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Wells Fargo Bank, N.A. v. McCluskey

Supreme Court of Illinois

November 21, 2013

WELLS FARGO BANK, N.A., Appellant,

Held [*]

Where vacation of a default judgment of mortgage foreclosure and a setting aside of the judicial sale is sought, civil procedure law may be utilized prior to a motion to confirm the sale, but not after, when the more restrictive foreclosure statute governs—denial of relief to debtor upheld under even the more liberal civil procedure law.

Appeal from the Appellate Court for the Second District; heard in that court on appeal from the Circuit Court of Du Page County, the Hon. Robert G. Gibson, Judge, presiding.

James V. Noonan and Michael H. Walsh, of Noonan & Lieberman, Ltd., of Chicago, for appellant.

Julia Topik and Mark A. Laws, both of Chicago, and Lloyd Brooks, of Matteson, for appellee.

Chief Justice Garman and Justices Freeman, Kilbride, Karmeier, and Burke concurred in the judgment and opinion.

Justice Thomas took no part in the decision.



¶ 1 In this residential mortgage foreclosure action, we are asked to consider whether, after a judicial sale of property, a party may seek to vacate an underlying default judgment of foreclosure under section 2-1301(e) of the Code of Civil Procedure (the Code) (735 ILCS 5/2-1301(e) (West 2010)) or whether the Illinois Mortgage Foreclosure Law (the Foreclosure Law) (735 ILCS 5/15-1101 et seq. (West 2010)) governs the mode of procedure. For the reasons that follow, we hold that after a motion to confirm the judicial sale has been filed, the Foreclosure Law governs.


¶ 3 In 2009, Katie McCluskey executed a promissory note in the principal amount of $330, 186 secured by a mortgage on her home. The mortgage was held by Wells Fargo Bank, N.A. McCluskey subsequently defaulted on the loan obligation. In July 2010, Wells Fargo initiated foreclosure proceedings pursuant to the Foreclosure Law. McCluskey was served with process on July 20, 2010, but did not answer or otherwise plead. Thereafter, on October 18, 2010, the circuit court entered an order of default and judgment of foreclosure. The judgment indicated that the statutory period of redemption would expire on February 20, 2011, after which time the property would be sold.

¶ 4 On February 24, 2011, seven months after the judgment of foreclosure was entered, and on the date set for judicial sale, McCluskey, through counsel, filed an emergency motion to stay the sale and to vacate the default judgment. Therein, she acknowledged service of process and that she was in default on the loan. She explained that she diligently sought a loan forbearance or loan modification agreement with the bank, but was unable to reach an agreement. She further explained that her husband had obtained new employment and was now able to make the monthly payments on their mortgage. At the hearing on the motion, the parties settled on an agreed order pursuant to which McCluskey withdrew her motion to vacate the default judgment, and Wells Fargo agreed to postpone the judicial sale for 75 days to allow McCluskey to negotiate a loan modification agreement with the bank.

¶ 5 Negotiations on the loan were unsuccessful and, on May 12, 2011, the rescheduled date for the judicial sale, Wells Fargo was the successful bidder on the property at a purchase price of $235, 985.69. On May 26, 2011, 10 months after the judgment of foreclosure, McCluskey, through new counsel, filed a new motion to vacate the default judgment and set aside the sale pursuant to section 2-1301(e) of the Code. Therein, McCluskey alleged for the first time that she had meritorious defenses to the complaint, including that (1) the affidavit in support of the judgment of foreclosure was not in compliance with the requirements of Supreme Court Rule 191 because the loan officer did not have personal knowledge of the facts of the case; and (2) evidence existed that Wells Fargo was not the current holder of the note and, therefore, lacked standing to bring suit.

ΒΆ 6 On August 30, 2011, following a hearing, the circuit court denied McCluskey's motion to vacate, finding that she had waived her objections to the default and had voluntarily withdrawn her original motion in return for the postponement of the judicial sale. Since she had received the benefit of the parties' agreement, and had agreed that the sale could go forward on the postponed date absent an agreement on the loan negotiations, the court determined that she could not now seek to rescind her agreement. Additionally, the court entered an order, over McCluskey's objection, confirming the judicial sale and finding that: (1) all notices required by the Foreclosure Law were given; (2) the sale was fairly and properly made; (3) the sale proceeded in accordance with the terms of the court's judgment; and (4) justice was done. McCluskey filed her notice of appeal, challenging the court's ruling on ...

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