Gorman-Dahm v. BMO Harris Bank, N.A.

2018 IL App (2d) 170082

94 N.E.3d 257

Meghan GORMAN–DAHM, as Administrator of the Estate of Kathleen Gorman, Deceased, Plaintiff–Appellant,

v.BMO HARRIS BANK, N.A.; Stephan G. Daday; and Klein, Daday, Aretos and O'Donohghue, LLC, Defendants–Appellees.

No. 2–17–0082

Appellate Court of Illinois, Second District.

Opinion filed January 17, 2018

Gary D. McGuane, of Aurora, for appellant.

Stephen G. Daday and Julie A. Repple, of Klein, Daday, Aretos & O'Donoghue, LLC, of Rolling Meadows, for appellee BMO Harris Bank, N.A.

David A. Sorensen, of Law Offices of Edward J. Kozel, of Chicago, for other appellees.

JUSTICE BURKE delivered the judgment of the court, with opinion.

¶ 1 Plaintiff, Meghan Gorman–Dahm, as administrator of the estate of Kathleen Gorman, deceased, filed a complaint against defendants, BMO Harris Bank, N.A. (BMO); Stephan G. Daday; and Klein, Daday, Aretos and O'Donohghue, LLC, consisting of five counts: count I, for slander of title; counts II and IV, for punitive damages; count III, for abuse of process; and count V, for partition. The trial court granted defendants' motion to dismiss all counts, finding that (1) the absolute litigation privilege barred counts I and III, (2) there was no separate cause of action for punitive damages (counts II and IV), and (3) the partition claim in count V was at issue in another case, the underlying foreclosure complaint pending in the same circuit. Plaintiff contends that the trial court erred in dismissing counts I, III, and V of her complaint.¹ We affirm.

¶ 2 I. FACTS

¶ 3 A. Underlying Foreclosure Complaint

¶ 4 The underlying foreclosure complaint arose from a mortgage loan made by Amcore Bank, N.A. (Amcore), BMO's predecessor in interest, to Kathleen's husband, John P. Gorman (deceased), on November 30, 2007, in the amount of $750,000, which was secured by property commonly known as 760 Church Street, Batavia, Illinois. The property had been owned by John and Kathleen, as tenants in common, prior to her death on July 3, 2006.

¶ 5 John defaulted on the loan and Amcore filed the foreclosure complaint on January 20, 2010 (No. 10–CH–266), in Kane County, naming both John and Kathleen as defendants.

¶ 6 The mortgage attached to the complaint showed that only John had granted a security interest in the property.

¶ 7 A judgment of foreclosure and sale on the property was entered on June 11, 2012. The judicial sale occurred on August 14, 2014. Later, the parties to the foreclosure action, BMO, John, and plaintiff (who was granted leave to intervene on October 14, 2014), agreed that the notice of sale indicated that the property to be sold was an "undivided half interest" in the property. It was also undisputed by the parties that an undivided half interest was the only interest that could be sold at the judicial sale. BMO was the successful bidder, in the amount of $112,399. The report of sale and distribution did not indicate that only an undivided half interest was sold.

¶ 8 On April 2, 2015, the trial court vacated the judicial sale of August 14, 2014. On April 28, 2015, the trial court granted BMO's motion to amend the complaint to conform to the proofs and its motion to amend the judgment of foreclosure and sale nunc pro tunc to reflect that the mortgaged real estate consisted of an undivided half interest in the property. The trial court also expunged the deed, which had not described the property as an undivided half interest. Another judicial sale took place, and a deed was issued to BMO for an undivided half interest in the property. A motion to confirm the sale was granted on January 4, 2017.

¶ 9 B. Plaintiff's Complaint

¶ 10 On August 11, 2016, while the foreclosure case was still pending, plaintiff filed her complaint in the present proceedings, alleging the following.

¶ 11 John executed the loan and the mortgage in his individual capacity only. When he borrowed the money for the mortgage, he did not know that he owned only an undivided half interest in the property and that Kathleen's estate owned the other half interest. John proceeded under the assumption that he held title to the property in joint tenancy with Kathleen and, therefore, had mortgaged the entire property. The complaint in the foreclosure case sought the entire property, not just an undivided half interest. And, at least as of the date of being served with John's answer, defendants knew that the loan was secured by only an undivided half interest in the property. Despite that knowledge, defendants sought foreclosure on the entire property.

¶ 12 Defendants proceeded to obtain a judgment of foreclosure against the entire property. Upon entry of the judgment, defendants caused to be published a notice of sale that provided for the sale of only an undivided half interest in the property. At the judicial sale, however, defendants caused the sheriff to sell the entire property. BMO was the successful bidder at the sale, having bid a price of $125,000. After the sale, defendants filed a motion for approval of the sale and distribution, reflecting the sale of the entire property. The court approved the sale of the entire property, and a sheriff's deed was issued and recorded by defendants.

¶ 13 During the pendency of the foreclosure proceeding, John proposed a settlement of a negotiated amount toward the loan in return for a release of the mortgage. He tried to fund the proposal by obtaining a reverse mortgage against the property, the proceeds of which were to be paid to BMO. During this process, he discovered through a title search that the property was held by him and Kathleen as tenants in common.

¶ 14 Plaintiff filed a petition to intervene in the foreclosure proceeding and ultimately prevailed in having the foreclosure court expunge the sheriff's deed. A second judicial sale occurred. BMO was the successful bidder again, but this time for an undivided half interest at a reduced price of $73,500.

¶ 15 Plaintiff further alleged that the clear purpose of accurately describing the secured interest in the notice of sale was to deter third-party bidders at the sale. During the settlement discussions with John, defendants produced a recent appraisal for the property showing a value of $250,000. Defendants thus used the foreclosure proceeding to obtain title to the entire property, with full knowledge that their security interest extended to only an undivided half interest in the property. The loan was substantially undersecured by the property mortgaged by John.

¶ 16 Plaintiff further alleged that defendants filed false pleadings in the foreclosure action, knowingly and intentionally misrepresenting BMO's security interest in the property. Plaintiff alleged that defendants prepared and filed the sheriff's deed representing the transfer of the entire interest in the property in order to obtain the full value of the property and apply it to the balance due on the note executed by John and to avoid the delay and cost of filing a partition action when and if a proper judicial sale of John's undivided half interest took place. The complaint expressly alleged $51,500 in deterioration of the estate's share of the property during the extended period of delay caused by defendants' dishonest conduct.

¶ 17 C. Defendants' Motion to Dismiss

¶ 18 BMO filed a combined motion to dismiss all counts of plaintiff's complaint, pursuant to section 2–619.1 of the Illinois Code of Civil Procedure (Code) ( 735 ILCS 5/2–619.1 (West 2016) ). Daday and Klein, Daday, Aretos and O'Donohghue joined in BMO's motion. Defendants contended that count I for slander of title and count III for abuse of process should be dismissed pursuant to both sections 2–615 and 2–619(a)(9). Finally, as to count V for partition, defendants contended that it too should be dismissed under section 2–619(a)(9) as the same cause was pending between the same parties in the foreclosure case.

¶ 19 On January 6, 2017, the trial court found that counts I and III were barred by the absolute litigation privilege, which applies to the recording of a "judicial deed." The court also dismissed count V, finding that "the partition matter is the subject of another case pending in this Circuit." Plaintiff timely appeals.

¶ 20 II. ANALYSIS

¶ 21 A. Standard of Review

¶ 22 Plaintiff contends that the trial court erred in dismissing counts I, III, and V of her complaint. Defendants maintain that the trial court properly dismissed counts I for slander of title and III for abuse of process as barred by the absolute litigation privilege. Defendants also assert that the trial court properly dismissed count V for partition, as the same cause was pending between the same parties in the foreclosure case.

¶ 23 Defendants' motion to dismiss was brought under section 2–619.1 of the Code, which allows a party to file a motion combining a section 2–619 motion to dismiss with a section 2–615 motion to dismiss. See 735 ILCS 5/2–619.1 (West 2016). A section 2–615 motion to dismiss tests the legal sufficiency of a complaint. Vitro v. Mihelcic , 209 Ill. 2d 76, 81, 282 Ill.Dec. 335, 806 N.E.2d 632 (2004). A section 2–619 motion to dismiss admits the sufficiency of the complaint but asserts a defense outside the complaint that defeats it. King v. First Capital Financial Services Corp. , 215 Ill. 2d 1, 12, 293 Ill.Dec. 657, 828 N.E.2d 1155 (2005). Specifically, section 2–619(a)(9) permits involuntary dismissal where the claim is barred by "other affirmative matter." 735 ILCS 5/2–619(a)(9) (West 2016). When ruling on such motions, a court must accept as true all well-pleaded facts, as well as any reasonable inferences that may arise from them ( Doe v. Chicago Board of Education , 213 Ill. 2d 19, 28, 289 Ill.Dec. 642, 820 N.E.2d 418 (2004) ), but a court cannot accept as true mere conclusions unsupported by specific facts ( Pooh–Bah Enterprises, Inc. v. County of Cook , 232 Ill. 2d 463, 473, 328 Ill.Dec. 892, 905 N.E.2d 781 (2009) ). See also Hanks v. Cotler , 2011 IL App (1st) 101088, ¶ 17, 355 Ill.Dec. 314, 959...