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First Mortgage Co. v. Dina

Court of Appeals of Illinois, Second District

November 15, 2017


         Appeal from the Circuit Court of Lake County, No. 10-CH-2877; the Hon. Luis A. Berrones, Judge, presiding.

          George H. Olsen, of The Rogers Law Group, of Deerfield, for appellants.

          Susan M. Horner and Edward J. Lesniak, of Burke, Warren, MacKay & Serritella, P.C., of Chicago, for appellee.

          Panel BURKE JUSTICE delivered the judgment of the court, with opinion. Justices Hutchinson and Spence concurred in the judgment and opinion.


          BURKE JUSTICE.

         ¶ 1 In this appeal, a follow-on to our decision in First Mortgage Co. v. Dina, 2014 IL App (2d) 130567 (Dina I), defendants Daniel Dina and Gratziela Dina appeal from a new foreclosure judgment and a new order confirming a judicial sale in favor of plaintiff, First Mortgage Co. (First Mortgage). We now affirm.

         ¶ 2 In Dina I, we held, based on our interpretation of the Residential Mortgage License Act of 1987 (Act) (205 ILCS 635/1-1 et seq. (West 2006)), that, if the original mortgagee, First Mortgage Company of Idaho, LLC (FMCI), lacked a license required by the Act, the Dinas' mortgage (which First Mortgage had acquired from FMCI) would be void. Based on uncertainty about FMCI's licensure status, we vacated a prior foreclosure judgment and sale and remanded the cause. In the period between the remand and the new foreclosure judgment, the General Assembly passed Public Act 99-113 (eff. July 23, 2015) (the amendment), which amended the Act so as to reject the holding in Dina I. On remand, the trial court granted judgment in favor of First Mortgage based not on the amendment but on its ruling that the Act was inapplicable to FMCI because FMCI did not engage in business in Illinois. We hold that the Act was applicable to FMCI, but we affirm on the basis that, as a result of the amendment, an exception to the law-of-the-case doctrine applies here.

         ¶ 3 I. BACKGROUND

         ¶ 4 On May 21, 2010, First Mortgage filed a complaint to foreclose a property in North Barrington. The named defendants were Daniel Dina, the property owner and borrower, and Gratziela Dina, who had cosigned the mortgage. The mortgage was dated November 16, 2007. The Dinas filed an answer with affirmative defenses, one of which was that First Mortgage lacked standing, as it was neither the original mortgagee, which was FMCI, nor FMCI's successor in interest. First Mortgage moved for summary judgment. It responded to the lack-of-standing defense by, among other things, filing a "Statement of Merger" filed with the Idaho Secretary of State. The statement showed that, effective April 30, 2011, FMCI, First Mortgage's wholly owned subsidiary, had merged into First Mortgage. The Dinas, having missed the deadline to respond to the motion for summary judgment, sought leave to file a late response in which they asserted, among other things, that neither First Mortgage nor FMCI was licensed under the Act. The court allowed the filing.

         ¶ 5 First Mortgage responded that, as a "registered domestic entity with the National Information Center under the laws of Oklahoma, " it was a bank, and thus was exempt from the licensing requirements of the Act. The exhibit attached in support states that First Mortgage "was established as a Domestic Entity Other" on or as of January 1, 2007.

         ¶ 6 The court granted the motion for summary judgment on August 14, 2012, and entered the judgment for foreclosure and sale the same day. The property was sold and the court confirmed the sale, over the Dinas' objection, on February 19, 2013. After the court denied the Dinas' motion for reconsideration, they appealed.

         ¶ 7 We addressed three questions on appeal: (1) whether the Dinas' lack-of-licensure defense was procedurally forfeited, (2) whether there was a question of material fact as to FMCI's licensure, and (3) whether the lack of a required license was a defense to foreclosure. Dina I, 2014 IL App (2d) 130567, passim. We vacated the summary judgment and ensuing orders, stating in summary that a question of material fact had existed as to FMCI's status under the Act (Dina, 2014 IL App (2d) 130567, ¶ 13), with the following being our main intermediate holdings:

(1)First Mortgage failed to demonstrate that the entity that made the mortgage was exempt from the Act. Dina, 2014 IL App (2d) 130567, ¶ 14.
(2)"[A] mortgage made by an entity that lacked authorization under the *** Act to conduct *** business [requiring such authorization] is void as against public policy." Dina, 2014 IL App (2d) 130567, ¶ 21.
(3)The Dinas raised their lack-of-licensure defense by the wrong means, but, because the issue implicated public policy, and because First Mortgage had a full opportunity to respond, they did not forfeit the defense. Dina, 2014 IL App (2d) 130567, ¶ 25.

         On the first point, some explanation is necessary. On appeal, First Mortgage argued that the Dinas' argument failed because public records showed that it was a bank, and thus exempt from the Act. Whether First Mortgage was a bank was of course not relevant to whether FMCI was a bank. Thus, First Mortgage had failed to show that the entity that made the mortgage was exempt from the Act. Therefore (on March 31, 2014), we vacated the order for summary judgment, the foreclosure judgment, and the order approving the sale, and we remanded the matter for further proceedings. (We made modifications not relevant here when we denied rehearing on May 22, 2014.) First Mortgage petitioned for leave to appeal to our supreme court, but the court denied leave on September 24, 2014. First Mortgage Co. v. Dina, No. 117903 (Ill. Sept. 24, 2014).

         ¶ 8 On May 13, 2015, First Mortgage moved in the trial court for additional time to file a new motion for summary judgment. It gave the following reason: "Subsequent to the entry of [a scheduling order] Plaintiff learned that there is presently pending in the Illinois legislature HB2814, a bill that, if passed, will be dispositive of the primary legal issue in this case. The bill will have the effect of reversing the Illinois Appellate Court's decision in this case, by establishing that a loan contract is not rendered void by virtue of the fact that the originator was not licensed under the [Act]." (Emphasis added.) The court gave First Mortgage until July 8, 2015, to file a new motion for summary judgment.

         ¶ 9 On July 8, 2015, First Mortgage filed a new motion for summary judgment, despite the continued pendency of the amendment to the Act in the General Assembly. It asserted two bases for the mortgage's validity. One, it anticipated that the General Assembly would pass the amendment, which would " 'reveal the legislature's intent in enacting [the] statute' " (quoting Daley v. Zebra Zone Lounge, Inc., 236 Ill.App.3d 511, 515 (1992)). Alternatively, it argued that, by the terms of sections 1-3(a) and 1-3(h) of the Act (205 ILCS 635/1-3(a), (h) (West 2006)), the Act "only applies to entities engaged in the business of residential mortgage lending in Illinois." Further, as an affidavit established, "the only loan FMCI ever made in the State of Illinois was the loan at issue in this case."

         ¶ 10 On July 23, 2015, the General Assembly approved Public Act 99-113, which amended section 1-3(e) of the Act to provide:

"A mortgage loan brokered, funded, originated, serviced, or purchased by a party who is not licensed under this Section shall not be held to be invalid solely on the basis of a violation under this Section. The changes made to this Section by this amendatory Act of the 99th General Assembly are declarative of existing law." Pub. Act 99-113, § 5 (eff. July 23, 2015) (amending 205 ILCS 635/1-3(e)).

         ¶ 11 On September 10, 2015, the Dinas filed their response. They argued that the lack-of-licensure defense remained viable for two reasons:

(1)Our holdings in Dina I created law of the case that barred First Mortgage from asserting that the Act was ...

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