Deutsche Bank National Trust Company v. BV Hotels, Inc.

2024 IL App (1st) 231097-U

• Court: Appellate Court of Illinois
• Decided: June 20, 2024
• Docket: 1-23-1097
• Status: Unpublished

Opinion

2024 IL App (1st) 231097-U No. 1-23-1097 Order filed June 20, 2024 Third Division

NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1). ______________________________________________________________________________ IN THE APPELLATE COURT OF ILLINOIS FIRST DISTRICT ______________________________________________________________________________ DEUTSCHE BANK NATIONAL TRUST COMPANY, ) Appeal from the ) Circuit Court of Plaintiff-Appellee, ) Cook County. ) v. ) No. 10 CH 25402 ) BV HOTELS, INC., ) Honorable ) Lynn Weaver Boyle, Defendant-Appellant. ) Judge, presiding.

JUSTICE VAN TINE delivered the judgment of the court. Presiding Justice Reyes and Justice D.B. Walker concurred in the judgment.

ORDER

¶1 Held: We affirm the circuit court’s order striking BV Hotels’ affirmative defense of laches over BV Hotels’ contention that laches can be premised solely on the passage of time between the filing of a lawsuit and effectuating service on a defendant. We also affirm the circuit court’s approval of the judicial sale of the property at issue over BV Hotels’ contention that notice of the sale was not advertised in a newspaper published in the same township as the property.

¶2 Defendant BV Hotels, Inc. (“BV Hotels”) appeals from the circuit court’s orders striking

its affirmative defense of laches and approving the judicial sale of a property in Northbrook, No. 1-23-1097

Illinois. BV Hotels argues that the circuit court (1) should not have stricken its laches defense

because BV Hotels was served 11 years after this lawsuit was filed and (2) should not have

approved the judicial sale of the property because Deutsche Bank failed to advertise the sale in a

newspaper published in the township where the property is located. For the following reasons, we

affirm.

¶3 I. BACKGROUND

¶4 In 2006, Beata Osinski took out a $672,000 mortgage on a property located at 1400

Kingsport Court in Northbrook, Illinois. 1 The parties agree that the property is in Northfield

Township. Osinski defaulted on the loan in September 2009 and conveyed the property to BV

Hotels in November 2009. Deutsche Bank filed this mortgage foreclosure action on June 14, 2010,

naming Osinski and BV Hotels (among others) as defendants.

¶5 After serving BV Hotels by publication, Deutsche Bank obtained an order of default

against BV Hotels in August 2015. Deutsche Bank National Trust Company as Trustee for

GSAAHET 2006-17 v. Osinski, 2021 IL App (1st) 191669-U, ¶ 13. In February 2019, an attorney

entered an appearance on behalf of BV Hotels and filed a motion to quash service by publication.

Id. ¶ 15. The circuit court denied the motion to quash service and BV Hotels appealed. Id. ¶ 2. We

reversed and remanded, holding that Deutsche Bank failed to comply with the statute and local

rule governing service by publication. Id. ¶¶ 1, 51.

1 We refer to this property by its address because its location is relevant to whether the advertisement of the judicial sale of the property was proper.

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¶6 On remand, BV Hotels was properly served by corporate service on July 9, 2021.

Approximately a year later, BV Hotels filed its answer and affirmative defenses. Relevant here,

BV Hotels raised an affirmative defense of laches, asserting:

“This lawsuit was filed in 2010 based upon a default that supposedly took place in 2009.

Despite this, BV Hotels was not served until 2021, well after the ten-year statute of

limitations for breach of a note or mortgage had expired. BV Hotels spent many thousands

of dollars on upkeep in reliance upon the natural assumption that plaintiff had abandoned

whatever rights it may have. For example, in 2021 over $10,000 was spent replacing the

roof of 1400 Kingsport. BV Hotels would suffer extreme prejudice if plaintiff was now

entitled to proceed.”

¶7 Deutsche Bank filed a motion to strike BV Hotels’ affirmative defense of laches pursuant

to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 2022)). Deutsche Bank

argued that “an alleged lack of diligent service of summons does not constitute laches” because

“[t]he proper time to measure the delay in laches is between the ‘actionable incident and the filing

of the suit,’ ” quoting Hannigan v. Hoffmeister, 240 Ill. App. 3d 1065, 1075 (1992). In response,

BV Hotels argued that “delay in prosecuting a lawsuit can support a claim for laches,” citing Miller

v. Bloomberg, 126 Ill. App. 3d 332, 336-37 (1984). BV Hotels also contended that even if laches

was measured from the time the plaintiff filed the lawsuit, “service of process is part of bringing

a lawsuit” because “service is almost always contemporaneous with filing.” (Emphasis in original.)

¶8 The circuit court granted Deutsche Bank’s motion and struck BV Hotels’ laches

affirmative defense with prejudice. The court’s written order does not explain its reasoning for this

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ruling. The same day, the court granted summary judgment for Deutsche Bank and entered a

judgment of foreclosure and sale.

¶9 Deutsche Bank arranged for a judicial sale of the property on February 6, 2023. Deutsche

Bank published notice of the sale in the Chicago Daily Law Bulletin on December 29, 2022, and

January 5 and 12, 2023, and in the Northbrook Star on January 5, 12, and 19, 2023. A certificate

of publication filed with the circuit court states that the “Northbrook Star is a secular newspaper

that has been published WEEKLY in the township where the real estate is located.” (Emphasis in

original.). The certificate is signed by the publisher’s representative.

¶ 10 Deutsche Bank purchased 1400 Kingsport for $750,000 at the judicial sale and filed a

motion to approve the sale. In response, BV Hotels argued that Deutsche Bank’s notice of sale in

the Northbrook Star did not comply with section 15-1507(c)(2) of the Illinois Mortgage

Foreclosure Law (IMFL) (735 ILCS 5/15-1507(c)(2) (West 2022)) because the Northbrook Star

“is indisputably published in downtown Chicago” at the offices of the Chicago Tribune, not in

Northfield Township where 1400 Kingsport is located. In reply, Deutsche Bank argued that BV

Hotels presented no evidence that the notice of sale violated section 15-1507(c)(2) or that BV

Hotels did not receive notice of the sale. In addition, Deutsche Bank contended that BV Hotels

had not refuted Deutsche Bank’s certificate of publication, which attested that the Northbrook Star

was published in the township where the property was located, and that BV Hotels failed to show

good cause for the circuit court setting aside the sale. The court approved the sale on May 18,

2023. In its written order, the court did not specifically address BV Hotels’ argument regarding

advertisement of the sale in the Northbrook Star beyond finding that “all notices required by 735

ILCS 5/15-1507(c) were given.”

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¶ 11 BV Hotels timely appealed.

¶ 12 II. ANALYSIS

¶ 13 On appeal, BV Hotels argues that the circuit court erred by striking its affirmative defense

of laches and by approving the judicial sale of the property.

¶ 14 A. Laches Affirmative Defense

¶ 15 BV Hotels first contends that the circuit court erred in striking its affirmative defense of

laches. An affirmative defense admits the legal sufficiency of the plaintiff’s claim but asserts

another matter that defeats the plaintiff’s right to recovery. Reverse Mortgage Funding, LLC v.

Catchins, 2023 IL App (1st) 221197, ¶ 22 (citing Vroegh v. J&M Forklift, 165 Ill. 2d 523, 530

(1995)). A defendant must plead facts to establish an affirmative defense with the same specificity

that a plaintiff must plead facts to state a cause of action. Id. ¶ 23. A section 2-615 motion to strike

an affirmative defense, like all section 2-615 motions, admits the well-pleaded facts of the

affirmative defense and challenges only the legal sufficiency of the defense. Id.; 735 ILCS 5/2-

615 (West 2022). We review the circuit court’s order striking the affirmative defense of laches

pursuant to section 2-615 de novo. See Bogner v. Villiger, 343 Ill. App. 3d 264, 268 (2003).

¶ 16 “Laches is an equitable defense asserted against a party who has knowingly slept upon [its]

rights and acquiesced for a great length of time.” (Internal quotation marks omitted.) Tillman v.

Pritzker, 2021 IL 126387, ¶ 25. Whereas a statute of limitations bars a claim based solely on the

expiration of a set period of time, laches turns on “the inequity of permitting the claim to be

enforced” based on a “change in the condition or relation of the property and parties.” (Internal

quotation marks omitted.) Id. Laches has two fundamental elements: (1) lack of due diligence by

the plaintiff and (2) prejudice to the defendant. Id.

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¶ 17 BV Hotels’ affirmative defense did not allege that Deutsche Bank lacked due diligence in

attempting to serve BV Hotels. The affirmative defense alleged only that BV Hotels was not

actually served until 2021. Our supreme court is clear that the first essential element of laches is

“lack of due diligence.” Noland v. Mendoza, 2022 IL 127239, ¶ 33; see also PNC Bank, National

Ass’n v. Kusmierz, 2022 IL 126606, ¶ 31; Van Milligan v. Board of Fire and Police Commissioners

of Village of Glenview, 158 Ill. 2d 85, 89 (1994). Such an allegation does not appear anywhere in

BV Hotels’ affirmative defense and BV Hotels pled no facts regarding Deutsche Bank’s diligence,

or lack thereof, in attempting service. Therefore, BV Hotels did not adequately plead laches. 2

Because we find that BV Hotels did not plead lack of due diligence, we need not consider whether

it adequately pled prejudice. See PNC Bank, 2022 IL 126606, ¶ 31 (a party must establish both

elements of laches for the affirmative defense to stand). And, because we resolve this issue based

on BV Hotels’ failure to plead an essential element of laches, we need not reach the substantive

question of whether laches can be premised solely on the passage of time between the filing of a

lawsuit and the effectuation of service upon a defendant. Accordingly, we affirm the circuit court’s

order granting Deutsche Bank’s section 2-615 motion to strike BV Hotels’ laches affirmative

defense.

¶ 18 B. Notice of Foreclosure Sale

¶ 19 BV Hotels also argues that the circuit court erred in approving the judicial sale of 1400

Kingsport because Deutsche Bank did not advertise the sale in a newspaper published in the

township in which the property is located, in violation of section 15-1507(c)(2) of the IMFL.

2 Although Deutsche Bank did not raise this issue, we may affirm on any basis apparent from the record on appeal. See Schrock v. Ungaretti & Harris Ltd., 2019 IL App (1st) 181698, ¶ 44.

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Specifically, BV Hotels contends that the sale was advertised in the Northbrook Star, which is

published in Chicago, not Northfield Township. As noted above, the parties agree that 1400

Kingsport is in Northfield Township.

¶ 20 We review a circuit court’s decision to approve a judicial sale for an abuse of discretion. 3

CitiMortgage, Inc. v. Bermudez, 2014 IL App (1st) 122824, ¶ 57. “A circuit court abuses its

discretion when its ruling rests on an error of law or where no reasonable person would take the

view adopted by the circuit court.” Id.

¶ 21 A judicial foreclosure sale is not complete until a circuit court approves the sale. Id. ¶ 59.

Section 15-1508(b) of the IMFL (735 ILCS 5/15-1508(b) (West 2022)) “governs the circuit court’s

analysis in approving or disapproving a sale and is the only means under which a defendant can

move to set aside a sale.” CitiMortgage, 2014 IL App (1st) 122824, ¶ 59. When a plaintiff moves

to approve a judicial sale of a property, the court must conduct a hearing and must approve the

sale unless the court finds that notice of sale did not comply with section 15-1507(c). 735 ILCS

5/15-1508(b) (West 2022). Relevant here, section 15-1507(c) provides that the sale must be

advertised in “a newspaper published in the township in which the real estate is located.” Id. § 15-

1507(c)(2). A party to the lawsuit that does not personally receive notice of the sale in compliance

with section 15-1507(c) may seek to set aside the sale on that basis alone. Id. § 15-1508(c). But in

all other cases, “no sale *** shall be held invalid or be set aside because of any defect in the notice

thereof or in the publication of the same *** except upon good cause shown in hearing pursuant

3 BV Hotels contends that this is a matter of statutory interpretation, implying that the standard of review should be de novo. See Tillman, 2021 IL 126387, ¶ 17. We disagree. Section 15-1508 of the IMFL “ha[s] been construed as conferring on circuit courts broad discretion in approving or disproving judicial sales.” Household Bank, FSB v. Lewis, 229 Ill. 2d 173, 178 (2008). The abuse of discretion standard applies. Sewickley, LLC, v. Chicago Title Land Trust Co., 2012 IL App (1st) 112977, ¶ 26.

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to [section 15-1508(b)].” (Emphasis added.) Id. § 15-1508(d). “The party opposing the foreclosure

sale bears the burden of proving that sufficient grounds exist to disapprove the sale.” U.S. Bank

National Ass’n as Trustees for C-Bass Mortgage Loan Asset-Backed Certificates Series 2006-CB2

v. Sharif, 2020 IL App (1st) 191013, ¶ 10.

¶ 22 Read together, these sections mean that when a defendant does not contest that it received

notice of the sale, the defendant can only seek to invalidate the sale based on defects in the notice

if the defendant establishes “good cause.” Cragin Federal Bank for Savings v. American National

Bank & Trust Co. of Chicago, 262 Ill. App. 3d 115, 120 (1994) (“Under the clear language of

section 15-1508(d), therefore, the [defendants] cannot establish that the sale was invalid merely

by showing that the notice was not published on the third consecutive week. They must show

‘good cause’ for setting aside the sale.”). Good cause under section 15-1508(d) means “provid[ing]

evidence that the property sold for substantially less than its actual value as a result of the

[plaintiff’s] failure to provide adequate notice.” Sharif, 2020 IL App (1st) 191013, ¶ 22 (citing

Cragin, 262 Ill. App. 3d at 121).

¶ 23 BV Hotels never claimed that it did not receive notice of the sale of 1400 Kingsport.

Therefore, BV Hotels had the burden of establishing good cause under section 15-1508(d) for

setting aside the sale. See id. ¶ 10. We find that BV Hotels did not even allege, much less prove,

good cause.

¶ 24 The record does not contain reports of proceedings for the May 18, 2023, hearing at which

the circuit court heard Deutsche Bank’s motion to approve the sale and at which BV Hotels had

the burden of establishing good cause to set the sale aside. When an issue on appeal relates to the

conduct of a hearing, we cannot review it without a report or record of the proceeding. Hye Ra

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Han v. William Holloway, 408 Ill. App. 3d 387, 390 (2011). In that scenario, we must presume

that the circuit court’s order followed the law and had a sufficient factual basis. Id.

¶ 25 That is a safe assumption in this case because BV Hotels has never claimed that 1400

Kingsport sold for substantially less than its actual value, i.e., BV Hotels has never attempted to

establish good cause under section 15-1508(d). See Sharif, 2020 IL App (1st) 191013, ¶ 22. In

fact, its appellate brief does not even address good cause aside from insisting that we should not

“force BV Hotels to offer particularized ‘good cause’. ” But that is precisely what Illinois law

requires. BV Hotels reads section 15-1508(d) backwards. BV Hotels argues that the circuit court

used section 15-1508(d) to excuse a presumptively defective notice and presumptively invalid sale.

Not so. The circuit court was required to approve the sale unless BV Hotels proved good cause.

BV Hotels did not even attempt to meet that burden of proof.

¶ 26 BV Hotels’ only complaint has ever been that the Northbrook Star is not published in

Northfield Township. Even assuming that is true, it does not constitute good cause to set the sale

aside. See id. ¶ 21 (“[e]ven assuming a defect occurred in the content of the notice of sale,

defendant fails to demonstrate good cause under section 15-1508(d) so as to have the sale held

invalid or set aside.”).

¶ 27 The cases that BV Hotels cites do not involve the IMFL and do not compel a finding that

the circuit court abused its discretion in approving the sale. See, e.g., Garcia v. Tully, 72 Ill. 2d 1

(1978); In re County Treasurer and ex officio County Collector, 2023 IL App (3d) 220226.

Accordingly, we find that the circuit court did not abuse its discretion in approving the judicial

sale of 1400 Kingsport.

¶ 28 III. CONCLUSION

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¶ 29 For the foregoing reasons, we affirm the judgment of the circuit court of Cook County.

¶ 30 Affirmed.

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