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Concord Air, Inc. v. Malarz

Court of Appeals of Illinois, Second District

June 30, 2015

CONCORD AIR, INC., Plaintiff-Appellant,
MARCIN MALARZ, CHICAGO TITLE LAND TRUST COMPANY, as Trustee Under a Trust Agreement Dated May 8, 2012, Known as Trust Number 80023599443, UNKNOWN OWNERS, and NONRECORD CLAIMANTS, Defendants-Appellees.

Appeal from the Circuit Court of Lake County. No. 13-CH-2931 Honorable Mitchell L. Hoffman, Judge, Presiding.

Justices Jorgensen and Hudson concurred in the judgment and opinion.



¶ 1 Harris Bank filed a foreclosure action (Harris foreclosure) as to the property at issue and named plaintiff, Concord-Air, Inc., as a junior lienholder. Affidavits in the record state that personal service was unsuccessful, and service ultimately was made by publication. Plaintiff defaulted, and Harris Bank was the successful bidder at the judicial sale of the property, which was confirmed by the trial court. Title was then conveyed to LaSalle Holdings via a sheriff's deed. In preparing to buy the property, defendant Chicago Title Land Trust Company (Chicago Title) obtained a title report showing that plaintiff's interest had been extinguished by the Harris foreclosure. Chicago Title purchased the property and resold it to defendant Marcin Malarz.[1]

¶ 2 Upon learning of its default, plaintiff successfully moved to quash the service as defective. The trial court vacated the judgment against plaintiff only; and in turn, plaintiff initiated this action by filing a complaint for foreclosure and sale of the property.

¶ 3 The trial court dismissed the complaint under section 2-619(a)(9) of the Code of Civil Procedure (Code) (735 ILCS 5/2-619(a)(9) (West 2012)), concluding that Chicago Title was a bona fide purchaser for value and that a ruling for plaintiff would be against public policy. Plaintiff appeals, arguing that the record in the Harris foreclosure gave Chicago Title inquiry notice that plaintiff's interest in the property had not been extinguished, because service by publication was improper. We conclude that the service affidavits on file in the Harris foreclosure gave Chicago Title inquiry notice; and therefore, the complaint may not be dismissed on the ground that Chicago Title was a bona fide purchaser. We reverse the dismissal and remand the cause for further proceedings.


¶ 5 On October 21, 2013, plaintiff filed a verified complaint to foreclose the mortgage on the property at 1313 East Westleigh Road in Lake Forest. The complaint named Malarz as mortgagor and Chicago Title as present owner of the property. Plaintiff alleged that the mortgage was executed on March 5, 2009, and recorded in Lake County on July 30, 2009. Plaintiff further alleged that the mortgage was in default because the property was transferred without plaintiff's prior written consent.

¶ 6 On February 14, 2014, Chicago Title filed a motion to dismiss the complaint under section 2-619(a)(9) of the Code, alleging as affirmative matter that Chicago Title was a bona fide purchaser for value. To the motion, Chicago Title attached relevant documents to support its assertions. Chicago Title alleged that BMO Harris Bank, as successor in interest to Harris Bank, previously pursued a foreclosure action as to the subject property, docketed in the circuit court of Lake County under No. 10-CH-636 (Harris foreclosure). The Harris foreclosure pertained to a mortgage-securing note of $2.66 million, which was recorded in the office of the recorder of deeds in Lake County on July 19, 2007.

¶ 7 Harris Bank obtained a judgment of foreclosure and sale on December 6, 2011. Thereafter, Harris Bank proceeded to a judicial sale in which the bank was the successful bidder. On April 13, 2012, the trial court entered an order confirming the sale. On April 19, 2012, the property was conveyed to LaSalle Holdings via a sheriff's deed, and the deed was recorded on June 18, 2012.

¶ 8 On or around May 7, 2012, Chicago Title obtained a title commitment in preparation of its purchase of the property from LaSalle Holdings. Chicago Title's motion alleged that "[n]o outstanding title issues with the property were found" in the title commitment. On May 21, 2012, LaSalle Holdings sold the property to Chicago Title for $1.15 million, and the special warranty deed conveying the property was recorded on June 18, 2012.

¶ 9 In the trial court, Chicago Title argued that the complaint must be dismissed because Chicago Title was a bona fide purchaser of the property for value. Referring to the title commitment, issued by Chicago Title Insurance Company, Chicago Title asserted that it took title "without notice of any outstanding right or interest of [plaintiff]." The title commitment "did not identify [plaintiff's] lien as creating a title issue or any exception of title that needed to be remedied prior to closing, " and in fact it "identifie[d] the Harris foreclosure action and identifie[d] no issue therein regarding any possible lien claim by [plaintiff]."

¶ 10 Plaintiff responded that the trial court in the Harris foreclosure lacked personal jurisdiction over plaintiff and that the jurisdictional defect was apparent from the record, defeating Chicago Title's claim that it was a bona fide purchaser. The record does not contain a transcript or a written order with an explanation of the court's basis for quashing service and vacating the judgment as to plaintiff in the Harris foreclosure. However, the motion to quash service alleged that plaintiff had never been served with a summons or complaint, plaintiff neither resided in another state nor left this state, plaintiff could have been found upon due inquiry, and plaintiff had not been concealed in this state.

¶ 11 To the motion, plaintiff attached the affidavit of Daniel Bachtold, Harris Bank's special process server, who stated that he was unsuccessful in attempting to serve plaintiff at 629 Pheasant Lane in Deerfield. The affidavit states:

"We tried to obtain service on Dzoko Stojanov at this address, we ran it several times before actually catching anybody at this address, when we encountered a man who fits our description of Dzoko, he answered the door intoxicated and he indicated he does not feel like talking to anybody and just come back tomorrow, we tried to get him to be cooperative and he was playing games by opening and closing the garage door, he had company over and was trying to be funny, we left a copy of the documents behind, all skip and service efforts have been exhausted, request for service by Notice of Publication for [plaintiff] being difficult!"

The motion alleged that the property at the Pheasant Lane address is a residence and that the Secretary of State's website indicated that, when service was attempted, (1) plaintiff's registered agent was Iljco Stojanov, not Dzoko Stojanov, (2) the address of plaintiff's registered agent was 7915 North Linder Avenue in Morton Grove, not 629 Pheasant Lane in Deerfield, and (3) plaintiff was dissolved as a corporation at the time of service by publication. The motion also alleged that the Linder Avenue address was listed as plaintiff's address on the mortgage. Plaintiff argued that, because it had been dissolved within five years of the attempted service, the registered agent and the registered office on record with the Secretary of State were an agent of the corporation upon whom claims could be served and service of process could be had. See 805 ILCS 5/5.05 (West 2012). Plaintiff contended that, according to the affidavit of nonservice, Bachtold did not attempt to serve process on Iljco Stojanov or anyone at the Linder Avenue address. Plaintiff also argued that the affidavit of due diligence filed by Kelly Doherty misidentified Mark Grena of Intelex Investigations as the process server, instead of Bachtold.

ΒΆ 12 The record in the Harris foreclosure contains a document labeled "Corporation File Detail Report" from the Secretary of State's website, which identifies Iljco Stojanov as plaintiff's agent, shows the Linder Avenue address, and indicates that, in 2010, plaintiff was dissolved as a corporation. Bachtold's affidavit of nonservice, Doherty's affidavit of due diligence, and the Secretary of State's corporation report were filed in the Harris ...

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