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Wells Fargo Bank, N.A. v. Simpson

Court of Appeals of Illinois, First District, First Division

June 1, 2015

WELLS FARGO BANK, N.A., Plaintiff-Appellee,
BERNADETTE DILLARD SIMPSON, Defendant-Appellant (Unknown Heirs and Legatees of Paula Dillard, Deceased; Unknown Owners and Nonrecord Claimants; Gerald Nordgren as Personal Representative for Paula Dillard, Deceased, Defendants)

Modified upon Denial of Rehearing: August 3, 2015.

Appeal from the Circuit Court of Cook County. No. 11 CH 36741. Honorable Alfred M. Swanson, Jr., Judge Presiding.


For APPELLANT: David J. Piell, Esq., Buffalo Grove, IL.

For APPELLEE: Kerry Walsh, of counsel, Fidelity National Law Group, Chicago, IL.

DELORT, PRESIDING JUSTICE delivered the judgment of the court, with opinion. Justices Connors and Harris concurred in the judgment and opinion.



[¶1] This case presents two questions regarding property law. The first issue involves the rights of heirs of deceased mortgagors under consumer-oriented mortgage foreclosure loss mitigation programs pursuant to our supreme court's ruling in ABN AMRO Mortgage Group, Inc. v. McGahan, 237 Ill.2d 526, 931 N.E.2d 1190, 342 Ill.Dec. 7 (2010), a case which precipitated the adoption of Illinois Supreme Court Rule 113 (Ill. S.Ct. R. 113 (eff. May 1, 2013)). The second is a quirky deed recording issue which has vexed title examiners, real estate lawyers, and courts since time immemorial. It involves the lien priority of a mortgagee when its mortgagor executes successive deeds to different grantees, but then records them out of chronological order.

[¶2] Paula Dillard purchased a home located in Buffalo Grove, Illinois in 1991. She died in 2008. In 2011, her mortgage lender filed this foreclosure lawsuit because the loan was delinquent. The lawsuit was eventually amended to name Dillard's granddaughter, Bernadette Dillard Simpson, as a defendant. Simpson claimed that ownership of the home had passed to her on Dillard's death. Simpson filed an answer to the amended complaint, but she failed to respond to the lender's summary judgment motion and lost the case. She tried to undo the resulting foreclosure by filing several motions to vacate and challenging the sale of the property at the judicial sale. We agree with the circuit court that she has provided an insufficient basis to vacate the foreclosure or invalidate the sale, and therefore affirm.


[¶4] In the 17 years between 1991 and her death in 2008, Dillard executed no less than 10 successive mortgages with various lenders.[1] The chain of title reveals that each mortgage, except the last one involved in this case, was released at or about the time the next was executed, indicating that the 10 mortgages represented a continuous series of refinancings. In 2003, a few months after executing the seventh mortgage in her individual capacity, she deeded the property into a trust wherein she was named as the trustee, apparently as part of an estate plan.

[¶5] Although this case involves the foreclosure of Dillard's tenth mortgage, her actions around the time she signed the eighth mortgage in 2004 frame the issues before us. Simpson argues that an out-of-order recording happened through no fault of her own, but rather by a sluggish lender or title company. The record, however, does not reveal whether Dillard personally undertook these actions, or whether they were done by someone else on her behalf or at her direction. For simplicity of expression only, we attribute them all to her. We also follow the presumption that Dillard (personally or as trustee) executed and delivered the deeds to the respective grantees on the dates shown on the face of the deeds. Calligan v. Calligan, 259 Ill. 52, 59, 102 N.E. 247 (1913) (in the absence of proof to the contrary, the presumption is that a deed was executed and delivered on the day it is dated); Berigan v. Berrigan, 413 Ill. 204, 214, 108 N.E.2d 438 (1952) (applying Calligan ).

[¶6] The relevant actions are as follows:



Dillard, as trustee, executes a deed

from the trust to herself

July 22, 2004

personally, but does not record it

immediately (first deed).

Dillard, in her personal capacity,

executes a quit claim deed

August 5, 2004

back to the trust, but does not record

it immediately (second


August 12, 2004

Dillard records the second deed.

Despite the fact she had already

signed the second deed

August 24, 2004

transferring the property back into

the trust on August 5 and

recorded it on August 12, Dillard

now records the first deed.

The recording number is 0423705368.

Dillard records the eighth

mortgage on the property with

MERS[2] as mortgagee. The

mortgage receives recording

August 24, 2004

number 0423705369, indicating that

it was recorded just after

the first deed as part of the closing

of the eighth mortgage.

This mortgage was released

on May 24, 2006.

April 26, 2006

Dillard signs a ninth mortgage in

her personal capacity. This

mortgage was released on

July 30, 2007.

Dillard signs a tenth mortgage

with Wachovia Mortgage

Company in her personal capacity.

That is the mortgage at

July 24, 2007

issue in this case. On November 18, 2009,

Wachovia assigned

the mortgage to plaintiff Wells

Fargo Bank, N.A. (Wells


[¶7] It appears that the lender for the eighth mortgage required Dillard to temporarily deed the property out of the trust to ensure that title was vested in Dillard personally when she signed that mortgage. The problem before us was created when the second deed, back to her trust, was recorded out of chronological order. While the first deed " sat in a drawer," it was supplanted by the second deed, which was recorded first. Accordingly, when Dillard signed the eighth mortgage in her personal capacity, she had already deeded the property back to her trust and that deed had been recorded. Common loan closing procedures contain safeguards to ensure this is not supposed to happen. Presumably, when Dillard signed the eighth mortgage in her personal capacity, she simultaneously executed a standard affidavit of title incorrectly (or falsely) certifying she was unaware of any unrecorded deeds. See generally Joseph R. Fortunato, Jr., Representing the Seller, in Residential Real Estate § 2.33 (Ill. Inst. for Cont. Legal Educ. 2011). Apparently due to the closeness in time between August 12 and August 24, and in reliance on the affidavit of title, the loan for the eighth mortgage closed without MERS or the title insurer noticing that Dillard had already deeded the property back to the trust. The recorded chain of title showed Dillard, not the trust, as the last grantee. That remains the status quo even today. Accordingly, Dillard proceeded to sign and obtain a ninth and tenth mortgage in her personal capacity notwithstanding the fact that the last executed deed granted the property to her trust.

[¶8] When Wells Fargo sued to foreclose the tenth mortgage in 2011, it did not know that Dillard was deceased. After it learned of her demise, it determined that there was no probate estate opened for her -- despite the fact that she had died three years earlier. Accordingly, it moved to amend the complaint to name defendant Gerald Nordgren as a special representative in her stead. See 735 ILCS 5/13-209 (West 2010). On January 31, 2012, the court granted that motion and specifically substituted Nordgren, in his representative capacity, as a defendant in place of Dillard. Nordgren conducted an investigation which confirmed that there was no probate estate opened for Dillard. He also discovered a published obituary which stated that Dillard was survived by unnamed " children, grandchildren, and great-grandchildren." Nordgren located only two possible heirs whom he could identify by name: Alan Dillard, a son, and Simpson, whom he discovered was living at her dead grandmother's property, and whom Nordgren's associate actually interviewed. Based on his investigation and the fact that no one had stepped forward to defend the foreclosure case, Nordgren recommended the case proceed as a default. Wells Fargo then filed a second amended complaint on July 3, 2012 which added Simpson as a defendant. See 735 ILCS 5/15-1501(b) (West 2012) (providing that a resident or tenant is a permissible party to a foreclosure case). The record does not reveal why Alan Dillard was not also named as a defendant in the second amended complaint.

[¶9] Simpson filed a pro se appearance and an answer, in which she admitted most of the allegations of the second amended complaint but claimed lack of knowledge regarding the allegation that the mortgage was in default. The answer contained no affirmative defenses whatsoever. Particularly absent from her answer was any defense relating to the out-of-order deed and the void lien issue which forms the basis for her present appeal. We recognize that in her second motion to vacate (but not her first), Simpson's counsel requested leave to file an amended answer. However, that request was fatally flawed because it did not contain a proposed amended answer. See First Robinson Savings & Loan v. Ledo Construction Co., Inc., 210 Ill.App.3d 889, 892, 569 N.E.2d 304, 155 Ill.Dec. 304 (1991) (" [A] motion for leave to amend a pleading must be in writing, state the reason for the amendment, set forth the amendment that is being proposed, show the materiality and propriety of the proposed amendment, explain why the proposed additional matter was omitted from earlier pleadings, and be supported by an affidavit." ). She also filed an application to sue as a poor person, stating she had been unemployed since 2008, which the court granted.

[¶10] On February 22, 2013, while this case was pending below, our supreme court promulgated Rule 114 (Ill. S.Ct. R. 114 (eff. May 1, 2013)). This rule requires that motions for judgment in a foreclosure case include a loss mitigation affidavit attesting to the efforts expended to comply with any specifically required loss mitigation programs. On March 21, 2013, before the rule's May 1 effective date, Wells Fargo filed a motion for summary judgment which did not include a Rule 114 affidavit. Simpson's counsel set the motion for hearing on May 21, 2013. In the meantime, on April 8, 2013, the supreme court rules committee amended the committee comments to Rule 114 to specifically clarify that the affidavit was required for a foreclosure motion in any pending case regardless of whether the case was commenced was pending on May 1, 2013. Ill. S.Ct. R. 114, Committee Comments (adopted Apr. 8, 2013). Because this clarifying amendment also became effective on May 1, 2013, some foreclosure motions filed but not yet presented for hearing were no longer viable and had to be amended to comply with the new affidavit requirement. On May 21, the court entered a written order noting that Wells Fargo withdrew its motion without prejudice because it did not contain a Rule 114 affidavit. Simpson was present at the May 21 hearing.

[¶11] Apparently because either the circuit court or Wells Fargo later realized that such an affidavit was meaningless in a case involving a deceased mortgagor, Wells Fargo refiled the motion without a Rule 114 affidavit on May 31, 2013, and noticed it for hearing on July 30, 2013. Simpson claims that the motion was heard ex parte, but the certified proof of service in the record demonstrates that Wells Fargo's counsel sent timely notice of the motion to Simpson after it reset the motion for hearing. See Cook Co. Cir. Ct. R. 2.1(c)(i) (Aug. 21, 2000) (requiring five business days' notice for motions sent by mail). Therefore, it was not heard ex parte. See Black's Law Dictionary 657 (9th ed. 2009) (an ex parte hearing is held " without notice to" the opposing party.) Simpson did not appear at the summary judgment hearing, and she has provided no explanation why she did not.

[¶12] On July 30, 2013, the circuit court granted summary judgment to Wells Fargo and entered an order of foreclosure and sale. The order included language indicating that it was final and appealable under Supreme Court Rule 304(a). Ill. S.Ct. R. 304(a) (eff. Feb. 26, 2010). Dillard harangues Wells Fargo's law firm for including this language and complains doing so was improper, but that is not so. Rule 304(a) allows a court the discretion to make an order appealable which does not terminate the case but which nonetheless is a final judgment as to one of the claims in the case. The rule states, in part " an appeal may be taken from a final judgment as to one or more but fewer than all of the parties or claims only if the trial court has made an express written finding that there is no just reason for delaying either enforcement or appeal or both." Id. While a foreclosure order does not entirely terminate a case because the court must still sell the property and confirm the sale, it is final as to the foreclosure claims for relief within the meaning of Rule 304(a) in that it terminates (or " forecloses" ) the defendant's basic ownership interest in the property. Accordingly, an order of foreclosure and sale can be subject to an interlocutory appeal if the court order includes Rule 304(a) language. In re Marriage of Verdung, 126 Ill.2d 542, 555, 535 N.E.2d 818, 129 Ill.Dec. 53 (1989); North Community Bank v. 17011 South Park Ave., LLC, 2015 IL App. (1st) 133672, ¶ ¶ 7, 11, 29 (noting that " [i]ncluding interlocutory appeal language in foreclosure orders is relatively uncommon, but nonetheless allowable" ).

[¶13] Shortly after the circuit court granted summary judgment in favor of Wells Fargo, Simpson, through a newly retained attorney, filed the first of three motions to vacate the summary judgment and the corresponding order of foreclosure and sale. In her first motion, filed August 29, 2013, Simpson alleged, among other things, that: (1) she was the executor of Dillard's estate and that fact had been a matter of " public record" for several years; (2) she paid on the mortgage for some time after Dillard's death and had tried to refinance her grandmother's loan; (3) she lived at the property; and (4) she was frustrated at Wells Fargo's refusal to " put the deed" to the property into her own name. She requested that the court not only vacate the foreclosure order, but also order Wells Fargo to comply with various loss mitigation programs applicable to mortgagors. Despite the fact she had no pending counterclaim requesting such relief, she also demanded that the court declare her to be the owner of the property. Again, we note that she was named as a defendant only in her personal capacity because she was an occupant and potential heir; she never intervened into the case in the capacity as a trustee or executor. The court denied her first motion to vacate on September 9, 2013.

[¶14] On October 11, 2013, Simpson filed a second motion to vacate, raising similar arguments as in her first motion. The motion was labeled as a motion to reconsider the denial of the first motion to vacate.[3] Simpson's second motion added a new argument -- that the mortgage was void because the mortgagor, Dillard, had no ownership interest in the property when she signed the mortgage -- only her trust did. Accordingly, Simpson argued, Wells Fargo had no valid lien on the property.

[¶15] The circuit court stayed the sale during the briefing of the second motion to vacate. On November 22, 2013, after briefing, the court denied the second motion to vacate and dissolved the stay of the sale. However, on January 28, 2014, Simpson filed a third motion to vacate, raising similar issues as she did in her earlier two motions. Simpson's first, second, and third motions to vacate included no copy of Dillard's will, Dillard's trust, an affidavit of heirship, or any other documents demonstrating that Simpson had acquired title to the property, other than her own conclusory affidavit to that effect. Wells Fargo noted this glaring omission in response to the motions, but Simpson never cured the problem by presenting that documentation. Accordingly, the appellate record now before us is bereft of any of these critically important documents. Simpson also filed a motion to compel discovery of materials related to her unsuccessful loan modification efforts, a motion which was doubly problematic because: (1) she had no right to modify her late grandmother's loan; and (2) discovery relating to anything other than the conduct of the sale was irrelevant because she had already lost the case. See Parkway Bank & Trust Co. v. Korzen, 2013 IL App. (1st) 130380, ¶ 60 (affirming denial of belated discovery request because " when the foreclosure has been entered, the defendant has lost the case for all intents and purposes" ). On February 4, 2014, the court denied the third motion to vacate and the motion to compel discovery.

[¶16] The property did not sell for enough to pay the outstanding balance on the mortgage, resulting in a deficiency. See 735 ILCS 5/15-1508(e) (West 2012). Wells Fargo moved for confirmation of the sale. Simpson opposed this motion, essentially repeating, for a fourth time, the same bases she used to attack the foreclosure order three times earlier. The circuit court again rejected Simpson's defenses. It issued a written opinion on September 22, 2014, finding that the last recorded deed in the chain of title at the time Dillard signed the mortgage granted the property to Dillard personally, and that therefore the mortgage was a valid lien against the real estate.

[¶17] In the same opinion, the circuit court, acting sua sponte, vacated the language in the original foreclosure order making it final and appealable under Rule 304(a). The court stated that language was included " inadvertently" and that it " determined" that it had been " erroneously included." As we explained in North Community Bank, 2015 IL App. (1st) 133672, ¶ ¶ 11, 29, including Rule 304(a) language in foreclosure orders is generally disfavored, because courts recognize that many foreclosure defendants do not truly appreciate the importance of judicial proceedings and do not appear to defend themselves until late in the process. However, because a case with a deceased mortgagor does not implicate that policy concern, lenders will often include the language in foreclosure orders involving deceased mortgagors. The original foreclosure order had been entered on July 30, 2013, so it became final when no appeal was filed by August 29, 2013, 30 days later. See Ill. S.Ct. R. 303(a)(1) (eff. May 30, 2008). Accordingly, Wells Fargo should have been able to justifiably rely on the fact that the order could never be appealed. Doubtless, the trial court judge vacated the Rule 304(a) language not only because it had been " inadvertently" included in the original order, but also to ensure Simpson could create a full record and avoid jurisdictional problems on appeal. Nonetheless, retroactively changing the rules of the game in this manner to Wells Fargo's detriment raises a legitimate jurisdictional question. However, because: (1) the situation is so unusual; (2) the court specifically found the Rule 304(a) language was " inadvertently" included; (3) Wells Fargo revested the court with jurisdiction by continuing to litigate on the merits while failing to object on this basis (see People v. Kaeding, 98 Ill.2d 237, 241, 456 N.E.2d 11, 74 Ill.Dec. 509 (1983)); and (4) the ultimate result would be the same under either approach, we will review the appeal of the motions to vacate on the merits.

[¶18] The order confirming the sale terminated the case on September 22, 2014, and this ...

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