Court Opinion

ID: 3194892
Source: CourtListenerOpinion
Date Created: 2016-04-15 23:03:30.251448+00
Date Added: 2024-06-11T14:36:22.508324
License: Public Domain

2016 IL App (3d) 140205

                           Opinion filed April 15, 2016
_____________________________________________________________________________

                                         IN THE

                           APPELLATE COURT OF ILLINOIS

                                    THIRD DISTRICT

                                          2016

PERU FEDERAL SAVINGS BANK,                  )       Appeal from the Circuit Court
                                            )       of the 13th Judicial Circuit,
       Plaintiff,                           )       La Salle County, Illinois,
                                            )
       v.                                   )
                                            )
TINA WEIDEN,                                )
                                            )
       Defendant-Appellant                  )
                                            )
(Olivero and Olivero Law Offices,           )
                                            )       Appeal No. 3-14-0205
       Defendant-Appellee;                  )       Circuit No. 12-CH-389
                                            )
 Donald Weiden, Jr.; Midland State Bank;    )
Successor to Amore Bank, N.A.; Collection   )
Professionals, Inc.; and Unknown Owners and )
Nonrecord Claimants,                        )
                                            )
       Defendants).                         )

                                             Honorable
                                             Eugene P. Daugherity,
                                             Judge, Presiding.
_____________________________________________________________________________

      JUSTICE LYTTON delivered the judgment of the court, with opinion.
      Presiding Justice O’Brien and Justice McDade concurred in the judgment and opinion.
_____________________________________________________________________________

                                        OPINION
¶1          Defendants, Donald and Tina Weiden, divorced in 2006. In 2012, plaintiff, Peru Federal

     Savings Bank, foreclosed on the martial residence. Olivero & Olivero Law Offices, the firm that

     represented Donald during the divorce, successfully requested that the surplus funds from the

     sale be awarded to it in satisfaction of a judgment lien for attorney fees. Tina appeals, claiming

     that she had priority based on the dissolution judgment and that her equitable lien should have

     been satisfied first. We reverse and remand with directions.

¶2          In August of 1998, Donald and Tina purchased the marital residence and executed a note

     and mortgage with plaintiff. In 2006, the trial court entered a judgment dissolving the Weiden's

     marriage.   The court awarded Donald the marital residence and ordered him to pay Tina

     $34,380.40 for her equitable share in the property.        A marital settlement agreement was

     incorporated into the judgment. Under its terms, Tina agreed to transfer her interest in the

     marital residence to Donald by executing a quitclaim deed, and Donald agreed to refinance the

     mortgage and pay Tina her award of $34,380.40. The agreement provided:

            "TINA shall transfer all ownership interest in and to the marital residence to

            DONALD by executing a Quit Claim Deed and any other necessary documents

            upon the refinance of the mortgage and note. Upon the refinance of the mortgage,

            DONALD shall pay the sum of $34,380.40 within sixty (60) days of the entry of

            the Judgment for Dissolution of Marriage for one-half of the equity in the

            residence."

     The parties also agreed that they were responsible for their own attorney fees.

¶3          The law firm of Olivero & Olivero represented Donald during the divorce proceedings.

     Shortly after the dissolution judgment was entered, the firm obtained a memorandum of

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     judgment for $18,253 in attorney fees. Olivero & Olivero recorded the judgment with the county

     recorder on June 5, 2008.

¶4           In August of 2012, the bank filed a complaint for foreclosure against the marital

     residence. The Olivero law firm was named as a defendant pursuant to its recorded lien. Donald

     and Tina were also listed as defendants as the legal owners of the real estate.

¶5           Donald did not file an appearance or otherwise contest the proceedings. Tina filed her

     appearance on September 17, 2012. On October 4, 2012, Olivero & Olivero filed an answer to

     the complaint for foreclosure and asserted its lien against the property. On February 13, 2013,

     the trial court granted the bank’s motion for summary judgment and entered a judgment of

     foreclosure.

¶6           Three months later, the sheriff conducted a judicial sale, and the property was sold. The

     winning bid was $35,909.88 more than the amount Donald and Tina owed to Peru Federal.

     Shortly after the sale, the bank filed a motion for approval and set a hearing on distribution of the

     excess funds, stating that Olivero & Olivero was a recorded lienholder.

¶7           On October 30, 2013, Olivero & Olivero filed a motion for summary judgment on its lien

     and a petition for fees. In response to the firm’s motion, Tina filed an answer to the petition and

     a cross-petition for distribution, alleging that she had a lien against the property and that her lien

     had priority over all other liens.

¶8           Following a hearing, the trial court denied Tina's claim of an equitable lien and found that

     Olivero & Olivero had a valid judgment lien against the property that had been perfected. The

     court then determined that the firm should be paid first from the surplus of the sale and that any

     remaining funds should be shared by Donald and Tina as joint owners in equity.

¶9                                               ANALYSIS

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¶ 10           On appeal, Tina claims that the trial court erred in awarding the surplus proceeds to

       Donald's law firm. She argues that the dissolution judgment awarding her $34,380.40 as her

       equitable share in the marital residence created an equitable lien on the property that has priority

       over the judgment lien recorded by Olivero & Olivero.

¶ 11           Under Illinois law, the proceeds resulting from the sale of real estate under foreclosure

       shall be applied as follows: (1) the reasonable expenses of the sale; (2) the reasonable expenses

       of securing possession before the sale; (3) satisfaction of claims in the order of priority

       adjudicated in the judgment of foreclosure or order confirming the sale; and (4) remittance of

       any surplus to the appropriate parties, as ordered by the court. 735 ILCS 5/15-1512 (West 2012).

       Generally, satisfaction of claims in the order of priority is determined by debts, or liens, that

       have been properly recorded. See Heritage Federal Credit Union v. Giampa, 251 Ill. App. 3d
237, 238-39 (1993). A judgment lien is created when a certified copy of a judgment is filed in

       the office of the county recorder on the real estate of the person against whom it is entered. 735

       ILCS 5/12-101 (West 2012) (a judgment is a lien only from the time a transcript, certified copy

       or memorandum of judgment is filed in the office of the recorder in the county in which the real

       estate is located).

¶ 12           Also, equitable liens may be imposed on real property out of considerations of fairness.

       W.E. Erickson Construction, Inc. v. Congress-Kenilworth Corp., 132 Ill. App. 3d 260, 270-71

       (1985). The essential elements of an equitable lien are: (1) a debt, duty or obligation owing by

       one person to another; and (2) a res to which that obligation attaches. Uptown National Bank of

       Chicago v. Stramer, 218 Ill. App. 3d 905, 907 (1991). Such liens have been imposed where

       contracts manifest the intent that a particular property or funds be security for a debt whenever

       there has been a promise to convey or assign the property as security. Id. at 907-08. While

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       express words are not required to create an equitable lien, "it must clearly appear from the

       instrument or the surrounding circumstances *** that the maker of the instrument intended that

       the property therein described is to be held, given, or transferred as security for the obligation."

       Hibernian Banking Ass'n v. Davis, 295 Ill. 537, 544 (1920).

¶ 13           In this case, we find that the dissolution judgment created an equitable lien in Tina's

       interest in the marital property. The dissolution judgment awarded Donald the marital residence.

       In exchange for her interest in the marital property, Tina agreed to execute a quitclaim deed

       giving her interest in the property to Donald, and Donald agreed to refinance the mortgage and

       use those funds to pay Tina. The specific language of the dissolution judgment clearly indicated

       that the martial residence was the security for Tina's equity interest. Upon refinance of the

       mortgage and note, Donald would receive the money necessary to buy Tina's interest in the

       property, and when Tina received her money, she would execute a quitclaim deed releasing her

       interest in the property.         Thus, it is apparent from the judgment and the surrounding

       circumstances that the parties intended that the property would be "held *** as security for the

       obligation." See Hibernian Banking, 295 Ill. at 544. The dissolution judgment therefore created

       an equitable lien that has priority over the judgment lien recorded by Olivero & Olivero. On

       remand, Tina should be awarded the excess surplus first and any remaining funds should be used

       to satisfy the law firm's lien.

¶ 14                                              CONCLUSION

¶ 15           The judgment of the circuit court of La Salle County is reversed. The cause is remanded

       to the trial court to redistribute the surplus proceeds as directed.

¶ 16           Reversed and remanded with directions.

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