APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FIRST DIVISION
533 N.E.2d 480, 178 Ill. App. 3d 545, 127 Ill. Dec. 608 1988.IL.1931
Appeal from the Circuit Court of Cook County; the Hon. Robert Sklodowski, Judge, presiding.
JUSTICE QUINLAN delivered the opinion of the court. BUCKLEY and O'CONNOR, JJ., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE QUINLAN
In September 1985, South Chicago Savings Bank (Bank) filed an action to foreclose an equitable mortgage against several defendants, including Lara Braxton (Braxton), in the circuit court of Cook County. Braxton filed an answer to the complaint and a counterclaim for damages against the Bank. *fn1 Subsequently, on the Bank's motion, the court granted summary judgment for the Bank on its complaint, but failed to address the Bank's motion to dismiss Braxton's counterclaim at that time. The Bank again moved to dismiss the counterclaim, and the court then granted that motion. Braxton filed a motion for a rehearing of the Bank's motion to dismiss, and that motion was denied by the court. Now, Braxton appeals the order that dismissed her counterclaim to the court.
The background to this litigation is as follows. In December 1982, Lara Braxton purchased property at 10834 South Perry Avenue, and, in October 1983, she borrowed $13,000 from the Bank, which was evidenced by a note. To secure the payment on the note, Braxton deeded the property into a land trust, trust No. 11 -- 2200, naming the Bank as trustee, and executed a collateral assignment of the beneficial interest in the trust to the Bank. The deed and collateral assignment apparently were intended to constitute an equitable mortgage, and the Bank, as trustee, thus became the owner of the property. Braxton, however, was the sole beneficiary of and had the sole power of direction in the trust.
Apparently unknown to either Braxton or the Bank, there were delinquent taxes on the property for the year 1980, and a tax sale proceeding was therefore initiated on the basis of these taxes. Consequently, in September 1982, the delinquent taxes for the year 1980 were sold at a tax sale to Leslie Barnard (Barnard). *fn2 When the two-year tax redemption period expired, Barnard filed a petition for a tax deed. The Bank, at that point, purchased the certificate of purchase on the forfeited property from Barnard for $12,000.
Following the purchase, the Bank demanded reimbursement from Braxton for the $12,000 it had paid, but Braxton refused to pay. Because of the tax problems with the property, and Braxton's refusal to reimburse the Bank for the $12,000 it had paid to settle the tax deed case, the Bank declared Braxton's loan to be in default. Consequently, the Bank demanded payment on the balance of the loan, as well as the $12,000. Braxton, however, still refused to pay.
Subsequently, in September 1985, the Bank filed the present complaint to foreclose the equitable mortgage on the property against several defendants, including Braxton. Braxton filed an answer, as well as a counterclaim against the Bank, as noted earlier. In her counterclaim, which consisted of a single count of 10 paragraphs, she stated that at the time of the loan, the Bank had searched the title and "assured" her that the title to the property was clear, and that had she known there were taxes owing, she would not have obtained the loan from the Bank. Further, she asserted that the Bank was a guarantor of the title to the property and that the Bank breached its fiduciary duty to her when it misrepresented the status of the title to the property to her. She also alleged that the Bank interfered with her right to defend against Barnard's petition for a tax deed because, although she intended to contest the petition, the Bank settled with Barnard before she had the opportunity to do so. Finally, she asserted that the Bank had no right to "exercise its assignment of the beneficial interest" until she defaulted on the loan, and that, by defaulting her, the Bank breached its contract with her. In its answer to Braxton's counterclaim, the Bank admitted that it had searched the title to the property at the time the loan was made to Braxton, but substantially denied all the other allegations.
The Bank next moved for summary judgment against Braxton on its own complaint and, as part of the same motion, moved to dismiss Braxton's counterclaim. Braxton did not respond in writing to either motion, and the court granted summary judgment in favor of the Bank without addressing the status of Braxton's counterclaim. Later, the Bank moved for entry of a decree of foreclosure and again moved for a dismissal of Braxton's counterclaim as being insufficient as a matter of law. Braxton did not file any written response to this motion either, but Braxton's counsel did orally argue the motion before the trial court.
In its oral argument on the motion to dismiss, the Bank stated that it had only settled the tax proceeding at the last moment and that it did so to protect its collateral. Moreover, the Bank asserted that Braxton had had an opportunity at the tax deed proceeding to present evidence to the court in her defense but had failed to do so. Braxton, on the other hand, responded orally that she was denied the opportunity to defend against the tax deed proceeding and that evidence existed which showed the property was tax exempt before she took title to it. She did not, however, proffer any evidence to support her contention.
After hearing the arguments, the court entered a decree of foreclosure, stayed execution of that order for 30 days, and dismissed Braxton's counterclaim without comment. The court did not specify whether the dismissal was with or without prejudice, but the order stated that there was no just reason to delay enforcement or appeal. Braxton then filed a motion for rehearing, and, in the same motion, moved to vacate the dismissal of her counterclaim, the decree of foreclosure, and the sheriff's sale, all of which were denied. Braxton has appealed only the dismissal of her counterclaim, but asks this court to vacate both the decree of foreclosure and the order dismissing her counterclaim.
Braxton, in her appeal, contends that her counterclaim was improperly dismissed as being insufficient as a matter of law. Motions to dismiss for failure to state a cause of action as being insufficient as a matter of law are based on the provisions of section 2-615 of the Code of Civil Procedure (Ill. Rev. Stat. 1987, ch. 110, par. 2-615). A court must not, however, dismiss a cause of action as being insufficient as a matter of law unless it clearly appears that no possible set of facts exists which will entitle the plaintiff to recovery. (Charles Hester Enterprises, Inc. v. Illinois Founders Insurance Co. (1986), 114 Ill. 2d 278, 286, 499 N.E.2d 1319, 1322.) Under section 2-615, the court must consider all well-pleaded facts as true, and any reasonable inferences drawn from the allegations must necessarily be construed liberally in favor of the complainant, as the motion merely tests the legal sufficiency of the complaint; the motion does not go to the merits of the claim. (See Ill. Rev. Stat. 1987, ch. 110, par. 2-615; Hester, 114 Ill. 2d at 286, 499 N.E.2d at 1322.) Hence, the purpose of the motion is to attack defects found on the face of the complaint and examination is, therefore, limited to the ...