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Beneficial Illinois, Inc. v. Parker

Court of Appeals of Illinois, First District, First Division

December 12, 2016

BENEFICIAL ILLINOIS, INC., d/b/a BENEFICIAL MORTGAGE CO. OF ILLINOIS, Plaintiff-Appellee,
v.
RANDALL PARKER a/k/a RANDALL W. PARKER; MARVELENE PARKER; UNKNOWN OWNERS and NON-RECORD CLAIMANTS, Defendants. (Randall Parker a/k/a Randall W. Parker, Defendant-Appellant).

         Appeal from the Circuit Court of Cook County No. 09 CH 39557 Honorable Anthony Kyriakopoulos, Judge Presiding.

          HARRIS, JUSTICE delivered the judgment of the court, with opinion. Justices Simon and Mikva concurred in judgment and opinion.

          OPINION

          HARRIS, JUSTICE

         ¶ 1 Defendant-appellant, Randall Parker (hereinafter Randall), refinanced his home loan mortgage with plaintiff-appellee, Beneficial Illinois Inc., d/b/a Beneficial Mortgage Company of Illinois (hereinafter Beneficial), in July 2007. In October 2008, he stopped making the required payments and Beneficial instituted a foreclosure proceeding in October 2009. In June 2010, Randall attempted to rescind the mortgage by mailing a letter to Beneficial. Beneficial never responded and proceeded with the foreclosure litigation. In September 2010, Randall filed a counterclaim and affirmative defenses. After briefing, the circuit court dismissed the counterclaims and affirmative defenses as untimely. Eventually, Beneficial voluntarily dismissed its foreclosure proceeding and Randall now appeals the dismissal of his affirmative defense and counterclaims.

         ¶ 2 For the following reasons, we agree that Randall properly invoked the rescission mechanism when he sent Beneficial the rescission letter. We also reverse the dismissal of Randall's counterclaim related to Beneficial's failure to honor the rescission letter. However, his counterclaim related to Beneficial's failure to disclose certain information when the loan closed is time barred.

         ¶ 3 JURISDICTION

         ¶ 4 Beneficial filed this foreclosure action on October 15, 2009. On September 1, 2010, Randall filed an answer, affirmative defense, and counterclaims. On September 5, 2014, the circuit court granted Beneficial's motion to dismiss Randall's affirmative defense and counterclaims. On December 15, 2015, the circuit court granted Beneficial's motion to voluntarily dismiss the foreclosure action. Thereafter, on January 14, 2016, Randall filed his notice of appeal. Accordingly, this court has jurisdiction over this matter pursuant to Article VI, Section 6 of the Illinois Constitution, and Illinois Supreme Court Rules 301 and 303. Ill. Const. 1970, art. VI, § 6; Ill. S.Ct. R. 301 (eff. Feb. 1, 1994); Ill. S.Ct. R. 303 (eff. May 30, 2008).

         ¶ 5 BACKGROUND

         ¶ 6 On July 9, 2007, Beneficial made a loan to Randall and his wife.[1] The loan was secured with a mortgage against Randall's home. In connection with the loan, Beneficial tendered to Randall a Loan Agreement outlining the terms of the loan. Based on the terms of the loan, Randall was required to start making payments on August 9, 2007.

         ¶ 7 The Loan Agreement contained a Truth In Lending Disclosure (TILD). The TILD disclosed estimated terms of the loan, including the finance charges, total number of payments, and when payments are due. In October 2008, Randall and his wife failed to make the required loan payment as set forth in the Loan Agreement. Thereafter, on October 15, 2009, Beneficial filed a foreclosure action seeking to foreclose on Randall's mortgage.

         ¶ 8 On June 16, 2010, Randall, through counsel, wrote to Beneficial to provide notice that Randall elected to rescind the Loan Agreement. The letter requested that Beneficial acknowledge Randall's right to rescission as required by the Truth in Lending Act (TILA) (15 U.S.C. § 1601 et seq. (2012)). The letter also requested that Beneficial provide Randall with a loan history so he could determine what amount he might have to repay. Beneficial did not respond to Randall's rescission notice and continued to proceed with the foreclosure proceeding. On September 1, 2010, Randall filed an answer, an affirmative defense, and two counterclaims against Beneficial. In his affirmative defense, Randall argued that he timely delivered a letter rescinding the Loan Agreement, thereby extinguishing the mortgage. In addition, his counterclaims sought actual and statutory damages for Beneficial's failure to honor the rescission and for making improper disclosures when the loan closed.

         ¶ 9 Beneficial eventually filed a motion to dismiss both the affirmative defense and the counterclaims. Beneficial argued that all of the claims were time barred by TILA's three year statute of repose. Additionally, Beneficial argued that the two counterclaims were barred by TILA's one year statute of limitations. After briefing, the circuit court agreed with Beneficial and found the affirmative defense and counterclaims time barred. Specifically, the circuit court found Randall's failure to file a court action seeking rescission within three years of the loan being made barred his rescission affirmative defense. The court also found Randall's damage counterclaim based on misleading disclosures was also time barred. The circuit court did not specifically rule on the counterclaim related to failing to respond to the rescission letter.

         ¶ 10 The foreclosure proceeding continued until Beneficial voluntarily agreed to dismiss the foreclosure action on December 15, 2015. Randall filed a notice of ...


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