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LLC v. Coleman

Court of Appeals of Illinois, First District, Sixth Division

June 5, 2015

LSREF2 NOVA INVESTMENTS III, LLC, Plaintiff-Appellant,
v.
MICHELLE COLEMAN, Defendant-Appellee

Appeal from the Circuit Court of Cook County. No. 12 L 5297. The Honorable Brigid Mary McGrath, Judge Presiding.

FOR PLAINTIFF-APPELLANT: Rebecca M.R. Weininger, Johnson, Blumberg & Associates, LLC, Chicago, IL.

FOR DEFENDANT-APPELLEE: Wade B. Arends, OF COUNSEL, Arends & Callahan, Chicago, IL.

JUSTICE LAMPKIN delivered the judgment of the court, with opinion. Justices Hall and Rochford concurred in the judgment and opinion.

OPINION

LAMPKIN, J.

Page 1031

[¶1] Plaintiff, LSREF2 Nova Investments III, LLC, appeals the circuit court's order granting a motion to reconsider in favor of defendant, Michelle Coleman, and dismissing plaintiff's complaint seeking relief under a promissory note based on the doctrine of res judicata. On appeal, plaintiff contends the circuit court erred in dismissing its complaint where res judicata did not bar it from pursuing a distinct remedy other than the remedy pursued in the prior mortgage foreclosure action. Based on the following, we affirm.

[¶2] FACTS

[¶3] On November 19, 2007, defendant executed a mortgage and a promissory note in relation to a commercial property located at 6456 S. Honore, in Chicago, Illinois. The promissory note was for $304,000 and was secured by the mortgage. Plaintiff is the current holder of the promissory note, as the apparent successor in interest of Citibank, N.A. Defendant defaulted on her payments in 2010.

[¶4] On August 18, 2010, plaintiff's predecessor in interest filed a single-count complaint to foreclose the mortgage seeking in its prayer for relief, inter alia, a judgment to foreclose the mortgage and a personal judgment for a deficiency. Plaintiff's predecessor in interest brought the complaint in its capacity as the legal holder of the mortgage and the promissory note. The mortgage and the promissory note were attached as exhibits to the complaint. The unpaid balance due at the time of the filing of the foreclosure complaint was $291,813.89. The complaint alleged that defendant was " personally liable for any deficiency."

[¶5] On November 22, 2010, the circuit court entered a judgment of foreclosure and sale in favor of plaintiff, finding that a default by defendant, the " valid" obligee of the mortgage and promissory note, had occurred in the payment of the principal and interest due pursuant to the terms of said mortgage and promissory note and that " plaintiff has the right and power to declare immediately due and payable all indebtedness secured by the mortgage." The circuit court further found that by virtue of the mortgage and note, plaintiff was due $322,668.35. The judgment also provided that " [i]n case there is any deficiency in the amount [due] the plaintiff, LSREF2 NOVA INVESTMENTS, LLC, the plaintiff shall be entitled to a deficiency judgment against the defendant, MICHELLE L. COLEMAN, jointly and severally, for such amount and for an execution thereon as provided by law." In addition, the judgment provided that " [t]he Court expressly retains jurisdiction of the property which is the subject of this foreclosure for so long as may be necessary for the purpose of placing in possession of the premises the holder of the Certificate of Sale or the grantees in the Intercounty Judicial Deed, or his or their legal representatives or assigns, and reserves the right to appoint a receiver to take possession of said premises in order to prevent impairment of the value of the premises, manage and conserve the premises, or satisfy any deficiency which may be found due to plaintiff."

[¶6] On January 11, 2011, a judicial sale was held and plaintiff purchased the subject property for $100,000. On February 28, 2011, the circuit court entered an order approving the report of the sale and distribution of the subject property, confirming the sale, and ordering possession. The February 28, 2011, order stated that " [t]here shall be an IN REM deficiency judgment entered in the sum of $227,416.32 with interest thereon as by statute provided against the subject property."

Page 1032

[¶7] On May 15, 2012, plaintiff filed a complaint, seeking to enforce the promissory note against defendant. On January 2, 2013, defendant filed an answer, but, on May 15, 2013, the circuit court granted defendant's motion to withdraw that answer and to file a motion to dismiss. In her motion to dismiss pursuant to section 2-619 of the Code of Civil Procedure (Code) (735 ILCS 5/2-619 (West 2010)), defendant alleged plaintiff's breach of contract action was barred by the doctrine of res judicata where the circuit court already had ruled on defendant's liability pursuant to the promissory note. On October 30, 2013, the circuit court denied defendant's motion to dismiss without providing its reasoning. Then, on November 27, 2013, defendant filed a motion to reconsider the circuit court's denial of her motion to dismiss, arguing that the circuit court erred in its application of the law to the facts established by the pleadings. Following a hearing,[1] the motion to reconsider was granted by the circuit court on December 19, 2013, and plaintiff's complaint was " dismissed with prejudice based upon res judicata." This appeal followed.

[¶8] ANALYSIS

[¶9] Plaintiff contends the circuit court erred in granting defendant's motion to reconsider and in dismissing its complaint based on res judicata where plaintiff was entitled to pursue an action separate from the prior foreclosure proceeding in order to adjudicate defendant's liability under the promissory note. In response, defendant contends plaintiff is barred from pursuing an in personam claim under the note against her where its previously adjudged complaint requested " [a] personal judgment for any deficiency," where the foreclosure judgment explicitly provided that plaintiff was " entitled to a deficiency judgment" against defendant in the event there was a remaining deficiency, and where the order approving the sale and distribution of the subject property stated that ...


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