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Bank of America, N.A. v. Higgin

Court of Appeals of Illinois, Second District

September 26, 2014

BANK OF AMERICA, N.A., Plaintiff-Appellee,
GLEN HIGGIN, d/b/a Birdies and Eagles, and KAREN HIGGIN, d/b/a Birdies and Eagles, Defendants-Appellants (JPMorgan Chase Bank, N.A., as Successor in Interest to Bank One, N.A., Successor in Interest to American National Bank and Trust Company of Chicago, Nonrecord Claimants, and Unknown Owners, Defendants)

Appeal from the Circuit Court of Kane County. No. 12-CH-983. Honorable Leonard J. Wojtecki, Judge, Presiding.


In mortgage foreclosure proceedings, the order confirming the judicial sale was modified by the appellate court to grant defendant mortgagors the sale surplus, even though the trial court initially awarded the surplus to the mortgagee bank after the bank informed the trial court that the bank paid the taxes due on the property at the time of the sale after the sale and requested the trial court to use the surplus to reimburse the bank for that payment, since the bank was only allowed to recover expenditures necessary to preserve its interests up until the time of the sale, and courts should not use a surplus to pay real estate taxes after the foreclosure sale in order to protect the mortgagee's interests, especially when real estate taxes do not constitute costs and fees, which may be allowed to the extent provided in the note and mortgage.

For Appellants: Scott G. Richmond and Peter J. Evans, Ariano Hardy Ritt Nyuli Richmond Lytle & Goettel, South Elgin, IL.

For Appellee: Thomas H. Peckham and Brian R. Orr, Lowis & Gellen LLP, Chicago, IL.

JUSTICE McLAREN delivered the judgment of the court, with opinion. Justices Jorgensen and Spence concurred in the judgment and opinion.



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[¶1] The property-owner defendants in a foreclosure action, Glenn Higgin, d/b/a Birdies and Eagles, and Karen Higgin, d/b/a Birdies and Eagles (defendants), appeal, challenging the order confirming the sale and ordering the distribution of the sale surplus to plaintiff, Bank of America, N.A., the mortgagee. Real estate taxes were due on the foreclosed property at the time of sale, plaintiff paid them afterward, and then plaintiff asked the court to apply the surplus from its own bid to reimburse it for that payment. Defendants asserted at the time and now reassert on 2014 IL App. (2d) 131302 appeal that such reimbursement is contrary to Illinois foreclosure law. We agree with defendants. We therefore modify the confirmation order to grant the sale surplus to defendants.


[¶3] On March 19, 2012, plaintiff filed a two-count complaint against defendants, lienor JPMorgan Chase Bank, N.A. (the successor in interest to Bank One, N.A., which was the successor in interest to American National Bank & Trust Co. of Chicago), nonrecord claimants, and unknown owners. The first count sought a money judgment against defendants based on breach of a group of related loan agreements. The second sought foreclosure on the mortgaged property at 1800 West McDonald Road in South Elgin.

[¶4] The mortgage instrument attached to the complaint stated that real estate tax payments made by the mortgagee would become due under the note.

[¶5] Defendants answered and plaintiff moved for summary judgment. On January 23, 2013, the court entered a judgment of foreclosure. The judgment provided that, " [i]f Plaintiff is the successful bidder at the sale, the amount due Plaintiff, plus all costs, advances, and fees, with interest incurred between entry of Judgment and confirmation of sale, shall be taken as credit in its bid." Further, the confirmation order " may also" " [a]pprove the Plaintiff's fees, costs and additional advances arising between entry of the Judgment of Foreclosure and the Confirmation hearing, pursuant to the terms of the mortgage and [section 15-1504 of the Code of Civil Procedure (Code) (735 ILCS 5/15-1504 (West 2012))]." The published notice of sale stated that the property was " subject to real estate taxes."

[¶6] Plaintiff moved for confirmation of the sale. The motion stated that plaintiff had been the successful bidder, having bid $1,905,374.78, for a surplus of $83,305.25. Plaintiff asked the court to " appl[y] [the surplus to] the unpaid outstanding taxes due on the Property as it is a reasonable expense for [plaintiff] to secure possession of the property."

[¶7] Plaintiff later filed an amended motion, in which it stated that it had intended to pay the taxes before the sale and therefore inadvertently had " included the amount of unpaid outstanding taxes *** as part of its credit bid." In support of its request to apply the surplus, it relied on a reference in the foreclosure judgment to section 15-1504(d) of the Code (735 ILCS 5/15-1504(d) (West 2012)). Most likely, plaintiff meant section 15-1504(d)(4), which states, concerning matters that are included in a judgment for fees and costs, " in order to protect the lien of the mortgage, it may become necessary for plaintiff to

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pay taxes and assessments which have been or may be levied upon the mortgaged real estate." 735 ILCS ...

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