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CF SBC Pledgor 1 2012-1 Trust v. Clark/School, LLC

Court of Appeals of Illinois, Fourth District

September 8, 2016

CF SBC PLEDGOR 1 2012-1 TRUST, a Delaware Statutory Trust, Plaintiff-Appellee,
CLARK/SCHOOL, LLC, an Illinois Limited Liability Company; and NON-RECORD CLAIMANTS and UNKNOWN OWNERS, Defendants CLARK/SCHOOL, LLC, Defendant-Appellant.

         Appeal from Circuit Court of Vermilion County No. 13CH252 Honorable Craig H. DeArmond, Judge Presiding.

          JUSTICE HARRIS delivered the judgment of the court, with opinion. Justices Steigmann and Appleton concurred in the judgment and opinion.



         ¶ 1 Plaintiff, CF SBC Pledgor 1 2012-1 Trust, a Delaware statutory trust, brought a mortgage foreclosure action against defendant, Clark/School, LLC, an Illinois limited liability company, alleging defendant was in default under the terms of the mortgage. Ultimately, plaintiff filed a motion for summary judgment, which the trial court granted. Defendant appeals, arguing genuine issues of material fact exist as to whether it was in default and, as a result, the trial court erred in granting plaintiff's motion for summary judgment. We affirm.

         ¶ 2 I. BACKGROUND

         ¶ 3 This is the second appeal involving the parties and the underlying mortgage foreclosure proceedings. Previously, defendant brought an interlocutory appeal after plaintiff obtained an ex parte order appointing a receiver over the mortgaged property. See CF SBC Pledgor 1 2012-1 Trust v. Clark/School, LLC, 2014 IL App (4th) 140416-U. The following recitation of facts is partially taken from our decision in that previous appeal.

         ¶ 4 In June 2006, defendant obtained a loan from Washington Mutual Bank that was secured by a mortgage on the property at issue, an eight-building apartment complex in Danville, Illinois. Washington Mutual Bank's interest was ultimately assigned to plaintiff. Under section 4.3 of the parties' mortgage security agreement, defendant agreed to keep the property in good condition and repair. Section 4.14 of that agreement noted the mortgage loan was being made in reliance on defendant's continued existence as a limited liability company (LLC). Under that section, defendant agreed to "not alter its name, jurisdiction of organization, structure, ownership or control without the prior written consent of the Lender" and to "do all things necessary to preserve and maintain [its] existence and to ensure its continuous right to carry on its business."

         ¶ 5 Section 5 of the mortgage security agreement set forth provisions relating to default. Section 5.1(c) defined an "Event of Default" to include defendant's failure to perform its obligations under the parties' agreement when that "failure continues for a period of [30] days after written notice of such failure by Lender to Borrower." However, that section further provided that the notice requirement and the 30-day "cure period" did not apply under the following circumstances:

"(i) any such failure that could, in Lender's judgment, absent immediate exercise by Lender of a right or remedy under [the parties' agreements], result in harm to Lender, impairment of the Note or this Security Instrument or any other security given under any other Loan Document; (ii) any such failure that is not reasonably susceptible of being cured during such 30-day period; (iii) breach of any provision that contains an express cure period; or (iv) any breach of *** section 4.14 of this Security Instrument."

         Additionally, section 5.3 of the parties' mortgage security agreement set forth the lender's remedies upon default, stating that "[u]pon the occurrence of any Event of Default all sums secured hereby shall become immediately due and payable, without notice or demand, at the option of [the] Lender." Further, it permitted the lender to "[f]oreclose this security instrument, " exercise any power of sale permitted by applicable law, and sue on the note.

         ¶ 6 In December 2013, plaintiff filed a complaint against defendant to foreclose the mortgage. It alleged defendant was in default under the terms of the mortgage for failing to (1) maintain the property and (2) preserve and maintain its existence as an LLC. Plaintiff asserted defendant allowed portions of the property to become uninhabitable and alleged as follows:

"More specifically, upon information and belief, a City of Danville building inspector recently inspected the Property and identified numerous issues and code violations, including, but not limited to, no electricity in multiple buildings due to non-payment by [defendant], water pipes leaking and flooding apartments, and garbage being dumped into a ravine on the Property near a city drinking water source.
Additionally, upon information and belief, [defendant] has not maintained its existence with the State of Illinois as an entity in good standing, and was consequently dissolved on or about September 9, 2011."

         Plaintiff attached various loan documents to its complaint, as well as e-mail correspondence between individuals identified in the e-mails as the Danville city attorney, Richard Dahlenburg; an environmental code inspector, Rick Brown; and a building inspector, Danita Anderson. The emails indicated the inspectors identified several maintenance issues on the property, including a lack of electricity due to nonpayment of electric bills by defendant, water ...

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