2024 IL App (1st) 231779-U No. 1-23-1779 Order filed December 26, 2024 Fourth 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 ______________________________________________________________________________

ANTHONY J. BOTTALLA and the ANTHONY J. ) BOTTALLA TRUST u/t/a July 7, 1999, A REVOCABLE ) Appeal from the TRUST, ) Circuit Court of ) Cook County. Plaintiffs-Appellees, ) ) No. 22 L 010438 v. ) ) Honorable DANIEL SERPE and DONALD SERPE, ) John J. Curry, Jr., ) Judge Presiding. Defendants-Appellants. )

JUSTICE LYLE delivered the judgment of the court. Presiding Justice Rochford and Justice Ocasio concurred in the judgment. ORDER ¶1 Held: We reverse the judgment of the circuit court of Cook County where the commercial guaranty and promissory note were not executed in Cook County pursuant to section 2-1301(c) of the Illinois Code of Civil Procedure (735 ILCS 5/2-1301(c) (West 2022)), and we find that the judgment by confession is void. ¶2 Plaintiffs, Anthony J. Bottalla and the Anthony J. Bottalla Trust u/t/a July 7, 1999, a Revocable Trust (collectively, “Bottalla”), brought a complaint for judgment by confession in the circuit court of Cook County based on a commercial guaranty and promissory note executed by No. 1-23-1779 defendants Daniel Serpe and Donald Serpe (the “Serpes”). Bottalla contended that the Serpes failed to pay the amount due on the promissory note. Pursuant to the terms of the commercial guaranty, any attorney was permitted to confess judgment for the amount due on behalf of the Serpes. Bottalla attached an affidavit from an attorney confessing to the allegations in the complaint and the circuit court entered judgment in favor of Bottalla in the amount of $700,000. ¶3 Four months later, the Serpes filed a motion pursuant to section 2-1401(f) of the Illinois Code of Civil Procedure (Code) (735 ILCS 5/2-1401(f) (West 2022)) to vacate the judgment by confession as void. The Serpes maintained that pursuant to section 2-1301(c) of the Code (735 ILCS 5/2-1301(c) (West 2022)), the judgment by confession could not be entered in the circuit court of Cook County because the Serpes resided in Maricopa County, Arizona, and the commercial guaranty and promissory note were executed in Maricopa County. The circuit court denied the motion to vacate. ¶4 The Serpes now appeal, contending that the court erred in denying their motion to vacate the judgment where Cook County was not the proper venue for the confession of judgment action pursuant to section 2-1301(c). The Serpes maintain that the agreement was executed in Maricopa County, Arizona, because that is where they signed the guaranty and note and placed the documents into the mail. The Serpes assert that the circuit court’s judgment is therefore void and we should instruct the circuit court to dismiss the case with prejudice. ¶5 I. BACKGROUND ¶6 According to Bottalla’s complaint for confession of judgment, on December 30, 2016, the Serpes executed and delivered to First Nations Bank, a commercial guaranty (Guaranty) and a

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No. 1-23-1779 promissory note (Note) made by Cars 2 Go, Inc. and Dynasty Finance, Inc. ^[1] The original principal of the Guaranty and Note was $2.5 million. First Nations Bank assigned the Note and Guaranty to

Bottalla. Bottalla filed a complaint for confession of judgment on November 21, 2022, contending

that the Note and Guaranty were in default in the amount of $700,000. The Note provided that, upon default, all indebtedness would become due and payable in full without notice, presentation, or demand, which had been waived by the Serpes. Bottalla demanded payment of the amount due, but the Serpes had refused to pay.

¶7 Bottalla maintained that Note and Guaranty were not given in a “consumer transaction” as that phrase was used in section 2-1301(c) of the Code (735 ILCS 5/2-1301(c) (West 2022)).

Bottalla acknowledged that the Serpes were residents of Maricopa County, Arizona, but contended that the Serpes had consented to jurisdiction in Cook County through a clause in the Guaranty.

¶8 As relevant here, the Guaranty contained governing law and choice of venue clauses. The governing law clause provided “This Guaranty will be governed by federal law applicable to

Lender and, to the extent not preempted by federal law, the laws of the State of Illinois without regard to its conflicts of law provisions.” The choice of venue clause provided: “If there is a

lawsuit, Guarantor agrees upon Lender’s request to submit to the jurisdiction of the courts of COOK County, State of Illinois.” There was an identical choice of venue clause in the Note.

¶9 The Guaranty also included a “confession of judgment” clause that provided:

“Guarantor hereby irrevocably authorizes and empowers any attorney-at-law to appear in any court of record and to confess judgment against the Guarantor for the unpaid amount of this Guaranty as evidenced by an affidavit signed by an officer of Lender setting forth

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No. 1-23-1779 the amount then due, attorneys’ fees plus costs of suit, and to release all errors, and waive all rights of appeal.” 2

Consistent with that clause, Bottalla attached to their complaint affidavits executed by an attorney

on behalf of the Serpes. The affidavits provided that the Serpes confessed to judgment and confessed that the allegations in the complaint were true and that Bottalla sustained the damages alleged therein.

¶ 10 The circuit court entered an order finding that it had subject matter and personal jurisdiction. The court found that Bottalla had presented an affidavit from a competent witness

proving the due execution of a power of attorney to confess judgment, that the Serpes, through the affidavit, confessed that the complaint was true and that Bottalla sustained damages as described

therein. The court found that the “instrument used is not a consumer transaction and is not a sale, lease, assignment, loan, or other disposition of an item of goods, a consumer service, or an intangible to an individual for purposes that are primarily family or household.” The court therefore entered judgment in the amount of $700,000 in Bottalla’s favor against the Serpes.

¶ 11 Four months later, on July 26, 2023, the Serpes filed a motion to vacate the judgment by

confession pursuant to section 2-1401(f) of the Code. 735 ILCS 5/2-1401(f) (West 2022). 3 The Serpes asserted that the judgment was void pursuant to section 2-1301(c) of the Code. Section

1301(c) provides, in pertinent part, that:

“Except as otherwise limited by this subsection (c), any person for a debt bona fide due may confess judgment by himself or herself or attorney duly authorized, without process.

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The application to confess judgment shall be made in the county in which the note or obligation was executed or in the county in which one or more of the defendants reside or in any county in which is located any property, real or personal, owned by any one or more

of the defendants. A judgment entered by any court in any county other than those herein specified has no force or validity, anything in the power to confess to the contrary notwithstanding.” (Emphases added.) 735 ILCS 5/2-1301(c) (West 2022).

The Serpes asserted that the Note was executed in Maricopa County, Arizona, that the Serpes have lived in Maricopa County for the last 22 years, and that they did not own any real or personal property in Cook County. The Serpes asserted that the judgment by confession was therefore void because none of the “jurisdictional criteria” in section 2-1301(c) had been met.

¶ 12 In response, Bottalla pointed out that the Guaranty contained a choice of venue clause that expressly provided that the Guarantor agreed to submit to the jurisdiction of the courts of Cook

County. Bottalla asserted that this written consent was fatal to the motion to vacate. Bottalla further contended that by the plain terms of the Guaranty, the Guaranty was deemed to have been executed in Cook County. Bottalla noted that the Guaranty contained a clause that provided that it would take effect when received by the Lender. That clause provided that the Guaranty would “take effect when received by the Lender without the necessity of any acceptance by Lender ***.” Bottalla

maintained that the original lender, First Nations Bank, was located in Cook County and the Guaranty became effective when it received the documents in Cook County.

¶ 13 The Serpes replied that the choice of venue clause in the Guaranty could not supersede the express language of section 2-1301(c) that “a judgment entered by a court in any county other than those herein specified has no force or validity, anything in the power to confess to the contrary notwithstanding.” (Emphasis in original.) The Serpes asserted that the Guaranty in this case

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No. 1-23-1779 required the signature of only one party and therefore was executed in Maricopa County where the Serpes signed it.

¶ 14 The court’s order on the motion to vacate indicates that oral argument was held, but there is no report of proceedings included with the record filed on appeal. The court’s written order

reflects that it considered the parties’ briefs, the oral argument of the parties, and the precedent the parties cited in their pleadings. The court denied the motion to vacate.

¶ 15 The Serpes filed a timely notice of appeal two weeks later. We find that we have jurisdiction to consider the merits of this appeal pursuant to Illinois Supreme Court Rules 301 (eff.

Feb. ^[1], 1994) and 303(a) (eff. July 1, 2017).

¶ 16 II. ANALYSIS

¶ 17 On appeal, the Serpes contend that the court erred in denying their motion to dismiss the judgment by confession where Cook County was not the proper venue for the proceedings. The Serpes maintain that pursuant to section 2-1301(c), a complaint for confession of judgment could only be filed in Maricopa County, Arizona, because that is where the Guaranty and Note were executed.

¶ 18 A. Standard of Review

¶ 19 Before proceeding to the merits, we must first address the standard of review to be applied in this case. The Serpes contend that we should review the court’s denial of their motion to vacate de novo because the court’s decision was a matter of statutory interpretation, and the court based

its decision solely on the parties’ written submissions. Bottalla asserts that we should review the court’s judgment for abuse of discretion because the court made a factual determination regarding the location where the Guaranty and Note were executed.

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¶ 20 Neither party addresses the fact that the Serpes’ motion to vacate was brought pursuant to section 2-1401 of the Code. Section 2-1401 “authoriz[es] a trial court to vacate or modify a final order or judgment in civil and criminal proceedings.” Warren County Soil & Water Conservation

District v. Walters, 2015 IL 117783, ¶ 31. The Serpes’ mistakenly labeled their pleading as a motion; however, a filing to vacate a judgment pursuant to section 2-1401 is more appropriately characterized as a “petition” because it is the equivalent of a complaint in a new proceeding rather than a request for relief in pending litigation. See 735 ILCS 5/2-1401(a) (West 2022) (relief under section 2-1401 “may be had upon petition”); Studentowicz v. Queen’s Park Oval Asset Holding

Trust, 2019 IL App (1st) 181182, ¶ 9 (a pleading’s character is determined by its content and not its label). Likewise, Bottalla should not have filed a “response” to the Serpes’ section 2-1401 pleading, but should have “pleaded to it as if it were a complaint, such as by filing an answer, or a motion [to dismiss] under section 2-615 or 2-619” of the Code (735 ILCS 5/2-615, 2-619 (West

2020)). Casteel v. Jiminez, 2022 IL App (1st) 201288, ¶ 20. Nonetheless, we find that these mischaracterizations were not fatal to the proceedings as the pleadings were the functional equivalent of briefs that served to frame a strictly legal question for the circuit court and this court.

Id. (citing Studentowicz, 2019 IL App (1st) 181182, ¶ 9).

¶ 21 Moving to vacate a judgment by confession pursuant section 2-1401 within two years of the entry of the judgment is one of the five recognized ways a defendant may challenge a judgment by confession. Charles v. Gore, 248 Ill. App. 3d 441, 450 (1993); 735 ILCS 5/2-1401(c) (West

2022) (“the petition must be filed not later than 2 years after the entry of the order or judgment.”).

The Serpes filed their motion to vacate the judgment by confession pursuant to section 2-1401(f) of the Code. Section 2-1401(f) provides that “[n]othing contained in this Section affects any existing right to relief from a void order or judgment, or to employ any existing method to procure

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No. 1-23-1779 that relief.” 735 ILCS 5/2–1401(f) (West 2022). Section 2-1401(f) does not itself provide a statutory vehicle for seeking relief from a void order or judgment, but merely states the well- established common law rule that a void judgment is subject to collateral attack at any time.

Reynolds v. Burns, 20 Ill. 2d 179, 192 (1960); Herrera v. Herrera, 2021 IL App (1st) 200850, ¶

35.

¶ 22 The standard of review from an order denying a petition brought pursuant to section 2-

1401 depends on whether the petition is based on factual matters or solely raises questions of law.

Warren County, 2015 IL 117783, ¶¶ 47-51. Where the petition raises a fact-dependent challenge to the circuit court’s final judgment, the petitioner must set forth specific factual allegations to establish: (1) the existence of a meritorious defense; (2) due diligence in presenting this defense or claim to the circuit court in the original action; and (3) due diligence in filing the section 2-1401

petition. Smith v. Airoom, 114 Ill. 2d 209, 220-21 (1986). Whether to grant the relief sought within the petition is within the sound discretion of the trial court and, accordingly, a reviewing court will reverse the circuit court’s ruling on the petition only if it constitutes an abuse of discretion. Id. at

221.

¶ 23 However, where a section 2-1401 petition raises a purely legal challenge to a judgment by alleging that it is void under subsection (f) of section 2-1401, our review is de novo. Warren

County, 2015 IL 117783, ¶ 47 (citing People v. Vincent, 226 Ill. 2d 1, 5 (2007)). In such circumstances, the equitable considerations that factor into a traditional 2-1401 analysis are inapplicable. Id. “ ‘[T]he allegation [in a section 2-1401 petition] that the judgment or order is void substitutes for and negates the need to allege a meritorious defense and due diligence.’ ” Id. ¶ 48

(quoting Sarkissian v. Chicago Board of Education, 201 Ill. 2d 95, 104 (2002)).

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¶ 24 In this case, the Serpes’ section 2-1401 petition raised a purely legal challenge to the circuit court’s order that the judgment was void pursuant to section 2-1401(f). The Serpes asserted that the court’s judgment was void because the “jurisdictional criteria” in section 2-1301(c) had not been satisfied. The Serpes’ petition was therefore based solely on the law and did not purport to

raise factual matters that were not known at the time of judgment that would have prevented the entry of judgment. Juszczyk v. Flores, 334 Ill. App. 3d 122, 126 (2002). Even assuming that the court’s ruling was based on a determination of where the Guaranty and Note were executed, as discussed below, this is a legal determination, not a factual one. Accordingly, our standard of review is de novo.

¶ 25 B. Confession Judgments

¶ 26 The power to confess judgment is derived from section 2-1301(c) of the Code, which provides that “ ‘any person for a debt bona fide due may confess judgment by himself or herself or attorney duly authorized, without process.’ ” Cole v. Davis, 2016 IL App (1st) 152716, ¶ 22

(quoting 735 ILCS 5/2-1301(c) (West 2000)). The statute does not apply to consumer transactions and has certain jurisdictional requirements. Id. As relevant here, “[t]he application to confess judgment shall be made in the county in which the note or obligation was executed or in the county

in which one or more of the defendants reside or in any county in which is located any property, real or personal, owned by any one or more of the defendants.” 735 ILCS 5/2-1301(c) (West 2022).

If a court in a county other than the county where the note or obligation was executed or in which one or more of the defendants resides or owns property, enters a confession judgment, that

judgment has no “force or validity”; or, in other words, is void, regardless of the language in the power to confess. See Green v. Walsh, 5 Ill. App. 2d 535, 539 (1955) (The statute “expressly declares that any judgments entered in any other county, whether entered in term time or in 231787

No. 1-23-1779 vacation, shall have no force or validity. This is an express declaration that the judgments are

void.”); see also 735 ILCS 5/2-104(a) (“No order or judgment is void because rendered in the wrong venue, except in case of judgment by confession as provided in subsection (c) of Section 2-

1301 of this Act.”). Thus, to the extent that the language in the power to confess conflicts with section 2-1301(c), that language must yield to the statute.

¶ 27 This rule stems from the fact that courts view judgments by confession “circumspectly.”

Oakland National Bank v. Tomei, 215 Ill. App. 3d 638, 640 (1991). “ ‘The power to confess a judgment must be clearly given and strictly pursued, and a departure from the authority conferred

will render the confessed judgment void. [citations].’ ” Grundy County National Bank v. Westfall, 49 Ill. 2d 498, 501 (1971) (quoting Wells v. George W. Durst Chevrolet Co., 341 Ill. 108, 111

(1930)). “The policy underlying this rule of strict construction against the party in whose favor the power operates is based on the severity of the summary proceeding itself. The party granting such authority deprives himself of all defenses and delay of execution and places his cause in the hands of a hostile defender.” Oakland National Bank, 215 Ill. App. 3d at 640. Accordingly, we find that the choice of venue provisions in the Guaranty and Note do not control here, and the relevant inquiry is whether the Guaranty and Note were “executed” in Cook County. ^[4]

¶ 28 The Serpes contend that the Guaranty and Note were executed in Arizona because that is

where they signed the documents and placed them in the mail. The Serpes maintain that the Guaranty and Note were executed at that point because that is when they lost possession of the papers and lost the right to reclaim them. Bottalla does not dispute the Serpes’ representations that they signed the Guaranty and Note in Arizona and placed the documents into the mail there.