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Werst Suburban Bank v. Attorneys' Title Insurance Fund

December 19, 2001

WEST SUBURBAN BANK, PLAINTIFF-APPELLEE AND CROSS-APPELLANT
v.
ATTORNEYS' TITLE INSURANCE FUND, INC.; COLDWELL BANKER STANMEYER REALTORS; AND COLDWELL BANKER HONIG BELL REALTORS, DEFENDANTS-APPELLANTS AND CROSS-APPELLEES



Appeal from the Circuit Court of Du Page County. No. 99-MR-405 Honorable Bonnie M. Wheaton, Judge, Presiding.

The opinion of the court was delivered by: Justice McLAREN

UNPUBLISHED

The parties appeal the trial court's decisions regarding the funds held in escrow by Attorneys' Title Insurance Fund. Defendants, Attorneys' Title Insurance Fund, Inc. (Attorneys' Title), and Coldwell Banker Stanmeyer Realtors and Coldwell Banker Honig Bell Realtors (collectively, Coldwell Banker), appeal the trial court's decision to grant the motion for summary judgment of plaintiff, West Suburban Bank, on its complaint seeking funds from an escrow account held by Attorneys' Title. Attorneys' Title appeals and West Suburban Bank cross-appeals the trial court's decisions denying both parties' requests for attorney fees. We affirm in part, reverse in part, vacate in part, and remand the cause.

The following facts are uncontroverted. On or about March 15, 1996, West Suburban Bank made two loans to Lombard Lodge 2350 Loyal Order of Moose (Moose Lodge), one for $560,000 and the other for $220,000. These loans were secured by mortgages on the property owned by the Moose Lodge located at 994 Lombard Road, Lombard, Illinois (Moose Lodge property). On April 3, 1996, these loans were recorded as liens upon the Moose Lodge property at the office of the Du Page County recorder of deeds.

On or about April 7, 1998, the Moose Lodge decided to sell the property and entered into an "Exclusive Listing Agreement" with Coldwell Banker Stanmeyer Realtors. Although the written agreement is not contained in the record, these facts are supported by an affidavit of the former president of Coldwell Banker Stanmeyer Realtors, Sergio Martinucci, and have not been disputed by any party. Coldwell Banker found a buyer, Anthony Hotko, who offered $700,000 for the property. The Moose Lodge accepted this price. The closing date for the sale of the property was scheduled for March 8, 1999.

On March 4, 1999, West Suburban Bank, through its attorneys, sent a letter to Coldwell Banker Stanmeyer, stating that the proceeds from the sale of the Moose Lodge property would be insufficient to pay off the mortgage in full and, therefore, no proceeds would be available to pay any liens asserted by Coldwell Banker Stanmeyer for its commission. The letter also stated:

"In the event that you claim a commercial real estate broker's lien, be advised the West Suburban Bank disputes such lien as being subject, subordinate, and inferior to West Suburban Bank's mortgage as provided by 770 ILCS 15/15. If you claim a lien, an amount equivalent to your lien claim will be deposited in escrow and you will be required to provide a release of your claim for lien at the closing as provided by 770 ILCS 15/20. If the dispute is not amicably resolved, West Suburban Bank will then file an action for judicial declaration or the parties' rights to the amount deposited in escrow, together with attorneys fees, costs, and prejudgment interest as provided by 770 ILCS 15/10(k)."

Prior to the closing, Coldwell Banker filed and recorded a lien against the Moose Lodge property in the amount of $35,000, its commission for the sale. West Suburban Bank then issued closing instructions and a closing statement to Attorneys' Title regarding its two prior mortgage loans given to the seller/Moose Lodge. The instructions indicated that West Suburban Bank would be issuing the buyer/Hotko two loans in the amounts of $560,000 and $190,000 and that these new loans would be secured as first and second liens, respectively, upon the newly purchased Moose Lodge property. The instructions contained provisions for the disbursement of the $700,000 sale price, including allocations for the payment of real estate taxes, record releases, title insurance, attorney fees, and $52,500 to be deposited in escrow, leaving $579,914.03 payable to West Suburban Bank.

On March 8, 1999, in accordance with these instructions, West Suburban Bank received $579,914.03 (leaving a deficiency balance on the original mortgages in the amount of $201,268.11), and $52,500 was deposited in an escrow account with Attorneys' Title.

Prior to the closing, Attorneys' Title, the seller/Moose Lodge, and the buyer/Hotko entered into a "Title Indemnity-Escrow Agreement" wherein the buyer and seller agreed to deposit $52,500 in escrow with Attorneys' Title to satisfy Coldwell Banker's broker's lien. Further, the parties agreed to satisfy or remove the broker's lien prior to March 8, 1999. This escrow money was to "constitute a fund under the absolute control of [Attorneys' Title] to indemnify [Attorneys' Title] as herein provided and for the other purposes herein set forth." The agreement also provided: "In case of litigation involving the fund or the rights of any person or corporation hereunder, the cost, expense and attorney's fees of [Attorneys' Title] may be paid or retained by [Attorneys' Title] out of the fund." Coldwell Banker was not a party to the agreement.

Accordingly, Attorneys' Title issued a title insurance policy that insured that West Suburban's two new loans to the buyer/Hotko would receive first and second priority upon the newly purchased Moose Lodge property.

On March 12, 1999, West Suburban Bank issued a release of its original loans secured by mortgages issued to the Moose Lodge. This release was recorded on April 29, 1999. Coldwell Banker did not release its broker's lien.

On June 11, 1999, West Suburban Bank filed a complaint for declaratory relief against Coldwell Banker and Attorneys' Title seeking the recovery of the escrow funds and an order directing Coldwell Banker to execute and deliver a release of its broker's lien. In its answer, Coldwell Banker claimed that West Suburban Bank lost any claim to the escrowed funds when it released its mortgage liens. West Suburban Bank filed a motion for summary judgment. Coldwell Banker and Attorneys' Title filed responses and cross-motions for summary judgment; Attorneys' Title claimed that it was entitled to full custody and control over the escrow funds and that it was entitled to attorney fees and costs.

The trial court granted summary judgment in favor of West Suburban Bank and denied the cross-motions of Coldwell Banker and Attorneys' Title. Relying on the Commercial Real Estate Broker Lien Act (Act) (770 ILCS 15/1 et seq. (West 1998)), the trial court stated that section 20 of the Act did not require Coldwell Banker to release its lien. However, the trial court "extinguished" Coldwell Banker's lien and stated that West Suburban Bank was entitled to "all sums held in escrow." The court also stated that Attorneys' Title had no property interest in the escrow fund. The trial court later denied Attorneys' Title's request for attorney fees and costs and West Suburban ...


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