HSBC Bank United States, N.A. v. Grason

2014 IL App (4th) 131066

HSBC BANK USA, N.A., Plaintiff-Appellee, v. ANTHONY GRASON, Defendant-Appellant,and KARL MEURLOT and C. DEADRICKDEVELOPMENT, INC., Intervenors-Appellees.

NO. 4-13-1066

APPELLATE COURT OF ILLINOIS FOURTH DISTRICT

FILED: May 1, 2014

NOTICE

This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).

Appeal from

Circuit Court of

Macon County

No. 08CH121

Honorable

Albert G. Webber,

Judge Presiding.

JUSTICE POPE delivered the judgment of the court.

Presiding Justice Appleton and Justice Knecht concurred in the judgment.

ORDER

¶ 1 Held: (1) The trial court did not abuse its discretion by appointing C. Deadrick Development, Inc., as receiver of property it purchased at a foreclosure sale later deemed void.

(2) The appellate court lacked jurisdiction to consider all other issues in this interlocutory appeal brought under Illinois Supreme Court Rule 307 (eff. Feb. 26, 2010).

¶ 2 This is an interlocutory appeal under Illinois Supreme Court Rule 307 (eff. Feb. 26, 2010), brought by defendant, Anthony Grason, from October 29, 2013, orders of the Macon County circuit court granting a petition to intervene by Karl Meurlot and C. Deadrick Development, Inc. (intervenors), and appointing C. Deadrick Development, Inc. (C. Deadrick), as receiver for the property at issue. We affirm.

¶ 3 I. BACKGROUND

¶ 4 This case has twice been before this court. On May 5, 2009, Cynthia Deadrick and Mark Wolfer, on behalf of Karl Meurlot, purchased the property at issue here at a judicial sale. In July 2009, a judicial deed to the property was issued to Meurlot's assignee, C. Deadrick. C. Deadrick has been in possession of the property since the judicial deed was issued and has made what it considers improvements to the property. The background facts and procedural history of this case through September 2012 are set out in detail in our prior decisions. See HSBC Bank U.S.A., N.A. v. Grason, No. 4-10-0090 (Apr. 11, 2011) (unpublished order under Supreme Court Rule 23) (hereinafter HSBC I); HSBC Bank U.S.A., N.A. v. Grason, 2012 IL App (4th) 110788-U (unpublished order under Supreme Court Rule 23) (hereinafter HSBC II). By way of overview, the underlying parcel is farm and pasture land, with several buildings and a house on the property. Grason had a mortgage on the land with HSBC Bank USA, N.A. (HSBC), which foreclosed. C. Deadrick is a corporation seeking to develop the property and, after purchase at the judicial sale, it removed trees and knocked down buildings toward that end.

¶ 5 In HSBC I, the primary issue was whether the judicial sale occurred prior to Grason filing his pro se bankruptcy petition, which this court found was filed at 8:37 a.m. on May 5, 2009. HSBC I, No. 4-10-0090, ¶ 9. On remand, the trial court failed to make a factual finding as to what time the judicial sale occurred as we directed, holding instead the automatic bankruptcy stay did not apply to the foreclosure sale because Grason was not an eligible debtor pursuant to section 109(g)(1) of the Bankruptcy Code (11 U.S.C. § 109(g)(1) (2006)). HSBC II, 2012 IL App (4th) 110788-U, ¶ 24.

¶ 6 On September 19, 2012, in HSBC II, we noted nothing in the record before us indicated Grason's previous bankruptcy petition was dismissed due to his willful failure to abide by a court order. Id. ¶ 30. We (1) reversed the trial court's ruling finding Grason's bankruptcyfiling did not affect the foreclosure sale regardless of the time it was filed; (2) vacated the confirmation and reconfirmation of the foreclosure sale; and (3) again remanded to the trial court to determine, by a preponderance of the evidence, whether the foreclosure sale occurred after Grason's 8:37 a.m. bankruptcy filing. Id. ¶ 47. We noted, "[i]f the court finds the sale occurred after 8:37 a.m., the automatic stay applied to the foreclosure sale and the sale is void unless HSBC or Meurlot can obtain relief from the automatic stay with regard to the foreclosure sale from the Bankruptcy Court." Id. Our mandate was issued on October 24, 2012.

¶ 7 On October 11, 2012, Meurlot filed a motion to reconsider dismissal and reopen the case in the bankruptcy court, which was allowed over Grason's objection. Meurlot argued (1) Grason's May 5, 2009, petition did not create an automatic stay because Grason was not eligible to be a debtor under section 109(g) of title 11 of the Bankruptcy Code (11 U.S.C. § 109(g) (West 2008)) because he failed to obtain credit counseling prior to filing his petition; and (2) even if the automatic stay went into effect at the time of the May 5, 2009, filing, the court should annul the stay. Grason responded (1) he was an eligible debtor and (2) Meurlot did not have standing because he had no legally cognizable interest in the subject property and was not a party in interest in the case.

¶ 8 In a February 2013 written opinion, the bankruptcy court denied Meurlot's motion for relief from stay, concluding Meurlot was, at best, a bystander to this case who

"chose to make a significant investment in a property purchased at a sheriff's sale where the purchase was clouded from the inception by a pending bankruptcy, a questionable confirmation hearing, and an appeal. And, after the Appellate Court of Illinois reversed and remanded the foreclosure case, Mr. Meurlot chose to fight HSBC'sefforts to back up and start over. That choice resulted in another appeal and another reversal. Significant resources have been expended by all involved, but that is simply not a basis to ignore Mr. Meurlot's lack of standing." In re Grason, 486 B.R. 448, 461 (Bankr. C.D. Ill. 2013).

The court continued, "[t]he real parties in interest here are [Grason] and HSBC," neither of whom sought relief before the court. Id.

¶ 9 HSBC then filed a motion for relief from stay in the bankruptcy court. (The record does not contain the date of this petition.) HSBC argued Grason's May 5, 2009, filing of the bankruptcy petition did not create an automatic stay because he was not eligible to be a debtor. On July 18, 2013, following an April 2013 hearing on the petition, the bankruptcy court issued its written opinion, concluding (1) Grason was an eligible debtor at the time his petition was filed, (2) the automatic stay was binding on HSBC, and (3) the sheriff's sale was void and remained void because the court declined to grant relief to HSBC or to annul the stay. In re Grason, 2013 WL 3781766, 8 (Bankr. C.D. Ill. 2013).

¶ 10 On July 29, 2013, after no proceedings had commenced in the trial court following our second remand, Grason filed a motion requesting the trial court (1) vacate the sale, refund the sales proceeds, and vacate the order approving the report of sale and distribution; (2) order the "restoration of defendant to procession [sic]"; and (3) vacate the order for in personam deficiency. (We note, while Grason asks to be restored to "procession" throughout the record, the meat of his argument pertains to getting possession of his property back; thus, we refer to possession rather than procession.) It appears all parties have conceded the judicial sale occurred after 8:37 a.m. because, rather than seeking a determination in the trial court on this issue,Meurlot, C. Deadrick, and HSBC proceeded in the bankruptcy court, asserting Grason was not an eligible debtor and, thus, the automatic stay did not apply.

¶ 11 On August 28, 2013, Karl Meurlot and C. Deadrick filed a petition in the trial court (1) to intervene as a matter of right pursuant to section 2-408 of the Code of Civil Procedure (735 ILCS 5/2-408 (West 2012)) and (2) for receivership pursuant to section 15-1704(a) of the Code of Civil Procedure (735 ILCS 5/15-1704(a) (West 2012)). The petition for receivership requested the trial court appoint C. Deadrick—the corporation which had been in possession of the property since July 2009, had "substantially improved the property," and had "sufficient means and interest to ensure the continuation of the status quo pending a final determination of this matter"—as receiver of the property. HSBC did not object.

¶ 12 On October 29, 2013, following arguments from all parties and over Grason's objections, the trial court (1) granted intervenors' petition to intervene, finding their interest in the property—as grantees of the judicial deed issued by the court for the property—was not adequately protected by HSBC or defendant and (2) appointed C. Deadrick as receiver of the property. The court allowed Grason's motions to (1) vacate the foreclosure sale, (2) refund the foreclosure proceeds, (3) vacate the order confirming the sale, and (4) vacate the order for in personam deficiency, as neither HSBC nor Meurlot objected. The court denied Grason's motion to restore him to possession.

¶ 13 On November 20, 2013, Grason filed a notice of interlocutory appeal as of right pursuant to Illinois Supreme Court Rule 307 (eff. Feb. 26, 2010).

¶ 14 II. ANALYSIS

¶ 15 In his notice of interlocutory appeal, Grason raised the following issues: whether the trial court erred in (1) allowing intervenors' motion to intervene; (2) appointing C. Deadrickas receiver for the subject property; (3) denying Grason's motion for possession of the subject property; and (4) "granting the sheriff sale and confirmation" of the subject property.

¶ 16 A. Intervenors' Motion To Strike Grason's Reply Brief

¶ 17 Intervenors have filed a motion to strike Grason's reply brief, which we ordered taken with the case. Intervenors assert Grayson's entire reply brief, or sections therein, must be stricken because (1) the statements and documents included within it are dehors the record; (2) it raises matters wholly outside those issues raised in either (a) HSBC's or intervenors' responses, (b) Grayson's notice of appeal, and (c) the narrow scope of this interlocutory appeal; and (3) it presents new arguments and authority for previously unsupported assertions made in his initial brief.

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