In re APPLICATION OF THE COUNTY COLLECTOR, for Judgment and Order of Sale Against Lands and Lots Returned Delinquent for Nonpayment of General Taxes and/or Special Assessments for the Yearand Prior Years
Mark Varboncouer, Ioana Furnea, Municipal Trust Savings Bank, Interstate Funding Corp., and Galaxy Sites, LLC, Respondents-Appellees. Stolat Financial, LLC, Petitioner-Appellant
from the Circuit Court of the 12th Judicial Circuit, Will
County, Illinois. Circuit No. 13-TX-227 The Honorable John C.
Anderson, Judge, presiding.
JUSTICE CARTER delivered the judgment of the court, with
opinion. Justice Holdridge concurred in the judgment and
opinion. Justice McDade dissented, with opinion.
1 Petitioner, Stolat Financial, LLC (Stolat), filed a
petition pursuant to section 2-1401(f) of the Code of Civil
Procedure (Code) (735 ILCS 5/2-1401(f) (West 2014)) to set
aside a tax deed that had been issued on certain real
property in Peotone, Will County, Illinois. The current
owners of the property and other interested parties filed
motions to dismiss the petition pursuant to sections 2-615
and 2-619(a)(9) of the Code (735 ILCS 5/2-615, 2-619(a)(9)
(West 2014)). After a hearing, the trial court granted the
motions to dismiss. Stolat appeals. We affirm the trial
3 In June 2009, Richard and Sylvia Modla executed a note and
mortgage in favor of the Peotone Bank and Trust Company
(Peotone Bank). The mortgage was recorded the following month
against certain real property owned by the Modlas in Peotone,
Will County, Illinois. The Modlas later defaulted on their
obligations under the note and mortgage.
4 In April 2010, the Peotone Bank was closed by the Illinois
Department of Financial and Professional Regulation, and the
Federal Deposit Insurance Corporation (FDIC) was appointed as
the receiver. A notice of the receivership was published in
the Federal Register.
5 In November 2010, Interstate Funding Corporation
(Interstate) purchased the 2009 delinquent property taxes on
the subject property at the annual tax sale and was issued a
certificate of purchase. The FDIC was not notified of, and
did not consent to, the sale of the delinquent taxes.
6 In February 2012, the FDIC created the FDIC 2011-N1 Asset
Trust (the trust), in which it pooled various assets from
failed banks. The Bank of New York Mellon Trust Company, N.A.
(Bank of New York), was retained as the trustee of the trust.
One of the assets that was assigned to the trust was the
Modla mortgage. The assignment of the Modla mortgage was made
in February 2012 and was recorded two months later. The
recorded assignment stated that the FDIC as the receiver for
the Peotone Bank did "convey, grant, sell, assign,
transfer and set over the described mortgage/deed of trust
with all interest secured thereby, all liens, and any rights
due or to become due thereon" to the Bank of New York,
in its capacity as the trustee of the trust, with its address
listed as being in care of Nationstar Mortgage (presumably
the loan servicer). There was no reservation of rights
contained in the assignment.
7 In July 2012, the Bank of New York, as trustee of the
trust, filed suit in Will County to foreclose upon the Modla
mortgage. A judgment of foreclosure and sale was later
entered in favor of the Bank of New York, but no further
action was taken in the case.
8 In July 2013, Interstate filed a petition in the trial
court for a tax deed to the subject property. A copy of the
petition was served upon the Bank of New York, its attorneys,
and upon the loan servicer. Neither the Bank of New York nor
the FDIC appeared in the proceedings or consented to the
issuance of a tax deed. An attorney for the loan servicer
did, however, appear at least one time in the tax deed
proceedings but did not file a formal appearance or any type
of pleading with the court.
9 In January 2014, after the tax redemption period had
expired, Interstate filed an application with the trial court
for an order directing the county clerk to issue a tax deed
on the subject property. A hearing was held later that same
month. At the conclusion of the hearing, the trial court
granted Interstate's request and entered an order
directing the county clerk to issue a tax deed to the subject
property to Galaxy Sites, LLC (Galaxy), as Interstate's
assignee. The tax deed was issued and recorded shortly
10 In July 2014, Galaxy sold the subject property to Mark
Varboncouer for $460, 000, pursuant to a special warranty
deed. The funding for the purchase was arranged through
Municipal Savings Bank, who held a mortgage on the property
as part of the transaction. The deed conveying the property
from Galaxy to Varboncouer was recorded later that same
11 In October 2014, the FDIC sold and assigned its rights in
the Modla mortgage to Stolat. In January 2015, Stolat filed a
section 2-1401(f) petition to set aside the tax deed on the
property. The petition was later amended (referred to simply
as the petition). In the petition, Stolat alleged that the
tax deed was void because the FDIC did not consent to the
sale of the delinquent taxes (or to the issuance of a tax
deed on the subject property) as required under federal
statute. In response, Mark Varboncouer; his wife, Ioana
Furnea; and their lender, Municipal Savings Bank
(collectively referred to hereinafter as the Varboncouers)
filed a motion to dismiss the petition pursuant to section