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Voyles v. Sandia Mortgage Corp.

May 24, 2001


The opinion of the court was delivered by: Chief Justice Harrison

Docket No. 89201-Agenda 30-September 2000.

The plaintiff, Graceia M. Voyles, brought the present action in the circuit court of Du Page County against the defendant, Sandia Mortgage Corporation (now known as Fleet Mortgage Corporation), seeking damages for the defendant's submission of allegedly inaccurate reports about her to credit reporting agencies. Following a bench trial, the trial judge awarded the plaintiff a total of $10,000 in damages, finding that the defendant was negligent in submitting certain information to the credit reporting agencies and in failing to timely correct alleged inaccuracies therein. The trial judge denied the plaintiff recovery on several other theories of recovery, including defamation, tortious interference with prospective economic advantage, and breach of duty of good faith and fair dealing. The court also denied plaintiff's request for punitive damages based upon her claim that defendant had acted wilfully. Plaintiff appealed, and defendant cross-appealed.

The appellate court did not disturb the trial court's ruling of liability on plaintiff's claims for negligent reporting of credit information and failure to timely correct alleged inaccuracies; however, in light of its disposition of plaintiff's other claims, the appellate court vacated the trial court's award of damages on the negligence counts and remanded for hearings on damages related thereto. Finding that the defendant had acted intentionally, the appellate court reversed the trial court's judgment in favor of the defendant on the plaintiff's other claims and remanded the cause to the circuit court for hearings on plaintiff's damages arising from those claims as well. 311 Ill. App. 3d 649. We allowed the defendant's petition for leave to appeal (177 Ill. 2d R. 315(a)), and we now reverse the judgment of the appellate court and affirm the judgment of the circuit court.

The facts pertinent to our disposition may be stated briefly. In 1976 the plaintiff bought a single-family home in Springfield, financing the purchase with a loan from a local lender, Citizens Savings and Loan Association (Citizens). In 1979, the plaintiff moved to the Chicago area. Late in 1981 or early in 1982, plaintiff's lawyer, Wayne Golomb, moved into the residence and eventually began making the mortgage payments. Subsequently, Citizens failed and was placed in receivership under the Resolution Trust Corporation. The plaintiff's loan was subsequently sold to another entity, and defendant Sandia Mortgage Corporation began servicing the loan in April 1991. The defendant soon discovered that the assessment on the property had increased, causing the plaintiff's real estate taxes to rise. Because of that increase, the escrow that had been established to cover property taxes on the property had become insufficient. To make up for the deficiency, the defendant increased the plaintiff's monthly mortgage payment from $503 to $582. The increased payments were reflected in a mortgage payment booklet sent to the plaintiff in the summer of 1991. Golomb noticed that the required monthly payment had increased and, on August 7, 1991, he sent a note to the defendant questioning the new amount. On August 16, one of the defendant's customer service representatives called Golomb. A note she made of the conversation stated, "I called Mr. Golomb this a.m. He was very vague, stating that he is sending us the payments on this mortgage and wants us to send mail to him-told him to send power of attny [sic] from Mrs. Voyles." Apart from the insufficient escrow, the defendant was also concerned that the property might have been sold by the plaintiff to Golomb, activating the due-on-sale clause in the mortgage.

Notwithstanding the August 16 conversation, Golomb sent defendant checks in the old amount of $503 in September and October for payment of the mortgage-less than the new monthly payment of $582. The defendant returned those checks with a letter to plaintiff dated October 3, 1991. The defendant explained that the loan was delinquent and set forth the total payment required for reinstatement. The defendant recommended that the correct amount be paid to reinstate the account and to avoid having adverse information placed on the plaintiff's credit record. In defendant's letter, it provided telephone numbers where plaintiff could request further information or discuss the matter in greater detail.

Golomb sent a check for only $503 in November 1991. On November 7, 1991, he sent a letter to defendant cautioning defendant against further contact with the plaintiff/mortgagor, stating his opinion that the last payment on the loan had been rejected without cause, and threatening suit.

On December 17, 1991, the defendant, by its assistant vice-president, James Duran, sent Golomb a letter informing him that the payments for August, September, October, and November were due and that plaintiff owed a total of $2,328. Duran again offered to answer any questions about the account.

Early in January 1992, Golomb sent the defendant two checks totaling the amount due. One was an insurance company check payable to the defunct Citizens Savings & Loan for $1,669.50, which had been issued as compensation for certain repairs on the home; the second check was Golomb's personal check for the balance. In response, the defendant returned both checks to Golomb, stating that it could not accept the insurance company check because Citizens was listed as the payee; the defendant further explained that even if the defendant were designated the payee, defendant could not accept the check until repairs to the property were completed, repair bills were paid in full with copies thereof submitted to defendant, executed and notarized lien waivers were completed by each contractor involved, and Golomb signed an insurance claim affidavit.

Golomb responded by sending the defendant his personal check for $582, representing the correct monthly payment due in late January. The next week, Golomb sent a check for $1,669.50. Because a balance of $658.50 remained, however, the defendant returned the checks to Golomb, stating that the entire amount due would have to be paid to avoid default. The defendant reiterated that concern in a letter to the plaintiff on February 4, 1992, explaining that it would not accept less than the full amount due and that it would institute foreclosure proceedings if it did not receive full payment. At the same time, the defendant referred the matter to its foreclosure department. Later that month, Golomb sent the defendant a letter stating that he would not make any further payments on the loan.

As a result of this ongoing dispute, defendant informed two credit reporting agencies, TRW and Trans Union, of the status of the plaintiff's mortgage and of the initiation of foreclosure proceedings. Reports issued by those companies reflected that foreclosure proceedings had been instituted and that the last payment had been received in July 1991. Golomb ultimately paid the arrearage and, as the defendant's records indicate, defendant then reinstated the mortgage "out of foreclosure" effective June 3, 1992.

As noted earlier, the plaintiff did not occupy the Springfield house but was instead living in the Chicago area, in Naperville. In March 1992, the plaintiff attempted to refinance the mortgage on her house in Naperville, and she submitted an application to Citibank, the original lender on that property. In the course of processing the plaintiff's application, Citibank obtained credit reports on the plaintiff from the two credit reporting agencies. Those reports stated that plaintiff's mortgage on the Springfield property was in foreclosure. In June of 1992, after receiving full payment, the defendant notified Citibank that the Springfield mortgage was no longer delinquent. Thereafter, Golomb supplied Citibank with additional information required by Citibank to complete plaintiff's application. That information was not related to the controversy between plaintiff and defendant. Citibank ultimately denied the plaintiff' application for a new loan on the Naperville property for a reason unrelated to credit reporting: the plaintiff was no longer employed. Citibank concluded that plaintiff's credit status was "satisfactory."

In September 1992, the plaintiff initiated the present action against the defendant in the circuit court of Du Page County. The plaintiff alleged that the defendant was negligent in reporting information about her to the credit agencies and in failing to promptly correct falsely reported information. The trial court originally ruled for the defendant, granting summary judgment for the defendant on the ground that the plaintiff could not establish that the defendant's conduct proximately caused the plaintiff's injury: Citibank's denial of the plaintiff's application for refinancing. In an appeal from that ruling, the appellate court reversed the circuit court judgment and remanded the cause for further proceedings, finding the existence of several questions of material fact that precluded entry of summary judgment. Voyles v. Sandia Mortgage Co., No. 2-94-0158 (1995) (unpublished order under Supreme Court Rule 23). On remand, the plaintiff added a further claim to her action, alleging the breach of an implied duty of good faith and fair dealing, and seeking an award of punitive damages. After the bench trial was conducted, but before the judge issued his ruling, the plaintiff added yet another count, alleging tortious interference with prospective business advantage. Also, the plaintiff argued that the negligent-reporting counts should be construed as defamation claims.

The trial judge ultimately awarded the plaintiff a total of $10,000 in compensatory damages on the two negligence counts, agreeing with the plaintiff that the defendant had issued false or inaccurate credit reports without exercising due care. The judge ruled against the plaintiff, however, on the counts alleging breach of an implied duty of good faith and fair dealing and tortious interference with prospective business advantage. The judge found that the defendant's conduct was not intentional. The trial court also rejected the plaintiff's defamation claims, concluding that she had failed to prove special damages.

Both parties appealed. The appellate court disagreed with the trial judge's finding that the defendant had not acted intentionally. The appellate court believed that the defendant had "embarked on a course of action to force plaintiff into foreclosure by raising her monthly payments with no notice and then arbitrarily and capriciously refusing plaintiff's tender of amounts owing." 311 Ill. App. 3d at 656. The appellate court entered judgment for the plaintiff on the counts rejected by the trial judge: breach of the duty of good faith and fair dealing, tortious interference with prospective economic advantage, and defamation. As previously noted, the appellate court vacated the ...

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