2024 IL App (1st) 221467 No. 1-22-1467 Second Division January 23, 2024

____________________________________________________________________________

IN THE APPELLATE COURT OF ILLINOIS FIRST DISTRICT ____________________________________________________________________________

) Appeal from the WILMINGTON SAVINGS FUND ) Circuit Court of SOCIETY, FSB, d/b/a Christiana Trust, Not ) Cook County. in Its Individual Capacity but Solely as ) Trustee of the Brougham Fund I Trust, ) Successor in Interest to Wells Fargo Bank, ) N.A., ) ) No. 11 CH 25112 Plaintiff-Appellee, ) ) v. ) ) Honorable MALCOLM D. HERZOG, ) William B. Sullivan ) Judge, Presiding. Defendant-Appellant. ____________________________________________________________________________

JUSTICE COBBS delivered the judgment of the court, with opinion. Justices McBride and Ellis concurred in the judgment and opinion.

OPINION

¶1 In this mortgage foreclosure action, defendant-appellant Malcolm D. Herzog appeals from orders of the circuit court of Cook County entering summary judgment in favor of plaintiff- appellee Wilmington Savings Fund Society, FSB, doing business as Christiana Trust, not in its

No. 1-22-1467 individual capacity but solely as trustee of the Brougham Fund I Trust, successor in interest to

Wells Fargo Bank, N.A. (Wilmington Savings), confirming the sale of the property and entering a deficiency judgment against Herzog in the amount of $1,574,091. On appeal, Herzog argues that

the circuit court erred in granting summary judgment in favor of Wilmington Savings because the release of the mortgage barred its foreclosure and Wilmington Savings did not provide evidence

of fraud, duress, illegality, or mutual mistake. He also argues that the court erred in confirming the foreclosure sale and entering a deficiency judgment without an evidentiary hearing where the amount was patently inequitable. For the reasons that follow, we affirm and remand with directions.

¶2 I. BACKGROUND

¶3 Preliminarily, we note that, despite the more than a thousand pages of record, Herzog’s

statement of facts is comprised of less than three pages. See Ill. S. Ct. R. 341(h)(6) (eff. Oct. ^[1], 2020) (statement of facts “shall contain the facts necessary to an understanding of the case, stated

accurately and fairly without argument or comment”). Those three pages provide almost none of the procedural history of the case and contains improper argument throughout. Unfortunately, Wilmington Savings did not provide its own statement of facts, despite the deficiency in Herzog’s

brief. See Ill. S. Ct. R. 341(i) (eff. Oct. ^[1], 2020) (statement of facts need not be included in appellee’s brief “except to the extent that the presentation by the appellant is deemed

unsatisfactory”). Nonetheless, we choose neither to strike the statement of facts nor dismiss the appeal. We will, however, disregard the noncompliant portions of Herzog’s statement of facts. See

Szczesniak v. CJC Auto Parts, Inc., 2014 IL App (2d) 130636, ¶ 8. The following statement of facts, therefore, is based on the record filed on appeal.

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¶4 The property that is the subject of these foreclosure proceedings is located at 9111 West

126th Street in Palos Park, Cook County, Illinois. On September 8, 2006, Herzog executed a mortgage in the amount of $1,499,999. The original mortgagor, Wells Fargo Bank, N.A. (Wells

Fargo), recorded the mortgage with the Cook County recorder of deeds on October 12, 2006.

¶5 The loan was twice modified, first on March 31, 2008, and a second time on April 3, 2008.

After the second modification, the amount of indebtedness was $1,728,798.05. Significantly, the release of the original mortgage was recorded, five days later, on April 8, 2008.

¶6 In late 2010, Herzog failed to make the necessary mortgage payments and the note and mortgage went into default.

¶7 Subsequently, on July 18, 2011, Wells Fargo filed its initial complaint in this action.

¶8 Between 2011 and 2017, Wells Fargo continued to pursue its foreclosure action against

Herzog. In 2016, Wells Fargo assigned Herzog’s mortgage to Wilmington Savings. On Wells

Fargo’s motion, Wilmington Savings was substituted as plaintiff. Attached to the motion was an exhibit showing the corporate assignment of Herzog’s mortgage, which reflected the mortgage as

“ReRecorded” on February 22, 2016. The court granted the motion on August 15, 2017.

¶9 On October 16, 2017, Wilmington Savings filed several nondispositive motions, including a motion for summary judgment.

¶ 10 Following briefing on Wilmington Savings’ motion for summary judgment on January 18, 2018, Herzog filed a motion and was subsequently granted leave to file an affirmative defense, namely release of the mortgage. Attached to the motion was an exhibit showing that, on April 18, 2008, Wells Fargo executed a “Release of Mortgage or Trust Deed,” recorded on May 8, 2008, with the Cook County Recorder of Deeds. The release stated that Wells Fargo “for and in consideration of the payment of indebtedness” secured by Herzog and “the cancellation of all the 221469

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notes thereby secured, and the sum of one dollar,” “do hereby REMISE, RELEASE, CONVEY, AND QUITCLAIM unto [Herzog] *** all the right, title, interest, claim or demand *** acquired in, through or by a certain Mortgage/Trust Deed, dated September 8, 2006.” The document was signed by Milly A. Thompson, as assistant vice president of Wells Fargo.

¶ 11 On March 2, 2018, Wilmington Savings moved to amend its complaint, the version of which is the subject of this appeal. Count I requested, inter alia, foreclosure on the mortgage.

Count II requested a judgment declaring the validity of the mortgage and expungement of the release from the public record. The complaint stated that Wilmington Savings’ predecessor “executed an erroneous ‘Release of Mortgage or Trust Deed’ dated April 18, 2008 and recorded

April 8, 2008.” The subject mortgage “was re-recorded February 22, 2016 *** to reflect that the subject mortgage is a valid and subsisting lien [against] the subject property,” and Herzog

continued to make payments on the note and mortgage “after the date of the erroneous Release of Mortgage.” Wilmington Savings requested that the circuit court declare the mortgage as valid, expunge the release of mortgage, and award such other relief as “fit and proper” under the circumstances.

¶ 12 Attached to the complaint was an affidavit of rescission dated May 4, 2015, and signed by

Elizabeth Ripka, vice president of loan documentation of Wells Fargo. Ripka averred that the release should be expunged as “null and void” because there is still a “valid and existing lien against the subject property.”

¶ 13 In his answer to the amended complaint, Herzog stated “affirmatively that [Wilmington

Savings] lacks any valid and subsisting instrument that is subject to foreclosure,” “all indebtedness secured thereby was released” by the release of mortgage, and the re-recording of the mortgage was not authorized or effective. He denied that the affidavit of rescission was genuine but

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“admit[ted] that he made payments to Wells Fargo” after the recording of the release. Finally, he requested that both counts be dismissed with prejudice.

¶ 14 Between 2018 and 2021, Herzog filed two motions to dismiss, as well as a motion for summary judgment, all of which were denied. During that time, the depositions of John Gresham, a corporate representative of BSI Financial Services (BSI), and Herzog were taken.

¶ 15 Gresham testified that BSI is the servicer for Wilmington Savings. BSI accepts payments from borrowers, sends out mortgage statements, takes inquiries, and assists with loss mitigation.

Gresham was responsible for reviewing loans that fall into default and attending trials, mediations, and depositions in foreclosure cases. He testified that he had not seen the agreement between Wells

Fargo and Wilmington Savings assigning the subject mortgage. He did not personally contact

Wells Fargo to see if there were any additional documents related to this mortgage. He also did not contact any persons identified in the release document or the affidavit of rescission, and he had no knowledge as to the error made in the release of the mortgage. As far as he knew, no one at BSI ever investigated who was involved in the execution of those documents. He further testified that there was nothing on the face of the release that would suggest that it was made in error.

¶ 16 Herzog testified that he had other “obligations” with Wells Fargo, in addition to the one at issue, and he did not recall making mortgage payments to Wells Fargo for the property at issue.

He testified that he believed that he did not have a mortgage on the property at issue because “it was released as well as the debt.” He further testified that he did not recall any of the specifics

surrounding the execution of the release. As to the continued payments to Wells Fargo after the release, Herzog stated that he did not recall making any payments after March 26, 2008, but he had other obligations with Wells Fargo and any payments made should have been applied to his other mortgage.

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¶ 17 During his deposition, the following colloquy occurred:

“Q. Did you receive a form 1099-C for this property after the release of mortgage was recorded in May of 2008 from Wells Fargo Bank?

A. I do not remember.

***

Q. ***

When people have loans forgiven against them, it gets taxed a certain way. When people make monthly payments or pay off a debt, it gets taxed in an entirely different way.

Do you know how that—do you know what actions or steps you reported to the IRS relating to the forgiveness of the $1.5 million?

A. No recollection.

Q. Do you know if it was treated as personal income?

A. No recollection.

Q. Do you recognize if you took $1.5 million of loan forgiveness and didn’t treat it as earned income it could have tax consequences?

A. No recollection.”

¶ 18 On June 1, 2021, Wilmington Savings filed a motion for summary judgment. Therein, Wilmington Savings asserted that Herzog admitted that the mortgage was a valid lien by failing to deny the allegation in his answer. Further, Herzog’s admission that he continued to make payments on the mortgage after the release was executed is evidence that the release was in error. It also contended that those continued payments evidenced that Herzog had not paid the entire indebtedness at the time the release was executed. Additionally, it maintained, Herzog’s deposition

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No. 1-22-1467 showed that he had no evidence of valid consideration for the release because he could not recall any of the details of the release. It further pointed to Wells Fargo’s re-recording of the mortgage as evidence of the invalidity of the release. Finally, Wilmington Savings asserted that Herzog’s indebtedness still existed and, had Herzog paid off the loan to secure the release, no amount would be owed. Attached to the motion was an affidavit from Cheryl Mallory, an assistant vice president of BSI, attesting that, as of January 8, 2021, the amount due under the mortgage was

$2,481,266.62.

¶ 19 Simultaneously, Wilmington Savings filed a motion to appoint a selling officer and a motion for judgment of foreclosure.

¶ 20 On July 15, 2021, Herzog filed his response to Wilmington Savings’ motion for summary judgment. He argued that an issue of fact existed as to whether the mortgage in this action remains in existence and is subject to foreclosure. He further asserted that Wilmington Savings lacks any proof that the release was mistakenly prepared, executed, and recorded by Wells Fargo.

Additionally, he claimed that evidence of unilateral mistake would be insufficient. Finally, Herzog

asserted that there is no evidence of lack of consideration and that issue was never included in plaintiff’s amended complaint.

¶ 21 On August 5, 2021, Wilmington Savings filed its reply, arguing that there would only be an issue of material fact if Herzog claimed that there was consideration for the release and he had evidence to support that claim.

¶ 22 The circuit court scheduled a hearing on the motion for September 28, 2021. There is no transcript of this hearing, or an acceptable substitute, in the record, in contravention of Illinois

Supreme Court Rule 323(a), (c), (d) (eff. July 1, 2017). Following the hearing, the circuit court

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No. 1-22-1467 granted summary judgment in favor of Wilmington Savings and entered a judgment of foreclosure and sale. The court also appointed a selling officer.

¶ 23 On November 29, 2021, Herzog filed a motion for a stay pending appeal pursuant to Illinois

Supreme Court Rule 305(b) (eff. July 1, 2017) and a motion for a finding pursuant to Illinois

Supreme Court Rule 304(a) (eff. Mar. 8, 2016), which were both denied.

¶ 24 On that same day, Herzog also filed a motion for reconsideration, containing largely the same arguments as in his response to the motion for summary judgment. On April 12, 2022, the circuit court denied Herzog’s motion for reconsideration.

¶ 25 On April 19, 2022, the subject property was sold at auction for $1,088,000.

¶ 26 After the sale, Wilmington Savings filed a motion for approval of the sale and for an

eviction order. Herzog objected, arguing that Wilmington Savings failed to show that the value of the collateral was less than the indebtedness and the sale was not commercially reasonable.

¶ 27 On August 30, 2022, the court approved the sale and entered a deficiency judgment of $1,574,091.18 against Herzog. The court’s written order stated that all required notices were given, the sale was fairly and properly made, and justice was otherwise done.

¶ 28 This timely appeal followed.

¶ 29 II. ANALYSIS

¶ 30 On appeal, Herzog argues that the circuit court erred in granting summary judgment in favor of Wilmington Savings because the release of the mortgage barred its foreclosure and Wilmington Savings did not provide evidence of fraud, duress, illegality, or mutual mistake. He also argues that the court erred in confirming the sale and entering a deficiency judgment without an evidentiary hearing where the amount was patently inequitable.

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¶ 31 A. Mootness

¶ 32 Initially, we must address Wilmington Savings’ contention that this appeal should be dismissed. Wilmington Savings asserts that Herzog’s appeal of the circuit court’s judgment is moot because he failed to obtain a stay of the judgment as required under Illinois Supreme Court Rule

305(k) (eff. July 1, 2017).

¶ 33 Herzog, in his reply, contends that, if this court reverses the foreclosure judgment or, in the alternative, vacates the deficiency judgment, it will have “provided highly substantial relief regardless of the inability of [Herzog] to recover the foreclosed property.” He further asserts that

“he will also get restitution for the value he lost by reason of the improper foreclosure and sale.”

Finally, he argues that there is no precedent for declaring an appeal moot that involves a deficiency judgment, or “where money was at stake.”

¶ 34 Before proceeding, we note that while this appeal was pending, Wilmington Savings filed a motion to dismiss the appeal as moot pursuant to Rule 305(k). Herzog filed an objection. A different panel of this court denied the motion.

¶ 35 “The denial of a motion to dismiss an appeal is not final and ‘[t]he panel that hears the appeal has an independent duty to determine whether it has jurisdiction and to dismiss the appeal

if it does not.’ ” Rocha v. FedEx Corp., 2020 IL App (1st) 190041, ¶ 54 (quoting In re Estate of Gagliardo, 391 Ill. App. 3d 343, 348-49 (2009)). Therefore, despite the prior order denying the motion to dismiss, we reconsider whether this appeal is moot, pursuant to our inherent authority

to reconsider our prior rulings. See Stevens v. Village of Oak Brook, 2013 IL App (2d) 120456, ¶ 37 (“A court has the inherent authority to reconsider and correct its rulings.”).

¶ 36 Whether an appeal is moot is a threshold question. See Lakewood Nursing & Rehabilitation

Center, LLC v. Department of Public Health, 2015 IL App (3d) 140899, ¶ 17. “An appeal is moot

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No. 1-22-1467 if no actual controversy exists or if events have occurred that make it impossible for the reviewing court to grant the complaining party effectual relief.” In re Marriage of Peters-Farrell, 216 Ill. 2d

287, 291 (2005). “The existence of a real dispute is not a mere technicality but, rather, is a prerequisite to the exercise of this court’s jurisdiction.” Id. However, the failure to obtain a stay pending appeal, by itself, does not render an appeal moot. In re Tekela, 202 Ill. 2d 282, 292 (2002).

Rather, where a reviewing court is not capable of granting any effectual relief to a party, the case is rendered moot. Id. at 292-93.

¶ 37 In cases involving property, an appeal is moot when the subject property “has already been conveyed to a third party” and the party seeking possession failed to obtain a stay. Northbrook

Bank & Trust Co. v. 2120 Division LLC, 2015 IL App (1st) 133426, ¶ 3. Where there is no stay of judgment pending appeal, Illinois Supreme Court Rule 305(k) (eff. July 1, 2017) protects a third- party buyer from reversal or modification of a judgment regarding the subject property. See

Steinbrecher v. Steinbrecher, 197 Ill. 2d 514, 523 (2001). As such, the protections afforded to the nonparty purchaser of the subject property under Rule 305(k) prevent this court from providing any relief that would affect the disposition of the property.

¶ 38 In his notice of appeal, as well as in his opening brief, Herzog requests merely that the trial court’s orders be reversed. In reply to Wilmington Savings’ mootness argument, however, he asserts that because there is a deficiency judgment at issue and there is a possibility for restitution for the value he lost if the foreclosure is held to be improper, his appeal cannot be considered moot.

¶ 39 We first note that the case to which Wilmington Savings cites for support, Deutsche Bank

National Trust Co. v. Roman, 2019 IL App (1st) 171296, is inapposite. There, although a deficiency judgment was entered against the defendant, the defendant did not, on appeal, request any monetary relief, and this court’s mootness analysis lacked any reference to that deficiency

- 10 -

No. 1-22-1467 judgment. Id. ¶¶ 19-27. That said, it is debatable whether, but for Wilmington Savings’ mootness argument, Herzog would have made a specific request for restitution. However, in the face of Rule

305(k), reversal in this case could only yield monetary relief.

¶ 40 Although not often sought in cases such as the one now before us, restitution remains a

viable form of equitable relief following a foreclosure. See, e.g., RCB Equities #3, LLC v. Jakubow, 2021 IL App (1st) 200256-U (mootness argument rejected where defendant had no interest in return of the foreclosed property, but instead sought reversal of the deficiency judgment or an award of the sale proceeds). Indeed, case law dating back over a century has established that, on the reversal of a foreclosure judgment, when the postjudgment sale of a property prevents a court

from restoring the foreclosure defendant to the status quo ante, the proper remedy is to award the defendant the sale proceeds in place of the property. See Thompson v. Davis, 297 Ill. 11, 15-19

(1921) (where “[t]he decree of foreclosure was reversed and set aside and the parties became entitled to be restored to their former rights as nearly as possible”); see also Williamsburg Village

Owners’ Ass’n v. Lauder Associates, 200 Ill. App. 3d 474, 483 (1990) (“[U]pon the reversal of a judgment, under which one of the parties has received benefits, he is under an obligation to make restitution.”).

¶ 41 Here, Herzog has requested that we vacate the summary judgment entered, and if he is

ultimately successful in the circuit court, he could seek restitution in lieu of possession of the transferred property and he would be relieved of the deficiency judgment. Because Herzog has requested relief other than possession of the property, we find that the appeal is not moot and proceed to the merits.

¶ 42 B. Summary Judgment

- 11 - No. 1-22-1467 ¶ 43 On appeal, Herzog argues that the release issued by Wells Fargo should have barred the foreclosure and “cannot be avoided by parol evidence of lack of consideration for its issuance.” Herzog further contends that Wilmington Savings was required to present evidence of fraud, duress, illegality, or mutual mistake to set aside the release and it failed to present such proof. ¶ 44 Wilmington Savings responds that Herzog failed to demonstrate that the purported release created a genuine issue of material fact. It further asserts Herzog presented no evidence that he provided consideration for a release on the mortgage. Instead, it maintains, during his deposition, he repeatedly asserted that he could not recall anything about the release and he admitted to continuing to make payments towards the outstanding indebtedness following the purported release. ¶ 45 Summary judgment is appropriate where “ ‘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.’ ” Suburban Real Estate Services, Inc. v. Carlson, 2022 IL 126935, ¶ 15 (quoting 735 ILCS 5/2-1005(c) (West 2020)). “ ‘Genuine’ means there is evidence to support the position of the nonmoving party.” Pekin Insurance Co. v. Adams, 343 Ill. App. 3d 272, 275 (2003). The court construes the pleadings, depositions, admissions, and affidavits strictly against the movant and liberally in favor of the opponent. Adams v. Northern Illinois Gas Co., 211 Ill. 2d 32, 43 (2004). The party moving for summary judgment is not required to prove its case or disprove the nonmovant’s case, but instead may be “entitled to summary judgment by demonstrating the absence of a genuine issue of material fact.” Berke v. Manilow, 2016 IL App (1st) 150397, ¶ 31. The nonmovant may defeat a summary judgment motion by demonstrating that a question of fact does exist. Id. To do so, the nonmovant “must come forth with some evidence that arguably would entitle [them to] recovery at trial.” Id. - 12 - No. 1-22-1467 “Summary judgment is a drastic measure and should only be granted if the movant’s right to judgment is clear and free from doubt.” Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102 (1992). “Mere speculation, conjecture, or guess is insufficient to withstand summary judgment.” Sorce v. Naperville Jeep Eagle, Inc., 309 Ill. App. 3d 313, 328 (1999). Our review of the court’s decision is de novo (Adams, 211 Ill. 2d at 43), meaning we perform the same analysis a trial court would perform and we afford no deference to the reasoning or the disposition of the trial court (Johnson v. Fuller Family Holdings, LLC, 2017 IL App (1st) 162130, ¶ 37). ¶ 46 Count I of Wilmington Savings’ amended complaint alleges that the mortgage is a valid, existing lien and requests that the circuit court enter a judgment of foreclosure against Herzog. Count II, though oddly worded, seeks a declaratory judgment that the release was recorded in error and requests that the court “expunge” it from the public record. We first note that the order entered in this case states simply that the circuit court granted Wilmington Savings’ motion for summary judgment. No mention is made of the release, the later filed purported recission, or expungement.^[1] That notwithstanding, the inference to be drawn from the court’s judgment is that the release was recorded in error and that there was, therefore, a valid lien on the property supporting summary judgment in favor of Wilmington Savings. See Illinois State Bar Ass’n Mutual Insurance Co. v. Canulli, 2020 IL App (1st) 190142, ¶ 19 (an order granting summary judgment that fails to expressly dispose of all issues may be appealed from where the order necessarily entailed the disposition of the remaining issues). Accordingly, we first address the validity of the release, a necessary predicate to determining whether there was a valid, existing mortgage under which