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United States v. Chicago Title Land Trust Co.

United States District Court, C.D. Illinois, Peoria Division

May 9, 2014

CHICAGO TITLE LAND TRUST COMPANY, f/k/a City National Bank and Trust Company, Under Trust Agreement Dated June 7, 1983, and Known as Trust 2256; ILLINOIS HOUSING DEVELOPMENT AUTHORITY; UNKNOWN OWNERS AND NON-RECORD CLAIMANTS, Defendants.


SARA DARROW, District Judge.

In this case, Plaintiff United States of America ("Government") seeks foreclosure of a mortgage on real property owned by Defendant Chicago Title Land Trust Company ("Chicago Title"). The Government has moved for possession of the properties prior to entry of a judgment of foreclosure. For reasons set forth below, the Government's Amended Motion for Possession, ECF No. 6, is DENIED without prejudice.


The U.S. Department of Agriculture ("USDA") loaned a total of $456, 290 to three borrowers under three agreements in 1975, 1984, and 1992. Compl. ¶ 3, ECF No. 1. As consideration for the loans, the borrowers mortgaged three nonresidential properties in Chillicothe, Illinois (collectively "the Property") to the USDA. Chicago Title is the present owner of the Property. Id. ¶ 3(L). The Government claims Chicago Title defaulted on the mortgages when a payment of $29, 798.05 became due on November 29, 2012, and when Chicago Title failed to maintain improvements and make repairs to the Property. Id. ¶ 3(J). As of October 30, 2013, the total amount allegedly due under the mortgage agreements was $418, 725.51 plus accrued interest. Id. The agreements provide that in the event of default, the United States is authorized to possess the Property. Compl., Ex. 1 at 3, 10, 17.

On December 2, 2013, the Government filed the instant suit seeking foreclosure on the mortgages, alleging subject matter jurisdiction under 28 U.S.C. § 1345. The Government simultaneously moved to take possession of the Property prior to a judgment of foreclosure pursuant 735 ILCS 5/15-1706. Pl.'s Mot. Poss. 1-2, ECF No. 5. In a Text Order dated December 19, 2013, the Court denied the motion without prejudice on the grounds that it was not "supported by affidavit or other sworn pleading" as required by 735 ILCS 5/15-1706(a). On December 23, 2013, the Government filed an Amended Motion for Possession, purporting to satisfy section 15-1706(a) by including the sworn declaration of USDA Housing Program Director for Rural Development Barry L. Ramsey. Pl.'s Am. Mot. Poss., ECF No. 1; Ramsey Decl., ECF No. 6-1.

The Government unsuccessfully attempted to serve process upon Chicago Title at 171 N. Clark Street, Chicago, Illinois on January 9, 2014. See Pl.'s Summons Issued, ECF No. 7. The Government had mailed notice of its Motion for Possession to Chicago Title at the same address on December 23, 2013. Pl.'s Am. Mot. Poss. 3. On April 21, 2014, a receptionist of Robert Kuzma, Trust Counsel to Chicago Title, was served with summons and the Complaint at a different address: 10 S. LaSalle Street, Chicago, Illinois. See Pl.'s Executed Summons, ECF No. 11. The notice of Summons Issued to Kuzma makes no mention of service of any document other than the Complaint along with the summons. See Pl.'s Alias Summons Issued, ECF No. 10. As of May 5, 2014, Chicago Title had yet to file an Answer or otherwise make any appearance in this case.


I. Legal Standard

Illinois Mortgage Foreclosure Law creates a presumption that the mortgagee of nonresidential real property is entitled to possession during the pendency of a foreclosure proceeding. Travelers Ins. Co. v. La Salle Nat'l Bank, 558 N.E.2d 579, 581 (Ill.App.Ct. 1990) (citing 735 ILCS 5/15-1701(b)(2)). Section 15-1701(b)(2) provides that, prior to the entry of a foreclosure judgment, a mortgagee may, upon request of the court, possess nonresidential real estate when (1) "the mortgagee is so authorized by the terms of the mortgage or other written instrument;" and (2) "the court is satisfied that there is a reasonable probability that the mortgagee will prevail on a final hearing of the cause." 735 ILCS 5/15-1701(b)(2). A proven mortgage default establishes a reasonable probability of success. First State Bank of Illinois v. Mass. Consumption, LLC, No. 2-13-0202, 2013 WL 2641612, at ¶ 19 (Ill.App.Ct. June 10, 2013); Bank of America, N.A. v. 108 N. State Retail LLC, 928 N.E.2d 42, 51 (Ill.App.Ct. 2010). Once the mortgagee's two requirements are satisfied, "the burden then shifts to the mortgagor to object and to show good cause as to why the mortgagor should be entitled to remain in possession." First State Bank of Illinois, 2013 WL 2641612, at ¶ 20 (citing 735 ILCS 5/15-1701(b)(2)).

A mortgagee's request to be placed in possession "shall be supported by affidavit or other sworn pleading." 735 ILCS 5/15-1706(a). "After reasonable notice has been given to all other parties, the court shall promptly hold a hearing and promptly rule on [the] request;" no hearing is necessary if the mortgagor does not object to the mortgagee's request for possession. 735 ILCS 5/15-1706(c). The Court "may" rule on a motion for possession without service on the mortgagor upon a showing of default or good cause. Id. § 15-1706(d).

Under the Federal Rules of Civil Procedure, process may be served upon a corporation, partnership, or association within a district in the United States by serving "an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process, " or as provided by Rule 4(e)(1) for service of an individual. Fed.R.Civ.P. 4(h)(1). Rule 4(e)(1) provides for service following the law of the state where the district court is located or where service is made. Fed.R.Civ.P. 4(e)(1). Illinois law provides that a business entity may be served by serving a registered agent or any officer or agent of a corporation, or any partner personally or agent of a partnership, as well as by publication and mail in the manner permitted for service of individuals. 735 ILCS 5/X-XXX-X-XXX. Whether a receptionist is an agent who may receive service of summons under Illinois law is a factual question. Bober v. Kovitz, Shifrin, Nesbit, No. 03 C 9393, 2005 WL 2271861, at *4 (N.D. Ill. Sept. 4, 2005) (citing Citicorp Sav. Of Ill. V. Rucker, 692 N.E.2d 1319, 1325 (Ill.App.Ct. 1998)). As Illinois courts have explained:

[E]mployment and agency are not identical. Service on a secretary or receptionist who understood the purport of the service of summons may be service on the corporation. However, service on a receptionist who does not understand her duty to deliver the summons to her employer may be insufficient.

Island Terrace Apartments v. Keystone Serv. Co., 341 N.E.2d 41, 44 (Ill.App.Ct. 1975) (citing, among other cases, Union Asbestos & Rubber Co. v. Evans Prods. Co., 328 F.2d 949, 952-53 (7th Cir. 1964) and Gurtz Elec. Co. v. ...

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