Wells Fargo Bank, N.A. v. Maka

2017 IL App (1st) 153010

72 N.E.3d 765

WELLS FARGO BANK, N.A., Plaintiff-Appellee,

v.Jan MAKA, Individually, and as Trustee Under Provisions of a Trust Agreement Dated 11th Day of July, 2005, and Known as Trust Number 1; Bridgeview Bank Group; John Makaska Custom Built and/or Owner; Unknown Beneficiaries of Trust Agreement Dated 11th Day of July, 2005, and Known as Trust Number 1; Village of South Holland; W.L. Engler Distributing, Inc.; William Houlihan; Unknown Owners; and Nonrecord Claimants, Defendants (Jan Maka, Individually, Defendant-Appellant).

No. 1-15-3010

Appellate Court of Illinois, First District, FIFTH DIVISION.

February 3, 2017

Susan S. Barron, of Law Office of Susan S. Barron P.C., of Northfield, for appellant.

Lucia Nale, Michelle V. Dohra, Charles M. Woodworth, and Jeffrey J. VanDam, of Mayer Brown LLP, of Chicago, for appellee.

OPINION

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

¶ 1 This matter arises out of a mortgage foreclosure on a property owned by defendant Jan Maka. In numerous motions after summary judgment and judgment of foreclosure were entered in favor of plaintiff, Wells Fargo Bank, N.A., defendant raised the issue before the circuit court that his mortgage was void because the original lender, Alliance Mortgage Company d.b.a. BNY Mortgage (Alliance) was not licensed at the time the loan was originated pursuant to the Residential Mortgage License Act of 1987 (License Act) (205 ILCS 635/1–1 et seq. (West 2012)). Defendant now appeals from the circuit court's orders (specifically the order of June 2015 denying his motion to vacate the judgment of foreclosure and sale and the order of September 2015 denying his motion to "reconsider, rehear and vacate" the court's June 2015 order). Defendant acknowledges that the License Act was amended in July 2015, but contends on appeal that that amendment is not applicable and the circuit court consistently failed to apply the law that existed at the time as set forth in First Mortgage Co. v. Dina , 2014 IL App (2d) 130567, 381 Ill.Dec. 712, 11 N.E.3d 343. Defendant maintains Dina is dispositive as it provided that a violation of the License Act results in a void mortgage. Id. ¶ 18. Defendant further asserts that any retroactive application of the amendment to the License Act is unconstitutional because it would divest him of his property rights without due process. For the reasons that follow, we affirm.

¶ 2 BACKGROUND

¶ 3 The property that is the subject of these foreclosure proceedings is commonly known as 8340 West Berwyn Avenue in Chicago, Illinois. In October 2002, defendant executed a mortgage in the amount of $274,000 in favor of Mortgage Electronic Registration Systems, Inc. as nominee for the lender, Alliance. Defendant also signed the note evidencing the loan was held by Alliance. The mortgage was later negotiated to plaintiff.

¶ 4 On May 6, 2013, plaintiff filed the instant complaint against defendant, among others, seeking to foreclose the mortgage. The complaint alleged that defendant had defaulted in payments due commencing August 1, 2012. Defendant subsequently appeared in court represented by counsel, answered the complaint, but set forth no affirmative defenses. Thereafter, plaintiff moved for summary judgment against him, as well as for default judgments against the other defendants and for a judgment of foreclosure.

¶ 5 Defendant, however, opposed the motion for summary judgment and asserted that the affidavit plaintiff submitted in support of its motion failed to comply with Illinois Supreme Court Rule 191(a) (eff. Jan. 4, 2013) and Rule 113 (eff. May 1, 2013). Defendant further argued that he failed to receive either the grace period notice or the notice of acceleration and, therefore, entry of summary judgment in favor of plaintiff was barred. Plaintiff denied these claims, and the circuit court agreed with plaintiff. On February 18, 2015, orders of summary judgment, default, and judgment of foreclosure and sale were entered in plaintiff's favor.

¶ 6 On March 20, 2015, defendant filed a motion to vacate the judgment of foreclosure pursuant to section 2–1301(e) of the Code of Civil Procedure (Code) (735 ILCS 5/2–1301(e) (West 2012)), alleging his mortgage was void and against public policy because the originator of the mortgage loan, Alliance, was not licensed pursuant to the License Act (205 ILCS 635/1–1 et seq. (West 2012)). In support of his motion, defendant relied on the Second District's decision in Dina , wherein the court held that a violation of the License Act results in a void mortgage. Dina , 2014 IL App (2d) 130567, ¶ 18, 381 Ill.Dec. 712, 11 N.E.3d 343. Defendant further attached the affidavit of attorney Carla Sherieves, in which she averred that she performed a search of the Illinois Department of Financial and Professional Regulation's website and generated the two documents attached to her affidavit. Those two documents, however, neither refuted nor affirmed whether Alliance was licensed at the time defendant's loan was originated.

¶ 7 On June 3, 2015, the circuit court, "being fully advised in the premises," deemed the motion to be a motion to reconsider and denied defendant's request. Shortly thereafter, defendant filed a motion to reconsider the denial of the court's June 3, 2015, order asserting the circuit court erred its application of existing law, again citing Dina . The circuit court ultimately denied this motion as well.

¶ 8 The property proceeded to judicial sale with Third Coast Holdings, LLC (Third Coast) as the highest bidder. Third Coast moved to intervene and have the sale of the property confirmed. The circuit court granted Third Coast's motion to intervene and allowed defendant time to respond to the motion to confirm the sale. In response, defendant asserted that justice was not otherwise done due to the circuit court's failure to follow the law as set forth in Dina . On August 26, 2015, the circuit court entered the order approving the sale.

¶ 9 Thereafter, defendant filed a motion to "reconsider, rehear and vacate" the June 3, 2015, order alleging the same basis as he previously asserted. On September 22, 2015, the circuit court denied the motion and this appeal followed.

¶ 10 ANALYSIS

¶ 11 On appeal, defendant maintains that because Alliance was not licensed in Illinois when the mortgage was originated his mortgage is void as against public policy and consequently the judgment of foreclosure was improperly granted.

¶ 12 Initially, we address the proper standard of review. Our standard of review is usually based on the procedural posture of the case. See, e.g. , MB Financial Bank, N.A. v. Ted & Paul, LLC , 2013 IL App (1st) 122077, ¶ 12, 371 Ill.Dec. 576, 990 N.E.2d 764 (reviewing the denial of a petition for relief from judgment of foreclosure and sale and order approving sale pursuant to section 2-1401 de novo ). Here, defendant challenges (1) the circuit court's June 3, 2015, order denying his section 2–1301(e) motion in which he alleged that the judgment of foreclosure must be vacated because the original mortgage lender was not licensed pursuant to the License Act, and (2) the circuit court's September 22, 2015, order denying defendant's motion to reconsider the June 3, 2015, order.¹ Defendant argues on appeal that the circuit court improperly decided his section 2–1301(e) motion as a motion to reconsider, but asserts that regardless we must review these motions for an abuse of discretion. While both section 2–1301 motions to vacate and motions to reconsider are typically reviewed for an abuse of discretion (Wells Fargo Bank, N.A. v. Simpson , 2015 IL App (1st) 142925, ¶ 32, 394 Ill.Dec. 333, 36 N.E.3d 266 ; JP Morgan Chase Bank v. Fankhauser , 383 Ill.App.3d 254, 259, 321 Ill.Dec. 870, 890 N.E.2d 592 (2008) ), the primary issue raised by defendant on appeal (that a violation of the License Act renders his mortgage void) is a purely legal one and, thus, we review the issue de novo (see Fankhauser , 383 Ill.App.3d at 259, 321 Ill.Dec. 870, 890 N.E.2d 592 (we review de novo the circuit court's determination of legal issues, even ones raised in a motion to reconsider)).

¶ 13 Turning to the case at hand, the License Act generally requires that certain entities involved in residential mortgage lending first obtain a license from the State of Illinois prior to engaging in any business activities. 205 ILCS 635/1–3(a) (West 2012). The License Act further sets forth numerous exemptions for this requirement, including but not limited to, entities engaged solely in commercial lending or individuals acting as mortgage loan originators who are not employed by or acting for any entity described in the section. Id. The consequences for violating the License Act include an injunction or a fine in an amount not to exceed $25,000. 205 ILCS 635/1–3(c), (e) (West 2012). The License Act further provides that, after written notice to a licensee by the Departmentof Financial and Professional Regulation, an entity may have its license revoked or suspended, or be placed on probation or reprimanded. 205 ILCS 635/4–5 (West 2012) ; see 205 ILCS 635/1–4(n) (West 2012) (stating that after April 6, 2009, all references in the Act to the "Commissioner" is a reference to the "Secretary of Financial and Professional Regulation" including "the Director of the Division of Banking of the Department of Financial and Professional Regulation"). The Department of Financial and Professional Regulation may further deny the issuance of a license on certain enumerated grounds. 205 ILCS 635/7–3 (West 2012). The licensee, however, may request a hearing before a hearing officer regarding that decision. 205 ILCS 635/4–12 (West 2012).

¶ 14 In support of his argument, defendant relies solely on the Second District case of Dina , which considered the question of whether a violation of the License Act would result in a void mortgage. Dina , 2014 IL App (2d) 130567, ¶ 18, 381 Ill.Dec. 712, 11 N.E.3d 343. For the reasons that...