Court of Appeals of Illinois, First District, Third Division
EDWARD F. PALIATKA, Plaintiff-Appellant,
JOHN BUSH, JOANNA BUSH, and CREDIT UNION I, Defendants-Appellees.
from the Circuit Court of Cook County. No. 16 CH 8105
Honorable William B. Sullivan, Judge, presiding.
PRESIDING JUSTICE COBBS delivered the judgment of the court,
with opinion. Justices Howse and Lavin concurred with the
judgment and opinion.
1 Plaintiff, Edward F. Paliatka, appeals from the order
dismissing his first amended complaint with prejudice
pursuant to section 2-615 of the Code of Civil Procedure (735
ILCS 5/2-615 (West 2016)). The trial court found that
dismissal with prejudice was warranted because Paliatka was
unable to state a cause of action for an equitable mortgage.
This finding was based on Paliatka's representation that
there was no written agreement subrogating him to the
original mortgage on the property at issue. Paliatka contends
that the trial court misapplied the law regarding the
elements of an equitable mortgage and an equitable
subrogation. We affirm.
2 I. BACKGROUND
3 The following facts are obtained from the pleadings in the
record. The property at issue is located at 4021 West 99th
Street in Oak Lawn, Illinois (the property), and is currently
owned by John and Joanna Bush. The Bushes entered into a real
estate contract to purchase the property from Miarstar
Properties, LLC (Miarstar), in April 2016, with a closing
date of June 9, 2016. They funded the purchase using a Credit
Union I loan with the property pledged as security. The
Credit Union I mortgage agreement and the warranty deed
granted by Miarstar were both executed on June 9, 2016, and
recorded in Cook County on July 20, 2016.
4 Paliatka first filed a complaint against Miarstar; Skyline
1, Inc.; S12, LLC; and any unknown owners and nonrecord
claimants on June 16, 2016, asserting a lien against the
property and seeking foreclosure. Skyline 1, Inc., and S12,
LLC, are companies solely owned and operated by
Paliatka's grandson, Lyle Anastos. Anastos did not file
an appearance in the proceedings below. At the time Paliatka
filed his complaint, Miarstar was the recorded owner of the
property. Paliatka also filed a lis pendens against
the property in conjunction with his complaint. Paliatka was
later granted leave of the court to add John Bush, Joanna
Bush, and Credit Union I as defendants. On April 20, 2017,
Paliatka voluntarily dismissed Miarstar as a defendant, with
prejudice. The trial court dismissed the complaint against
the Bushes and Credit Union I under section 2-615.
¶ 5 With leave of the trial court, Paliatka filed an
amended complaint on May 18, 2017. The amended complaint
named Skyline 1, Inc.; S12, LLC; the Bushes; and Credit Union
I as defendants and sought a judgment declaring the existence
of Paliatka's "equitable lien and mortgage" on
the property and to initiate foreclosure proceedings.
According to Paliatka's amended complaint, Anastos owned
the property, operating under the business S12, LLC, until he
sold it on July 1, 2014. Prior to the sale of the property,
Anastos executed a mortgage, security agreement, and
financing statement for $290, 000 in favor of Renovo Financial
Loan Fund, LLC (Renovo), pledging the property and a second
property as security for the loan. This mortgage was recorded
in Cook County on August 24, 2013. The following year, Renovo
assigned its interest in both properties to RFLF 2, LLC. This
assignment was recorded on March 31, 2014. On July 1, 2014 a
quitclaim deed conveying the property to Miarstar was
recorded in Cook County. The deed stated that Miarstar paid
Anastos's company $75, 000 for the property.
6 The amended complaint further alleged that Paliatka paid
$342, 354.67 to RFLF 2, LLC, on October 29, 2015, to satisfy
the outstanding balance on the mortgage loan. Paliatka
claimed that through this payment he acquired all the rights,
liens, and interest of RFLF 2, LLC, and Renovo in relation to
the property and mortgage agreement. Paliatka alleged that
S12, LLC, defaulted on the mortgage because it had missed
more than eight months of payments and it violated the terms
of the mortgage by conveying the property to Miarstar. Thus,
Paliatka brought this suit to foreclose on the property and
satisfy the defaulted mortgage.
7 On September 11, 2017, the trial court granted the Bushes
and Credit Union I's jointly filed motion to dismiss
under section 2-615, with prejudice. The trial court's
order explicitly stated it found Paliatka could not state a
cause of action for an equitable mortgage based on the
representation by his counsel, in open court, that no written
agreement existed showing that Paliatka was subrogated to
Renovo's or RFLF 2, LLC's mortgage interest.
8 Although not attached to the amended complaint, Paliatka
entered an additional exhibit during the proceedings showing
that Renovo executed a release deed referencing the mortgaged
property and the assignment to RFLF 2, LLC. The release deed
was dated November 10, 2015, and recorded in Cook County on
December 18, 2015.
9 II. ANALYSIS
10 Paliatka assigns error to the trial court's dismissal
of his first amended complaint for failure to state a cause
of action. Paliatka contends that he sufficiently pleaded a
claim for an equitable mortgage because he pleaded facts
showing an equitable subrogation. Further, even if he had
failed to plead sufficient facts, Paliatka argues that
dismissal with prejudice was erroneous because he could cure
the deficient complaint with further amendments.
11 The question on appeal is whether Paliatka pleaded
sufficient facts to state a claim upon which relief can be
granted. A motion to dismiss pursuant to section 2-615
challenges the legal sufficiency of a complaint. Wilson
v. County of Cook, 2012 IL 112026, ¶ 14. Illinois
is a fact-pleading jurisdiction and plaintiffs are required
to allege "a legally recognized cause of action and ***
must plead facts which bring the particular case within that
cause of action." (Internal quotation marks omitted.)
Chandler v. Illinois Central R.R. Co., 207 Ill.2d
331, 348 (2003). When reviewing a section 2-615 motion, a
court must determine "whether the allegations in the
complaint, considered in a light most favorable to the
plaintiff, are sufficient to state a cause of action upon
which relief can be granted." Sheffler v.
Commonwealth Edison Co., 2011 IL 110166, ¶ 61. A
court should only dismiss a ...