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Olive Portfolio Alpha, LLC v. 116 West Hubbard Street, LLC

Court of Appeals of Illinois, First District, Fourth Division

March 23, 2017

OLIVE PORTFOLIO ALPHA, LLC, Assignee of Olive Portfolio, LLC, Successor to BMO Harris Bank N.A., f/k/a Harris N.A., Plaintiff-Appellee,
v.
116 WEST HUBBARD STREET, LLC; BRIDGEVIEW BANK AND TRUST; UNKNOWN OWNERS; NONRECORD CLAIMANTS; UNKNOWN TENANTS, OCCUPANTS, and LEASEHOLD S Defendants (116 West Hubbard Street, LLC, Defendant-Appellant).

         Appeal from the Circuit Court Cook County No. 14 L 1929 Honorable Michael F. Otto, Judge Presiding.

          McBRIDE JUSTICE delivered the judgment of the court, with opinion. Presiding Justice Ellis and Justice Burke concurred in the judgment and opinion.

          OPINION

          McBRIDE JUSTICE

         ¶ 1 Plaintiff, Olive Portfolio Alpha, LLC, assignee of Olive Portfolio, LLC, successor to BMO Harris Bank N.A., f/k/a Harris N.A., filed a mortgage foreclosure complaint in February 2014, against defendant 116 West Hubbard Street, LLC. In June 2015, the trial court granted plaintiffs motion for summary judgment against defendant and entered a judgment of foreclosure and sale in plaintiffs favor. A judicial sale was held, and plaintiff filed a motion to confirm the sale in September 2015. In December 2015, the trial court granted plaintiffs motion to confirm the sale.

         ¶ 2 Defendant appeals, arguing that (1) the trial court erred in granting summary judgment when defendant had raised affirmative defenses and denied defendant's motion for an extension of time to file a response; (2) the trial court erred in denying discovery pursuant to Supreme Court Rule 191(b) (Ill. S.Ct. R. 191(b) (eff. Jan. 4, 2013)); and (3) the trial court erred in granting counsel's motion to withdraw simultaneously with approving the judicial sale and not providing defendant 21 days to obtain new counsel and file a response.

         ¶ 3 In February 2014, plaintiff filed its complaint seeking foreclosure of a mortgage on the commercial property located at 116 West Hubbard Street in Chicago, owned by defendant. An amended complaint was subsequently filed in September 2014. The amended complaint stated that in February 2007, Harris N.A. (Harris) agreed to loan defendant up to $7.2 million under a promissory note, which provided for five months of interest payments with a maturity date of August 20, 2007, with one balloon payment of all outstanding principal and interest due from defendant. As collateral on the loan, defendant granted a mortgage on the commercial property to Harris. Also in February 2007, Harris agreed to loan defendant up to $300, 000 in a promissory note with the same initial payment terms.

         ¶ 4 In June 2008, the two loans were consolidated into one loan with a new promissory note for $7.5 million. The new note stated that interest payments were to be paid by defendant beginning in July 2008, with a maturity date of February 20, 2009, for a balloon payment of outstanding principal and interest. A series of amendments and extensions were made on the original loans. In January 2012, an amended promissory note provided that defendant would pay Harris $7, 466, 056.94, through monthly $5000 plus interest payments retroactive to September 2011, with a maturity date of August 13, 2013 (hereinafter the 2012 Note).

         ¶ 5 In February 2013, BMO Harris (f/k/a Harris) assigned its interest in the 2012 Note to Olive Portfolio, LLC. The assignment was subsequently recorded with the Cook County recorder of deeds. The document was titled "Endorsement and Allonge[1] to Promissory Note, " it was signed by a vice president of BMO Harris, and stated:

"PAY to the order of Olive Portfolio, LLC, a Delaware limited liability company, without warranty, representation or recourse of any kind, that certain Amended and Restated Promissory Note dated January 1, 2012 in the original principal amount of $7, 466, 056.94 made by 116 West Hubbard Street, LLC, an Illinois limited liability company, to the order BMO Harris Bank National Association (f/k/a Harris, N.A.)."

         ¶ 6 In July 2013, Olive Portfolio, LLC, conveyed its interest in the promissory note to plaintiff through an assignment, which was subsequently recorded. The allonge stated:

"THIS ALLONGE IS TO BE ATTACHED TO AND MADE AN INTEGRAL PART of the following instrument:
Note: Amended and Restated Promissory Note Dated: January 1, 2012
Payable by: 116 WEST HUBBARD STREET, LLC Payable to the Order of: BMO HARRIS, N.A., F/K/A HARRIS, N.A.
Original Principal Amount: Seven Million Four Hundred
Sixty-Six Thousand Fifty-Six and 94/100 Dollars
($7, 466, 056.94)
PAY TO THE ORDER OF OLIVE PORTFOLIO ALPHA, LLC, A DELAWARE LIMITED LIABILITY COMPANY, WITHOUT RECOURSE AND WITHOUT REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED OR BY OPERATION OF LAW, OF ANY KIND AND NATURE WHATSOEVER.
OLIVE PORTFOLIO, LLC, a Delaware limited liability company"

         ¶ 7 As of August 28, 2013, the total amount due to plaintiff under the 2012 Note was $7, 675, 251.05, which consisted of the principal balance, interest, late charges, and other fees. Notice of default was sent to defendant.

         ¶ 8 In July 2014, defendant filed a motion to dismiss plaintiff's complaint under section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 2012)), arguing that plaintiff failed to properly allege or demonstrate that it owned and/or was a holder of the 2012 Note and how it acquired its interest in the 2012 Note. On September 22, 2014, the trial court granted defendant's motion in part and denied it in part. The motion was granted "as to failure to attach allonge between BMO [Harris] and Olive Portfolio" and denied without prejudice for the remaining allegations. In the same order, the trial court noted that "plaintiff presented to court original of amended and restated promissory note, February 27, 2013 Allonge and July 25, 2013 Allonge, " and "that July 25, 2013 Allonge does not have binder holes at top and neither allonge has staple holes or marks." On September 26, 2014, plaintiff filed its amended complaint. No motion to dismiss the amended complaint was filed.

         ¶ 9 In October 2014, plaintiff paid approximately $900, 000 in unpaid real estate taxes on the subject property to avoid the issuance of a tax deed.

         ¶ 10 Subsequent to the filing of the amended complaint, defendant filed its answer and affirmative defenses in November 2014. Defendant raised three affirmative defenses: (1) plaintiff lacks standing to bring this action because plaintiff is a foreign limited liability company (LLC) that does business in Illinois but failed to register in Illinois prior to filing the instant action; (2) plaintiff is not a valid holder of the 2012 Note because the allonge was not affixed to the 2012 Note at the time of filing or when it was negotiated to plaintiff; and (3) plaintiff is barred from charging late fees based on a flat fee.

         ¶ 11 In December 2014, plaintiff sought leave to file its answers to defendant's affirmative defenses. Plaintiff answered that the first affirmative defense presented "simply legal conclusions which include no factual allegations that can be admitted or denied. Notwithstanding, [plaintiff] denies that it lacks standing or that its claims against [defendant] are barred." As for the second affirmative defense, plaintiff admitted that it filed the foreclosure action and that it was the holder of the note through an allonge. Plaintiff answered that defendant's claims regarding the UCC requirements that the allonge be affixed to the note were legal conclusions with no factual allegations. Plaintiff denied defendant's allegation that the allonge was not affixed to the note at the time the action was filed or when the note was negotiated to plaintiff.

         ¶ 12 In March 2015, plaintiff filed its motion for summary judgment against defendant and judgment of foreclosure and sale. On March 2015, the trial court granted defendant 40 days to file its response to the summary judgment motion: May 15, 2015. The motion was set for hearing on June 16, 2015.

         ¶ 13 On May 15, 2015, defendant filed two motions, a motion for extension of time to file a response and a motion for additional discovery under Rule 191. The motion for extension of time sought an extension until the Rule 191 discovery was completed. The motion for discovery under Rule 191 stated that discovery was necessary for two limited areas: (1) plaintiff's relationship with Sabal Financial Group LP (Sabal), a nonparty and plaintiff's loan servicer; and (2) the transaction through which plaintiff and its predecessor Olive Portfolio acquired the loan from BMO Harris. Defendant also attached deposition ...


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