bank filed a motion for entry of an order of default against the
        appellant and prove-up was made. On June 24, 2010, an order of default was entered against
        the appellant and a judgment for foreclosure and sale of the property was entered. Because
        this foreclosure judgment contained a finding that it was final and appealable and no just
        reason existed for delaying its enforcement or appeal, the judgment constituted a final and
        appealable order. See In re Marriage of Verdung, 126 Ill. 2d 542, 555 (1989).
¶4          On October 22, 2010, the appellant filed a pro se motion to vacate the default judgment
        against her, but the motion was not set for hearing. On November 10, 2010, the appellant
        filed a second motion to vacate the default judgment and a notice of hearing on the motion.
¶5          Before the motions to vacate the default judgment could be heard, on February 16, 2011,
        attorney Charles H. Stegmeyer entered an appearance on behalf of the appellant. The
        appellant’s pro se motion to vacate the default judgment came on for hearing one day later,
        on February 17, 2011, but neither she nor her attorney appeared. Accordingly, the motion
        was denied “with prejudice.” The court’s order stated erroneously that no counsel had
        entered an appearance on the appellant’s behalf.
¶6          On February 28, 2011, the appellant, through attorney Stegmeyer, filed a motion to

                                                 -2-
       reconsider the order denying her motion to vacate the default judgment. The motion pointed
       out that the appellant’s counsel had entered his appearance and filed a motion for
       continuance the day before the motion to vacate was heard, and asserted that the appellant
       had a meritorious defense.
¶7          After a hearing held April 21, 2011, the appellant’s motion to reconsider the order
       denying the motion to vacate the default judgment was denied. The court found that the
       appellant had failed to present a meritorious defense.
¶8          On April 25, 2011, the property was sold at public auction and purchased by the Bank
       for the amount of the debt. On May 6, 2011, the Bank filed its motion for an order approving
       the report of sale and distribution. On May 19, 2011, such an order was entered.
¶9          On May 25, 2011, the appellant, through attorney Stegmeyer, filed a motion to reconsider
       the order approving the sale. The motion asserts simply that “[t]here exists a Consent Order
       involving Onewest Bank, FSB dated April 13, 2011.” The consent order is attached as an
       exhibit to the motion to reconsider.
¶ 10        The consent order, effective April 13, 2011, is between the Bank and the Office of Thrift
       Supervision for “unsafe and unsound banking practices relating to mortgage servicing and
       the initiation and handling of foreclosure proceedings.” Among other things, the order
       requires the Bank to retain an independent consultant to conduct an independent review of
       residential foreclosure actions or proceedings, including foreclosures that were in process or
       completed, that have been pending at any time from January 1, 2009, to December 31, 2010,
       as well as residential foreclosure sales that occurred during this time period. Among the
       purposes of this review are to determine whether at the time the foreclosure was initiated, the
       foreclosing party had properly documented ownership of the promissory note and mortgage,
       and to determine whether a foreclosure sale occurred when an application for loan
       modification was under consideration, when the loan was performing in accordance with a
       trial or permanent loan modification, or when the loan had not been in default for a sufficient
       period of time to authorize foreclosure.
¶ 11        On June 23, 2011, attorney Rusty K. Reinoehl entered an appearance as cocounsel for
       the appellant for the purpose of filing and proceeding with an amended motion to reconsider
       the order approving the sale and a motion to reconsider the order denying the appellant’s
       motion to vacate the default judgment. On that same date, attorney Reinoehl filed an
       amended motion to reconsider or in the alternative for a stay of execution.
¶ 12        The amended motion was based on the consent order and alleged that, because it only
       became effective on April 13, 2011, none of the required review had occurred. The motion
       alleges that the Bank was known to have employed “robo-signers” who falsely swore that
       they had reviewed mortgage documents in foreclosure actions and that the assignment of the
       mortgage to the Bank may have been falsely signed by such a robo-signer. The motion
       asserts that there is a “strong likelihood” that the assignment purporting to transfer ownership
       of the note and mortgage in the case at bar was robo-signed and falsely attested to. If this is
       true, the motion asserts, the Bank had no standing to bring the foreclosure action in the first
       place, and may have committed fraud upon the court. Furthermore, at the time the appellant’s
       mortgage was assigned to the Bank, a loan modification agreement was in effect which the

                                                 -3-
       Bank failed to honor. Accordingly, the order approving the sale should be vacated and the
       appellant should be given time to engage in further investigation and discovery to determine
       if fraud or other improper conduct occurred in the course of the foreclosure proceedings.
¶ 13        The Bank filed a response to the appellant’s amended motion to reconsider, and on July
       21, 2011, the appellant’s motion was denied. The order contained a finding that it was final
       and appealable pursuant to Illinois Supreme Court Rule 304 (eff. Feb. 26, 2010).
¶ 14        On September 16, 2011, acting pro se, the appellant filed a “Petition to Reopen/Vacate
       Judgment Pursuant to 735 ILCS 5/2-1401 and or Motion to Set Aside for Misrepresentation.”
       This petition raises exactly the same issues as were raised in the amended motion to
       reconsider the order approving the sale.
¶ 15        Hearing was held on the section 2-1401 petition on October 27, 2011. The appellant
       appeared pro se. The Bank’s counsel argued that the appellant had shown neither due
       diligence in bringing her section 2-1401 petition nor the existence of a meritorious defense
       that was likely to succeed. At the conclusion of the hearing the court denied the appellant’s
       section 2-1401 petition, finding that the appellant had not shown the existence of a
       meritorious defense that was likely to succeed. The appellant filed her notice of appeal on
       October 28, 2011.
¶ 16        Preliminarily we must address a question raised by the Bank regarding our jurisdiction
       to hear this appeal. The Bank argues that this court is without jurisdiction to hear this appeal
       because the appellant’s section 2-1401 petition, the denial of which is the subject of this
       appeal, was a second or successive section 2-1401 petition, which is not permitted. The Bank
       argues that the amended motion to reconsider filed by attorney Reinoehl on June 23, 2011,
       was untimely because it was filed more than 30 days after the order approving the sale.
       Because postjudgment motions filed more than 30 days after the judgment must be treated
       as section 2-1401 petitions (see, e.g., Protein Partners, LLP v. Lincoln Provision, Inc., 407
       Ill. App. 3d 709, 715 (2010)), the amended motion to reconsider had to have been treated as
       a section 2-1401 petition. Accordingly, the appellant’s pro se section 2-1401 petition filed
       September 16, 2011, was a second or successive section 2-1401 petition.
¶ 17        We reject the Bank’s argument. The amended motion to reconsider was an amendment
       to the motion to reconsider filed May 25, 2011, just six days after entry of the order
       approving the sale. As such, it was not untimely.
¶ 18        We also reject the Bank’s argument that we are without jurisdiction over this appeal
       because the appellant’s section 2-1401 petition, having been filed pro se while she was
       represented by counsel Stegmeyer and Reinoehl, was a nullity. While it is true that the
       appellant’s counsel did not formally withdraw from representation, the final order was
       entered in the case with the court’s denial of the amended motion to reconsider, thus ending
       counsel’s representation of the appellant in the foreclosure action. There is no indication that
       counsel undertook to also represent the appellant in her section 2-1401 proceeding. While
       a section 2-1401 petition is filed in the same proceeding in which the order or judgment was
       entered, it is not a continuation thereof. 735 ILCS 5/2-1401(b) (West 2010). Accordingly,
       we conclude we have jurisdiction over this appeal.
¶ 19        We turn now to the merits. Where, as in this case, the circuit court either enters judgment

                                                 -4-
       on the pleadings or dismisses the section 2-1401 petition, our review is de novo. People v.
       Vincent, 226 Ill. 2d 1, 18 (2007).
¶ 20        Section 2-1401 of the Code provides a mechanism for review in the circuit court of the
       circuit court’s order or judgment when the time for filing posttrial motions or a notice of
       appeal has expired. It creates an exception to the general rule that a court cannot review its
       own judgment after the expiration of 30 days from the date of entry. Malkin v. Malkin, 301
       Ill. App. 3d 303, 310 (1998).
¶ 21        A party seeking vacatur of an order or judgment under section 2-1401 must show: (1) the
       existence of a meritorious defense or claim, that is, facts that would have prevented the
       rendition of the original judgment if they had been of record when the judgment was entered,
       (2) due diligence in pursuing that claim or defense before judgment, that is, that the failure
       to discover and present those facts before the judgment was not the fault of the petitioner,
       and (3) diligence in pursuing the claim or defense after judgment. Malkin, 301 Ill. App. 3d
       at 310. The petitioner must affirmatively set forth specific factual allegations supporting each
       of the above three elements. Smith v. Airoom, Inc., 114 Ill. 2d 209, 220-21 (1986). We affirm
       the circuit court’s order denying the appellant’s petition because we find that she has failed
       to set forth specific factual allegations supporting the first two of the required elements. She
       has demonstrated neither due diligence in pursuing her defense prior to judgment nor the
       existence of a meritorious defense.
¶ 22        With respect to the element of diligence in pursuing the claim or defense prior to
       judgment, it has been stated that section 2-1401 is not intended to give a litigant a new
       opportunity to do that which should have been done in an earlier proceeding, nor is the
       provision intended to relieve a litigant of the consequences of her mistake or negligence.
       Malkin, 301 Ill. App. 3d at 310-11. Due diligence requires the section 2-1401 petitioner to
       have a reasonable excuse for failing to act within the appropriate time. Smith, 114 Ill. 2d at
       222. It must appear that through no fault or negligence of the petitioner, the existence of a
       valid defense was not made to appear to the trial court. Smith, 114 Ill. 2d at 222. Specifically,
       the petitioner must show that her failure to defend against the lawsuit was the result of an
       excusable mistake and that under the circumstances she acted reasonably, and not
       negligently, when she failed to initially resist the judgment. Smith, 114 Ill. 2d at 222.
¶ 23        We note that the appellant has offered no excuse for her failure to answer or otherwise
       respond to the complaint, resulting in the entry of a default judgment against her, nor has she
       offered any explanation for her failure to raise the now-claimed defense prior to the entry of
       the foreclosure judgment. The defense she now seeks to raise was available to the appellant
       at the time of entry of the foreclosure judgment had she only bothered to appear and contest
       the foreclosure. To set aside a judgment based on newly discovered evidence, the evidence
       must be such as could not reasonably have been discovered at the time of or prior to the entry
       of judgment. Malkin, 301 Ill. App. 3d at 311.
¶ 24        The gist of the petitioner’s defense is that certain defects were present in the mortgage
       documents which deprived the Bank of standing to bring the foreclosure action. These
       defects, if any, did not arise by virtue of the consent decree entered April 13, 2011, but
       existed in the mortgage documents at the time the foreclosure action was commenced. Had

                                                 -5-
       the petitioner not defaulted, but appeared in the foreclosure action in the beginning, she could
       have put the Bank to its proof and raised the same issues which are pointed to by the consent
       decree.
¶ 25       The petitioner has presented no excuse, reasonable or otherwise, as to why she did not
       appear and challenge the Bank’s standing to foreclose on her home. Accordingly, we find
       that she has failed to demonstrate due diligence in pursuing that defense prior to judgment.
       The petitioner has failed to demonstrate that her failure to discover and present her defense
       before the judgment was entered was not a result of her own mistake or negligence.
¶ 26       Nor has the petitioner pleaded facts which show the existence of a meritorious defense
       to the foreclosure action. She has failed to affirmatively set forth specific factual allegations
       supporting her claim that, due to defective documentation, the Bank had no standing to bring
       the foreclosure action. Her section 2-1401 petition raises only the possibility that there may
       be defects in the documentation relating to mortgages other than hers. She pleads no facts
       which demonstrate that the documentation relating to her mortgage was defective in any way.
       To prove the existence of a meritorious defense, a petitioner must allege facts that would
       have prevented entry of the judgment if they had been known by the trial court. Physicians
       Insurance Exchange v. Jennings, 316 Ill. App. 3d 443, 457 (2000).
¶ 27       The appellant had ample opportunity to raise any defenses to the foreclosure action prior
       to entry of judgment. She has presented no reasonable excuse for her failure to do so. The
       defense which she now wishes to raise is not based on “newly discovered” evidence, despite
       the entry of the consent decree in April 2011. The defense which the appellant now wishes
       to raise is based on the validity of her mortgage documentation, the underlying facts of which
       were available prior to judgment. Despite this, neither she nor her counsel were able prior
       to entry of judgment or after judgment to discover or present any specific factual allegations
       supporting the existence of a meritorious defense relating to her mortgage. The circuit court
       did not err in denying the appellant’s section 2-1401 petition.
¶ 28       For the foregoing reasons, we affirm the judgment of the circuit court of St. Clair County.

¶ 29       Affirmed.

                                                 -6-