OneWest Bank Fsb v. Cielak

2016 IL App (3d) 150224, 67 N.E.3d 884

• Court: Appellate Court of Illinois
• Decided: August 31, 2016
• Docket: 3-15-0224
• Status: Unpublished

Opinion

2016 IL App (3d) 150224

Opinion filed August 31, 2016 _____________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

ONEWEST BANK FSB, ) Appeal from the Circuit Court ) of the 12th Judicial Circuit, Plaintiff-Appellee, ) Will County, Illinois, ) v. ) Appeal No. 3-15-0224 ) Circuit No. 09-CH-01236 MICHAEL CIELAK, JEAN CIELAK, a/k/a, ) Jean C. Cielak, UNKNOWN OWNERS, ) Honorable and NONRECORD CLAIMANTS ) Daniel Rippy, Thomas A. Thanas, and ) Richard J. Siegel Defendants-Appellants. ) Judges, Presiding. _____________________________________________________________________________

JUSTICE McDADE delivered the judgment of the court, with opinion. Presiding Justice O’Brien and Justice Wright concurred in the judgment and opinion.

_____________________________________________________________________________

OPINION

¶1 Defendants, Michael and Jean Cielak (the Cielaks), appeal from a judgment of

foreclosure. The Cielaks argue that the trial court erred in finding the mortgage valid,

considering plaintiff OneWest Bank FSB’s (OneWest) renewed motion to strike, and finding

OneWest had standing to bring the foreclosure action. We affirm. ¶2 FACTS

¶3 On April 3, 2006, the Cielaks purchased a home in Bolingbrook, Illinois. The Cielaks

acquired the real estate as tenants by the entirety and occupied the property continuously as their

marital residence.

¶4 On June 3, 2008, Michael signed a promissory note with a principal amount of $275,674

due to IndyMac Bank FSB (IndyMac). Jean did not sign the note. On the same day, the Cielaks

executed a mortgage against their interest in the real estate to secure payment of the loan. Unlike

the note, both Jean and Michael signed the mortgage.

¶5 On March 3, 2009, IndyMac filed a complaint to foreclose mortgage against the Cielaks.

The complaint alleged that Michael defaulted in his obligations under the note by failing to pay

the required monthly installments. The complaint sought to enforce the rights of IndyMac by

foreclosing the interests of the Cielaks in the real estate.

¶6 On July 28, 2009, IndyMac moved to substitute OneWest as plaintiff. The record on

appeal does not include a written order granting the motion, but the proceedings continued in the

name of OneWest.

¶7 On December 26, 2012, OneWest filed an amended complaint. The amended complaint

included a copy of the note signed by Michael. The note was stamped as a certified copy of the

original and rubberstamped indorsed in blank by IndyMac. The amended foreclosure complaint

also included a copy of the mortgage signed by Jean and Michael.

¶8 The Cielaks answered the amended complaint and raised two affirmative defenses. The

first affirmative defense alleged the mortgage could not be foreclosed as to Jean’s interest in the

property because only Michael signed the note and the Cielaks owned the property in a tenancy

by the entirety. The second affirmative defense alleged that the copy of the note attached to the

2 amended complaint did “not comply with the requirements of the Illinois Mortgage Foreclosure

Act 735 ILCS 5/15-1506(b).”

¶9 OneWest filed a motion to strike the Cielaks’ affirmative defenses. OneWest attached

another copy of the note to the motion to strike. Unlike the version of the note attached to the

amended complaint, the blank indorsement on the note attached to the motion was stricken

through and marked void and included two undated and detached allonges.

¶ 10 On December 11, 2013, the trial court considered OneWest’s motion to strike as to the

Cielaks’ first affirmative defense (alleging the property could not be foreclosed against Jean’s

interest because only Michael signed the note). After hearing the parties’ arguments, the trial

court denied, without prejudice, OneWest’s motion to strike the first affirmative defense. The

trial court allowed OneWest 35 days to answer or otherwise plead. In its ruling, the trial court

told counsel for OneWest that counsel could amend the motion to strike the first affirmative

defense to better address the legal aspects of the argument. OneWest was also given 35 days to

obtain an affidavit explaining why the version of the note attached to the motion to strike had a

void mark on the blank indorsement. The trial court continued the matter and took OneWest’s

motion to strike the second affirmative defense under advisement.

¶ 11 On January 14, 2014, OneWest filed a renewed motion to strike the Cielaks’ first

affirmative defense. In the motion, OneWest argued that Michael’s indebtedness under the note

was sufficient consideration for Jean’s mortgage grant to be effective. The motion further argued

that Jean granted a consensual lien on her interest in the property when she signed the mortgage.

Thus, even though the Cielaks owned the property as tenants by the entirety, OneWest could

foreclose on the mortgage.

3 ¶ 12 On the same day OneWest filed its renewed motion to strike, it also filed the affidavit of

one of its employees explaining how OneWest came into possession of the note. According to

the affidavit, OneWest serviced the loan that is secured by the Cielaks’ real estate. OneWest

came into possession of the note by way of purchase of assets from the Federal Deposit

Insurance Corporation (FDIC) as receiver for IndyMac. The bill of sale attached to the affidavit

indicated that on March 19, 2009 (before filing the amended complaint), OneWest purchased the

assets of IndyMac.

¶ 13 Upon hearing argument, the trial court granted OneWest’s motion and struck the Cielaks’

first affirmative defense. The trial court also held a hearing on OneWest’s motion to strike the

Cielaks’ second affirmative defense. The second affirmative defense attacked the adequacy of

the note attached to the amended complaint and challenged OneWest’s standing to bring the

foreclosure action. Ultimately, the trial court found that OneWest had standing to bring the

foreclosure complaint and granted OneWest’s motion to strike the second affirmative defense.

¶ 14 On August 6, 2014, OneWest moved for summary judgment. The Cielaks did not respond

to the motion, and the trial court granted summary judgment in OneWest’s favor. OneWest

moved for an order confirming the sale of the foreclosed property. The Cielaks filed a motion to

deny confirmation of the sale. The motion to deny confirmation of the sale raised the same

argument made in the Cielaks’ second affirmative defense that OneWest lacked standing. The

trial court denied the Cielaks’ motion finding the issue had already been resolved when the trial

court struck the second affirmative defense.

4 ¶ 15 ANALYSIS

¶ 16 On appeal, the Cielaks argue that the trial court erred in (1) finding OneWest could

foreclose the mortgage against Jean’s interest in the real estate, (2) considering OneWest’s

renewed motion to strike the Cielaks’ first affirmative defense, and (3) finding OneWest had

standing to foreclose the mortgage. We discuss each contention in turn.

¶ 17 I. Jean’s Interest in the Real Estate

¶ 18 The Cielaks argue that the judgment against Michael for defaulting in his obligations

under the note cannot be enforced by foreclosing Jean’s interest in the real estate. Specifically,

they argue the mortgage is invalid because Jean did not sign the note and the property is held in a

tenancy by the entirety.

¶ 19 The Cielaks initially contend that for a mortgage to be valid there must be an underlying

debt. According to the Cielaks, there is no underlying debt supporting Jean’s grant of a mortgage

lien because only Michael signed the note secured by the mortgage. Stated differently, because

Jean is not personally liable under the note, the Cielaks argue that Jean’s grant of a mortgage lien

is invalid.

¶ 20 A mortgage is a consensual lien on real property owned by another party. Federal

National Mortgage Ass’n v. Kuipers, 314 Ill. App. 3d 631, 634 (2000). The lien secures the

payment of a debt. Id. In the present case, Michael received a loan (memorialized by the note) in

return for the Cielaks’ grant of a mortgage lien in their real estate to secure payment of the loan.

The loan to Michael is the underlying debt secured by the mortgage executed by the Cielaks. The

mere fact that only Michael signed the note governing the loan does not invalidate the note or

mortgage. “[I]t is not uncommon for notes and the corresponding mortgages securing them to be

5 executed by different parties.” North Community Bank v. 17011 South Park Ave., LLC, 2015 IL

App (1st) 133672, ¶ 17; see also State Bank of Geneva v. Sorenson, 167 Ill. App. 3d 674, 684

(1988). A review of the corresponding note and mortgage reveals that the documents were

signed together, executed contemporaneously, and intended to complement each other. See

17011 South Park Ave., LLC, 2015 IL App (1st) 133672, ¶ 17. Consequently, we find the

mortgage is valid.

¶ 21 Next, the Cielaks contend that OneWest cannot foreclose on the mortgage because the

Cielaks owned the real estate as tenants by the entirety. The Cielaks claim that their ownership of

the real estate as tenants by the entirety precludes foreclosure of the mortgage because Jean is not

personally liable for the debt.

¶ 22 Real estate held as tenants by the entirety protects a spouse against having his or her

homestead property sold to satisfy the individual debts of the other spouse. 735 ILCS 5/12-112

(West 2012). However, “where both spouses are judgment debtors, borrowers or guarantors,

their real estate is not protected from judgment based on their ownership as tenants by the

entirety.” Marquette Bank v. Heartland Bank & Trust Co., 2015 IL App (1st) 142627, ¶ 12.

Here, the Cielaks granted a consensual lien on their real estate by mortgaging their property to

secure payment of the loan to Michael. Because both are obligated under the lien, their real estate

is not protected by their ownership of the property as tenants by the entirety. See id.

¶ 23 The Cielaks insist that this conclusion defeats the protections of a tenancy by the entirety.

However, the Cielaks’ argument ignores the fact that Jean signed the mortgage, knew the amount

owed under the note, and consented to creating a lien on the real estate to secure the payment of

the loan. Tenancy by the entirety ownership “protects an innocent spouse from losing the marital

6 home because of the individual debts of his or her spouse.” Id. That is not the case here. Again,

the Cielaks jointly agreed to grant a lien on their home when they signed the mortgage.

¶ 24 II. OneWest’s Renewed Motion to Strike

¶ 25 Next, the Cielaks argue that the trial court erred when it considered OneWest’s renewed

motion to strike the first affirmative defense. For clarity, we note that the Cielaks’ first

affirmative defense raised the same substantive issues discussed above (supra ¶¶ 19-23)—that is,

the mortgage cannot be foreclosed against Jean’s interest in the property because only Michael

signed the note. The Cielaks argue that the issue had been decided when the trial court denied

OneWest’s motion to strike. We summarily reject the Cielaks’ argument. When the trial court

denied OneWest’s motion to strike it did so without prejudice and granted OneWest leave to

otherwise plead. Moreover, the trial court told counsel for OneWest that counsel could amend

the motion to better address the legal aspects of the first affirmative defense. The renewed

motion to strike cited new case law and presented more detailed analysis of the argument’s legal

aspects. Consequently, the trial court did not err in considering OneWest’s renewed motion to

strike the first affirmative defense.

¶ 26 III. OneWest’s Standing

¶ 27 The Cielaks argue that OneWest lacked standing to foreclose on the mortgage.

Specifically, the Cielaks contend that OneWest lacks standing because it only services the

mortgage. The Cielaks also argue that OneWest fraudulently prepared the note to establish

standing.

7 ¶ 28 The doctrine of standing requires that a party have real interest in the action and its

outcome. Wexler v. Wirtz Corp., 211 Ill. 2d 18, 23 (2004). An action to foreclose upon a

mortgage may be filed by a mortgagee. Deutsche Bank National Trust Co. v. Gilbert, 2012 IL

App (2d) 120164, ¶ 15. A mortgagee is defined as “(i) the holder of an indebtedness or obligee of

a non-monetary obligation secured by a mortgage or any person designated or authorized to act

on behalf of such holder and (ii) any person claiming through a mortgagee as successor.” 735

ILCS 5/15-1208 (West 2012). To bring a foreclosure action, a party must have this status when

the suit is filed, and not later. Gilbert, 2012 IL App (2d) 120164, ¶ 15. “[L]ack of standing is an

affirmative defense. A plaintiff need not allege facts establishing that he has standing to proceed.

Rather, it is the defendant’s burden to plead and prove lack of standing.” Wexler, 211 Ill. 2d at

22.

¶ 29 In the present case, the note attached to the amended complaint is prima facie evidence

that OneWest had standing as holder of the note indorsed in blank. Bayview Loan Servicing, LLC

v. Cornejo, 2015 IL App (3d) 140412, ¶ 12. The attachment of a copy of the note to a foreclosure

complaint is prima facie evidence that the plaintiff owns the note. Rosestone Investments, LLC v.

Garner, 2013 IL App (1st) 123422, ¶ 24. Thus, to establish that someone other than OneWest

was the true holder of the note, the Cielaks had the burden to produce evidence to support their

contention. See CitiMortgage, Inc. v. Sconyers, 2014 IL App (1st) 130023, ¶ 12.

¶ 30 In an effort to meet their burden, the Cielaks contend that OneWest lacks standing

because it “is only the servicer of the mortgage.” However, the Cielaks’ admission supports a

finding that OneWest did have standing to bring the foreclosure action as a servicer of a

mortgage. “An action to foreclose upon a mortgage may be filed by a mortgagee, i.e., the holder

of an indebtedness secured by a mortgage, or by an agent or successor of a mortgagee.”

8 (Emphasis added.) Gilbert, 2012 IL App (2d) 120164, ¶ 15. Thus, OneWest established two

bases for standing to foreclose as both the holder of the note and servicer of the mortgage.

¶ 31 The Cielaks further challenge OneWest’s standing by attacking the legitimacy of the

note. The Cielaks highlight that, unlike the note attached to the amended complaint, the note

attached to OneWest’s motion to strike has been altered to show the blank indorsement as void

and includes two detached and undated allonges. The Cielaks also emphasize that OneWest

failed to provide an affidavit explaining the voided blank indorsement on the note attached to

OneWest’s motion to strike. According to the Cielaks, “[i]t is clear that the undated, unnotarized

and otherwise unauthenticated allonges were fabricated by employees of the mortgage services,

IndyMac and OneWest, to create the illusion that through documents fraudulently prepared and

signed by their own employees *** the Note had been endorsed over to them.”

¶ 32 The Cielaks’ above argument ignores the fact that OneWest presented an affidavit from

its employee attesting that OneWest acquired IndyMac’s assets, including the loan secured by

the Cielaks’ home, by way of purchase from the FDIC as receiver for IndyMac before OneWest

filed the amended complaint. Moreover, OneWest presented the original note with the stricken

blank indorsement and allonges to the trial court. Sconyers, 2014 IL App (1st) 130023, ¶ 11. The

Cielaks, by contrast, offered no evidence to support their claim or to rebut the affidavit provided

by OneWest. In short, the Cielaks’ speculation as to the history of the note and the lack of an

explanation for the voided blank indorsement does not establish OneWest lacked standing to file

the amended foreclosure complaint. Again, it is the Cielaks’ burden to produce evidence to

support their affirmative defense. Id. ¶ 12 (to show another party other than plaintiff is the

mortgagee of a note, defendants are obligated to present evidence to support their contention).

9 ¶ 33 CONCLUSION

¶ 34 The judgment of the circuit court of Will County is affirmed.

¶ 35 Affirmed.