The opinion of the court was delivered by: ROBERT GETTLEMAN, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff JD Capital Management Associates, LLC ("JD Capital")
initiated the instant malpractice suit against its former
attorney, defendant Lawrence J. Goldstein & Associates, P.C.
("defendant"), a professional corporation of which Lawrence J.
Goldstein ("Mr. Goldstein") is the principal. Plaintiff seeks
damages from defendant's failure to redeem back taxes on a
property that had been sold for delinquent taxes. Plaintiff has
moved for summary judgment solely on the issue of liability. For
the reasons stated below, the court grants plaintiff's motion.
Plaintiff is a purchaser of performing and nonperforming debt,
which was formed by its managing member, Steven Jason. In 2002,
plaintiff agreed to service 20 residential loans, including a
property at 7808 South Peoria Avenue, Chicago, Illinois, 60620
(the "7808 property"), for Alliance Company of Nevada, Inc.
("Alliance"). Defendant was retained to represent plaintiff in connection
with a mortgage foreclosure action involving the 7808 property.
On September 11, 2002, defendant sent to plaintiff a "Take
Notice" from the Cook County Clerk for delinquent taxes on the
7808 property. The notice stated that the property had been sold
for delinquent taxes and set a redemption date of January 21,
2003. Defendant informed plaintiff that it needed to redeem its
taxes to protect its interest, and that defendant would redeem
the taxes if plaintiff provided the necessary funding.
On September 19, 2002, plaintiff drafted a check in the sum of
approximately $10,000 payable to defendant to redeem the taxes.
Defendant received the check and deposited it into a trust
account on October 2, 2002, but according to Mr. Goldstein's
testimony at his deposition, he "forgot" to make a check payable
to the Cook County clerk to redeem the taxes. Moreover, Mr.
Goldstein testified at his deposition that, in his opinion, his
failure to redeem the taxes constituted malpractice.
Thereafter, defendant represented plaintiff as mortgagee in
foreclosure proceedings and obtained a judgment in the amount of
approximately $100,000 in favor of plaintiff. In March 2003,
defendant, on behalf of plaintiff, bid on the 7808 property at a
foreclosure sale. Plaintiff was the successful bidder, but later
learned from defendant that it had failed to redeem the taxes.
The tax buyer subsequently perfected its interest in the 7808
property, extinguishing plaintiff's rights in the 7808 property.
In plaintiff's complaint for foreclosure, filed in the Circuit
Court of Cook County, Illinois, the response to the item labeled,
"Capacity in which plaintiff brings this foreclosure," stated
that, "plaintiff, JD Capital Management Associates, LLC, is the
legal holder or the Mortgage and Note attached hereto as Exhibits `A' and `B'
At his deposition, Steven Jason, the
managing member of JD Capital, explained:
Through discussions with Mr. Goldstein we determined,
he and I, that it would be best to proceed with the
foreclosure action in the name of JD Capital rather
than Alliance Funding since I was the party who was
going to be responsible for the foreclosure activity.
So along with the file I forwarded assignments to Mr.
Goldstein's office to be completed and recorded so
that JD Capital would become the mortgagee on the
property, to proceed with the foreclosure in [JD
Consistent with Jason's testimony, Mr. Goldstein testified at
his deposition that "there were a series of at least three or
four different assignments of [the 7808 property] loan," and
agreed that the loan was ultimately assigned to plaintiff, making
plaintiff the holder of the mortgage on the 7808 property.
Plaintiff also submitted correspondence in which Jason instructed
Mr. Goldstein to complete the assignment from Alliance to
In his report, defendant's expert, Mark Kalina, concluded that
"JD Capital never had any legal standing to enforce the terms of
the mortgage of its own accord." At his deposition, Kalina
explained that he based that conclusion on his observation that
there may not have been an assignment of the mortgage to
plaintiff, as well as on Steven Jason's deposition, during which
Jason was "quite emphatic in his testimony that JD Capital did
not own the loan." Kalina further testified that the Mortgaging
Servicing Agreement between plaintiff and Alliance appointed
plaintiff to be servicer, rather than owner, of the 7808 property
In its motion for summary judgment, plaintiff argues that
because Mr. Goldstein admits, (1) undertaking the duty to redeem
taxes, and (2) failing to properly perform that duty, plaintiff
is entitled to summary judgment on its malpractice claims. In the
face of what appear to be clear admissions by Mr. Goldstein on
both of these points, defendant argues that because plaintiff
failed to obtain a license under either the Illinois Residential
Mortgage License Act, 205 ILCS 635/1, or the Illinois Collection
Agency Act, 225 ILCS 425/2.02, "[plaintiff's] actions and
attempts to collect and enforce the mortgage on the 7808 property
were void as a matter of law."
According to defendant, "Plaintiff should not be allowed to
recover any amount of damages from defendant where plaintiff was
not authorized at any time to carry out the action for which it
engaged defendant's legal representation." In support, defendant
directs the court's attention to the testimony of its expert,
Kalina, who (according to defendant) "opined" that the Illinois
Residential Mortgage License Act (the "Mortgage Act") and
Collection Agency Act (the "Collection Act") applied to plaintiff
and the facts of this case. Defendant maintains that Kalina's
testimony "creates at least a question of fact as to whether
plaintiff can pursue an action against defendant for its alleged
failure to carry out directives which plaintiff was not entitled
or permitted to pursue."
The court disagrees. The Mortgage Act, 205 ILCS 635/1-3(a),
No person, partnership, association, corporation or
other entity shall engage in the business of
brokering, funding, originating, servicing or
purchasing of residential mortgage loans without
first obtaining a license from the Commissioner in
accordance with the licensing procedure provided in
Article I and such regulations as may be promulgated
by the Commissioner.
Defendant argues that because plaintiff was "servicing" the
residential mortgage loan for the 7808 property, and collecting
on it, it was required to be licensed by the Mortgage Act. This
argument, it seems, is based on defendant's assertion that
plaintiff did not own the residential mortgage for the 7808
property. As discussed below, however, defendant's
characterization of the ownership and assignment of the mortgage
is belied by the deposition testimony of both Mr. Goldstein and
Kalina's conclusion in his expert report that he could find "no
evidence that JD Capital Associates, LLC was ever the owner and
holder of the Mortgage or the Note," is a legal conclusion
entitled to no weight. In any event, it does not create an issue
of fact in light of Mr. Goldstein's admission that the mortgage
was assigned to JD Capital and that he presented the assignment
documents to the judge in the foreclosure action that he
prosecuted in plaintiff's name as mortgagee. To the extent that
Jason's testimony was equivocal in any respect on this issue, Mr.
Goldstein's testimony which was not listed in Kalina's expert
report as a source that he consulted in rendering his opinion
was unambiguous and unwavering as to plaintiff's ownership of the
mortgage. Taken together with the complaint in the foreclosure
action, as well as the documentation regarding Jason's
instructions to Mr. Goldstein to complete the assignment from
Alliance to plaintiff, the court finds that plaintiff owned the
mortgage on the 7808 property, and no reasonable jury could
Defendant has not cited to any authority that would require
plaintiff, as the owner of the 7808 mortgage, to be licensed by
the Mortgage Act to: (1) pursue foreclosure; (2) request that
defendant redeem taxes on the property; or (3) bid on the 7808
property to obtain title. Moreover, as plaintiff points out, the
definition of "servicing" in the Mortgage Act refers to "collection or remittance . . . of payments, interests, principal
and trust items such as hazard insurance and taxes on a
residential mortgage loan in accordance with the terms of the
residential mortgage loan; and includes loan payment follow-up,
delinquency loan follow-up, loan analysis and any notifications
to the borrower that are necessary to enable the borrower to keep
the loan current and in good standing." 205 ILCS 635/1-4(q). This
language, as plaintiff argues, clearly contemplates collecting
payments under a loan ...