Nationstar Mortgage, LLC v. Canale

2014 IL App (2d) 130676, 10 N.E.3d 229

• Court: Appellate Court of Illinois
• Decided: April 9, 2014
• Docket: 2-13-0676
• Status: Unpublished

Opinion

2014 IL App (2d) 130676 No. 2-13-0676 Opinion filed April 9, 2014 ______________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT ______________________________________________________________________________

NATIONSTAR MORTGAGE, LLC, ) Appeal from the Circuit Court ) of Du Page County. Plaintiff-Appellee, ) ) v. ) No. 11-CH-4285 ) WAYNE CANALE, a/k/a Wayne F. Canale, ) ) Defendant-Appellant ) ) (RBS Citizens, N.A., SBM Charter One ) Honorable Bank, N.A., Unknown Owners, and ) Robert G. Gibson, Nonrecord Claimants, Defendants). ) Judge, Presiding. ______________________________________________________________________________

JUSTICE JORGENSEN delivered the judgment of the court, with opinion. Justices McLaren and Hudson concurred in the judgment and opinion.

OPINION

¶1 Defendant, Wayne Canale, the property owner in a foreclosure action, appeals after the

trial court confirmed the judicial sale of the property at issue. He asserts that, because plaintiff,

Nationstar Mortgage, LLC, failed to comply with the statutory pleading requirements for a

foreclosure action (see 735 ILCS 5/15-1504(a) (West 2010)), the trial court lacked subject matter

jurisdiction to enter a foreclosure judgment for plaintiff. We disagree, and thus we affirm.

¶2 I. BACKGROUND 2014 IL App (2d) 130676

¶3 Plaintiff filed a foreclosure complaint relating to the property at 5S365 Vest Avenue,

Naperville, on September 8, 2011. It made defendant a defendant as the property owner and

borrower and alleged that he was in default on the note at issue. It also named two banks—RBS

Citizens, N.A. (RBS), and SBM Charter One Bank, N.A. (SBM)—and unknown owners and

nonrecord claimants. The complaint stated that the “mortgagee, trustee or grantee in the

Mortgage” was Mortgage Electronic Registration Systems, Inc., as nominee for Silver Mortgage

Bancorp, Inc. The attached mortgage was consistent with that allegation. Plaintiff stated that the

capacity in which it brought the action was “mortgagee and holder of the note.” However, the

attached note showed a single endorsement, from Silver Mortgage Bancorp, Inc., to Ohio Savings

Bank (OSB), “ITS SUCCESSORS AND/OR ASSIGNS.” Also part of the record is a mortgage

modification agreement between defendant and Amtrust Bank (Amtrust).

¶4 RBS and SBM appeared and answered. Defendant did neither. Plaintiff moved for

summary judgment against the banks and default judgment against defendant.

¶5 On June 5, 2012, the court entered a judgment of foreclosure in favor of plaintiff, i.e., it

entered judgment for $107,466.04 in favor of plaintiff and ordered the sale of the property to

satisfy that judgment. The judgment also described the mortgage lien as plaintiff’s. The sale

took place on October 11, 2012. Plaintiff bid the judgment indebtedness and was the winning

bidder.

¶6 Plaintiff moved to confirm the sale. Defendant appeared pro se and filed an objection.

His objection included the assertions that he had been present at the sale and that no public offering

of the property had occurred. The court confirmed the sale on April 4, 2013. On May 3, 2013,

defendant moved to vacate the confirmation, arguing that a slight delay in his arrival in the

courtroom resulted in his inability to argue his objection. However, for the first time, he also

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asserted, on information and belief, that the original mortgagee had never properly assigned the

note and mortgage to plaintiff and that plaintiff was asserting rights “without showing whether any

proper assignment occurred between [the known earlier owners of the note and mortgage] over

time.” He described this as an issue of standing.

¶7 The court denied the motion, ruling that defendant had forfeited the standing issue by

failing to file an answer. Defendant timely appealed.

¶8 II. ANALYSIS

¶9 On appeal, defendant concedes that, in Lebron v. Gottlieb Memorial Hospital, 237 Ill. 2d

217, 252-53 (2010), the supreme court held that a lack of standing is an affirmative defense, which

the defendant forfeits if he does not timely plead. However, defendant asserts that, in a

foreclosure action, standing must be pleaded by the plaintiff. Specifically, under the Illinois

Mortgage Foreclosure Law (735 ILCS 5/15-1101 et seq. (West 2010)), the plaintiff must allege the

“[c]apacity in which [the] plaintiff brings this foreclosure,” i.e., “the legal holder of the

indebtedness, a pledgee, an agent, the trustee under a trust deed or otherwise.” 735 ILCS

5/15-1504(a)(3)(N) (West 2010). Noting that plaintiff’s allegation that it was the “mortgagee and

holder of the note” was unsupported (if not refuted) by the attached mortgage and note, defendant

concludes that plaintiff failed to plead its standing and that the resulting judgment was void for

lack of subject matter jurisdiction, a defect that cannot be forfeited (Lebron, 237 Ill. 2d at 252).

¶ 10 In Deutsche Bank National Trust Co. v. Gilbert, 2012 IL App (2d) 120164, ¶ 16, the

defendant likewise argued that the Illinois Mortgage Foreclosure Law shifted to the plaintiff the

burden to plead and prove standing. We were not required to resolve that issue, “because even if

[the defendant] bore the burden of showing that [the plaintiff] lacked standing, he met that

burden.” Id. We need not resolve the issue here either. Here, even if plaintiff had the burden to

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plead its standing, and even if it failed to do so, its failure to do so did not deprive the trial court of

subject matter jurisdiction.

¶ 11 Defendant relies almost exclusively on City National Bank of Hoopeston v. Langley, 161

Ill. App. 3d 266 (1987), which does tend to support his contention. There, sua sponte, the

appellate court deemed it “necessary to address the trial court’s subject-matter jurisdiction based

upon the short form statutory complaint for foreclosure.” Id. at 275. The court observed that the

plaintiff was statutorily required to “attach a copy of the mortgage and a copy of the note secured

thereby.” Id. at 276 (citing Ill. Rev. Stat. 1983, ch. 110, ¶ 15-108(2) (now 735 ILCS

5/15-1504(a)(2) (West 2010))). Noting that the plaintiff, in violation of that requirement, had

“fail[ed] to match up documentation,” the court deemed the judgment void. Id. at 277.

¶ 12 The difficulty is that Langley rests on a defunct view of subject matter jurisdiction. In

Belleville Toyota, Inc. v. Toyota Motor Sales, U.S.A., Inc., 199 Ill. 2d 325 (2002), the supreme

court explained that, under the Illinois Constitution of 1870, “in cases involving purely statutory

causes of action, *** unless the statutory requirements were satisfied, a court lacked jurisdiction to

grant the relief requested.” Id. at 336-37. However, under our present constitution, “[w]ith the

exception of the circuit court’s power to review administrative action, which is conferred by

statute, a circuit court’s subject matter jurisdiction is conferred entirely by our state constitution.”

Id. at 334. That jurisdiction extends to all “ ‘justiciable matters.’ ” Id. (quoting Ill. Const. 1970,

art. VI, § 9). “Thus, in order to invoke the subject matter jurisdiction of the circuit court, a

plaintiff’s case, as framed by the complaint or petition, must [merely] present a justiciable matter.”

Id. Although the plaintiff’s pleadings thus are pertinent, “[s]ubject matter jurisdiction does not

depend upon the legal sufficiency of the pleadings.” Id. at 340. “Indeed, even a defectively

stated claim is sufficient to invoke the court’s subject matter jurisdiction ***.” In re Luis R., 239

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Ill. 2d 295, 301 (2010). “[T]he only consideration is whether the alleged claim falls within the

general class of cases that the court has the inherent power to hear and determine. If it does, then

subject matter jurisdiction is present.” (Emphasis in original.) Id.

¶ 13 In Belleville Toyota, the supreme court went on the explain the practical importance of this

broad view of subject matter jurisdiction:

“Our conclusion, while firmly rooted in our constitution, is also consistent with the

trend of modern authority favoring finality of judgments over alleged defects in validity.

[Citations.] Labeling the requirements in statutory causes of action ‘jurisdictional’ would

permit an unwarranted and dangerous expansion of the situations where a final judgment

may be set aside on a collateral attack. [Citation.] Even if the statutory requirement is

considered a nonwaivable condition, the same concern over the finality of judgments

arises. Once a statutory requirement is deemed ‘nonwaivable,’ it is on equal footing with

the only other nonwaivable conditions that would cause a judgment to be void, and thus

subject to collateral attack—a lack of subject matter jurisdiction, or a lack of personal

jurisdiction. [Citation.] As our appellate court has observed, ‘[b]ecause of the disastrous

consequences which follow when orders and judgments are allowed to be collaterally

attacked, orders should be characterized as void only when no other alternative is possible.’

[Citations.]” Belleville Toyota, 199 Ill. 2d at 341.

¶ 14 In Langley, the appellate court equated the plaintiff’s violation of the statutory

requirements for a foreclosure action with the trial court’s lack of subject matter jurisdiction. See

also Mortgage Electronic Registration Systems, Inc. v. Barnes, 406 Ill. App. 3d 1, 6 (2010)

(suggesting that trial court had jurisdiction of foreclosure action because complaint “was legally

and factually sufficient and included allegations relative to standing”). This equation is error.

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Those requirements might go to the complaint’s legal sufficiency, but they do not pertain to the

court’s subject matter jurisdiction. The latter turns only on whether the claim, even if defectively

stated, presents a “justiciable matter,” i.e., “falls within the general class of cases that the court has

the inherent power to hear and determine.” Luis R., 239 Ill. 2d at 301. There is no doubt that

courts have the inherent power to hear and determine foreclosure cases. Cf. Belleville Toyota,

199 Ill. 2d at 340 (claim under statute was justiciable matter). Thus, here, plaintiff’s claim, even

if defectively stated, presented a justiciable matter, invoking the trial court’s subject matter

jurisdiction.

¶ 15 A different outcome is not required by the fact that the purported defect in plaintiff’s claim

was plaintiff’s failure to plead its standing. To be sure, the supreme court has stated that standing

is “an element of justiciability.” People v. Greco, 204 Ill. 2d 400, 409 (2003). This is not to say,

however, that a plaintiff who lacks standing cannot assert a “justiciable matter.” Indeed, if such

were the case, the plaintiff’s lack of standing would itself defeat the trial court’s subject matter

jurisdiction, and the defendant could not forfeit the lack of standing. Cf. Lebron, 237 Ill. 2d at

252-53. Thus, though standing might be “an element of justiciability” (Greco, 204 Ill. 2d at 409),

it is not a requirement for a “justiciable matter.”

¶ 16 An Ohio appellate court has explored this nuance. In Deutsche Bank National Trust Co. v.

Finney, 2013-Ohio-4884, appeal allowed, 2014-Ohio-1182, on facts substantially identical to

these, the defendants asserted that “the trial court lacked subject-matter jurisdiction to enter the

default judgment because [the plaintiff] did not demonstrate that it had standing as the real party in

interest at the time it filed the foreclosure action.” Id. ¶ 12. The appellate court observed that,

like in Illinois, the Ohio Constitution grants trial courts jurisdiction “ ‘over all justiciable

matters.’ ” Id. ¶ 22 (quoting OH Const. art. IV, § 4(B)). The court further noted that, as the

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defendants argued, “a legal action filed by a party who lacks standing is not justiciable.” Id. ¶ 23.

However, the court rejected the defendants’ conclusion that the lack of this “justiciability” resulted

in a lack of subject matter jurisdiction:

“Rather, we recognize that subject-matter jurisdiction is not dependent upon the

justiciability of any particular case. *** [A] court may have jurisdiction over the

subject-matter of a case and yet not be empowered to adjudicate it to final judgment for

reasons particular to that case, including the lack of standing of the plaintiff. Where an

action is brought by a plaintiff who lacks standing, the action is not justiciable because it

fails to present a case or controversy between the parties before it. [Citation.] But the

court’s lack of ‘jurisdiction,’ i.e., its ability to properly resolve a particular action due to the

lack of a real case or controversy between the parties, does not mean that the court lacked

subject-matter jurisdiction over the case.” Id. ¶ 24.

Thus, the court accepted the plaintiff’s argument that, whereas subject matter jurisdiction exists as

long as “the matter alleged is within the class of cases in which a particular court has been

empowered to act” (id. ¶ 18), “justiciability” implicates only a different type of jurisdiction, “ ‘the

trial court’s authority to determine a specific case within that class of cases that is within its subject

matter jurisdiction. It is only when the trial court lacks subject matter jurisdiction that its

judgment is void; lack of jurisdiction over the particular case merely renders the judgment

voidable’ ” (emphasis omitted) (id. ¶ 17 (quoting Pratts v. Hurley, 102 Ohio St. 3d 81,

2004-Ohio-1980, 806 N.E.2d 992, at ¶ 12)). The court agreed with the plaintiff that, because “its

foreclosure complaint alleged [a] cognizable cause of action within the subject-matter jurisdiction

of the [trial court], i.e., foreclosure” (id. ¶ 19), the trial court had subject matter jurisdiction despite

the nonjusticiability of the particular case, and the judgment was not void (id. ¶ 26).

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¶ 17 Although Ohio’s view of jurisdiction might not be a perfect analogue of our own, Finney

strongly supports our conclusion that a plaintiff’s standing, though “an element of justiciability”

(Greco, 204 Ill. 2d at 409), is not an element of the trial court’s subject matter jurisdiction. Again,

the latter requires only a “justiciable matter,” which a foreclosure clearly is. Thus, here, the trial

court’s judgment was not void.

¶ 18 In sum, we reject the precise argument that defendant raises: that plaintiff’s failure to plead

its standing, assuming that it had the burden to do so, deprived the trial court of subject matter

jurisdiction and thus rendered the foreclosure judgment void. Again, even if plaintiff lacked

standing, it presented a “justiciable matter,” as a foreclosure case “falls within the general class of

cases that the court has the inherent power to hear and determine” (Luis R., 239 Ill. 2d at 301).

Thus, the trial court had subject matter jurisdiction. We note, however, that we do not hold that

plaintiff had standing. Indeed, in light of the apparent discrepancy between plaintiff’s complaint

and the attached documents, plaintiff’s standing is much in doubt. See Gilbert, 2012 IL App (2d)

120164, ¶ 17 (“[The plaintiff’s] name does not appear on either of these documents. Thus, the

documents attached to the complaint contradict [the plaintiff’s] allegation that it was ‘the

mortgagee’ and support [the defendant’s] argument that [the plaintiff] did not have an interest in

the mortgage that would confer standing.”). Nevertheless, as noted, defendant conditions our

reaching the merits of that issue on his assertion that plaintiff’s lack of standing deprived the trial

court of subject matter jurisdiction. Because that assertion is not correct, we do not reach the

merits of the standing issue.

¶ 19 Defendant does not provide a convincing alternative argument as to why we should reach

the merits of that issue. He says only that, “should this court not find the judgment(s) below void,

[he] respectfully request[s that] this Court address the issue of standing of Plaintiff pursuant to

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considerations of substantial justice, plain error and/or public importance.” He cites two cases for

the boilerplate proposition that we may ignore a forfeiture as necessary to ensure a just result.

See, e.g., In re Marriage of Rodriguez, 131 Ill. 2d 273, 279 (1989). In this context, however, that

proposition is not applicable. Although after a judicial sale a court may vacate a default judgment

of foreclosure if “justice was otherwise not done” (735 ILCS 5/15-1508(b)(iv) (West 2010)), that

provision “merely codif[ied] the long-standing discretion of the courts of equity to refuse to

confirm a judicial sale” (Wells Fargo Bank, N.A. v. McCluskey, 2013 IL 115469, ¶ 19). That

discretion is “ ‘not a mere arbitrary discretion but must be exercised in accordance with established

principles of law.’ ” Id. (quoting Shultz v. Milburn, 366 Ill. 400, 403 (1937)). Specifically, it

may not be invoked “merely to protect an interested party ‘against the result of his own

negligence.’ ” Id. (quoting Shultz, 366 Ill. at 405). Thus, once the plaintiff moves to confirm the

sale:

“To vacate both the sale and the underlying default judgment of foreclosure, the

[defendant] must not only have a meritorious defense to the underlying judgment, but must

establish under section 15-1508(b)(iv) that justice was not otherwise done because either

the [plaintiff], through fraud or misrepresentation, prevented the [defendant] from raising

his meritorious defenses to the complaint at an earlier time in the proceedings, or the

[defendant] has equitable defenses that reveal he was otherwise prevented from protecting

his property interests. *** See, e.g., *** Deutsche Bank National Trust Co. v. Snick,

2011 IL App (3d) 100436, ¶ 9 (court held it was far too late to assert the defense of standing

where the plaintiff had already moved for confirmation of the judicial sale). This

interpretation is consistent with the legislative policy of balancing the competing

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objectives of efficiency and stability in the sale process and fairness in protecting the

[defendant’s] equity in the property and preserving the integrity of the sale.” Id. ¶ 26.

Thus, here, we may not reach defendant’s standing issue merely in the interest of achieving a just

result. Rather, defendant must satisfy the standard of “justice” under section 15-1508(b)(iv). He

has not attempted to do so.

¶ 20 III. CONCLUSION

¶ 21 For the reasons stated, the judgment of the circuit court of Du Page County is affirmed.

¶ 22 Affirmed.

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