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Us Bank National Association, As Trustee For Wfalt 2005-02 v. Benjamin Villasenor Jr. A/K/A Benjamin S.

October 5, 2012


Appeal from the Circuit Court of Cook County. No. 07 CH 22660 Honorable Jesse Reyes, Judges Presiding.

The opinion of the court was delivered by: Presiding Justice Gordon

PRESIDING JUSTICE GORDON delivered the judgment of the court, with opinion. Justices Hall and Garcia concurred in the judgment and opinion.



¶ 2 I. Complaint to Foreclose Benjamin Villasenor's Mortgage

¶ 3 Defendant, Benjamin Villasenor, purchased a home located at 11724 South Bishop Street (the subject property) from First Suburban National Bank (First Suburban) on June 7, 2005. On June 23, Villasenor obtained a $99,000 loan from Wells Fargo Bank*fn1 secured by a mortgage, recorded August 3, 2005. Villasenor defaulted on his mortgage on May 1, 2007, and Wells Fargo filed a complaint to foreclose on August 21, 2007. On November 7, 2007, Wells Fargo filed a motion for an order of default and for judgment for foreclosure and sale for Villasenor's failure to file an appearance and answer or otherwise plead.

¶ 4 An order of default and judgment for foreclosure and sale was entered on December 10, 2007. The notice of sale was mailed to two separate addresses, one of which was the subject property. At the time the notice was mailed to the subject property, Michael Ellis was the occupant of the home. At the judicial sale, the property was sold to Wells Fargo. On April 24, 2008, Wells Fargo filed a motion to approve the report of sale and for the entry of an order of possession, which was granted the same day.

¶ 5 II. Ruthie Lee Ellis's Intervention and Complaint to Quiet Title

¶ 6 Ruthie Lee Ellis, the intervenor, age 73, alleges in her intervenor's complaint, affirmative defense, and complaint to quiet title that she had owned the home since 1972 and lived in the home with her son, Andre Ellis, until 1985. Ellis then moved out and Andre, or other relatives, continued to reside in the home until 2003. Later, Andre moved out and Michael Ellis, a grandson, moved in and resided in the home until 2009. From 2009 through the commencement of the instant action, Martez Knox, another of Ellis' grandsons, has lived in the home.

¶ 7 In 2004, Ellis became aware that her 2000 Cook County real estate taxes had been sold in a tax sale. To avoid losing the property, Ellis sought a loan to pay off the overdue taxes. She began searching for loan providers and was contacted by Property Tax Counselors, Inc. (PTC). On September 23, 2004, Ellis signed a written agreement drafted by PTC (the PTC agreement) and, pursuant to the agreement, executed a warranty deed in trust on the same day, conveying title to the home to First Suburban as trustee of trust number 9892-01, a land trust. The terms of the PTC agreement are noted below. After recording the warranty deed on October 4, 2004, the trustee transferred the property to trust No. 9896-01 via trustee's deed on December 8, 2004.*fn2

However, the deed indicates that the transfer between trusts was exempt from transfer taxes.

¶ 8 Ellis alleges in her motion for summary judgment, addressed in a later section, that Villasenor purchased the subject property on June 7, 2005. However, Ellis's account of the chain of title hereafter differs from that of US Bank because she alleges that Villasenor purchased the property, not from First Suburban as trustee, but rather from a company called CRG Investments, LLC (CRG). In her motion she attempts to introduce into evidence a real estate contract indicating Frank Lopez, an associate of CRG, as the seller, and Villasenor, also an associate of CRG, as the buyer; however, this contract was not admissible for want of authentication. In the contract, both Lopez and Villasenor list the same addresses next to their names: 1475 W. Irving Park Rd. Chicago, IL 60613. Ellis alleges that this address matches the addresses of both PTC and CRG. She relies on an "LLC-5.5 form" entitled "Illinois Limited Liability Company Act,

Articles of Organization" that was filed with the Secretary of the State on August 4, 2004 as evidence to link the Irving Park address to CRG. However, a "Cyber Drive LLC" member search from April of 2010, also admitted as evidence, does not indicate a matching address for CRG, yet does list Lopez and Villasenor as members. Regardless, a trustee's deed was recorded on August 3, 2005 indicating a sale from First Suburban to Benjamin Villasenor; Villasenor does list the allegedly matching PTC/CRG address on this deed. However, it is unclear if Villasenor accepted title as an individual or as a representative of CRG.

¶ 9 Once Villasenor had title, Ellis alleges in her motion to intervene, he conveyed title to a third bank: Lasalle Bank National Association as trustee for trust number 134185. Ellis admits the quitclaim deed in trust as proof of this conveyance recorded July 20, 2005. Lasalle Bank has never been a party to this action, its possession of title is not disputed, and its quitclaim deed is not addressed again. Thereafter, Villasenor mortgages the very same property and conveys title to Wells Fargo in a mortgage recorded August 3, 2005. Nonetheless, after Ellis executed a warranty deed pursuant to her agreement, the subsequent transfers occurred under authority of the deed and terms of the agreement.

¶ 10 The PTC agreement outlined the terms of a $10,210.63 loan in which Ellis alleges, in her affirmative defense and complaints, that her property served as security for the loan. Paragraph 4 of the PTC agreement, entitled "Promise to Pay," reads in part: "If the Grantor [Ellis] shall fail to pay any monthly payment at the times, place and in the manner above provided*** the PTC by reason thereof shall be authorized to declare the Term ended, an acceleration clause will apply and the right to repurchase will be forfeited ***."

¶ 11 Paragraph 6, entitled "Collateral," reads: "The Grantor acknowledges that the PTC is securing the property in order to resell it to the Grantor or sell it to a third party purchaser, if and in the event the grantor defaults on any terms of this agreement." The agreement required that a warranty deed in trust be conveyed to PTC, but stated that Ellis held the right to repurchase her property and explained how Ellis could exercise such a right.

¶ 12 Paragraph 10, entitled "Transfer of Title," reads in part: "If Grantor complies with all the requirements for the exercise of the Right to Repurchase, PTC shall convey (or shall cause to be conveyed) to Grantor merchantable title to the Premises by special warranty deed, free and clear of all liens and encumbrances ***."

¶ 13 Paragraph 13 reads: "This agreement contains all the terms and provisions of the understanding between the parties. There are no other promises or agreements other than those contained herein."

¶ 14 Paragraph 14 reads: "This agreement shall be construed in accordance with the laws of the State of Illinois." Paragraph 15 provides: "Grantor shall not record or file this agreement (or any memorandum hereof) in the public records of any county or state."

¶ 15 Paragraph 18, entitled "Express Acknowledgment," reads:

"Grantor expressly acknowledges hereby that PTC has the right at any time during the term of this [a]greement to encumber title and/or convey ownership of PTC's interest in the Agreement premises notwithstanding Grantor's *** Right to Repurchase ***. It is expressly agreed hereby that any such conveyance by PTC shall not be deemed an anticipatory breach and/or default of PTC's obligations under this said Agreement, and notwithstanding any such conveyance, Grantor shall continue to be obligated to perform any and all undertakings, promises, covenants, and agreements as provided in this said Agreement, said performances, and each of them to continue to be rendered to PTC hereunder or to PTC's successor as directed by written notice forwarded by PTC to Grantor. PTC expressly undertakes hereby to reacquire title to the subject premises such that PTC will be in a position to perform as provided in paragraph 10 above."

¶ 16 On April 1, 2007, Ellis secured a second loan from PTC for $3,764.19, alleging in her deposition that she needed the money to pay off water bills and property taxes. An identical agreement was executed for that loan. Ellis alleges in her complaints, affirmative defense, and motions that she made all payments due under both PTC loans until October of 2007 when her mailed payments were returned by the United States post office showing that PTC was not located at the address and had left no forwarding address. All efforts to locate PTC were unsuccessful.

¶ 17 Ellis alleges in her motion for leave to intervene that she learned of a cloud on her title on April 28, 2008 after receiving notice that her property had been foreclosed and that an eviction action had commenced. In response she filed, on May 21, 2008, a motion for leave to intervene in the Villasenor foreclosure and a motion to vacate the judgment for foreclosure and the order confirming the sale. On August 7, 2008, the court permitted Ellis to intervene and granted her request to vacate the April 24 order approving the report of sale and possession order, and the December 10 judgment of foreclosure and order confirming the sale. The court granted Ellis leave to file an answer, affirmative defense, and complaint to quiet title.

¶ 18 Ellis alleges in her affirmative defense and complaint that the warranty deed was represented to her and in the PTC agreement as only security for her loan. Ellis claimed that the agreement and warranty deed she executed created an equitable mortgage.

¶ 19 Ellis further alleges in her motion to intervene and affirmative defense that since she remained in title, all transfers after the deed was recorded in trust No. 9892-01 were void for lacking consideration. Ellis also alleges that PTC would be required to foreclose on her mortgage in accordance with Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1101 et seq. (West 2004)) before title could pass to a third party.

¶ 20 Lastly, Ellis alleges in her motion and affirmative defense that all payments due under the agreement were delivered to PTC as required until October 2007. In her complaint to quiet title, she alleges that these payments total $13,345.40, which is more than the sum required to satisfy the indebtedness due. In October of 2007 she attempted to exercise her right to repurchase and made efforts to find PTC to no avail. Ellis alleges that she should have reacquired merchantable title.

¶ 21 III. Depositions

¶ 22 The following are excerpts from Ruthie Lee Ellis's deposition regarding the agreement she signed with PTC, which was admitted in evidence.

"PLAINTIFF'S COUNSEL: Let's turn to the second page. Do you recognize the second page of this document? [Warranty Deed]

ELLIS: Yes. I signed it.

PLAINTIFF'S COUNSEL: Did you read this document before you signed it?

ELLIS: No, I did not.

PLAINTIFF'S COUNSEL: Was it explained to you? ELLIS: Yes, they explained it. They went through it. Yes, they did.

PLAINTIFF'S COUNSEL: What did you understand about this document?

ELLIS: I thought you had to sign all of these forms in order to get the loan. That is the only thing. I signed these forms in order to get the loan.

PLAINTIFF'S COUNSEL: But what did you understand that these documents said?

ELLIS: I didn't know it said he was taking my property. I did not know that.

PLAINTIFF'S COUNSEL: Do you see about three quarters of the way down the page [of the PTC Agreement] by paragraph three where it says, 'Warranty Deed in Trust' in bold?

ELLIS: Yeah.

PLAINTIFF'S COUNSEL: Do you remember reading that provision before you signed this document?


PLAINTIFF'S COUNSEL: Do you remember this provision being explained to you?

ELLIS: I don't think it were.

PLAINTIFF'S COUNSEL: If you read that paragraph now, what does that paragraph say? What do [you] understand that paragraph to mean?

ELLIS: Right now it says you giving the other people the warranty and deed of your property. But up above that it says where I was getting the $10,000 to pay the taxes on the property.

PLAINTIFF'S COUNSEL: Did you understand that you had to give a deed to the Bishop property ...

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