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April 23, 1991


Milton I. Shadur, United States District Judge.

The opinion of the court was delivered by: SHADUR



 Bancboston Mortgage Corporation ("Bancboston") has just filed this mortgage foreclosure action against mortgagors Daniel J. Pieroni, Sr. and Mary Ann Pieroni without naming any other defendants -- even "unknown owners and non-record claimants." Bancboston invokes federal jurisdiction under 28 U.S.C. ยง 1332, predicated on the asserted diversity of citizenship and the requisite more-than-$ 50,000 amount in controversy. Based on its initial review of Bancboston's Complaint, *fn1" this Court determines that at least in facial terms there is no need to consider this action's dismissal for any potential lack of subject matter jurisdiction.

 This District Court is one of the few -- perhaps the only one -- in the federal system whose case filings include a substantial component of mortgage foreclosure litigation (based of course on diversity of citizenship and the requisite amount in controversy). This Court's understanding of the reason for that phenomenon has been that the prevalence of federal filings is directly attributable to the difference in the mortgage foreclosure fees payable in state court foreclosures and the fees payable in sales under the aegis of this District Court. *fn2"

 In at least one respect the traditional Illinois mortgage foreclosure does not fit comfortably into the limited federal subject matter jurisdiction requirement of diversity of citizenship. To provide the purchaser at the mortgage foreclosure sale with marketable title, the uniform state practice has always been to name as defendants not only those persons that are known to have interests junior to that of the mortgagee but also "unknown owners and non-record claimants." That practice led this Court in John Hancock Mutual Life Insurance Co. v. Central National Bank in Chicago, 555 F. Supp. 1026 (N.D. Ill. 1983) to decide that joinder of such unidentified parties (whose citizenship was unknown by definition) would destroy federal jurisdiction. *fn3" Just a bit later that same year, this Court's colleague Honorable Prentice Marshall reached the same conclusion in a thoughtful opinion dealing with a variant of that problem: General Electric Credit Corp. v. American National Bank & Trust Co. of Chicago, 562 F. Supp. 456 (N.D. Ill. 1983) (which should be read in full for its impeccable treatment of the subject matter).

 Even later during that same year another of this Court's then colleagues, Honorable George Leighton, disagreed with the conclusions reached by this Court and Judge Marshall -- choosing instead the view that "unknown owners and non-record claimants are nominal parties whose citizenship does not affect the court's jurisdiction" ( John Hancock Realty Development Corp. v. Harte, 568 F. Supp. 515 (N.D. Ill. 1983)). This Court has not found that distinction well founded, and it has continued to apply the analysis exemplified by its own John Hancock decision and by Judge Marshall's General Electric Credit decision. Nonetheless any dismissals by this Court of foreclosure actions for lack of subject matter jurisdiction have become almost unknown, because (as in General Electric Credit and in the current case) mortgagees' counsel have since ceased the practice of either joining "unknown owners and non-record claimants" as defendants or seeking to bind those parties by publication (a subject discussed at some length by Judge Marshall and expanded upon in this opinion).

 Now another of this Court's colleagues, Honorable Charles Norgle, has issued a recent memorandum order in Home Savings of America, F.A. v. American National Bank & Trust Company of Chicago, 762 F. Supp. 240 (N.D. Ill. 1991), expressing his agreement with the analysis employed by this Court and Judge Marshall and his disagreement with Judge Leighton's reasoning. *fn4" This Court of course continues to agree with that result, but it finds itself troubled by one possible implication -- though perhaps unintended -- of Judge Norgle's Home Savings opinion. Because subject matter jurisdiction is nonwaivable and must therefore be addressed at the outset of any newly-filed action, *fn5" this opinion is being issued sua sponte in this new foreclosure suit.

 No mortgagee can evade the thrust of this Court's John Hancock case and Judge Marshall's General Electric Credit opinion by the end-run device of not naming "unknown owners and non-record claimants" as defendants, while at the same time seeking to bind them by filing an appropriate affidavit and proceeding via publication as permitted by Ill. Rev. Stat. ch. 110, paras. 2-413 and 15-105 as to pre-July 1, 1987 mortgages (see id. para. 15-1106(f)) and 15-1502 as to later mortgages. But any mortgagee clearly remains free to eschew any binding determination of the rights and interests of any unknown owners and non-record claimants by pursuing neither of those avenues. That does not differ in concept or effect from a situation in which a mortgagee, though inadvertence or otherwise, does not join as a party defendant any known or knowable claimant (a junior lienholder, a tenant or anyone else), in which event the purchaser at the foreclosure sale ends up with title encumbered by the rights of any such non-joined claimants. *fn6" And that result is not altered in legal terms if, for example, a mortgagee is successful in persuading a title insurer to provide insurance coverage to the purchaser at the foreclosure sale despite the mortgagee's deliberate omission, from the named defendants in the proceedings, of the truly unknown risks -- the "unknown owners and non-record claimants." *fn7"

 Thus this Court remains of the same view that it originally expressed in its John Hancock opinion. And it does not view any aspects of Judge Norgle's recent Home Savings opinion as threatening this Court's subject matter jurisdiction in cases such as this one. Although "unknown owners and non-record claimants must be considered to be more than nominal parties" ( Home Savings, 762 F. Supp. at 242) where they are either named as parties or are sought to be bound by publication, and although this Court therefore continues to disagree with Judge Leighton's treatment of the issue, federal subject matter jurisdiction remains where neither of those things is true. This action therefore remains pending.

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