Court Opinion

ID: 4251545
Source: CourtListenerOpinion
Date Created: 2018-03-02 21:11:28.811298+00
Date Added: 2024-06-11T14:43:38.435501
License: Public Domain

Digitally signed by
                                                                              Reporter of Decisions
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                              Illinois Official Reports                       accuracy and
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                                                                              document
                                    Appellate Court                           Date: 2018.02.20
                                                                              15:10:16 -06'00'

           Royalty Farms, LLC v. Forest Preserve District, 2017 IL App (1st) 161409

Appellate Court         ROYALTY FARMS, LLC, Plaintiff and Counterdefendant-
Caption                 Appellant, v. THE FOREST PRESERVE DISTRICT OF COOK
                        COUNTY, ILLINOIS, Defendant and Counterplaintiff-Appellee.

District & No.          First District, Second Division
                        Docket Nos. 1-16-1409, 1-17-0377 cons.

Filed                   December 5, 2017

Decision Under          Appeal from the Circuit Court of Cook County, No. 14-MR-03394;
Review                  the Hon. Martin C. Kelley, Judge, presiding.

                        Reversed and remanded.
Judgment

Counsel on              James M. Messineo & Associates, P.C., of Inverness (James M.
Appeal                  Messineo, of counsel), and Norman J. Lerum, P.C., of Chicago
                        (Norman J. Lerum and Catherine E. Lerum, of counsel), for appellant.

                        Holland & Knight LLP, of Chicago (Christopher W. Carmichael,
                        Maureen Browne Schoaf, and Darren H. Goodson, of counsel), for
                        appellee.

Panel                   PRESIDING JUSTICE NEVILLE delivered the judgment of the
                        court, with opinion.
                        Justices Pucinski and Hyman concurred in the judgment and opinion.
                                              OPINION

¶1       We must determine what happens to a judgment for eviction when ownership of the
     property awaits determination in a separate lawsuit for mortgage foreclosure. The circuit
     court granted the Forest Preserve District of Cook County, Illinois’s (FPD), motion for
     summary judgment on a complaint to foreclose a mortgage on land Royalty Properties
     owned, land Royalty Properties purportedly leased to Royalty Farms, LLC (Royalty Farms).
     After FPD made the highest bid at a foreclosure sale of the property, Royalty Farms sued
     FPD for breach of its duties under the purported lease from Royalty Properties. FPD denied
     that Royalty Farms had a valid lease and counterclaimed for eviction. The circuit court
     awarded FPD a judgment evicting Royalty Farms. But in the separate lawsuit for foreclosure
     of the mortgage, the appellate court reversed the foreclosure judgment, finding that material
     factual issues required a trial. The circuit court, in the litigation over the lease, awarded
     possession of the property to FPD, despite the reversal of the foreclosure judgment. Royalty
     Farms now appeals.
¶2       We hold that the reversal of the foreclosure judgment voids the sale of the property to
     FPD. If the circuit court, following trial, again awards a foreclosure judgment in favor of
     FPD, the court will need to hold a new foreclosure sale, and the purchaser at that sale will
     acquire the property owner’s rights and duties under the lease with Royalty Farms (if Royalty
     Farms has a valid lease). Accordingly, we reverse the order awarding possession of the
     property to FPD and remand and stay the eviction proceedings pending resolution of the
     foreclosure action.

¶3                                         BACKGROUND
¶4       In 2004, Meryl Cannon and David Warner formed Royalty Farms. In December 2006,
     Meryl and Richard Cannon created Royalty Properties and signed documents presented to
     them by Amcore Bank (Amcore). Amcore labeled one of the documents a “Mortgage,” and
     the Cannons signed that document. Amcore loaned Royalty Properties $14.5 million, which
     Royalty Properties used to purchase a 400-acre horse farm in Barrington Hills, Illinois. In
     January 2007, Meryl, acting on behalf of both Royalty Properties and Royalty Farms, signed
     in two different capacities a document titled, “Agreement for Farm Lease,” purportedly
     leasing to Royalty Farms part of the horse farm.
¶5       On June 8, 2009, Amcore filed a complaint to foreclose the purported mortgage on the
     horse farm. Amcore did not list Royalty Farms as a defendant in the foreclosure action.
     Royalty Properties and the Cannons filed an answer with affirmative defenses and a
     counterclaim.
¶6       In April 2010, the federal Office of the Comptroller of the Currency determined that
     Amcore’s “unsafe or unsound practices or conditions [were] likely to cause insolvency or
     substantial dissipation of assets or earnings.” The comptroller appointed the Federal Deposit
     Insurance Corporation (FDIC) as receiver for Amcore’s assets. As receiver, the FDIC sold
     substantially all of Amcore’s assets, including its interest in the loan to the Cannon parties, to
     BMO Harris Bank (BMO Harris).
¶7       In 2013, BMO Harris sold to FPD its interest in all the documents it obtained from
     Amcore related to Royalty Properties and the horse farm. The circuit court granted FPD

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       leave to substitute as plaintiff in the mortgage foreclosure action Amcore filed. In an order
       dated August 30, 2013, the circuit court granted FPD’s motion for summary judgment and
       ordered a foreclosure of the purported mortgage and a sale of the farm. FPD, the highest
       bidder at the foreclosure sale, bid $14.5 million for the farm. The circuit court approved the
       sale. After further proceedings on the counterclaims, Royalty Properties filed a timely notice
       of appeal on May 8, 2015.
¶8         In September 2014, after the circuit court approved the foreclosure sale but before final
       judgment on the counterclaims, Royalty Farms filed a complaint against FPD, alleging that
       FPD breached the duties it assumed as a landlord when it bought the farm. FPD filed an
       answer and counterclaim. In count I of the counterclaim, FPD sought a judgment declaring
       the purported lease invalid. In count II, FPD sought a judgment declaring that the purported
       lease terminated on December 31, 2014. FPD sought to enforce the lease’s indemnity
       provisions in count IV and requested money damages. In count III, the only count at issue in
       this appeal, FPD alleged (1) the purported lease had no legal effect, (2) Royalty Farms had
       breached the terms of the purported lease, and (3) FPD had effectively terminated the lease
       by notifying Royalty Farms of the termination. FPD prayed for an order evicting Royalty
       Farms from the horse farm.
¶9         On June 24, 2015, the circuit court entered a trial call order, setting the case for a status
       hearing. The order states, “Plaintiffs to vacate premises by 12/31/15.” At a hearing held on
       July 8, 2015, Royalty Farms’ attorney said, “We’ve signed a termination of the lease. ***
       We’re leaving in December.”
¶ 10       In January 2016, FPD filed a motion to hold Royalty Farms in contempt for failing to
       vacate the horse farm by December 31, 2015. The circuit court entered an order, dated March
       4, 2016, in which the court noted that Royalty Farms did not dispute FPD’s claim that it
       owned the horse farm. The court granted FPD possession of the property, effective December
       31, 2015, but added that it would “stay enforcement of said Order until May 2, 2016.” The
       court denied the motion for a finding of contempt.
¶ 11       Royalty Farms filed a motion to reconsider the March 4 order and asked the court to find
       no just reason to delay enforcement or appeal if it denied the motion for reconsideration. The
       circuit court, in an order dated April 25, 2016, denied the motion for reconsideration and
       repeated that Royalty Farms must vacate the premises, “with the exception of the two
       pregnant horses which can be confined to a barn until June 1, 2016.”
¶ 12       Royalty Farms filed a motion for clarification of the April 25 order, asking that the court
       expressly permit Royalty Farms personnel to retain access to the farm to tend to the pregnant
       horses and to add a finding of enforceability and appealability. On April 29, 2016, the circuit
       court granted the motion for clarification and ordered that Royalty Farm personnel should
       retain access to the horse farm to care for the pregnant horses. The court added, “there is no
       just reason to delay the appeal of this court’s order of March 4, 2016.”
¶ 13       On May 17, 2016, the appellate court entered its order deciding the appeal in the
       foreclosure suit. The appellate court reversed the circuit court’s order granting summary
       judgment in favor of FPD on the complaint for foreclosure. The appellate court held that
       Royalty Properties and the other defendants adequately pled facts that could support a
       finding that Amcore subjected the defendants to economic duress that rendered the loan
       documents, including the mortgage, void. BMO Harris Bank, N.A. v. Royalty Properties, LLC,
       2016 IL App (1st) 151338-U, ¶ 48.

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¶ 14       The day after the appellate court issued the order, Royalty Farms moved to vacate the
       order for possession, arguing that FPD had not proven ownership of the horse farm. FPD
       acquired a deed in a foreclosure sale held as a direct consequence of the foreclosure
       judgment the appellate court reversed.
¶ 15       At the hearing on the motion to vacate, the circuit court said,
               “I think the proper thing at this point to do is stay the proceedings and wait to see
               what happens in the trial in the Chancery Division.
                   So I’m maintaining the status quo. I’m not vacating my orders.”
¶ 16       The circuit court clarified that its order for Royalty Farms to vacate the property by June
       1, 2016, remained in effect. In the order, dated May 19, 2016, the court expressly found no
       reason to delay enforcement or appeal.
¶ 17       On May 24, 2016, Royalty Farms filed a notice of appeal, listing the orders of March 4,
       2016, April 25, 2016, and May 19, 2016, as the orders appealed. Royalty Farms then filed a
       motion to stay the orders pending the decision on the appeal. The circuit court denied the
       motion and entered another order for possession on December 28, 2016, but the court added,
       “the entire case shall be stayed pending the appeals in this matter including but not limited to
       the order of possession entered on Dec. 28, 2016.”
¶ 18       FPD filed a motion in the appellate court to dismiss the appeal for lack of jurisdiction,
       arguing that the orders of March 4, April 25, and May 19 did not finally dispose of any
       separate claim. The appellate court ordered the parties to address the issue in their briefs.

¶ 19                                            ANALYSIS
¶ 20                                             Jurisdiction
¶ 21       Royalty Farms contends that Illinois Supreme Court Rule 304(a) (eff. Mar. 8, 2016) gives
       this court jurisdiction to consider the appeal. “Rule 304(a) provides that if multiple claims for
       relief are involved in an action, an appeal may be taken from a final judgment as to one or
       more but fewer than all of the claims if the trial court has made an explicit written finding
       that no just reason exists for delaying either enforcement or appeal. [Citation.] Rule 304(a)
       does not allow for a trial court to confer appellate jurisdiction merely by using the Rule
       304(a) language that ‘there is no just reason for delaying enforcement or appeal.’ ” In re
       Estate of Stark, 374 Ill. App. 3d 516, 522 (2007). The circuit court here added Rule 304(a)
       language to the orders of March 4, 2016, and May 19, 2016. The parties agree that those
       orders did not finally resolve any of Royalty Farms’ claims, and they did not resolve the
       claims raised in counts I, II, and IV of FPD’s counterclaim. The parties dispute only the issue
       of whether the orders finally resolved count III of the counterclaim, the count in which FPD
       prayed for eviction of Royalty Farms from the horse farm.
¶ 22       The circuit court granted FPD the relief it sought in count III when it entered the order
       dated June 24, 2015, which said, “Plaintiffs to vacate premises by 12/31/15.” We find that
       the order finally disposed of a separate claim. See Great American Federal Savings & Loan
       Ass’n v. Grivas, 137 Ill. App. 3d 267 (1985) (order for eviction final and appealable under
       Rule 304(a)); County of Cook v. Schroeder, 55 Ill. App. 2d 449, 459-60 (1965) (although part
       of appeal dismissed for want of jurisdiction, court had jurisdiction to review separate claim
       for possession of property). Rule 304(a) provides: “any judgment that adjudicates fewer than
       all the claims or the rights and liabilities of fewer than all the parties *** is subject to

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       revision at any time before the entry of a judgment adjudicating all the claims, rights, and
       liabilities of all the parties.” Ill. S. Ct. R. 304(a) (eff. Mar. 8, 2016). The circuit court did not
       add Rule 304(a) language to the order of June 24, 2015. Therefore, the circuit court retained
       jurisdiction to modify the order of June 24, 2015, despite its finality. See Washington Mutual
       Bank, F.A. v. Archer Bank, 385 Ill. App. 3d 427, 432 (2008). The circuit court modified the
       June 24, 2015, order in the order dated May 19, 2016, as that order permitted Royalty Farms
       to remain on the horse farm until June 1, 2016. See In re Meko Holding Inc. v. Joy, 486
       N.Y.S.2d 201, 203-04 (App. Div. 1985) (a change of the effective date of an order constitutes
       a modification of the order). We agree with the circuit court’s implicit holding that the
       eviction orders of March 4, 2016, and May 19, 2016, finally disposed of a separate claim in
       this case. See Com-Co Insurance Agency, Inc. v. Service Insurance Agency, Inc., 321 Ill. App.
       3d 816, 819 (2001) (by adding Rule 304(a) language to an order, court implicitly finds that
       order final as to a separate part of the case). We find that we have jurisdiction to review the
       modified final orders for eviction that the circuit court entered on March 4, 2016, and May
       19, 2016.

¶ 23                                             Eviction
¶ 24       The circuit court’s order of May 19, 2016, evicts Royalty Farms from the horse farm
       based on FPD’s termination of Royalty Farms’ lease. If FPD had any rights regarding the
       lease, it acquired the rights by purchasing the horse farm at the foreclosure sale, which the
       sheriff held pursuant to a judgment of foreclosure the circuit court entered in BMO Harris
       Bank, N.A. v. Royalty Properties, LLC, No. 09 CH 18291 (Cir. Ct. Cook Co.) (hereinafter
       BMO Harris v. Royalty Properties). BMO Harris, 2016 IL App (1st) 151338-U, ¶¶ 20-21.
       The appellate court in BMO Harris held that the circuit court erred when it entered the
       judgment of foreclosure, so the court reversed the judgment of foreclosure and remanded for
       further proceedings on the complaint. BMO Harris, 2016 IL App (1st) 151338-U, ¶ 71. The
       circuit court here recognized correctly that, because FPD derived its interest in the horse farm
       and the lease from the judicial sale held in the course of BMO Harris v. Royalty Properties,
       the circuit court needed to stay all proceedings in this case pending a resolution of BMO
       Harris v. Royalty Properties, which would determine whether FPD has any interest in the
       horse farm and the lease. See Bjorklund v. Bjorklund Trucking, Inc., 753 N.W.2d 312 (Minn.
       Ct. App. 2008) (trial court abused its discretion when it denied motion to stay eviction
       proceedings pending resolution of separate lawsuit that would determine issue of ownership
       of property). The circuit court decided to protect the status quo by leaving FPD in sole
       possession of the horse farm during the proceedings in BMO Harris v. Royalty Properties.
¶ 25       The circuit court based its decision on Royalty Farms’ admission that it received notice of
       termination of the lease from FPD and Royalty Farms’ statement in court in July 2015 that it
       would vacate the premises in December 2015. FPD argues that Royalty Farms judicially
       admitted that the lease terminated, and therefore the circuit court correctly evicted Royalty
       Farms.
¶ 26       “Judicial admissions are defined as deliberate, clear, unequivocal statements by a party
       about a concrete fact within that party’s knowledge.” In re Estate of Rennick, 181 Ill. 2d 395,
       406 (1998). “A party is not bound by admissions regarding conclusions of law because the
       courts determine the legal effect of the facts adduced.” JPMorgan Chase Bank, N.A. v. Earth
       Foods, Inc., 238 Ill. 2d 455, 475 (2010). Here, Royalty Farms judicially admitted that it

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       received a document from FPD purporting to terminate Royalty Farms’ lease of part of the
       horse farm. Royalty Farms could not judicially admit that FPD terminated the lease because
       the parties cannot judicially admit the legal effect of the facts adduced. See In re Marriage of
       Osborn, 206 Ill. App. 3d 588, 594 (1990). The statement that Royalty Farms would leave the
       farm by December 31, 2015, does not qualify as a judicial admission because it constitutes a
       promise and not a statement of fact. See Bradley Real Estate Trust v. Dolan Associates Ltd.,
       266 Ill. App. 3d 709, 713 (1994). The judicial admission cannot justify the circuit court’s
       decision to award FPD a judgment of eviction.
¶ 27        Royalty Farms does not dispute the circuit court’s decision to stay proceedings in this
       case pending the resolution of FPD’s rights in BMO Harris v. Royalty Properties. Royalty
       Farms challenges only the decision to give possession to FPD pending the final decision in
       BMO Harris v. Royalty Properties.
¶ 28        Our supreme court said, “A party to a decree cannot acquire any rights thereunder while
       the same is subject to review which he can assert after the decree is reversed, since the effect
       of the reversal is to abrogate the decree and leave the cause as it stood prior to the entry of
       the decree.” Willett Co. v. Carpentier, 4 Ill. 2d 407, 412 (1954). In Thompson v. Davis, 297
       Ill. 11, 15 (1921), the court said, “The decree of foreclosure was reversed and set aside and
       the parties became entitled to be restored to their former rights as nearly as possible.”
¶ 29        In Rosewood Corp. v. Fisher, 46 Ill. 2d 249 (1970), Fisher bought real estate from
       Rosewood on an installment plan. When Fisher missed a payment, Rosewood filed a
       complaint for forcible entry. Fisher filed a counterclaim and affirmative defense, alleging that
       Rosewood’s misrepresentations made the sales contract void. The Rosewood court said,
       “Where as here, the right to possession a plaintiff seeks to assert has its source in an
       installment contract for the purchase of real estate by the defendant, we believe it must
       necessarily follow that matters which go to the validity and enforceability of that contract are
       germane, or relevant, to a determination of the right to possession. *** [A] contract seller
       claiming and seeking to enforce a claimed right of possession should not be permitted to
       prevail on the basis of such contract so long as its validity and enforceability is questionable
       under the law.” Rosewood, 46 Ill. 2d at 256-57.
¶ 30        Cases from other jurisdictions, with facts similar to the facts here, show the application of
       the principles restated in Carpentier and Rosewood. Fannie Mae v. Hicks, 2016-Ohio-8484,
       77 N.E.3d 380, also involved a foreclosure judgment, a judicial sale of the foreclosed
       property to the party who foreclosed the mortgage, and a subsequent reversal of the
       foreclosure judgment. The Fannie Mae court held: “a reversal of the judgment entered in the
       trial court *** operat[es] to set aside, vacate and nullify everything done under and in
       pursuance of said judgment; we therefore conclude that the sale made under the first decree
       of foreclosure was vacated when the judgment, upon the authority of which the sale was
       made, was reversed by the Court of Appeals.” (Internal quotation marks omitted.) Fannie
       Mae, 2016-Ohio-8484, 77 N.E.3d 380, at ¶ 14. In Sundie v. Haren, 253 So. 2d 857 (Fla.
       1971), Sundie won a summary judgment on a complaint for foreclosure, and the court
       approved the sale of the property to a party to the foreclosure proceedings. The court of
       appeals reversed the judgment, finding that Haren’s evidence created issues of material fact.
       After the trial on remand, the circuit court again entered judgment in favor of Sundie and
       upheld the original sale of the property. The appellate court affirmed the judgment of
       foreclosure but found that the circuit court had an obligation to order a new sale of the

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       property. The Florida Supreme Court said, “the correct result, requiring a new sale, was
       reached in the instant case. *** [R]eversal of the summary final decree required, as between
       the parties to the suit, restoration of the original status. A party against whom an erroneous
       judgment has been made is entitled upon reversal to have his property restored to him by his
       adversary.” Sundie, 253 So. 2d at 858.
¶ 31       Because the validity of the mortgage remains unresolved and at issue in BMO Harris, the
       circuit court had no basis for awarding a judgment in favor of FPD on its claim for eviction.
       We hold that the decision in BMO Harris voids the judicial sale of the horse farm. If FPD
       succeeds in winning a judgment of foreclosure on the mortgage, the circuit court will need to
       order a new judicial sale of the property, and the purchaser at that sale may succeed to
       Royalty Properties’ rights under the purported lease, including the right to terminate the
       lease. We reverse the order evicting Royalty Farms from the horse farm and remand and stay
       the eviction proceedings pending resolution of the foreclosure action.
¶ 32       One final note. Through a series of maneuvers by the parties, decisions by the trial court,
       and overlapping briefing schedules, this disagreement has inefficiently led to separate cases
       proceeding in the trial court, in front of different judges, and to a series of separate appeals.
       In BMO Harris, we held that the decision in Baker v. Forest Preserve District, 2015 IL App
       (1st) 141157, had a res judicata effect against the Cannons in part because that case, too,
       involved the dispute between the Cannons and FPD over ownership of the farm. BMO Harris
       Bank, 2016 IL App (1st) 151338-U, ¶¶ 57-58.
¶ 33       And in August 2017, this court entered another order in the ongoing litigation between
       the parties, vacating a trial court order that named FPD as mortgagee in possession of the
       farm. Forest Preserve District v. Royalty Properties, LLC, 2017 IL App (1st) 171564-U. We
       now stay proceedings on the claims of Royalty Farms and the counterclaims of FPD,
       including the eviction proceedings, for those claims to await final determination of the
       mortgage foreclosure case.

¶ 34                                       CONCLUSION
¶ 35       Because the circuit court’s orders of March 4, 2016, and May 19, 2016, modified an
       order that finally disposed of FPD’s separate claim for eviction and the court included
       appropriate language to make the orders immediately appealable, Rule 304(a) gives this court
       jurisdiction over the appeal. The appellate court’s decision in BMO Harris, which reversed
       the foreclosure judgment, rendered void the judicial sale of the property and left FPD with no
       present right to evict Royalty Farms from the property. Accordingly, we reverse the circuit
       court’s order awarding FPD possession of the property and remand and stay the eviction
       proceedings pending a resolution of the BMO Harris v. Royalty Properties foreclosure
       proceedings.

¶ 36      Reversed and remanded.

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