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MB Financial Bank, N.A. v. Ted & Paul, LLC

Court of Appeals of Illinois, First District, Fourth Division

May 2, 2013

MB FINANCIAL BANK, N.A., Plaintiff-Appellee,
v.
TED & PAUL, LLC, FLORIN LELA, TUDOR BERCE, UNKNOWN OWNERS AND NONRECORD CLAIMANTS, Defendants-Appellants.

Held [*]

The trial court’s denial of defendants’ petition for relief from a default judgment entered for plaintiff in a mortgage foreclosure action was reversed, notwithstanding the fact that plaintiff mortgagee had already purchased the property and sold it to a third party and service of process on two individual defendants appeared to be proper, since the return of service showing that the mortgagor, a corporation, was served by service on the corporation’s agent was challenged by affidavits asserting that the person served was not an agent for receipt of service but the trial court failed to conduct an evidentiary hearing to resolve that factual issue; therefore, the cause was remanded for such a hearing.

Appeal from the Circuit Court of Cook County, No. 09-CH-26861; Hon. Jean Pendergast Rooney, Judge, presiding.

Wesley E. Johnson, of Goodman Law Offices, LLC, of Chicago, for appellants.

Eric S. Rein and Megan M. Mathias, both of Horwood, Marcus & Berk, Chtrd., of Chicago, for appellee.

Panel JUSTICE FITZGERALD SMITH delivered the judgment of the court, with opinion. Presiding Justice Lavin and Justice Pucinski concurred in the judgment and opinion.

OPINION

FITZGERALD SMITH, JUSTICE.

¶ 1 Following the entry of a default judgment in a mortgage foreclosure action against defendants-appellants Ted & Paul, LLC, Florin Lela and Tudor Berce (defendants or as named), as obtained by plaintiff-appellee MB Financial Bank, N.A. (plaintiff), the subject property was eventually sold to a third party and confirmed by court order. In response, defendants filed a petition for relief from judgment, which was denied. Defendants appeal, contending that the trial court erred in denying their petition due to lack of personal jurisdiction, and ask that we reverse the trial court's order. For the following reasons, we reverse and remand.

¶ 2 BACKGROUND

¶ 3 On August 4, 2009, plaintiff filed a "Complaint to Foreclose Commercial Mortgage and For Other Relief" against defendants regarding commercial property located at 5351 North Damen Avenue in Chicago. This cause, which is the underlying cause in the instant appeal, was assigned case number 09 CH 26861 (the 61 case). On the same date, plaintiff filed a second, similar complaint to foreclose against defendants regarding a different property. That cause, which is not subject to the instant appeal, was assigned case number 09 CH 26866 (the 66 case). Plaintiff then filed a motion to appoint E. L. Johnson Investigations as a special process server. The trial court granted plaintiff's motion and appointed E. L. Johnson Investigations to be the special process server for both cases.

¶ 4 Regarding the 61 case, which, again, is the underlying cause in the instant appeal, on March 5, 2010, plaintiff filed a "Motion for Order of Default, " seeking an order of default against defendants for their failure to appear, answer or respond to the complaint. To this motion, plaintiff attached three separate documents each entitled "Summons and Complaint Affidavit." The first was for defendant Ted & Paul, LLC; it was signed by Vince Soto from E. L. Johnson Investigations, dated September 11, 2009, and stated that corporate service was completed upon Mariana Berce, a 56-year-old white female, as that corporation's agent. The second was for defendant Tudor Berce; it was again signed by Soto, dated September 11, 2009, and stated that abode service was completed upon Mariana Berce, with the same physical description. And, the third summons and complaint affidavit was for defendant Florin Lela; it, too, was signed by Soto and dated September 11, 2009, and stated that personal service was completed on defendant Lela, a 40-year-old white female.

¶ 5 On March 24, 2010, the trial court granted plaintiff's motion and entered an order for default against defendants. The court found that defendants "were served with Summons and Complaint on September 11, 2009; and, therefore, [they] are now in default for failure to timely appear, answer or otherwise plead to [p]laintiff's Complaint." The trial court then entered a judgment of foreclosure and sale, stating that it "specifically [found] service of process in each instance was properly made in accordance with the [Illinois] Code of Civil Procedure, " and that it had "jurisdiction over all the parties hereto and the subject matter presented herein." The court noted that the total balance due on the property was $2, 832, 708.17, and that defendants could be personally liable for any deficiency, which plaintiff had the right to seek. The court gave defendants until June 22, 2010 to redeem the property.

¶ 6 Defendants did not redeem the property. Accordingly, a judicial sale was held and plaintiff purchased the property for $700, 000, leaving a deficiency of $2, 196, 969.57. The trial court entered an order approving the report of sale and distribution and, per plaintiff's decision not to pursue collection, no deficiency judgment was entered. Then, on October 19, 2010, plaintiff sold the property to Ballina Development, Inc.[1]

ΒΆ 7 On April 2, 2012, defendants filed a petition for relief from judgment pursuant to section 2-1401 of the Illinois Code of Civil Procedure (Code) (735 ILCS 5/2-1401 (West 2010)), seeking relief from the trial court's March 24, 2010 order of default and judgment of foreclosure and sale. To their petition, defendants attached copies of the three "Summons and Complaint Affidavits" from the underlying 61 case, as well as copies of three "Summons and Complaint Affidavits" from the 66 case. Among the summonses from the 66 case, the first was for defendant Ted & Paul, LLC; it was signed by Vince Soto from E. L. Johnson Investigations, dated August 29, 2009, and stated that corporate service was completed upon defendant Berce, a 50-year-old white male, as that corporation's agent. The second was for defendant Berce, personally; it was signed by Soto, dated August 31, 2009, and stated that personal service was completed upon him, with the same physical description. And, the ...


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