LAURA J. TURCZAK and ROBERT M. LEW, Plaintiffs-Appellants,
FIRST AMERICAN BANK and LEBOW, MALECKI & TASCH, LLC, Defendants-Appellees.
Appeal from the Circuit Court of Cook County No. 11 M 4001670 The Honorable James Gavin, Judge Presiding.
PRESIDING JUSTICE HYMAN delivered the judgment of the court, with opinion. Justices Pucinski and Mason concurred in the judgment and opinion.
PRESIDING JUSTICE HYMAN
¶ 1 For plaintiffs to close a short sale, defendants, the second mortgagee and the law firm that represented the second mortgagee, conditioned the release of the second mortgage on plaintiffs paying $6, 000. This payment forms the basis for plaintiffs' claims.
¶ 2 Plaintiffs contend that once the second mortgagee had obtained a default judgment on its promissary note, the doctrine of res judicata barred any action on the second mortgage, and defendants' demand for $6, 000 to execute the release, violated the Illinois Consumer Fraud and Deceptive Business Practices Act (in the case of the second mortgagee) (815 ILCS 505/1 et seq. (West 2008)), and the federal Fair Debt Collections Practices Act (in the case of the law firm) (15 U.S.C. § 1692 et seq. (2006). The trial court dismissed the complaint for lack of legal sufficiency. We affirm. Illinois law holds a lender may proceed in separate suits to enforce the mortgage and the underlying promissory note, and the second mortgagee's rights in the property were not extinguished as a matter of law.
¶ 3 BACKGROUND
¶ 4 Wells Fargo Bank and First American Bank financed plaintiffs Laura Turczak's and Robert Lew's purchase of a residence at 1300 Dodson Ave., Elburn, Illinois. Wells Fargo secured its $391, 250 loan with a promissory note and first mortgage on the property. First American secured its $73, 335 loan with a promissory note, in which plaintiffs were jointly and severely liable for the repayment of the principle, and a second mortgage on the property. Both the Wells Fargo and First America mortgages were dated August 9, 2007.
¶ 5 In 2010, plaintiffs stopped paying off the loans. In June 2010, Wells Fargo filed to foreclose its mortgage against plaintiffs and First American. On September 3, 2010, Wells Fargo obtained a "Variable Foreclosure Order" finding plaintiffs, First American, and other parties in default. Judgment for foreclosure and sale was entered in the amount of $408, 597.92.
¶ 6 Also in June 2010, during the pendency of Wells Fargo's action, First American, through defendant law firm, sued plaintiffs on the promissory note that secured First American's second mortgage. On December 21, 2010, First American obtained a default judgment against plaintiffs in the amount of $80, 986.93 and recorded a memorandum of the judgment in Kane County on December 28 (the Wells Fargo and First American lawsuits were all filed in the circuit court of Kane County as the property was located in Kane County). Under the judgment First American could garnish each plaintiff's wages.
¶ 7 Plaintiffs tried to set up a short sale of the property between September 3, 2010, and March 10, 2011, with a sale being subject to the approval of Wells Fargo and First American. Plaintiffs allege that during this time, First American refused to consent to any short sale unless the balance it was due on its promissory note or the default judgment was paid.
¶ 8 Plaintiffs received an offer of $277, 000 for the property. Although not enough to satisfy Wells Fargo's judgment, Wells Fargo agreed to approve the short sale if, among other things, First American executed a release of its mortgage lien. First American required plaintiffs pay $6, 000 to sign the release. On March 7, 2011, plaintiffs secured First American's release of its mortgage lien after paying $3, 000 and Wells Fargo contributing the remaining $3, 000.
¶ 9 Plaintiffs alleged that during the time plaintiffs tried to sell the property, defendant Lebow, Malecki & Tasch, LLC, the law firm for First American, engaged in false or misleading conduct by maintaining that First American had an enforceable second mortgage after obtaining the judgment on First American's promissory note. Plaintiffs plead the law firm violated the federal Fair Debt Collections Practices Act (15 U.S.C. § 1692 et seq. (2006)) (FDCPA).
¶ 10 Plaintiffs further alleged First American violated either the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 2008)) or a valid interlocutory order. Plaintiffs pled First American could not have sought to foreclose the second mortgage when it tied the release of the second mortgage to the payment. Plaintiffs do not challenge the enforceability of the $80, 986.93 judgment in First American's promissory note action against them.
¶ 11 Defendants moved to dismiss the complaint under section 2-615 of the Code of Civil Procedure. 735 ILCS 5/2-615 (West 2008). They argued that First American's default judgment on the promissory note securing the second mortgage did not bar First American from enforcing its second mortgage because Illinois law allows a creditor to consecutively as well as concurrently pursue remedies on a mortgage and the note securing the mortgage. Defendants also argued Illinois law recognizes that Wells Fargo's default judgment did not ...