U.S. Bank, N.A. v. Kosterman

39 N.E.3d 245

U.S. BANK, N.A., as trustee for Bank of America Funding Corporation 2007–2 Trust, Plaintiff–Appellee

v.Matthew KOSTERMAN and Amy Kosterman, Defendants–Appellants.

No. 1–13–3627.

Appellate Court of Illinois, First District, Second Division.

Aug. 18, 2015.

Lucia Nale, Michelle V. Dohra, and Charles M. Woodworth, Mayer Brown LLP, Chicago, for appellants.

Sandra M. Emerson, Matthew C. Swenson, Richard F. Kohn, and Lindsey N. McGuire, Emerson Law Firm, LLC, Oak Park, for appellee.

OPINION

Presiding Justice SIMON delivered the judgment of the court, with opinion.

¶ 1 This is a mortgage foreclosure case in which the trial court dismissed defendants' affirmative defenses, entered summary judgment in plaintiff's favor, and entered an order of possession in plaintiff's favor. The trial court erred in finding that lack of standing is not an affirmative defense. Moreover, defendants were improperly denied the opportunity to mount a meaningful defense because plaintiff failed to produce the records relied upon by its affiant and refused to produce the affiant for a deposition. Accordingly, we reverse and remand for further proceedings consistent with this order.

¶ 2 BACKGROUND

¶ 3 Because the analysis in this case is best understood when examined alongside the procedural history, many of the relevant events are set forth in the analysis section. Thus, this section will serve only as a brief outline of the events leading up to the parties being at issue.

¶ 4 On October 20, 2006, defendants Matthew and Amy Kosterman executed a mortgage for the property commonly known as 608 Bonnie Brae Place in River Forest, Illinois. The mortgage was executed to secure a loan evidenced by a promissory note. The lender was HLB Mortgage, a New York corporation. Defendants apparently made payments for several years.

¶ 5 On October 18, 2011, plaintiff U.S. Bank, as trustee for Bank of America Funding Corporation 2007–2 Trust, filed a complaint to foreclose the mortgage on defendant's property alleging that defendants had failed to make payments when due. In response to the complaint, defendants filed an answer that included two affirmative defenses. The trial court dismissed the affirmative defenses with prejudice and did not grant leave to replead. Shortly thereafter, plaintiff filed a motion for summary judgment which was granted, and an order of foreclosure and an order of possession were thereafter issued in plaintiff's favor. Defendants now appeal.

¶ 6 ANALYSIS

¶ 7 We review the dismissal of an affirmative defense de novo. CitiMortgage, Inc. v. Bukowski, 2015 IL App (1st) 140780, ¶ 15, 389 Ill.Dec. 405, 26 N.E.3d 495. Like a motion to dismiss a plaintiff's claim, a motion to dismiss a defendant's affirmative defense should not be granted with prejudice unless it is clearly apparent that there is no set of facts that might entitle the defendant to some relief. Mack Industries, Ltd. v. Village of Dolton, 2015 IL App (1st) 133620, ¶ 18, 391 Ill.Dec. 248, 30 N.E.3d 518 ; Farmers Automobile Insurance Ass'n v. Neumann, 2015 IL App (3d) 140026, ¶ 16, 390 Ill.Dec. 177, 28 N.E.3d 830.

¶ 8 Here, defendants interposed two separate defenses in their answer: one was lack of standing and the other was lack of capacity to sue. The trial court treated the putative defenses as one in the same. However, “standing is not the same as legal capacity to sue.” Aurora Bank FSB v. Perry, 2015 IL App (3d) 130673, ¶ 17, 391 Ill.Dec. 528, 30 N.E.3d 1166. Capacity to sue is something the plaintiff must allege; while lack of standing is a defense that a defendant can allege. See id. ¶ 16. Regardless, the difference is not material to the outcome of this appeal because the trial court considered both as challenges to standing.

¶ 9 At the hearing on plaintiff's motion to strike defendants' affirmative defenses, the trial judge stated, “[A] claim or assertion that the plaintiff cannot maintain a cause of action is not an affirmative defense under any definition of affirmative defense.” “[A challenge to standing] doesn't say this plaintiff has a cause of action, but [the defendant] can avoid the effect of that cause of action by some other affirmative matter. That's what an affirmative defense does.” The trial judge continued, “what you're saying is this plaintiff doesn't have a right to sue. That's a basis for dismissal, not an assertion of a defense.” The trial court explained that lack of standing might be an “affirmative matter,” (invoking the phrasing for section 2–619 motions to dismiss) but that “it just simply is not an affirmative defense.” Accordingly, the trial court struck the defenses from defendants' answer.

¶ 10 The Illinois Supreme Court has made clear that a challenge to standing in a civil case is an affirmative defense. Greer v. Illinois Housing Development Authority, 122 Ill.2d 462, 508, 120 Ill.Dec. 531, 524 N.E.2d 561 (1988). So the trial judge's explanation is inconsistent with established, binding precedent. Plaintiff nevertheless claims that a challenge to standing is not an affirmative defense in a foreclosure case. Within just the past two years, we have explained on at least six occasions that the assertion of lack of standing in a foreclosure action is an affirmative defense that not only can be raised in an answer, but must be, or else it is waived. See Aurora Bank, 2015 IL App (3d) 130673, ¶ 18, 391 Ill.Dec. 528, 30 N.E.3d 1166 ; Beal Bank v. Barrie, 2015 IL App (1st) 133898, ¶ 39, 390 Ill.Dec. 29, 28 N.E.3d 198 ; Bank of America, N.A. v. Adeyiga,

2014 IL App (1st) 131252, ¶¶ 59–63, 390 Ill.Dec. 431, 29 N.E.3d 60 ; US Bank, National Ass'n v. Avdic, 2014 IL App (1st) 121759, ¶ 34, 381 Ill.Dec. 254, 10 N.E.3d 339 ; Rosestone Investments, LLC v. Garner, 2013 IL App (1st) 123422, ¶¶ 24, 28, 377 Ill.Dec. 616, 2 N.E.3d 532 ; Parkway Bank & Trust Co. v. Korzen, 2013 IL App (1st) 130380, ¶ 24, 377 Ill.Dec. 771, 2 N.E.3d 1052. Accordingly, the trial court erred by striking defendants' affirmative defense for lack of standing as a matter of law.

¶ 11 Even though striking the affirmative defense was erroneous, we still must determine whether the trial court erred in granting summary judgment in plaintiff's favor. We review the grant of summary judgment de novo. Cook v. AAA Life Insurance Co., 2014 IL App (1st) 123700, ¶ 24, 382 Ill.Dec. 607, 13 N.E.3d 20. Summary judgment is appropriate when the pleadings, depositions, admissions and affidavits, viewed in a light most favorable to the nonmovant, fail to establish a genuine issue of material fact, thereby entitling the moving party to judgment as a matter of law. 735 ILCS 5/2–1005 (West 2012) ; Progressive Universal Insurance Co. of Illinois v. Liberty Mutual Fire Insurance Co., 215 Ill.2d 121, 127–28, 293 Ill.Dec. 677, 828 N.E.2d 1175 (2005). If disputes as to material facts exist or if reasonable minds may differ with respect to the inferences drawn from the evidence, summary judgment may not be granted. Associated Underwriters of America Agency, Inc. v. McCarthy, 356 Ill.App.3d 1010, 1016–17, 292 Ill.Dec. 724, 826 N.E.2d 1160 (2005).

¶ 12 Two weeks after defendants' affirmative defenses were stricken, plaintiff filed a two-page motion for summary judgment. Plaintiff's motion for summary judgment was supported by the affidavit of Carolyn Mobley, a vice president for loan documentation at Wells Fargo Bank. In her affidavit, Mobley asserts that she has reviewed various records that support her averments. However, none of the records were attached to her affidavit. The Illinois Supreme Court Rules require that affidavits submitted in support of motions for summary judgment “shall have attached thereto sworn or certified copies of all documents upon which the affiant relies.” Ill. S.Ct. R. 191(a) (eff. Jan. 4, 2013). Defendants responded to the summary judgment motion with affidavits pursuant to Illinois Supreme Court Rule 191(b) (eff. Jan. 4, 2013) asserting that they could not adequately respond to Mobley's affidavit without the records or other information she relied upon.

¶ 13 In response to defendants' affidavits, plaintiff faxed defendants' counsel a copy of an 11–page loan transaction history that was not even certified by Mobley, and that did not contain any indication that the record produced was the one she relied upon. Again, the Illinois Supreme Court Rules require that the affiant identify and certify the records forming the basis of the attestations. Ill. S.Ct. R. 191(a) (eff. Jan. 4, 2013). Mobley, in fact, averred that she relied upon “data compilations, electronically imaged documents, and others” to reach her conclusions. That attestation is not in line with the single record made available for the first time while the summary judgment motion was pending. Plaintiff then transparently claimed that the records were too numerous to make available. But if that was the case, defendants were entitled to at least some access to the records. See Champaign National Bank v. Babcock, 273 Ill.App.3d 292, 298, 210 Ill.Dec. 46, 652 N.E.2d 848 (1995) (holding that summaries may be used in place of producing a mass of documents as long as the entirety of the documents is at least made accessible to the opposing party After producing that singular record, plaintiff, by letter dated January 31, 2013, offered defendants seven days to amend their response to the motion for summary judgment. Plaintiff proceeded to file its reply on February 14, 2013.

¶ 14 While the parties awaited a ruling on the summary judgment motion, on February 20, 2013, defendants filed a notice of telephonic deposition requesting to depose Mobley which also requested that she produce the records she used to make out her affidavit. On February 26, 2013, the trial court granted plaintiff's motion for summary judgment. On March 5, 2013, plaintiff filed a motion to strike defendants' outstanding discovery requests that were served 15 months earlier (some of which pertained to the issue of standing) as well as to strike the notice of...