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Citicorp Savings of Illinois v. Rucker

March 26, 1998

CITICORP SAVINGS OF ILLINOIS, FROM THE COUNTERDEFENDANT-APPELLEE, COUNTY.
v.
FRED RUCKER, AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, AS TRUSTEE, HARRY "BUS" YOURELL, CHICAGO TITLE AND TRUST COMPANY, AS TRUSTEE, LAVERGNE JONES, UNKNOWN OWNERS AND NONRECORD CLAIMANTS, DEFENDANTS AND COUNTERPLAINTIFFS-APPELLANTS.



Appeal from the Circuit Court of Cook County Honorable JOHN K. MADDEN, judge Presiding.

The opinion of the court was delivered by: Justice South

On January 30, 1978, American National Bank and Trust Company of Chicago, as trustee, executed a promissory note in favor of Citicorp Savings of Illinois, n/k/a Citibank, F.S.B., in the original principal amount of $25,000. The note was secured by a mortgage on a six-unit apartment building located at 1456-1458 East 71st Place in Chicago, Illinois. At all relevant times, title to the property was held by the trustee.

On May 1, 1987, counterplaintiff Fred Rucker allowed the insurance on the property to expire. In accordance with paragraph B(1) of the mortgage, Citicorp advised Rucker that it would obtain insurance coverage on the property and add the premium cost to the indebtedness due on the note if Rucker failed to reinstate or replace his cancelled insurance policy. The mortgage documents provided that in the event of Rucker's failure to obtain or maintain the required property insurance, Citicorp could obtain the insurance on Rucker's behalf and charge it to Rucker's account.

Rucker did not reinstate or replace the insurance policy on the property. On May 21, 1987, Citicorp's subsidiary, Citicorp Savings Insurance Agency, Inc., notified Rucker that the property had been added to a blanket insurance policy for Citicorp Savings of Illinois, and the "annual premium of $422" was being charged to Rucker's account. Notwithstanding Citicorp's notification, without disclosure to Rucker, Citicorp added premiums for the insurance coverage to the indebtedness due under Rucker's note at a rate of $422 monthly, not $422 annually, as previously represented to Rucker.

Thereafter, Rucker fell behind in his mortgage payments. When Rucker tendered to Citicorp the total for back payments that had been specified by Citicorp, he was notified for the first time that the premium rate stated to him as an annual rate was instead a monthly rate of premium and that an additional amount of $4,300 was past due. As a result, Citicorp rejected Rucker's tender of payment, which excluded the monthly insurance premiums of $422, and Rucker remained in default under the mortgage contract.

On December 2, 1988, Citicorp filed a complaint for foreclosure of mortgage seeking to foreclose the mortgage based upon Rucker's failure to make the monthly payments due and owing under the note. On September 27, 1990, the circuit court granted Citicorp's motion for summary judgment. A Judgement of foreclosure and sale was entered on October 10, 1990. Pursuant to the judgment, the court awarded Citicorp $11,314.70 for its advances for insurance.

On October 25, 1990, Rucker filed a three-count counterclaim against Citicorp alleging negligence and fraud in the procurement of insurance on the property and excessive premiums charged. Citicorp filed a motion to strike and dismiss the counterclaim, and the motion was set for hearing on February 20, 1991.

On January 30, 1991, Rucker filed a chapter 13 bankruptcy petition, and the hearing on Citicorp's motion to strike and dismiss the counterclaim was never held. On July 15, 1993, the bankruptcy case was dismissed.

On November 16, 1993, a sheriff's sale was conducted at which Citicorp was the successful bidder for the property. An order was entered approving the sheriff's report of sale and distribution on December 10, 1993.

On January 20, 1994, Rucker filed a motion for an order vacating the order approving the sale. The circuit court denied Rucker's motion on January 31, 1994, and granted Rucker leave to file his amended counterclaim, which Rucker filed on February 7, 1994.

On February 14, 1994, Rucker filed a notice of appeal of the court's order denying his motion to vacate the order approving sale of the property. The appeal raised, inter alia, the issue in the amended counterclaim concerning the propriety of the advances for insurance by Citicorp. On June 15, 1995, the appellate court entered an order dismissing the appeal on the grounds of mootness.

On May 2, 1994, while the appeal was pending, Citicorp filed a motion to strike and dismiss Rucker's amended counterclaim, which the court granted on September 19, 1994. Thereafter, Rucker filed his second amended counterclaim. On December 14, 1994, Citicorp filed a motion to strike and dismiss Rucker's second amended counterclaim, which the court granted on January 13, 1995.

On March 1, 1995, Rucker filed a three-count third amended counterclaim against Citicorp. Count I alleges that Citicorp breached the implied duty of good faith and fair dealing in connection with the procurement of insurance on the property. Count II alleges that Citicorp was negligent in the procurement of insurance on the property. Count III alleges that Citicorp breached a fiduciary duty owed to Rucker.

On May 3, 1995, Citicorp filed a motion to strike and dismiss Rucker's third amended counterclaim. Citicorp argued that (1) the cause of action was barred by the law of the case doctrine; (2) count II was barred by the Moorman doctrine (Moorman Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69, 435 N.E.2d 443 (1982)); and (3) counts I, II and III failed to allege facts necessary to support the causes of action alleged.

On September 8, 1995, the circuit court granted Citicorp's motion to strike and dismiss Rucker's third amended counterclaim with prejudice as being substantially insufficient in law and based upon the law of the ...


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