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LLC v. Gizynski

Court of Appeals of Illinois, First District, Second Division

June 20, 2017

3432 WEST HENDERSON BUILDING, LLC, as Successor in Interest to Citizens Bank & Trust Company of Chicago, Plaintiff-Appellee and Cross-Appellant,
v.
WIESLAW GIZYNSKI, Defendant-Appellant and Cross-Appellee and NORTHEASTERN ILLINOIS UNIVERSITY, Plaintiff
v.
WIESLAW GIZYNSKI, Defendant.

         Appeal from the Circuit Court of Cook County. Nos. 09 CH 20706, 13 L 50596 The Honorable Carl Anthony Walker, Judge, presiding.

          PRESIDING JUSTICE HYMAN delivered the judgment of the court, with opinion. Justices Pierce and Mason concurred in the judgment and opinion.

          OPINION

          HYMAN PRESIDING JUSTICE

         ¶ 1 The underlying case involved default on a note and mortgage. The issues defendant Wieslaw Gizynski raises pertain to the amount and calculation of the trial court's award of attorney's fees[1] and interest on the fees. On cross-appeal, 3432 West Henderson Building, LLC (Henderson Building), contends the trial court erred in denying its motion for leave to file a fee petition regarding Gizynski's motion to reconsider. Because we find the trial court properly calculated Henderson Building's attorney's fees, including default interest, and was not obligated to hold an evidentiary hearing on the fee request, we affirm the order and its denial of the motion to reconsider. But as to the trial court's denying Henderson Building's request to file a fee petition for the time spent responding to the motion to reconsider, we remand for further consideration as well as consideration of fees incurred in this proceeding.

         ¶ 2 BACKGROUND

         ¶ 3 Gizynski owned commercial property at 3432 West Henderson Street since 1994. In April 2005, he signed a note for a $1.4 million loan from Citizens Bank & Trust Company of Chicago. A first mortgage on the property secured the note. The following month the parties amended the terms so that in the event of default, the interest rate would increase to a total interest rate of 13.5%. In February 2009, Gizynski defaulted on the loan, and Citizens Bank filed a foreclosure proceeding. While the foreclosure case was pending, Henderson Building acquired the promissory note and mortgage, substituted itself as the successor real party in interest, and filed an amended verified complaint.

         ¶ 4 In January 2013, Northeastern Illinois University (NEIU) filed a petition to intervene in the foreclosure case to exercise eminent domain over the property. NEIU filed a complaint for condemnation and, ultimately, acquired the property for $5.2 million. A joint motion for entry of stipulation of value and an order of judgment vesting fee simple title in NEIU was granted, and the foreclosure and condemnation cases were consolidated. NEIU deposited the $5.2 million with the Cook County Treasurer.

         ¶ 5 In November 2014, Henderson Building filed a petition for disbursement of funds in the consolidated case. Henderson Building sought a payoff amount of nearly $2.6 million, which included (i) unpaid principle balance, (ii) reimbursement of an advance to satisfy property taxes and liens against the property; (iii) late fees; (iv) attorney's fees of $108, 104.35; and (v) $1, 005, 279.21 in accrued interest. The petition attached the affidavit of Gayle Teicher, an accountant for Henderson Building, stating that the attorney's fees had been paid or were in the process of being paid.

         ¶ 6 In December 2014, the trial court gave Gizynski until February 4, 2015, to reply to Henderson Building's disbursement petition. On February 4, Gizynski sought additional time to respond, and the trial court gave him until March 3. In the interim, on January 30, Henderson Building filed supplemental exhibits to its petition, which included an additional $15, 868.95 in attorney's fees incurred in defending against Gizynski's reply to its disbursement petition, for a total payoff amount of $2, 657, 203.16.

         ¶ 7 On March 3, 2015, Gizynski filed his reply raising numerous objections to Henderson Building's disbursement request including its assertions that the loan documents were not originals, Henderson Building incorrectly calculated the payoff amount, Henderson Building was not obligated to purchase other liens on the property, Henderson Building should not be awarded attorney's fees relating to the condemnation case, and attorney's fees and real estate taxes should not be added to principal once the foreclosure case was filed.

         ¶ 8 On April 3, 2015, Gizynski's attorney filed a motion to withdraw, stating that Gizynski had terminated his service and retained another attorney. Henderson Building filed a response objecting to the motion to withdraw and asking that it only be granted if a substitute appearance was filed and if the court did not delay the scheduled May 6, 2015, hearing on its disbursement petition. The trial court denied the motion to withdraw at that time but continued the hearing on the disbursement petition until May 20, 2015. (The record does not indicate a final ruling on the motion to withdraw, and the same attorney is now representing Gizynski on appeal.)

         ¶ 9 On May 15, 2015, Henderson Building filed supplemental exhibits in support of its disbursement petition, showing additional attorney's fees of $52, 123.52 and a payoff amount of nearly $2.8 million.

         ¶ 10 On May 20, 2015, the trial court entered an order granting Gizynski and Henderson Building until June 10 to submit authority addressing a mortgagee's right to collect interest up to satisfaction of a condemnation award. On July 8, Henderson Building filed supplemental exhibits in support of its petition showing an additional $17, 348.41 in attorney's fees and a payoff amount of $2, 826, 316.02.

         ¶ 11 On September 24, 2015, the trial court entered an opinion and order granting Henderson Building's disbursement petition. The trial court stated that the mortgage expressly added to the balance of the note various expenses the lender was required to pay, namely "taxes, liens, security interest, encumbrances and other claims" levied or placed on the property, or advance funds otherwise necessary "for insuring, maintaining and preserving the Property." Henderson Building paid property taxes and discharged four receiver's liens on the property and included those amounts to the unpaid loan balance. The trial court found that the proper interest rate under the amended terms was 13.5% from the date of default based on the original 7.5% interest rate and an additional 6% default rate. The court also found Henderson Building was entitled to late fees.

         ¶ 12 In addition, the note and mortgage expressly provided for reimbursement of attorney's fees. The note stated that if the borrower fails to pay and the lender hires attorneys to help collect on the note, the borrower owes the lender its attorney's fees and expenses whether or not there is a lawsuit. The mortgage similarly provided, "[i]f Lender institutes any suit or action to enforce any of the terms of this Mortgage, Lender shall be entitled to recover such sum as the court may adjudge reasonable as attorneys' fees at trial and upon any appeal." Further, the mortgage provided that "all reasonable expenses Lender incurs that in Lenders' opinion are necessary at any time for the protection of its interest or the enforcement of its ...


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