U.S. Bank N.A. v. Grason

2020 IL App (4th) 190085-U

• Court: Appellate Court of Illinois
• Decided: March 23, 2020
• Docket: 4-19-0085
• Status: Unpublished

Opinion

NOTICE This order was filed under Supreme 2020 IL App (4th) 190085-U FILED Court Rule 23 and may not be cited March 23, 2020 as precedent by any party except in NO. 4-19-0085 Carla Bender the limited circumstances allowed 4th District Appellate under Rule 23(e)(1). Court, IL IN THE APPELLATE COURT

OF ILLINOIS

FOURTH DISTRICT

U.S. BANK N.A., as Trustee on Behalf of the ) Appeal from the Holders of the J.P. Morgan Mortgage Acquisition ) Circuit Court of Trust 2006-RM1 Asset Backed Pass Through ) Macon County Certificates, Series 2006-RM 1, ) No. 14CH286 Plaintiff-Appellee, ) v. ) Honorable ANTHONY J. GRASON, a/k/a ANTHONY JAMES ) Thomas E. Little, GRASON; RONALD GRASON; ) Judge Presiding. CRAFTMASTERS, INC.; UNITED STATES OF ) AMERICA; STATE OF ILLINOIS DEPARTMENT ) OF REVENUE; UNKNOWN OWNERS and NON ) RECORD CLAIMANTS, Defendants (Ronald ) Grason, Defendant-Appellant). ) ______________________________________________________________________________

JUSTICE HARRIS delivered the judgment of the court. Presiding Justice Steigmann and Justice DeArmond concurred in the judgment.

ORDER

¶1 Held: Plaintiff had standing to bring foreclosure proceedings. The trial court did not abuse its discretion when it granted plaintiff’s motion to file a late reply to defendant’s affirmative defenses.

¶2 Defendant, Ronald Grason, appeals the summary judgment entered in favor of

plaintiff, U.S. Bank N.A., on its complaint to foreclose a mortgage. Defendant argues: (1) a

material question of fact exists as to whether plaintiff had standing to bring foreclosure

proceedings, (2) the trial court abused its discretion when it struck his affirmative defense that

plaintiff lacked standing to bring foreclosure proceedings, (3) the court abused its discretion when it denied his motion to amend the pleadings to assert as a new affirmative defense that plaintiff

lacked standing to bring foreclosure proceedings for a different reason than previously alleged,

(4) the court erred in denying his motion to dismiss the complaint because plaintiff lacked standing

to bring foreclosure proceedings, (5) the court abused its discretion when it confirmed the sale of

the mortgaged property because plaintiff lacked standing to bring a foreclosure proceeding, and

(6) the court erred when it granted plaintiff’s motion to file a late reply to defendant’s second set

of affirmative defenses. We affirm.

¶3 I. BACKGROUND

¶4 On December 22, 2014, plaintiff filed its complaint to foreclose a mortgage on

property owned by defendant. In its complaint, plaintiff identified the original mortgagee as

“[Mortgage Electronic Registration Systems, Inc.], as Nominee for ResMae Mortgage Corporation

[(ResMae)].” Plaintiff attached to its complaint a copy of the subject mortgage (the Mortgage),

originally dated May 22, 2006, which was signed by defendant. Plaintiff also attached to its

complaint a copy of an “Assignment of Mortgage” pursuant to which ResMae’s interest in the

Mortgage had been transferred to plaintiff. In support of its claim to be the current mortgagee,

plaintiff attached a copy of an “adjustable rate note” (the Note), also dated May 22, 2006. Adjacent

to the signature block of the Note was a stamp from ResMae which stated, “Pay to the order of

___________ without recourse.” Under the stamp was the signature of ResMae’s collateral control

manager.

¶5 On March 10, 2015, defendant filed an answer, affirmative defenses, and a

counterclaim. Among the affirmative defenses pleaded by defendant, he alleged, “[Plaintiff] is not

an interested party duly authorized to bring its instant foreclosure complaint and fails to provide

any documentation whatsoever evidencing its authority to file the instant complaint.” Specifically,

-2- defendant challenged the “validity” of the assignment of the Mortgage to plaintiff. Plaintiff

subsequently filed a motion to strike defendant’s affirmative defenses and dismiss defendant’s

counterclaim. After a hearing, the trial court struck defendant’s counterclaim with prejudice and

struck defendant’s affirmative defenses without prejudice. Defendant subsequently filed a second

set of affirmative defenses which were identical to those initially pleaded. Almost four months

later, over defendant’s objection, plaintiff successfully petitioned the court for leave to file a reply

to defendant’s second set of affirmative defenses. Plaintiff filed a reply as well as a motion to strike

defendant’s affirmative defenses, which was subsequently granted.

¶6 Defendant filed a third set of affirmative defenses, making the same allegations

contained in the first two sets. In response, plaintiff again filed a motion to strike defendant’s

affirmative defenses. Prior to a hearing on plaintiff’s motion to strike, defendant filed a “Motion

for Leave to File Amended Pleadings.” In defendant’s motion, he asserted as a new affirmative

defense that plaintiff was not “the holder of the indebtedness,” and, consequently, was not entitled

to bring a foreclosure action under the Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1101 et

seq. (West 2012)). Specifically, defendant asserted that “the attached copy of the [N]ote

demonstrates on its face it is payable to [ResMae]. The [N]ote is not endorsed in blank or to an

identifiable person or entity.”

¶7 On October 25, 2016, the trial court conducted a hearing on plaintiff’s motion to

strike defendant’s affirmative defense and on defendant’s motion for leave to amend the pleadings.

Regarding plaintiff’s motion, defendant argued his affirmative defense that plaintiff lacked

standing to bring a foreclosure action was meritorious because there was “no record of [the Note]

ever be[ing] endorsed and [sic] blank or to any identifiable person—and that’s the reason for my

amended pleadings to—because in Illinois, *** you have to sue on the note, not the mortgage.”

-3- Regarding defendant’s motion, defendant argued that he “d[idn’t] think” the stamp on the Note

was an endorsement in blank. Following the hearing, the trial court struck defendant’s affirmative

defenses with prejudice and denied defendant’s motion to file amended pleadings.

¶8 On January 25, 2017, plaintiff filed a motion for summary judgment. In his

response to plaintiff’s motion for summary judgment, defendant argued plaintiff “lack[ed] a

security interest and should not be allowed to pursue this foreclosure action” because “[plaintiff]

received an assignment of the [M]ortgage without transfer of the [N]ote.” In addition to

defendant’s response to plaintiff’s motion for summary judgment, he also filed a motion to dismiss

plaintiff’s complaint in which he alleged plaintiff lacked standing to bring foreclosure proceedings

because plaintiff only held “an assignment of the [M]ortgage without the accompanying

indebtedness.” Following a hearing, the trial court denied defendant’s motion to dismiss plaintiff’s

complaint and granted plaintiff’s motion for summary judgment.

¶9 On March 16, 2017, the trial court entered a judgment of foreclosure and sale in

favor of plaintiff. The property subject to the Mortgage was sold at a sheriff’s sale on August 14,

2018. The court confirmed the sale on November 20, 2018, over defendant’s objection that plaintiff

lacked standing to bring a foreclosure proceeding. The court subsequently denied defendant’s

“Motion to Reconsider and or Vacate the Order of Confirmation of Sale” in which defendant

alleged plaintiff had not “demonstrated procession [sic] of any ‘note’ linking and or connecting

their right to foreclosure under the [Illinois Mortgage Foreclosure Law].”

¶ 10 This appeal followed.

¶ 11 II. ANALYSIS

¶ 12 On appeal, defendant argues: (1) a material question of fact exists as to whether

plaintiff had standing to bring foreclosure proceedings, (2) the trial court abused its discretion

-4- when it struck his affirmative defense that plaintiff lacked standing to bring foreclosure

proceedings, (3) the court abused its discretion when it denied his motion to amend the pleadings

to assert as a new affirmative defense that plaintiff lacked standing to bring foreclosure

proceedings for a different reason than previously alleged, (4) the court erred in denying his motion

to dismiss the complaint because plaintiff lacked standing to bring foreclosure proceedings, (5) the

court abused its discretion when it confirmed the sale of the mortgaged property because plaintiff

lacked standing to bring a foreclosure proceeding, and (6) the court erred when it granted plaintiff’s

motion to file a late reply to defendant’s second set of affirmative defenses.

¶ 13 We first address defendant’s contention that summary judgment was improper

because a material question of fact exists as to whether plaintiff had standing to foreclose on the

Mortgage. Summary judgment is appropriate only “if the pleadings, depositions, and admissions

on file, together with the affidavits, if any, show that there is no genuine issue as to any material

fact and that the moving party is entitled to a judgment as a matter of law.” 735 ILCS 5/2-1005(c)

(West 2016). “The purpose of a summary-judgment proceeding is not to try an issue of fact, but

instead, to determine whether a genuine issue of material fact exists.” Essig v. Advocate BroMenn

Medical Center, 2015 IL App (4th) 140546, ¶ 38, 33 N.E.3d 288. Our review of a summary

judgment ruling is de novo. Standard Mutual Insurance Co. v. Lay, 2013 IL 114617, ¶ 15, 989

N.E.2d 591.

¶ 14 “The doctrine of standing is designed to preclude persons who have no interest in

a controversy from bringing suit.” Raintree Homes, Inc. v. Village of Long Grove, 209 Ill. 2d 248,

262, 807 N.E.2d 439, 447 (2004). The doctrine “requires a person seeking to invoke the jurisdiction

of the court to have some real interest in the cause of action or a legal or equitable right, title or

interest in the subject matter of the controversy.” Ferguson v. Patton, 2013 IL 112488, ¶ 27, 985

-5- N.E.2d 1000.

¶ 15 Defendant correctly argues that the assignment of the Mortgage alone was

insufficient to confer upon plaintiff standing to foreclose on defendant’s property. See Moore v.

Lewis, 51 Ill. App. 3d 388, 391, 366 N.E.2d 594, 599 (1977) (“[A] mortgage, which in this state is

only regarded as a mere incident to the debt [citation], is not assignable at law.”). However,

plaintiff does not argue that it had standing to bring foreclosure proceedings pursuant to the

assignment of the Mortgage. Rather, plaintiff contends its standing arose from possession of the

Note, which is indorsed in blank.

¶ 16 As an initial matter, we find that the stamp impressed upon the Note is a blank

indorsement. The Uniform Commercial Code defines an “indorsement” as:

“a signature, other than that of a signer as maker, drawer, or acceptor, that alone or

accompanied by other words is made on an instrument for the purpose of

(i) negotiating the instrument, (ii) restricting payment of the instrument, or

(iii) incurring indorser’s liability on the instrument, but regardless of the intent of

the signer, a signature and its accompanying words is an indorsement unless the

accompanying words, terms of the instrument, place of the signature, or other

circumstances unambiguously indicate that the signature was made for a purpose

other than indorsement.” 810 ILCS 5/3-204(a) (West 2012).

A “special indorsement” is one “made by the holder of an instrument, whether payable to an

identified person or payable to bearer, and the indorsement identifies a person to whom it makes

the instrument payable.” 810 ILCS 5/3-205(a) (West 2012). “If an indorsement is made by the

holder of an instrument and it is not a special indorsement, it is a ‘blank indorsement.’ ” 810 ILCS

5/3-205(b) (West 2012). Here, the stamp on the Note was signed by an employee of ResMae, the

-6- original holder of the Note, and there is no indication the signature was meant to serve as anything

but an indorsement. Because the indorsement did not identify a person to whom the Note was

payable, the indorsement was a “blank indorsement.”

¶ 17 “When indorsed in blank, an instrument becomes payable to bearer and may be

negotiated by transfer of possession alone until specially indorsed.” Id.; see also Brenner v.

Franke, 18 Ill. App. 2d 202, 209, 151 N.E.2d 650, 653 (1958) (“Endorsement in blank made title

to the note pass by delivery.”). “A transfer of a note constitutes an assignment of the mortgage

securing the debt, and thus the bearer of the note is deemed the mortgagee, authorized to bring

foreclosure proceedings.” U.S. Bank Trust National Ass’n v. Hernandez, 2017 IL App (2d) 160850,

¶ 18, 88 N.E.3d 1056; see 735 ILCS 5/15-1208(i) (West 2012) (defining “mortgagee” as “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”); see also Moore, 51 Ill. App. 3d

at 392 (“[T]ransfer of the debt carrie[s] with it the mortgage security.”). Therefore, possession of

a note indorsed in blank is sufficient to establish standing to foreclose upon a mortgage absent a

contrary showing. U.S. Bank Trust National Ass’n, 2017 IL App (2d) 160850, ¶ 18.

¶ 18 Here, the Note contained a blank indorsement from ResMae. Defendant makes no

argument and has presented no facts that would refute the legitimacy of the indorsement or that

would otherwise call into question plaintiff’s possession of the Note. Therefore, because the Note

is payable to plaintiff, plaintiff had standing to bring the foreclosure proceeding because it had a

“real interest in the cause of action.” Ferguson, 2013 IL 112488, ¶ 27. Accordingly, the trial court’s

order for summary judgment in favor of plaintiff was proper.

¶ 19 Our finding that plaintiff had standing to foreclose upon the Mortgage renders

irrelevant all but defendant’s last contention on appeal because all of defendant’s other contentions

-7- were based upon the allegation that plaintiff lacked standing. Therefore, we decline to address

those issues.

¶ 20 Defendant’s final contention on appeal is that the trial court erred when it granted

plaintiff’s motion to file a late reply to defendant’s second set of affirmative defenses. Plaintiff

failed to file its response to these affirmative defenses by September 15, 2015, the date set by the

court. See Ill. S. Ct. R. 182(a) (eff. Jan. 1, 1967) (requiring that any pleadings subsequent to a reply

to an answer “shall be filed at such time as the court may order”). However, Illinois Supreme Court

Rule 183 (eff. Feb. 16, 2011) provides, “The court, for good cause shown on motion after notice

to the opposite party, may extend the time for filing any pleading *** which is required by the

rules to be done within a limited period, either before or after the expiration of the time.” Our

supreme court has found “the plain language of Rule 183 specifically makes good cause a

prerequisite to relief” and “the burden of establishing good cause rests on the party seeking relief

under Rule 183.” Vision Point of Sale, Inc. v. Haas, 226 Ill. 2d 334, 353, 875 N.E.2d 1065, 1078

(2007). There is no set definition of “good cause;” rather, such a finding is “fact-dependent and

rests within the sound discretion of the circuit court.” Id. “Absent an abuse of discretion, the

decision of the circuit court on this issue will not be disturbed.” Id. at 354.

¶ 21 Almost three months after the date set by the trial court for plaintiff to file a reply

to defendant’s second set of affirmative defenses, plaintiff filed its motion for leave to file a reply.

A hearing was held on plaintiff’s motion, but a record of that proceeding is not before us. Without

that record, we cannot say that the trial court abused its discretion in granting plaintiff’s motion

for good cause. See Foutch v. O’Bryant, 99 Ill. 2d 389, 391-92, 459 N.E.2d 958, 959 (1984) (“[A]n

appellant has the burden to present a sufficiently complete record of the proceedings at trial to

support a claim of error, and in the absence of such a record on appeal, it will be presumed that the

-8- order entered by the trial court was in conformity with law and had a sufficient factual basis. Any

doubts which may arise from the incompleteness of the record will be resolved against the

appellant.”).

¶ 22 III. CONCLUSION

¶ 23 For the reasons stated, we affirm the trial court’s judgment.

¶ 24 Affirmed.

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