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In re Application of County Treasurer

Court of Appeals of Illinois, Third District

October 16, 2013

In re APPLICATION OF THE COUNTY TREASURER AND ex officio COUNTY COLLECTOR OF WILL COUNTY, ILLINOIS, for Judgment and order of Sale Against Lands and Lots Returned Delinquent for Nonpayment of General Taxes for the Year 2007
v.
Nomanbhoy Family Limited Partners, Respondent-Appellant). (Lincoln Title Company, Petitioner-Appellee,

Appeal from the Circuit Court of the 12th Judicial Circuit No. 10-TX-324, Will County, Illinois Honorable Barbara N. Petrungaro, Judge, Presiding.

Justices McDade and O'Brien concurred in the judgment and opinion.

OPINION

CARTER, JUSTICE

¶ 1 After respondent, Nomanbhoy Family Limited Partners (Nomanbhoy), obtained a tax deed to certain residential real property (the subject property) in Will County, Illinois, petitioner, Lincoln Title Company (Lincoln Title) filed a petition under section 2-1401 of the Code of Civil Procedure (735 ILCS 5/2-1401 (West 2010)) to declare the tax deed void and to vacate the order that directed the issuance of the tax deed. Nomanbhoy filed a motion to dismiss (735 ILCS 5/2-619 (West 2010)), alleging that Lincoln Title lacked standing to file a section 2-1401 petition to collaterally attack the tax deed. After a hearing, the trial court denied the motion to dismiss, took the case under advisement, and subsequently issued a ruling granting Lincoln Title's section 2-1401 petition. Nomanbhoy filed a motion to reconsider, which the trial court denied. A few weeks later, Nomanbhoy filed an emergency motion to vacate the previous order that granted the section 2-1401 petition, alleging that the trial court had failed to consider Nomanbhoy's right to reimbursement and that no reimbursement had been made as required by statute. The trial court denied that motion, as well. Nomanbhoy appeals, challenging the trial court's rulings: (1) denying Nomanbhoy's motion to dismiss; (2) granting Lincoln Title's section 2-1401 petition (and denying Nomanbhoy's motion to reconsider); and (3) denying Nomanbhoy's emergency motion to vacate the prior order. For the reasons that follow, we affirm the trial court's orders denying the motion to dismiss and granting the section 2-1401 petition, we reverse in part the trial court's order denying the emergency motion, and we remand this case with directions for further proceedings.

¶ 2 FACTS

¶ 3 On November 6, 2008, Nomanbhoy purchased the subject property at the annual tax sale for the delinquent 2007 general real estate taxes and was later issued a certificate of purchase. The subject property was improved with a single-family home and was owned at the time by Salta Group, Inc. (Salta), which, coincidentally, had previously acquired the property through the tax-sale process. Under section 22-5 of the Property Tax Code (35 ILCS 200/22-5 (West 2010)), to be entitled to a tax deed later in the process, Nomanbhoy was required to deliver a take notice to the county clerk (clerk) within 4 months and 15 days after the sale so that an official take notice could be sent by the clerk to the assessee of record. Nomanbhoy failed to deliver a section 22-5 take notice to the clerk and instead, allegedly, erroneously mailed the notice by regular mail to Salta at various addresses. It appears from the record that three different section 22-5 notices were allegedly sent by Nomanbhoy to Salta on various dates. The first two notices, entitled, "TAKE NOTICE, " incorrectly listed November 4, 2010, as the date for the expiration of the redemption period (redemption date). The third notice, entitled, "LEGAL NOTICE, " incorrectly listed the redemption date as May 7, 2010. Because the subject property was improved with a single-family home, the actual redemption date was May 6, 2011 (two years and six months from the date of sale). See 35 ILCS 200/21-350(b) (West 2010)).

¶ 4 On November 19, 2010, Nomanbhoy filed a verified petition for tax deed to the subject property. The petition stated, among other things, that Nomanbhoy had fully complied with all of the provisions of the statutes and Illinois constitution relating to tax sales and would be entitled to a tax deed if the subject property was not redeemed. Later that same month, Nomanbhoy filed a motion asking the trial court to direct the county clerk to post Nomanbhoy's costs to the redemption records. The clerk's office, aware that Nomanbhoy had failed to deliver a section 22-5 take notice to it and believing, therefore, that Nomanbhoy would not be able to obtain a tax deed to the subject property, refused to post the costs unless it was ordered to do so by the court. A hearing was held on the motion on December 16, 2010, at which Nomanbhoy's attorney at the time, attorney James, appeared on behalf of Nomanbhoy and attorney Mock appeared on behalf on the county clerk. James acknowledged that a section 22-5 take notice had not been provided to the clerk and that his client had erroneously sent the notice by mail. James told the trial court that although he believed that only substantial compliance with section 22-5 was required, the issue regarding the notice was not yet ripe for the court to determine and that it would be litigated if the case proceeded to a tax deed or possibly not at all, if the taxes were redeemed. The trial court found that the issue regarding the take notice was not before it at that time and directed the clerk to post the costs to the redemption record.

¶ 5 In February 2011, Nomanbhoy filed a motion the extend the redemption date from May 6, 2011, to October 21, 2011, and to amend the petition for tax deed accordingly. On March 10, 2011, the trial court granted Nomanbhoy's motion, ordered the clerk to extend the expiration of the redemption date to October 21, 2011, and set the case for hearing on the amended verified petition for tax deed for October 28, 2011. The amended verified petition for tax deed was filed that same day, March 10, 2011. It contained the same representation as the original petition–that Nomanbhoy had fully complied with all of the statutes and Illinois Constitution relating to tax sales and would be entitled to a tax deed if the subject property was not redeemed. Within the time provided for by statute, Nomanbhoy had a section 22-10 (35 ILCS 200/22-10 (West 2010)) take notice served on the clerk and on an agent or officer of Salta. Upon receiving the section 22-10 take notice, the clerk sent out its own official notice, which appears in the court file. The sheriff attempted to serve notice at the subject property as required by section 22-15 (35 ILCS 200/22-15 (West 2010)), but that attempt was unsuccessful and it was indicated on the return of service that the subject property was vacant and for sale. Notice was also made by publication as provided for in section 22-20 (35 ILCS 200/22-20 (West 2010)) and a certificate of publication was filed with the court.

¶ 6 A hearing on the petition for tax deed took place as scheduled on October 28, 2011, before the same judge that had heard the motion to direct the clerk to post the costs in December 2010. No one appeared at the hearing other that Nomanbhoy's attorney, attorney James. James did not inform or remind the trial court of the fact that the section 22-5 take notice had not been provided to the clerk as required and that an official version of that notice had not been sent out. Nomanbhoy filed an application in support of its request for an order directing the issuance of a tax deed and stated in that application, among other things, that the applicable notices were given to the occupants of the property, the recorded parties in interest, and the county clerk as required by law and cited sections 22-5 through 22-30 of the Property Tax Code (35 ILCS 200/22-5 through 22-30 (West 2010)). Nomanbhoy also stated in the application that it had complied with all of the statutes relating to the issuance of tax deeds and that it was entitled to a tax deed to the subject property. Attached to the application as supporting documents were, among other things, copies of the three section 22-5 take notices that were allegedly mailed out by Nomanbhoy. After reviewing the supporting documents, the trial court entered an order directing the clerk to issue a tax deed for the subject property to Nomanbhoy. As part of that order, the trial court found that Nomanbhoy had fully complied with all of the statutes and Illinois Constitution relating to sales of real estate for taxes and for the issuance of tax deeds. Nomanbhoy recorded its tax deed in Will County on December 9, 2011.

¶ 7 On March 6, 2012, Lincoln Title filed its section 2-1401 petition to declare the tax deed void and to vacate the order that directed the issuance of the tax deed.[1] In count I of the petition, Lincoln Title alleged that the tax deed was void because it had not been recorded by Nomanbhoy within one year after the redemption date as required by section 22-85 of the Property Tax Code (35 ILCS 200/22-85 (West 2010)). Lincoln Title claimed that the legal notice that Nomanbhoy had allegedly mailed to the required parties set the redemption date as May 7, 2010; that the redemption period was not extended by Nomanbhoy prior to that date and ended on that date; and that Nomanbhoy failed to record the deed within one year from the May 7, 2010, redemption date. In count II of the petition, Lincoln Title alleged that the order directing the issuance of the tax deed should be vacated because the tax deed was procured by fraud in that despite knowing that an official section 22-5 take notice was never sent out by the county clerk or an original redemption date set because the section 22-5 take notice had not been provided by Nomanbhoy to the county clerk as required by section 22-5, Nomanbhoy represented to the court in its application that it had complied with all of the statutory notice requirements and made no representation to the trial court at the hearing that its section 22-5 take notice was defective. Lincoln Title alleged further that Nomanbhoy had attached to its application copies of unfiled section 22-5 take notices (the ones that had been erroneously mailed out) in an attempt to deceive the trial court into believing that the mandatory section 22-5 take notice had been delivered to the clerk. Lincoln Title claimed that the entire tax deed proceeding was a complete nullity due to Nomanbhoy's failure to file, serve, and set the original redemption date with the clerk. As a second part of count II, Lincoln Title asserted that it was entitled to equitable redemption because it would have redeemed the tax sale but, in reliance on the county clerk's official records and statements, it believed that the tax sale was "dead" because Nomanbhoy had failed to file the required section 22-5 take notice with the clerk within the required time period. Lincoln Title also asserted in its petition that it had acted diligently in bringing its section 2-1401 petition and that it had reasonably and justifiably relied upon an error by the county clerk. As for its interest in the matter, Lincoln Title indicated in its petition that on or about February 9, 2012, it received a demand from a title guaranty company to cure a defect in title caused by the instant tax deed issuing.

¶ 8 On March 12, 2012, attorney James filed a motion to withdraw as counsel of record for Nomanbhoy, citing irreconcilable differences. The trial court granted the motion to withdraw; gave Nomanbhoy 21 days to file a supplemental appearance; gave Nomanbhoy until May 3, 2012, to file its answer or other pleading in response to the section 2-1401 petition; continued the case for a status hearing; and set a hearing on the section 2-1401 petition for May 24, 2012. On the April 5, 2012, status date, the hearing on the section 2-1401 petition was continued to June 4, 2012, and Nomanbhoy was given until May 15, 2012, to answer or otherwise plead. On the June 4 hearing date, the hearing on the section 2-1401 petition was continued over Lincoln Title's objection to July 2, 2012, attorney Schroeder was granted leave to file an appearance on behalf of Nomanbhoy, and Nomanbhoy was given until June 18, 2012, to file an answer or other pleading in response to the section 2-1401 petition. On June 15, 2012, attorney Schroeder filed a motion to extend his time to respond to the petition. That motion was granted, Schroeder was given until June 29, 2012, to file his response, and the hearing on the section 2-1401 petition was continued until July 9, 2012. On June 28, 2012, attorneys Morthland and Phipps entered their appearance for Nomanbhoy and filed a section 2-619 motion to dismiss the section 2-1401 petition, alleging that Lincoln Title lacked standing to collaterally attack the tax deed because Lincoln Title had no recorded interest in the subject property and was a "complete stranger" to the subject property's title. Morthland and Phipps filed no other response to the section 2-1401 petition. Lincoln Title filed a response opposing the motion to dismiss. In its response, Lincoln Title asserted, among other things, that as the title insurer to the policy issued on the subject property at its sale during the tax deed proceeding, it had an unequivocal injury in fact and a legally cognizable interest in attacking the validity of the tax deed and the propriety of the tax deed proceeding and, thus, that it had standing to bring the section 2-1401 petition.

¶ 9 A hearing was held on the section 2-1401 petition and on the motion to dismiss on July 9, 2012, as previously scheduled. Attorney Phipps appeared for Nomanbhoy. At the outset of the hearing, the trial court asked whether either attorney needed more time to do any additional briefing of the issues and if the attorneys were ready to argue the matter. Neither attorney requested additional time at that point. No evidence was presented at the hearing, just the arguments of the attorneys. Phipps argued that Lincoln Title lacked standing and that the motion to dismiss should be granted. During its argument, Lincoln Title elaborated further on its interest in the property, stating that Salta was trying to close on the sale of the property to a third party and that Lincoln Title had issued a title insurance policy on the subject property based upon its search of the records. Lincoln Title argued that it had standing, that the motion to dismiss should be denied, and that the section 2-1401 petition should be granted. Phipps responded to Lincoln Title's argument as to whether the section 2-1401 petition should be granted, although somewhat briefly and primarily in the context of standing. At the conclusion of the hearing, the trial court denied Nomanbhoy's motion to dismiss and took the section 2-1401 petition under advisement. Phipps made no objection or request of the trial court at that time. On July 11, 2012, the trial court issued a written decision granting Lincoln Title's section 2-1401 petition. In reaching that conclusion, the trial court found that Nomanbhoy had failed to file its section 22-5 take notice with the county clerk and implicitly ruled that the deed had been procured by fraud because Nomanbhoy represented in its application in support of its request for a tax deed that it had complied with all of the statutory requirements pursuant to section 22-5 and that all of the applicable notices required by law were given. The trial court made no statement in its ruling about count I of the section 2-1401 petition or about section 22-85 of the Property Tax Code.

¶ 10 Attorney Morthland filed a motion to reconsider on behalf of Nomanbhoy. In the motion, Morthland alleged that prior to the July 9 hearing, he had agreed with counsel for Lincoln Title that the only matter that would be heard at the hearing was Nomanbhoy's motion to dismiss, that he was personally unable to attend the hearing, and that he had his associate (Phipps) appear for the purpose of arguing the motion to dismiss. Morthland pointed out that no discovery had been conducted in this case and asked the trial court to reconsider its ruling and to allow the parties to present further evidence after discovery had been conducted. Morthland alleged further that the issue of the defective take notice had previously been litigated before the trial court at a prior hearing.[2] Morthland claimed that because the trial court was previously informed of the issue of the defective take notice at the prior hearing and had knowledge of the issue, no facts or circumstances were withheld from the court, and Nomanbhoy's statement in the application was not fraudulent. Morthland represented further that it was undisputed that the owner of record at the time received the section 22-5 take notice by regular mail. Attached to the motion to reconsider was the affidavit of Shabbir Nomanbhoy, a limited partner of Nomanbhoy. In the affidavit, Shabbir attested that after he received the certificate of purchase, he mailed by regular mail a take notice to the assessee of record, Salta; that after mailing several notices to Salta, Shabbir had a phone conversation with Marshall Atlas, an officer and director of Salta; that Atlas acknowledged that he had received the section 22-5 take notice sent by Shabbir; that Atlas informed Shabbir that he did not intend to redeem the taxes and offered Shabbir $2, 000 to " 'go away' "; and that Atlas told Shabbir that Shabbir had legal problems with his petition and that he was not going to get his money back. Nomanbhoy also filed a memorandum of law in support of its motion to reconsider.

ΒΆ 11 Lincoln Title filed a response and opposed the motion to reconsider. Lincoln Title denied that it had an agreement with Morthland to proceed only on the motion to dismiss at the July 9 hearing and stated that it informed opposing counsel that it was going to proceed on its section 2-1401 petition. Lincoln Title pointed out that at the hearing on the posting of costs, the trial court did not make a determination as to the effect of Nomanbhoy's failure to comply with the notice requirements ...


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