HSBC Bank USA v. Kirkland Townsend

793 F.3d 771, 2015 U.S. App. LEXIS 12320, 2015 WL 4321023
CourtCourt of Appeals for the Seventh Circuit
DecidedJuly 16, 2015
Docket13-1017
StatusPublished
Cited by30 cases

This text of 793 F.3d 771 (HSBC Bank USA v. Kirkland Townsend) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
HSBC Bank USA v. Kirkland Townsend, 793 F.3d 771, 2015 U.S. App. LEXIS 12320, 2015 WL 4321023 (7th Cir. 2015).

Opinions

WOOD, Chief Judge.

This is one of the flood of mortgage foreclosure cases that hit the country after the 2008 economic downturn. Before we can say anything about its merits, however, we must decide whether an appealable final judgment is before us. That question turns out to be more complicated than usual, given the many steps that must take place before the foreclosure process is complete. Here, the case has reached the point where the bank seeking to foreclose has secured a judgment of foreclosure and an order of sale pursuant to Illinois law. The district court declared that its judgment was “final,” but at the same time, it acknowledged that the public judicial sale could take place only after certain additional steps were completed, including the expiration of the statutory reinstatement and redemption periods to which the mortgagor was entitled under Illinois law. The court also noted that it would need to hold a hearing to confirm the sale (thereby ■ allowing it to go to closing) upon a party’s motion, and at such a hearing it could decide not to confirm the sale if, among other things, “justice was ... not done.”

Kirkland Townsend has brought an appeal from the rulings we have just described. Concerned about our appellate jurisdiction, we asked the parties for additional briefing on that point. Those briefs, plus our independent review of the case, convince us that the appeal must be dismissed for want of appellate jurisdiction.

I

In 2005, Townsend signed a promissory note for $136,000 with Fremont Investment & Loan. He needed the money to purchase a condominium in the South Shore neighborhood of Chicago. At the same time, Townsend executed a mortgage on the property, naming Mortgage Electronic Registration Systems, Inc. (MERS) as the mortgagee. (MERS was Fremont’s nominee.) After Townsend ceased making payments on his mortgage in 2011, MERS assigned the mortgage to HSBC Bank, USA; MERS remained Fremont’s nominee, however, for a junior mortgage Fremont held in the amount of $34,000. Shortly thereafter, HSBC filed a complaint against Townsend in the district court ask[774]*774ing for a judgment of foreclosure of the mortgage, sale of the condominium, and related relief under Illinois law. The district court’s subject-matter jurisdiction was based on diversity. See 28 U.S.C. § 1332(a)(1).

Representing himself, Townsend answered the complaint. HSBC then moved for summary judgment. It supported its motion with evidence showing that Townsend was in default; that he owed $141,425.65 on the note; and that HSBC owned both the note and the mortgage. Townsend failed to respond to HSBC’s motion, and so the district court granted it in open court on September 6, 2012. Later that day, it entered a written judgment of foreclosure, an order finding that Townsend owed the bank $143,569.65 (representing principal, interest, attorney’s fees, and costs), and an order providing for judicial sale of the property if Townsend did not pay before the redemption period expired. The court wrote that the judgment was “a final and appealable order” that was “fully dispositive” of all defendants’ interests for purposes of Federal Rule of Civil Procedure 54(b).

At the same time, the court retained “jurisdiction over the parties and subject matter of this cause for the purpose of enforcing th[e] Judgment or vacating said Judgment if a reinstatement is made as set forth in this Judgment.” The court acknowledged that “[ujpon motion and notice,” it would be required to hold a hearing to confirm the judicial sale pursuant to 735 ILCS 5/15-1508. After such a hearing, it could decide not to enter a confirmation order, if it found that appropriate parties did not receive proper notice of the-sale, if the terms of the sale were unconscionable, if the sale was conducted fraudulently, “or ... justice was otherwise not done.” Thirty days after the order confirming the sale, the purchaser obtains the right to possession of the property. 735 ILCS 5/15-1508(g). (This is a good time to observe that the word “sale” is used in several senses in the governing Illinois statutes: (1) as the formal judicially authorized event at which people bid for the property in foreclosure — we call this the “judicial sale” in this opinion; (2) as the confirmation of the judicial sale — the step, resembling closing, at which the purchaser’s right to a deed is established; and (3) as the final transfer of possession. We have attempted to be precise about which meaning is involved at various points in our discussion.)

Elsewhere in the judgment, the district court said that it would appoint a special commissioner to conduct the judicial sale according to instructions in the order. The court concluded that HSBC’s interest was superior to that of MERS (which as we have noted was still acting on Fremont’s behalf as nominee for its junior mortgage), it ordered that ultimately the proceeds of the sale would be paid out according to the terms of the judgment and 735 ILCS 5/15-1512. The judgment also provided that if the proceeds of a confirmed sale came up short, a deficiency judgment would be entered against Townsend for the difference.

After the parties submitted their briefs on Townsend’s pro se appeal of the district court’s foreclosure judgment, we ordered supplemental briefing on the question of appellate jurisdiction. We asked the parties to address whether (1) the district court improperly certified its judgment as final under Rule 54(b); (2) its judgment qualified as an appealable injunction under 28 U.S.C. § 1292(a); or (3) the doctrine of Forgay v. Conrad, 47 U.S. (6 How.) 201,12 L.Ed. 404 (1848), supported jurisdiction. We recruited attorney Kenneth J. Vanko to represent Townsend, and we are grateful to him for his able service to his client [775]*775and the court, and to all counsel for the helpful supplemental briefs.

II

We consider first whether we may hear Townsend’s appeal under the final judgment rule expressed in 28 U.S.C. § 1291. That provision states that the courts of appeals “shall have jurisdiction of appeals from all final decisions of the district courts of the United States.” As the Supreme Court recently reiterated, “[a] party can typically appeal as of right only from [a] final decision.” Bullard v. Blue Hills Bank, — U.S.-, 135 S.Ct. 1686, 1691, 191 L.Ed.2d 621 (2015). The first question before us is whether the district court’s disposition of Townsend’s case was final for purposes of section 1291.

Although section 1291 should be given “a practical rather than a technical construction,” the law’s “core application is to rulings that terminate an action.” Gelboim v. Bank of Am. Corp., — U.S.-, 135 S.Ct. 897, 902, 190 L.Ed.2d 789 (2015) (quotations omitted). Such a decision “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 89 L.Ed. 911 (1945).

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Bluebook (online)
793 F.3d 771, 2015 U.S. App. LEXIS 12320, 2015 WL 4321023, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hsbc-bank-usa-v-kirkland-townsend-ca7-2015.